The guidance portion of Bitlaw is provided by the attorneys of Forsgren Fisher McCalmont DeMarea Tysver. We have a great deal of expertise in many areas of patent law including patent office rejections and legal invalidity challenges under Section 101. Please contact us if you need any assistance!
This is the second of four different sections that make up our guidance on Section 101 rejections. The first section describes Section 101 issues in general and introduces the two-step Alice test. This second section discusses how to apply the first step of the Alice test, while the third describes the second step of the test. The fourth section provides a list of potential arguments that one can make when responding to a rejection from the patent office under Section 101. If you have any comments or suggestions for this guidance, please contact Dan Tysver.
Overview of Step One of the Alice Test
Claims must be "directed to," and not just "be based on," the ineligible concept
The Supreme Court has described the first step of the Alice test as follows: "[f]irst, we determine whether the claims at issue are directed to one of those patent-ineligible concepts." Alice. However, in making this determination, the Supreme Court reminds us to "tread carefully:"
At the same time, we tread carefully in construing this exclusionary principle lest it swallow all of patent law. Mayo. At some level, "all inventions... embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." Id.... Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. See Diamond v. Diehr. "[A]pplication[s]" of such concepts "`to a new and useful end,'" we have said, remain eligible for patent protection. Gottschalk v. Benson.Alice (full citations removed). In its Enfish decision, the Federal Circuit has explained that we tread carefully by focusing on whether the claims are “directed to” the ineligible concept rather than simply embody, use, or apply the concept. In other words, the first part of the Alice test is not whether an abstract idea or natural phenomenon can be found in the claim, but rather whether the claims are actually directed to the patent-ineligible concept.
Obviously, the difference between whether a claim merely uses or applies an ineligible concept, or is actually "directed to" that concept, is a difficult esoteric issue, but this issue is at the heart of step one of the Alice test. In making this determination, the Federal Circuit further reminds us that step one of Alice must be considered a “meaningful” step, and that a substantial class of claims will not be considered directed to a patent-ineligible concept under this step.” Enfish. In other words, step one of the Alice test does not create a “particularly high bar” to overcome. Amdocs (Israel) Ltd. v. Openet Telecom, Inc. (Judge Reyna, in dissent).
Comparison of Step One is between character of the claim and ineligible concept
Overall test: The previous section explained that step one doesn't require merely analyzing whether a claim contains an ineligible concept. Rather, the claim must be "directed to" that concept. The Federal Circuit has explained that the “directed to” inquiry requires that the "character of the claim" be determined. Once determined, this character is then compared against the abstract idea or natural phenomenon:
[T]he "directed to" inquiry applies a stage-one filter to claims, considered in light of the specification, based on whether "their character as a whole is directed to excluded subject matter."
Enfish. Of course, this begs the question as to how the character of the claim is to be determined.
Determine character--Examine claim as a whole: The Federal Circuit states that one must look at the whole claim in order to define its character. See Internet Patents (step one requires a determination of whether the "character [of the claim] as a whole is directed to excluded subject matter") (emphasis added) (cited by Enfish). See also MPEP §2106.04 (“examiners should consider the claim as a whole when performing the Step 2A analysis”). This means that a patent office rejection that compares only a portion of the claim against an ineligible concept, without first looking at the whole claim to examine its character, is not properly applying the step one of the Alice test.
Determine character--Review the specification: In addition to examining the claim as a whole, it is important that the claims be “considered in light of the specification.” Enfish. See also MPEP §2016.04(a) (“it is critical that examiners … evaluate both the specification and the claim”). Consequently, patent office rejections that fail to consider what the specification says about what is claimed has not properly applied step one of the Alice test.
Character is the claimed advance over prior art: Finally, the Federal Circuit emphasizes that the purpose of examining the whole claim and examining the specification is to determine "the claimed advance over the prior art.” when performing this analysis. Affinity Labs ("The 'abstract idea' step of the inquiry calls upon us to look at the 'focus of the claimed advance over the prior art' to determine if the claim's 'character as a whole' is directed to excluded subject matter"). Similar language is found in Intellectual Ventures v. Capital One. The examination of the specification is necessary because one of the key elements is determining what the applicant was attempting to patent. Amdocs (the dissent explained that “the step one inquiry is a legal analysis that must focus on determining ‘what type of discovery is sought to be patented.’”).
Strive to define the character as a technical improvement: The goal is to identify a claimed advance that is technical in nature, and not related to an abstract idea or natural phenomenon. The court in Enfish, for instance, was heavily persuaded by the fact that the specification taught that the invention provided technical improvements over the prior art, such as "increased flexibility, faster search times, and smaller memory requirements." Based upon this support in the specification, the Federal Circuit found the claims were directed to a technical improvement and not an improvement related to an abstract idea. Consequently, the claims were patent-eligible under step one. Similarly, in Core Wireless, the Federal Circuit found that claims for a mobile device user interface were directed to a technical advancement over the prior art because the specification explained that earlier interfaces "required users to drill down through many layers to get to desired data or functionality" and that such prior art interfaces "seem slow, complex and difficult to learn, particularly to novice users." Thus, specifications that describe advantages over the prior art that are technical in nature will support a finding that the character of the claim is technical in nature and not directed toward an abstract idea.
Don't examine prior art at this stage: Furthermore, note that the claimed advance should be determined without actually examining the prior art (see below). Rather, one looks to the specification and the claim as a whole.
Restatement of the test: In summary, the Federal Circuit has described step one of the Alice test as follows:
- Determine the "character of the claim" by:
- Examining the claim as a whole
- Examining the specification
- Identifying the focus of the claimed advancement over the prior art
- Once identified, analyze the character of the claim to see if the claimed advance is directed to the ineligible concept (the abstract idea or natural phenomenon) or is instead directed toward a technical improvement or a solution to a technical problem.
Role of Novelty and Prior Art in Step One
While the inventor's claimed advancement over the prior art is clearly relevant to step one of the Alice test, it does not appear that step one should actually include any analysis of the prior art. Based on the current case law, the important consideration is what the inventor is claiming to be the advancement over the prior art, not which elements of the claim are actually new and non-obvious when compared to the prior art. The actual teachings of the prior art appear to be relevant only to step two of the Alice test. Ultramercial v. HULU, LLC (“any novelty in implementation of the idea is a factor to be considered only in the second step of the Alice analysis”).
An important corollary of this is that inventor arguments pointing to the actual novelty of certain claimed features will generally be ignored when analyzing the claim under step one of the Alice test. In the words of the Federal Circuit, "[w]e may assume that the techniques claimed are '[g]roundbreaking, innovative, or even brilliant,' but that is not enough for eligibility." SAP.
In sum, the recited claims are directed to an abstract idea because they consist of generic and conventional information acquisition and organization steps that are connected to, but do not convert, the abstract idea— displaying a second set of data without interfering with a first set of data—into a particular conception of how to carry out that concept.However, in support of this statement the court cited a portion of the Mayo decision that was clearly referring to step two of the test. The court could have avoided this issue by focusing on the character of the claimed advance over prior art, which would have properly analyzed the claimed advance without analyzing irrelevant and conventional claim elements.
Several months after Interval Licensing, the Federal Circuit reaffirmed that an analysis of whether the prior art taught a particular limitation was not relevant to step one of the Alice test:
The eligibility question is not whether anyone has ever used tabs to organize information. That question is reserved for §§ 102 and 103. The question of abstraction is whether the claim is "directed to" the abstract idea itself.Data Engine
Role of Preemption
The Federal Circuit has expressed its belief that "the preemption concern is the basis for the creation of the three judicial exceptions to statutory patent eligibility." Vehicle Intelligence. This concern about preemption is that, if patents were allowed on abstract ideas and natural phenomena, those patents might preempt all other uses of those concepts, and those concepts are considered "the basic tools of scientific and technological work.” Mayo.
Because of the role that these preemption concerns had in establishing the abstract ideas and natural phenomenon exceptions to patentability, many believe that whether or not a specific claim preempts an ineligible concept should be considered when analyzing step one of the Alice test. However, the Federal Circuit has held that the Alice test itself addresses any issues concerning preemption. Ariosa ("questions on preemption are inherent in and resolved by the § 101 analysis" of the Alice test). See also MPEP 2106.04. As a result, it is not clear that arguments relating to preemption will have much persuasive weight in convincing the patent office to withdraw a Section 101 rejection.
Applying Step One in the Context of Abstract Ideas
Identifying the Abstract Idea without any Definitions
As explained above, step one of the Alice test requires that the claimed advancement over the prior art be determined, and that this character of the claim as a whole be compared with the ineligible concept to see if the claim is directed to the concept. To complete this step in the context of abstract ideas, it is necessary to determine what actually constitutes an abstract idea.
Unfortunately, the Supreme Court has refused to set forth any definition of what qualifies as an abstract idea. The Alice Court has hinted that processes that "solve a technological problem" or "improve an existing technological process" are probably not abstract, because the Court used those descriptions to explain its decision in Diamond v. Diehr. But the Supreme Court stopped well short of any definition, and lower courts and the patent office are instead left “to compare claims at issue to those claims already found to be directed to an abstract idea in previous cases.” Enfish.
In effect, once the claimed advancement over the prior art is determined for a claim, one must compare this character of the claim against recent court decisions to determine which case includes facts most analogous to the identified claimed advancement. Bitlaw includes a rather comprehensive collection of Section 101 cases that have been decided since the Mayo and Alice decisions. Bitlaw's Section 101 Cases index includes a sortable list of all cases, including case summaries and case results, that can be used to identify cases and develop appropriate analogies.The patent office will also frequently try to characterize a claim according to the four types of abstract idea that it has pre-identified. At Section 2106.04(a)(2) of the MPEP, the patent office presents "Examples of Concepts the Courts Have Identified as Abstract Ideas." In this section, the MPEP tries to categorize all of the cases in which a claim was found to be directed to an abstract idea. The four categories presented are:
- Fundamental Economic Practices, including agreements related to financial transactions, and mitigating risk;
- Certain Methods of Organizing Human Activity, including managing relationships and legal obligations, advertising and marketing, managing human behavior, and collecting, analyzing, classifying, and storing data;
- An Idea "of Itself", including data comparison and analysis that can be done in the human mind (or on pen and paper), concepts analogous to human mental work, and ideas with no concrete or tangible form;
- Mathematical Relationships/Formulas, including concepts relating to mathematical formulas or calculations.
Supplemental ("Shadow") tests for Step One to Simplify the Analysis
As explained above, step one requires a determination of whether a claim is “directed to” an abstract idea by determining whether the character or claimed advance of the claim is directed to an idea that courts have previously decided were abstract. This is the formal test for step one of Alice, and no court has suggested that anything other than this analysis governs step one. We have therefore placed this rule first in the above chart. Nonetheless, an analysis of over fifty Federal Circuit cases relating to subject matter eligibility shows the development of several “shadow tests” or shortcuts for analyzing step one of the Alice test. While we are not suggesting that these shadow tests supersede this explicit step one test, it does appear that the conclusion reached by applying the formal step one test can be greatly influenced by the results of these shadow tests. To some extents, courts seemed to have found that passing one of these three shadow tests are sufficient to pass the main "directed to an abstract idea" standard. The following analysis sets forth three different shadow tests below, and provides support for these tests in the case law.
All three of the identified shadow tests seem most applicable to computer-implemented (software) inventions, although they may be applicable outside this area as well. The first shadow test asks whether the claimed software/method improves the computer (or other technology), or whether the claimed computer is simply being used "as a tool" to improve an abstract process. The second test examines whether the claim language specifies a particular process to solve to a problem, or merely identifies a desired outcome. The third test states that if a software claim can be characterized as collecting data, applying an algorithm to the data, and then storing or displaying the result, the claim is directed to an abstract idea.
These are called “shadow” test because, while the Federal Circuit has not acknowledged the test as a replacement for step one, the Federal Circuit has frequently and consistently used these tests in its step one analysis.
Improving Computers vs. Using Computers as a Tool
This first shadow test reduces step one of the Alice test to a single question: does the software being claimed improve the capabilities of the computer, or is the software merely using the computer as a tool to improve some abstract process. This test was articulated in Enfish as follows:
For that reason, the first step in the Alice inquiry in this case asks whether the focus of the claims is on the specific asserted improvement in computer capabilities (i.e., the self-referential table for a computer database) or, instead, on a process that qualifies as an "abstract idea" for which computers are invoked merely as a tool.
Similar articulations of this shadow test are found in Electric Power ("The present case is different: the focus of the claims is not on such an improvement in computers as tools, but on certain independently abstract ideas that use computers as tools"); Affinity Labs ("In this case, the claims are directed not to an improvement in cellular telephones but simply to the use of cellular telephones as tools in the aid of a process focused on an abstract idea"); Smart Systems (quoting Enfish); FairWarning (quoting Electric Power); and TLI (comparing improvement in the functioning of a computer with adding computer components to well-known business practices).
In developing an argument based on this shadow test, one should focus on the extent to which the computer process is improved. The test largely originated in Enfish, and in Enfish the invention related to a new logical model for computer databases. The court was convinced that the software improved the processing of the computer because of the benefits created through the software, namely increased flexibility, faster search times, and smaller memory requirements. Even if a new invention appears to be focused more on a business process than Enfish, it is frequently possible to explain how the new process will also increase the efficiency of the computer or other components that run the software. Once a computer-related improvement is identified (such as faster electronic processing of purchase orders), one can argue that the invention is improving the capabilities of the computer and not merely using the computer as a tool.
Note that the decision in BSG may make this argument harder. In this case, a process that improved the data that was input into a database through a new process was considered to be directed to an abstract idea, because the court felt that improving data was not "an improvement to database functionality." This was true even though the invention might improve the ability to review millions of records and efficiently find only the few relevant records. The court found that the process for improving the data input was an abstract idea, and the benefits of the improved data flowed "from performing an abstract idea in conjunction with a well-known database structure."
A recent development that has emerged is the Federal Circuit's willingness to consider improvements to the user-interface of the software as a technical improvement to the computer. In Core Wireless, the Federal Circuit found that claims for a mobile device user interface were directed to a technical advancement over the prior art because the specification explained that earlier interfaces "required users to drill down through many layers to get to desired data or functionality" and that such prior art interfaces "seem slow, complex and difficult to learn, particularly to novice users." Similarly, in Data Engine, the Federal Circuit held claims to be patent-eligible when they claimed a user-interface that used tabs to move between pages of a 3-D spreadsheet. The court believe that prior art techniques for navigating between multiple pages was burdensome and hindered the user's access to the power of the spreadsheet, while the tab interface "solved this known technological problem in computers." Of course, the simple display of a graphical user interface will not pass step one of Alice--the claimed user-interface must have some usability improvement over prior art user interfaces.
Claiming Particular Solution vs. Claiming Outcome
A second shadow test suggests that step one of the Alice test might be resolved by examining whether the claims are written so as to claim only the desired results of a process, or whether the claims specify a specific means or method for producing that result. Claims that only set forth the desired results of the invention will be considered to be directed to an abstract idea under step one, while claims that specifically explain how the result is achieved should pass step one and be patent eligible.
This test is most articulately set forth in the dissent opinion in Amdocs:
[A] claim is "directed to" an abstract goal if the claim fails to describe how — whether by particular process or structure — the goal is accomplished. Even if the claim recites additional limitations, the claim is nevertheless directed to the underlying goal if those limitations fail to restrict how the goal is accomplished. Conversely, where the claim recites specific structure or function for accomplishing the desired goal in a particular way, the claim is more likely directed to a means than to the underlying abstract goal. In those cases, concerns of patent eligibility are resolved at step one, and there is no need to proceed to step two.
(citations and footnote omitted). In its 2018 SAP decision, the Federal Circuit acknowledged that this shadow test has been “reflected repeatedly in our cases," describing the test as to whether the claims have "the specificity required to transform a claim from one claiming only a result to one claiming a way of achieving it." The SAP decision cites the following cases for support of this shadow test: Finjan, Apple, Inc. v. Ameranth, Inc., Affinity Labs, Two-Way Media, Secured Mail, RecogniCorp, and Symantec. Similarly, the 2018 Interval Licensing decision found a claim directed to an abstract idea primarily because the claims demanding the "production of a desired result" without "any limitation on how to produce that result."
Data Collection, Analysis, and Results
The third shadow test singles out software claims that exist entirely in the realm of data and data manipulation. As articulated by the Federal Circuit in RecogniCorp:
A process started with data, added an algorithm, and ended with a new form of data [is] directed to an abstract idea.
The RecogniCorp court found that the claims it analyzed were directed to "a method whereby a user starts with data, codes that data using 'at least one multiplication operation,' and ends with a new form of data." As such, the claim was directed to an abstract idea. Similarly, the Federal Circuit in Electric Power concluded that the individual steps of collecting information, analyzing information, and presenting the results of the analysis are all abstract ideas, and claims that combine these three steps are similarly abstract.
Many other courts have reached similar conclusions. In Digitech, the court found that "[i]f a claim is directed essentially to a method of calculating, using a mathematical formula, even if the solution is for a specific purpose, the claimed method is nonstatutory." (quoting Parker v. Flook). Similar holdings are found in Intellectual Ventures v. Capital One ("an invention directed to collection, manipulation, and display of data was an abstract process"), FairWarning ("merely presenting the results of abstract processes of collecting and analyzing information, without more (such as identifying a particular tool for presentation), is abstract"), SAP ("As many cases make clear, even if a process of collecting and analyzing information is 'limited to particular content' or a particular 'source,' that limitation does not make the collection and analysis other than abstract"), Berkheimer (recognizing a claim consisting of "1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory" as abstract), and Smart Systems ("We have determined that claims directed to the collection, storage, and recognition of data are directed to an abstract idea.").
In these cases, the advancement over the prior art was in the manipulation of data--how the data was processed, which was considered an abstract idea. And these patents did not become directed to a non-abstract concept by the mere inclusion of tangible devices such as a general-purpose computer, at least where those devices were described generally and were simply responsible for merely processing the data in the desired manner. See, e.g., TLI (the fact that the server was described simply in terms of performing generic computer functions indicated that the focus of the claims was not on improving the server).
It can be difficult to overcome this shadow rule if your invention relates to software that can be viewed as starting with data, analyzing the data, and then presenting the result. It is important to note that cases which reject patent-eligibility for software for this reason are almost always examining software claims that depend heavily on the content of the data being analyzed. For instance, the data involved might relate to credits and debits, or other accounting figures, or a bingo game, or advertisements, or an electrical grid, or some other specific type of real-world data. In contrast, cases that have been found patent-eligible, focus on improving the functionality of the computer that is manipulating data. In most of these cases, it doesn't really matter what the actual content of the data represents. For instance, in DDR Holdings an invention related to web pages was deemed to be patent eligible because the invention improved the manner in which computer processed the interactions between web pages regardless of the content of those pages. In Enfish, the invention related to a new technique for representing data in a database. The invention was patent eligible because the invention improved the manner in which a computer processes that data, regardless of the content of that data.
Applying Step One in the Context of Natural Phenomena
Identifying the Laws of Nature/Natural Phenomena
As explained above, the Supreme Court has given us no definition for the phrase "abstract idea." Similarly, there is no clear-cut definition of what constitutes a law of nature or natural phenomena. One might imagine, given the fact this this statutory exception relates to laws of nature and natural phenomena, the exception should require that the product or process be "natural" or appear in "nature." However, the courts have not limited the exception in this manner, and patent claims directed to non-naturally occurring products can still be excluded from patent protection under these exceptions (see the discussion of the markedly different characteristics test below).
Courts have identified many items as natural phenomena or natural ideas. Many of these decisions have related to DNA, such as isolated DNA (in Ass’n for Molecular Pathology v. Myriad Genetics) and correlations between non-coding regions and coding regions of DNA (in Genetic Techs. Ltd. v. Merial LLC). Other decisions have related to the content of human bodily fluids, or correlations between drugs and body reactions, such as the existence of cell-free fetal DNA in maternal blood (in Ariosa) or the correlations discussed in Mayo, Cleveland Clinic Foundation v. True Health Diagnostics, LLC, and Genetic Techs. Ltd. v. Merial LLC. Other natural phenomena include cloned sheep (in In re Roslin Institute), artificially-created bacteria (in Chakrabarty) and, going back over seventy years, bacterial mixtures (in Funk Bros. Seed Co.).
Markedly different characteristics test for Products of Nature
The markedly different characteristics (or "MDC") test is the test that is used by both the courts and the U.S. Patent and Trademark Office to determine whether a claim is directed to a law of nature or natural phenomena under step one of the Alice test. The test is generally limited to product claims, that is claims that attempt to protect a physical product rather than a process. Process claims that are effectively no different than a product claim (a method of "providing the product") can be analyzed under the MDC test, but other process claims should not use this test (see below).
The MPEP describes physical products that are derived from natural sources as a "nature-based products," and encourages that the markedly different characteristics test be applied to nature-based products that appear as part of a claimed invention. If a product claim includes both a nature-based product and additional physical elements that are not nature-based products (such as a container), those additional elements are to be analyzed under step two of the Alice test.
The MDC test asks whether the claimed nature-based product is markedly different from its naturally occurring counterpart. Section 2106.04(c) of the MPEP sets forth the steps undertaken by the patent office in applying the markedly different characteristics test to nature-based products. You should familiarize yourself with the steps set forth in this section of the MPEP when determining whether a particular examiner followed these instructions when drafting a Section 101 rejection. The following paragraphs summarize the application of this test.
Select the Counterpart: Because the MDC test compares the claimed nature-based product against a naturally occurring counterpart, the selection of the counterpart can be a critical component of the test. When a nature-based product is derived from something that is found in nature, then this naturally occurring item is selected as the counterpart. Note that the counterpart may be only a portion of the item that is actually found in nature (a single strand of a double-stranded molecule, or a particular gene that is found in a whole chromosome). If two different naturally occurring items were used to derive the claimed nature-based product, only a single item (the naturally occurring item that is closest to the claimed nature-based product) is selected as the counterpart.
Identify Characteristics for Comparison: The MDC tests compares characteristics of the claimed nature-based product and the counterpart. The particular characteristics selected for this test are determined by examining the claimed nature-based product and selecting a characteristic related to the product's structure, function, or other property. Example properties discussed in the MPEP include:
- Biological or pharmacological functions or activities
- Chemical and physical properties
- Phenotype, including functional and structural characteristics
- Structure and form, whether chemical, genetic or physical
Evaluate Characteristics to Determine if They are Markedly Different: The selected characteristics of the nature-based product are then compared to the naturally-occurring counterpart. To be markedly different, the characteristic must be changed from the counterpart, and such change cannot be an incidental change or an innate characteristic of the counterpart. Rather, the applicant must have caused the claimed nature-based product to possess a characteristic that is different from that of the counterpart. If there is no marked difference, the nature-based product fails step one of the Alice test, and step two should be applied to the claim. The MPEP states that nature-based products that fail the markedly different characteristics test under step one have failed the "product of nature exception."
Natural Phenomena Process Claims
According to the MPEP, the markedly different characteristics test should be applied to process claims only when the process claim "is drafted in such a way that there is no difference in substance from a product claim." For most process claims involving a natural phenomenon or natural law, the MDC test is not applied.
For these process claims, the process described above for step one of the Alice test should be applied. In other words, the character of the claim should be analyzed as explained above to determine the claimed advancement over the prior art, and this claimed advancement should then be compared to see if it is directed to a natural phenomenon or natural law. As was true with the abstract ideas, it is not enough for a claim to simply involve a natural phenomenon or natural law, it must be "directed to" that patent-ineligible concept. See Rapid Litigation Mgmt.
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Guidance on Patent Prosecution--Section 101 (Patent Subject Matter Eligibility)
The following pages provide guidance on how to analyze and respond to section 101 rejections at the patent office, or section 101 claims of invalidity against issued patents.
Section 101 Rejections
Four statutory categories under Section 101
Non-statutory exceptions to subject matter eligibility
Overview of the Alice text
Overview of step one of the Alice test
Analyzing step one for abstract ideas
Analyzing step one for natural phenomena
Applying the Markedly Different Characteristics test
Overview--Searching for an "inventive concept"
Evaluating the "conventionality" of the claim elements
What is enough for inventive concept?
The machine-or-transformation test
Responding to a statutory rejection (outside four categories)
Proving patent eligibility under step one
Proving patent eligibility under step two