Federal Circuit Broadens Eligibility Requirements for Software Inventions
Last week, in Enfish, LLC v. Microsoft Corp., 2016 WL 2756255 (Fed.Cir. 2016), a panel of the U.S. Court of Appeals of the federal circuit provided clarity on the eligibility of patents on certain software technologies, holding that certain types of patents are patent-eligible and not subject to a two-step inquiry on patent eligibility. The case addresses an open question in patent law – are all patents on software technologies necessarily directed to "abstract ideas," and subject to a two-step Alice inquiry?
The court held that the answer to that question is no, stating that all claims directed to software are not inherently abstract. The decision has significant consequences for parties seeking patents on software technology and parties in litigation related to software patents, and it may also have meaningful implications for diagnostic method patents in biotechnology.
For nearly two years, federal courts and the U.S. Patent and Trademark Office (USPTO) have wrestled with a confusing standard for patent-eligibility that has been mandatory since the Supreme Court's decision in Alice Corp. Pty Ltd. v. CLS Bank Int'l. The Alice decision requires that all patents should be analyzed to "first determine whether the claims at issue are directed to a patent-ineligible concept." If a patent includes claims that are directed towards a "patent-ineligible concept," they are then examined to determine if the claims include "significantly more" than the concept itself. "Patent-ineligible concepts" include "laws of nature, natural phenomena, and abstract ideas."
The Supreme Court and the federal circuit have not yet defined what constitutes "significantly more" beyond narrow exceptions. Until the Enfish decision, it seemed that nearly every patent on software technology was directed to an "abstract idea." As a result, obtaining and protecting patents on software technology has been difficult for the past two years. In the Enfish decision, the federal circuit clarified that "a substantial class of claims are not directed to a patent-ineligible concept" and suggest that many patents on software technology should not be subjected to the confusing second step of the Alice inquiry.
Enfish, the patent owner in the case, was appealing a district court decision that its patents were patent-ineligible. Enfish's patents were on technologies for self-referential databases that ran more efficiently and were easier to configure than traditional relational databases. Notably, the Enfish patents could be run on a "general purpose computer." The district court below found the Enfish patents to be patent-ineligible because the patents were directed to the abstract idea of "the concept of organizing information using tabular formats" and did not include "significantly more" than that abstract idea.
As has often been the case in Alice analysis, the district court's definition of the abstract idea was at a very high level. The federal circuit disagreed with the district court's definition, stating that, "describing the claims at such a high level of abstraction and untethered from the language of the claims all but ensures that the exceptions to § 101 swallow the rule." Instead, the federal circuit determined that the Enfish patents were directed to a "self-referential table for a computer database." Noting that the Enfish patented technology improved the speed, efficiency, and capabilities of databases, the federal circuit stated that the claims "are directed to a specific improvement to computer functionality" and that the claims were therefore not directed to any abstract idea.
Implications of Decision
Although complicated, the implications of this decision are significant for parties seeking patent protection and parties in patent litigation. As noted above, the Enfish patents were on pure software technology that could be run on any general purpose computer. For the past few years, it has been unclear whether such types of patents were patent-eligible. The federal circuit has clarified that patents on pure software technology are not automatically subject to the second step of an Alice analysis, making these types of inventions patent-eligible.
The decision may also have implications for patents in the area of diagnostic method patents involving natural laws. As with software claims, federal courts and the USPTO have concluded that diagnostic method claims involving correlations between biomarkers and disease are directed to a natural law, and therefore, are patent ineligible. Following Enfish, it is possible that courts analyzing diagnostic method claims will similarly recognize that a conclusion that diagnostic method claims are patent ineligible requires more than describing the claims at a high level of abstraction. In particular, diagnostic method claims analyze the natural law in an assay in a practical application to diagnose a patient as having or not having the disease. Therefore, federal courts and the USPTO may determine that diagnostic method claims are not automatically subject to the second step of an Mayo/Alice analysis, making these types of inventions patent-eligible.