Card Games Using a Standard Deck Face a Tough Road at the Patent Office

Ray and Amanda Smith applied for a patent on a method of playing a wagering card game. The title of their patent application was “Blackjack Variation.” The court of appeals noted that the Smiths’ claim were directed to rules for playing a wagering game using conventional shuffling and dealing of a standard deck of cards. As such, the court of appeals found the Smiths’ claims were not patent eligible in In Re Smith, No. 2015-1664 (Fed. Cir. 2016).

The court found that the Smiths’ claim were similar to other fundamental economic practices previously found abstract. The court agreed with the reasoning of the patent office that “[a] wagering game is, effectively, a method of exchanging and resolving financial obligations based on the probabilities created during the distribution of cards.”

The court also found that the claims did not contain an inventive concept sufficient to transform the abstract idea into a patent-eligible subject matter. The shuffling and dealing of physical playing cards from a standard card deck were purely conventional activities, according to the court.

However, the court noted that some inventions in the gaming arts could be patent-eligible. The court said “claims directed to conducting a game using a new or original deck of cards potentially” could be patent eligible.

Tabbed-Spreadsheet Claims Found Patent-Eligible

Data Engine Technologies (DET) sued Google claiming that it infringed several claims of U.S. Patents 5,590,259, 5,784,545, 6,282,551 directed to tabbed-spreadsheets, among others. The patents claim system and methods for making complex electronic spreadsheets more accessible by providing familiar, user-friendly interface objects–specifically notebook tabs–to navigate through spreadsheets.

Google asserted that the claims of these patents were directed to abstract ideas and did not provide an inventive concept. The Federal Circuit disagreed finding claims directed to the tabbed spreadsheet were patent eligible in Data Engine Technologies LLC v. Google LLC, No. 2017-1135 (Fed. Cir. 2018).

Figure 4D of the ‘259 patent shows tabs at the bottom of each sheet.

Figure 2D provides an enlarged view of the tabs.

The court notes that while these tabbed spreadsheet interfaces are common now, “Quattro Pro, the first commercial embodiment of the claimed invention, was highly acclaimed as having revolutionized three-dimensional electronic spreadsheets.” The court goes on to review articles from PC World and Info World touting the advantages of the tabs in improve navigation of three-dimensional sheets.

The Court found that the claims were directed to a specific method for navigating through three-dimensional electronic spreadsheets. And provided a solution to the then-existing technological problems in computers and prior art electronic spreadsheets. The claimed invention solved a known technological problem in a particular way.

Ultimately the court rejected Google’s assertion that the claims were directed to the abstract idea of indexing information because the claims were directed to “an improved user interface for computer devices” and “a particular manner of summarizing and presenting information in electronic devices.”

Computer Based Method of Determining Optimal Product Price Not Patent Eligible

USPatent7970713OIP Technologies sued Amazon alleging that Amazon infringed OIP’s patent 7,970,713 directed to a computer based method of automatically determining the optimal price for a product. The court of appeals determined that the claimed method was not patent eligible as an abstract idea under 35 USC 101 in OIP Technologies v. Amazon, No. 2012-1696 (Fed. Cir. 2015).

The court summarized the limitations of claims 1 of the ‘713 patent as: “(1) testing a plurality of prices; (2) gathering statistics generated about how customers reacted to the offers testing the prices; (3) using that data to estimate outcomes (i.e. mapping the demand curve over time for a given product); and (4) automatically selecting and offering a new price based on the estimated outcome.”

Following the two step test from Alice v. CLS Bank, 134 S. Ct. 2347 (2014), the court found under step one that the claims were directed to the abstract idea of offer-based price optimization. The court summarized a problem that the method of the ‘713 patent aimed to solve:

The ’713 patent explains that traditionally merchandisers manually determine prices based on their qualitative knowledge of the items, pricing experience, and other business policies. In setting the price of a particular good, the merchandiser estimates the shape of a demand curve for a particular product based on, for example, the good itself, the brand strength, market conditions, seasons, and past sales. . . The ’713 patent states that a problem with this approach is that the merchandiser is slow to react to changing market conditions, resulting in an imperfect pricing model where the merchandiser often is not charging an optimal price that maximizes profit.

Accordingly, the ’713 patent teaches a price optimization method that “help[s] vendors automatically reach better pricing decisions through automatic estimation and measurement of actual demand to select prices.”

The court found that the offer-based price optimization of the ‘713 patent was similar to other ‘fundamental economic concepts” found to by abstract ideas and then cited the following cases: Alice, 134 S. Ct. at 2357 (intermediated settlement); Bilski v. Kappos, 561 U.S. 593, 611 (2010) (risk hedging); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014) (using advertising as an exchange or currency); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1347 (Fed. Cir. 2014) (data collection); Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1346 (Fed. Cir. 2013) (generating tasks in an insurance organization).

In the second step of the Alice test, the court found that the other elements of the claims did not transform the abstract idea of offer-based price optimization into a patentable method. The court found that the additional elements in the claims merely recited well-understood, routine conventional activities either by requiring conventional computer activities or routine data-gathering steps.

The court concluded that “[a]t best, the claims describe the automation of the fundamental economic concept of offer-based price optimization through the use of generic-computer functions.

Non-invasive Prenatal Genetic Testing Method Not Patent Eligible

NonInvasivePrenatalDiagnosisPatentToday test results from a pregnant mother’s blood can detect characteristics of the fetus, such as genetic defects or gender. The method of detecting such characteristics was found non patent eligible by the Court of Appeals in Ariosa Diagnostics v. Sequenom, Inc., Nos. 2014-1139, 2014-1144 (Fed. Cir. 2015).

In 1996, Drs. Dennis Lo and James Wainscoat discovered cell-free fetal DNA (“cffDNA”) in maternal plasma and serum. This plasma and serum was previously discarded as waste by researchers. cffDNA is non-cellular fetal DNA that circulates freely in the blood stream of a pregnant woman. Drs. Lo and Wainscoat used known laboratory techniques to detect the cffDNA and determine fetal characteristics, such as genetic defects or  gender. U.S. Patent 6,258,540, titled “Non-invasive prenatal diagnosis” was granted on this method. But the Court of Appeals determined that the claimed method was not patent eligible.

Claim 1 of the patent provides:

1. A method for detecting a paternally inherited
nucleic acid of fetal origin performed on a maternal
serum or plasma sample from a pregnant female,
which method comprises

amplifying a paternally inherited nucleic acid
from the serum or plasma sample and

detecting the presence of a paternally inherited
nucleic acid of fetal origin in the sample.

According to the Supreme Court in Mayo v. Prometheus,132 S.Ct. 1289 (2012) to determine whether a patent is directed to ineligible natural phenomena, (1) first its is determined whether the claims at issue are directed to a patent-inelibible concept, and (2) if so, it is determined whether the additional elements of the claim transform the nature of the claim into a patent-eligible application of the natural phenomena. The second step is the search for the inventive concept “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”

It was undisputed that the existence of cffDNA in maternal blood is a natural phenomenon. So the question under step two of the Mayo test was whether the additional steps transformed the claim into a patentable application of the natural phenomenon.

The court determined that amplifying and detecting the cffDNA were well-understood, routine, and conventional activities in 1997. Those activities simply were not previously applied to maternal blood. Since the steps of amplifying and detecting were well know the only new subject matter was the discovery of the presence of cffDNA in the maternal plasma or serum.

As a result, the method patent was found not patent eligible as a natural phenomena under 35 USC 101.

The court recognized that the testing method in U.S. Patent 6,258,540 was a positive and valuable contribution to science and medicine. But that alone was not sufficient to make the method patentable under the Supreme Court’s precedent, which provides “[g]roundbreaking, innovative, or even brilliant discovery does not by itself satisfy the § 101 inquiry.”

Claims to Intermediated Financial Settlement Not Patent Eligible; Software Patents Still Alive

Alive_v_CLSBankThe U.S. Supreme Court issued its decision in Alice v. CLS Bank (June 19, 2014) touching on the patent-eligibility of software implemented inventions. The decision continues to allow patent protection for software innovation and technological solutions implemented with software. Therefore all software patents are not dead in the wake of this opinion, in fact, most survive under the USPTO’s interpretation.  However, this decision limits or eliminates, depending on the circumstances, the ability of one to obtain a patent covering a fundamental economic practice long prevalent in commerce that is merely implemented in a generic computer using generic functions without more.

The patents at issue in Alice were directed to using a computer to mitigate financial settlement risk, i.e., the risk that only one party to an agreed-upon financial exchange will satisfy its obligation. The court found that all of  the claims at issue are drawn to “the abstract idea of intermediated settlement, and that merely requiring generic computer implementation fail[ed] to transform the abstract idea into a patent-eligible invention.”

Mayo Framework
The court followed the two step framework presented in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U. S. ___ (2012), to determine whether the claims at issue were directed to an abstract idea. First, the Court determines whether the claims at issue are directed to a patent-ineligible concept (e.g. laws of nature, natural phenomena, or abstract ideas). If so, the second step is to determine whether there are additional elements in the claims that transform the nature of the claims into a patent-eligible application of the law of nature, natural phenomena, or abstract idea at issue.

Software is Still Patentable
The court asserted that the claims at issue in Alice did not improve the function of the computer itself, nor effect an improvement in any other technology or technical field. So at least software that does either of those things should be patent eligible. Further, the court acknowledged that it must tread carefully so that the rules about abstract ideas or other excluded subject matter do not swallow all of patent law. This is true because at some level all inventions use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. The court continued to recognize that the application of a law of nature, natural phenomena, or abstract idea to a new and useful end remains patent eligible.

Method Claims
The Court first looked at the method claims in Alice. In the first part of the Mayo framework, the court found that the method claims were directed to the abstract idea of intermediated settlement. The Court cited a 1896 publication discussing the use of a clearing-house as an intermediary to reduce settlement risk.

In the second part of the Mayo framework–whether there are additional elements–the court found that “the method claims, which merely require a generic computer implementation, fail to transform that abstract idea into a patent eligible invention.” The Court stated that the “wholly generic computer implementation is not generally the sort of ‘additional featur[e]’ that provides any practical assurance that the process is more than a drafting effort designed to monopolize the [abstract] idea itself.” The Court found that the method claims at issue did not do more than instruct the practitioner to implement the abstract idea of intermediated settlement on a generic computer.

The Court noted that the method claims did not improve the function of the computer itself, nor effect an improvement in any other technology or technical field. The Court found that all the computer steps were “well-understood, routine, conventional activities previously known to the industry.” Further, the Court found that the ordered combination of the steps using a generic computer added nothing that was not already present when the steps were considered separately.

The Court found that the computer readable medium claims failed for the same reasons as the method claims and because Alice conceded that the computer readable medium claims raise and fall with the method claims.

System Claims
The systems claims fared no better than the method and medium claims. The Court discounted arguments that the system claims were not abstract because they included specific hardware configured to perform specific computerized functions (“… a data storage unit having stored therein information….”, “a computer, coupled to said data storage unit, that is configured to…”, “a communications controller”, etc). The Court found these items were “purely functional and generic.” The Court stated that “Nearly every computer will include a ‘communications controller’ and a ‘data storage unit’ capable of performing the basic calculation, storage, and transmission functions…” Therefore, the Court found that the hardware recited by the system claims did not offer “a meaningful limitation beyond generally linking the use of the method to a particular technological environment.”

The Court found that the system claims were no different from the method claims in substance. The court stated, “The method claims recite the abstract idea implemented on a generic computer; the system claims recite a handful of generic computer components configured to implement the same idea.” The court stated that to interpret the method claims as patent-ineligible, but then interpret the system claims as patent-eligible would go against the Court’s previous precedent that section 101 should not be interpreted in ways that make patent eligibility depend on the patent draftsman’s art (e.g. the manner in which the claims are drafted).

Analysis: Generic Computer
Some have argued that  Court has imported the question of novelty, usually reserved for consideration under section 102 and 103, into the 101 patent-eligibility analysis under the second question: “whether there are additional elements in the claims that transform the nature of the claims into a patent-eligible application.”

The argument is that under the second step we must ask: are the additional components of the claim beyond the abstract idea old and well known? Whether something is old or well known if usually a questions determined under sections 102 and 103 by looking to see if the claimed subject matter is disclosed in the prior art or legally obvious in view of the prior art.

At least one commentator suggests that the court did not import a novelty test into the section 101 analysis, but instead presented a question of whether the claim does significantly more than state a fundamental principle connected with an instruction to “apply it.” The court said, “Stating an abstract idea while adding the words ‘apply it”’ is not enough for patent eligibility. Nor is limiting the use of an abstract idea “‘to a particular technological environment.” The Court said, “Stating an abstract idea while adding the words ‘apply it with a computer’ simply combines those two steps, with the same deficient result.” Therefore the reference to a generic computer not being enough is simply a recognition that Alice’s claim did no more than apply a old principle in a generic computer.

While the court provides that a generic computer is not enough to transform an abstract principle into patent-eligible subject matter, another commentator  notes that the court does not provide much guidance on what is enough.

Not Abstract: Technological Solutions
As yet another commentator noted, the Court provided in Diamond v. Diehr, 450 U.S. 175 (1981) that a process of curing rubber using a well known mathematical equation was patent-eligible not because it involved a computer, but because the claimed process improved an existing technological process. Therefore, inventions directed at improving a technological problem should not be found to be abstract under section 101.

The question arises, what is a technological problem? At least the areas of applied economics and finance, such as intermediated settlement, which provide a non-technical method of organizing human activity are excluded from the meaning of technological.

USPTO Interprets Alice
On June 25, 2014, the USPTO issued a memo to its patent examiners instructing how to apply the ruling in Alice to pending patent applications. The memo instructs examiners to follow the two step Mayo analysis. The memo provides these examples of abstract ideas referenced in Alice under the first step of Mayo:

  • Fundamental economic practices
  • Certain methods of organizing human activities
  • An idea itself
  • Mathematical relationships/formulas

The memo instructs that inventions are not patent ineligible simply because the invention involves an abstract concept. The application of an abstract idea in a meaningful way is patent eligible.

If any of the above abstract ideas are found in the claims, the Examiner must proceed to the second step of Mayo to determine whether the claim is nonetheless patent eligible because it has additional elements that amount to significantly more than the abstract idea itself. Examples of limitations that may be enough to qualify as significantly more when recited in a claim with an abstract idea include:

  • Improvements to another technology or technical field
  • Improvements in the functioning of the computer itself
  • Meaningful limitations beyond generally linking the use of an abstract idea to a particular technological environment

The USPTO noted that limitations that are not enough to qualify as significantly more include:

  • Adding the words “apply it” (or an equivalent) with an abstract idea, or mere instructions to implement an abstract idea on a computer
  • Requiring no more than a generic computer to perform generic computer functions that are well-understood, routine, and conventional activities previously known to the industry.

While patent protection for software directed to fundamental principles of economics and finance without more is limited, patent eligibility for protecting software innovation and technological solutions implemented with software is still alive after Alice.