Court Says Software Not Necessarily Ineligible as Abstract

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By Tony Dutra

May 12 — The Federal Circuit declared May 12 that not all software patents start out as ineligible abstract ideas, and that any “improvement to computer functionality itself” bypasses the exception that what's abstract can't be patented.

The decision reverses a lower court's judgment that, ironically, had created what many stakeholders considered a good contrast for a Section 101 analysis of what constitutes patentable subject matter.

Central District of California Judge Mariana R. Pfaelzer had found, on the same day, that Enfish LLC's improvement to database management was ineligible for patenting, but that the California Institute of Technology's patents on error correction were eligible. Patent owners will now be ecstatic that both are eligible, even if the contrast is lost.

“This is a significant change,” Robert R. Sachs of Fenwick & West LLP, San Francisco, told Bloomberg BNA. “This is important because it’s typically the case that if a court finds the idea abstract, it’s almost a foregone conclusion that they don’t find any improvement.” Sachs, a noted critic of the two-part Alice patentability test, is author of the Bilski Blog.

Enfish's infringement cases against Microsoft Corp., Fiserv Inc., Intuit Inc., Sage Software Inc. and Jack Henry & Associates Inc. now return to the district court, but with an uncertain future. Pfaelzer has made other rulings against Enfish, including invalidating six patent claims as non-novel, leaving just one for a non-infringement judgment. The Federal Circuit affirmed that claim's non-infringement but vacated the invalidity of the other six.

Source Material:

Case below (C.D. Cal.):No. 2:12-cv-0736056 F. Supp. 3d 1167

U.S. Patent:No. 6,151,604No. 6,163,775

Now Two Out of 21

Previously, the U.S. Court of Appeals for the Federal Circuit had ruled only one patent eligible under Section 101 out of 20 appeals on the issue since the U.S. Supreme Court laid out the two-step test for an ineligible computer-implemented method in Alice Corp. Pty Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347, 2014 BL 170103, 110 U.S.P.Q.2d 1976 (2014) (119 PTD, 6/20/14): Is it directed to an abstract idea? If so, is there “enough” in the rest of the patent claim—an “inventive concept”—to overcome the abstractness?

In that one case, the court bypassed the Alice first step (DDR Holdings, LLC v., L.P., 773 F.3d 1245, 2014 BL 342453 (Fed. Cir. 2014)(235 PTD, 12/8/14). It acknowledged that assigning an “abstract idea” label to a patent on improving web advertising performance was difficult but, regardless, the patent was eligible under step two.

Enfish's U.S. Patent Nos. 6,151,604 and 6,163,775 never got to step two. On that basis alone, the court's opinion is more far reaching than in DDR.

Even after DDR, in 11 decisions in less than a year, Judge Sue L. Robinson of the District of Delaware said, “Because computer software comprises a set of instructions, the first step of Alice is, for the most part, a given; i.e., computer-implemented patents generally involve abstract ideas.”

Today, “The Federal Circuit has clearly rejected this view,” Sachs said in an e-mail.

Supreme Court Gave Hint, Federal Circuit Took It

“We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two,” the court said.

The opinion said that Alice“suggested” that the abstract idea exception didn't apply to claims “purport[ing] to improve the functioning of the computer itself,” or “improv[ing] an existing technological process.”

The court made it an either-or question. That is, a claim is directed to either computer functionality or an abstract idea.

Enfish is claiming benefits over conventional databases, the court said, “such as increased flexibility, faster search times, and smaller memory requirements.” It rejected the argument that the improvements had to be tied to “physical” components using conventional hardware.

“Much of the advancement made in computer technology consists of improvements to software that, by their very nature, may not be defined by particular physical features but rather by logical structures and processes,” it said.

In fact, the court said, Enfish's addressing of a problem in “the software arts” was adequate to say it was not directed to an abstract idea.

Pfaelzer's Contrasting Opinions

Pfaelzer's two contrasting opinions both came on Nov. 3, 2014. Enfish, LLC v. Microsoft Corp., 56 F. Supp. 3d 1167, 113 U.S.P.Q.2d 2082 (C.D. Cal. 2014) (216 PTD, 11/7/14); Cal. Inst. of Tech. v. Hughes Commc'ns Inc., 59 F. Supp. 3d 974, 2014 BL 313254 (C.D. Cal. 2014) (218 PTD, 11/12/14).

She ruled that both the Enfish and Cal Tech inventions failed Alice step one. At step two, the difference was that humans essentially did data record-keeping functions that corresponded to the limitations in Enfish's claims, while Cal Tech's “irregular repetition of bits and the use of linear transform operations” were sufficient as “inventive concepts.”

That distinction is irrelevant under the Federal Circuit's reversal of Enfish.

But Sachs was still not satisfied. If a computer automates or improves the performance of an existing task, it might be obvious, but it shouldn't be ineligible subject matter, he said.

“I do have a concern that the court gives little value to the use of a computer as ‘tool' for some other purpose,” he said. “Computers are by design general purpose ‘tools' and inventions often involve using them as such to provide an improvement in other fields.”

Judge Todd M. Hughes wrote the court's opinion. Judges Kimberly A. Moore and Richard G. Taranto joined.

Cooley LLP represented Enfish. Perkins Coie LLP represented Microsoft.

To contact the reporter on this story: Tony Dutra in Washington at

To contact the editor responsible for this story: Mike Wilczek in Washington at

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