Arguments Hint That RCT Ruling Will Limit Challenges to Computer Method Patents

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It will be more difficult for accused infringers to succeed in challenges to the patent eligibility of computer-implemented method claims under Section 101 of the Patent Act, based on judges' comments in July 7 oral arguments at the U.S. Court of Appeals for the Federal Circuit (Fuzzysharp Technologies Inc. v. 3D Labs Inc., Fed. Cir., No. 2010-1160, oral arguments 7/7/11).

The panel repeatedly turned to the appeals court's recent Research Corporation Technologies v. Microsoftdecision as the only relevant precedent since the U.S. Supreme Court's Bilskiruling. The panel appeared to give a broad reading to the RCT holding, echoing a suggestion in that opinion that an invention may satisfy Section 101 merely if it “presents functional and palpable applications in the field of computer technology.”

However, the instant case also presented a secondary problem that concerned at least two of the panel members—the lower court had yet to make a claim construction ruling, and the parties, in presenting their Section 101 arguments, disagreed as to the scope of the asserted claims. The court clearly left open the possibility that it may have to remand the case for a claim construction decision before it can reach the patent eligibility question.

Case, Jurisprudence Background

Fuzzysharp Technologies Inc. is the assignee of two patents (6,172,679 and 6,618,047) on improving 3D computer graphics “through provision of an improved method for performing visibility calculations.”

The company asserted five method claims from the two patents against 3D Labs Inc. The claims at issue are drawn to mathematical algorithms including a step that reduces calculations by ignoring images that are either always visible or always invisible. The invention therefore is in decreasing the processing time necessary to form a 3D digital image, thereby enhancing the speed with which the image can be displayed.

Judge Saundra Brown Armstrong of the U.S. District Court for the Northern District of California determined that the claims were not statutory subject matter under Section 101. No. 07-CV-5948 (N.D. Cal. Dec. 11, 2009).

Armstrong relied on the Federal Circuit's binding precedent at the time and applied the “machine-or-transformation” (MoT) test decided by the en banc court in In re Bilski, 545 F.3d 943, 88 USPQ2d 1385 (Fed. Cir. 2008) (en banc).

The Supreme Court granted certiorari in Bilskisubsequently, though, and eventually ruled that the MoT test was a useful tool but not determinative. Bilski v. Kappos, 129 S.Ct. 2735, 95 USPQ2d 1001 (2010).

In its first Section 101 decision after Bilski, the Federal Circuit refused to provide a rigid formula or definition for abstractness, in Research Corporation Technologies Inc. v. Microsoft Corp., 627 F.3d 859, 97 USPQ2d 1274 (Fed. Cir. 2010). The appeals court only held that “this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act.”

Notably, the RCT court did not apply the MoT test.

Two Federal Circuit panels have heard oral arguments in cases on patent eligibility of computer-related methods since RCT. On May 2, Judges William C. Bryson, Timothy B. Dyk, and Sharon Prost heard oral arguments on whether manipulation of credit information is a transformation worthy of patent eligibility (CyberSource Corp. v. Retail Decisions Inc., No. 2009-1358 (Fed. Cir., oral arguments May 2, 2011). Then on May 4, Dyk was joined by Judge Richard Linn and Senior Judge S. Jay Plager to hear oral arguments in a case testing patent claims on computer-aided, simultaneous distribution of a credit application to multiple lenders (DealerTrack Inc. v. Huber, No. 2009-1566 (Fed. Cir., oral arguments May 4, 2011) (89 PTD, 5/9/11).

However, few answers were apparent after either case, as both the parties and the judges struggled with the “gap between an abstract idea and ‘the machine test' ” left open by the Supreme Court's Bilski ruling.

No Definition of Abstract

As Bryson and Judges Kathleen M. O'Malley and Jimmie V. Reyna queried counsel July 7, it seemed apparent that no definitions for abstractness would be created in the instant case either.

Jonathan Daniel Baker of Skadden, Arps, Slate, Meagher, Palo Alto, Calif., arguing for 3D Labs, in fact, rejected the opportunity to provide a definition of “abstract idea.” He contended only that “reducing the complexity” of computations, as he characterized Fuzzysharp's asserted claims, “is an abstract concept.”

Ultimately, though, abstractness was not the focus of the court's questioning, as O'Malley and Reyna repeatedly asked questions in light of the court's holding in RCT. O'Malley told Baker, in fact, that findings of an abstract idea should be rare after that decision. Baker had to agree that his client's case had become harder because of RCT, but, essentially ignoring the holding, said, “Bilski didn't detract from the analysis of the district court here, … [and] the concurrence agreed that [the MoT test] is still reliable in most cases.”

When Reyna quoted RCT for requiring only a “functional and palpable application[] in the field of computer technology,” Baker questioned whether relying exclusively on that text from the case would revive the “useful, concrete, and tangible” test that both the Federal Circuit's and the Supreme Court's Bilskirulings rejected.

Matthew G. McAndrews of Niro, Scavone, Haller & Niro, Chicago, arguing for Fuzzysharp, asserted that the lower court did “not hav[e] the benefit” of the Supreme Court's Bilski decision and therefore erred in relying exclusively on the MoT test. He seized on the comparison of RCT and the instant case, of course.

O'Malley characterized some commentary after RCT as arguing that the court in that case did, in fact, perform a “classic transformation analysis” in finding the claims patent eligible, but McAndrews noted that the RCT court made no mention of the word “transformation.”

Bryson still argued that the MoT test should be a valuable tool, and he asked McAndrews what the court should do next assuming it concludes that Fuzzysharp's claims failed the test. O'Malley phrased it as “saving [a claim] after the fact” of failing the MoT test.

McAndrews replied, “I would take two steps back and start with Section 101, the broad categorical definition of what is patentable, look also at the definition [of “method”] under Section 100(b), and see that there's nothing that categorically or statutorily precludes these claims from patent eligibility under the act.”

“I found the analysis in Research Corporation to be refreshing in that regard,” he added.

Court Still Looks for Differentiating Aspects

Though the judges and parties appeared to agree that the scope of patent eligibility under RCT is quite broad, they still looked for ways to distinguish among computer-related method claims for possible dividing lines. Indeed, the claims found to be patent eligible in RCT were directed to halftone digital imaging, a technology not far removed from that at issue in Fuzzysharp, and many of the court's questions sought comparisons of the two sets of claims.

O'Malley borrowed from the MoT test the idea that a method claim would still have to have sufficient tangible elements such that it would be a method operating on “a particular machine” as opposed to a general purpose computer. McAndrews countered that Fuzzysharp's 3D imaging invention was directed to “unique aspects of a computer” and as “specific” as RCT's halftone imaging, but Bryson distinguished the patent description from the claims. “You can have an elaborate description of a submarine,” he said, “but you can't have a claim for ‘boats under water.' ”

Baker argued that the claims at issue in RCT “produce a real world output; … the product of the claim is something that is displayed.” In contrast, he said, the Fuzzysharp claims were calculations performed entirely “inside of a general purpose computer.” He agreed with Bryson that the claims were lacking in detail and said they were attempting to claim a general algorithm.

However, Bryson shifted his questions at that point to counter Baker, as he said, “It would certainly seem to be a patentable concept … to come up with a method for simplifying what otherwise was a very complex computer operation.”

Baker agreed, but said the claim would have to be drafted to transform data at least. He insisted that the claim would at the very least have to have an input step or an output step to become patent eligible.

Difficult Without Claim Construction

Throughout the arguments, however, there was never any doubt that the parties disagreed on the scope of the patent claims. Claim construction had been briefed but not decided when the district court made its summary judgment decision, Baker acknowledged.

“For purposes of appropriate review, … wouldn't we be better off if the district court had construed the claims, so we're not sitting here debating what the claims do,” O'Malley—the only member of the appeals court to rise from the ranks of federal court judges—asked.

Baker said it would not matter in the instant case. “I could imagine some cases where claim construction has an impact on Section 101 analysis, but not in this case,” he said.

When O'Malley later asked McAndrews if, after such a remand, the court would only see the same case again later, next time argued on obviousness or written description grounds, he pointed to his four daughters' Sony PlayStation video game usage. “Any process that can significantly short-circuit the calculations required … is absolutely new, useful, and nonobvious,” he said.

Bryson, though, continued with his point about the difference between the detail of a specification and the detail of a claim. He characterized Claim 1 of the Fuzzysharp ‘047 patent as “not so much a method, as a proposed approach to a problem: … Look for things that don't change … and disregard them.”

Rather than challenge that view, McAndrews indeed said, “That's one of the reasons why this ought to be remanded for claim construction.”

By Tony Dutra

Lower court opinion at  

Recording of oral arguments available by entering appeal number 2010-1160 at