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A New Hope for Software Patents?

A new hopeSoftware patents have been facing intense scrutiny under 35 U.S.C. § 101 for subject matter eligibility since the U.S. Supreme Court’s Alice v. CLS Bank decision in 2014.  In the last two years, the patent ecosystem (including USPTO examiners, PTAB, U.S. district courts, and the Federal Circuit) is generally considered unfavorable and sometimes hostile to software patents.

However, a new hope may have arisen lately.  Last month, we reported that the Federal Circuit upheld validity of a software patent under § 101 in its Enfish v. Microsoft decision on May 12, 2016 [click here].  This is only the second time since the Alice decision in 2014 that a software patent has won at the Federal Circuit in terms of § 101 subject matter eligibility.

In Enfish the Federal Circuit held that claims directed to software, as opposed to hardware, are not inherently abstract and should not automatically fail the first step of the Alice analysis.  The Federal Circuit clarified that the proper test should be “whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea, even at the first step of the Alice analysis.”  The Federal Circuit then found the claims in the Enfish patents about “self-referential” database tables to be directed to “a specific improvement to the way computers operate” and therefore not abstract ideas.

The patent world took notice immediately and naturally patent owners were first to smell a fresh sense of hope.  On May 13, 2015, the very next day after the Enfish decision, Intellectual Ventures submitted a letter to the Federal Circuit regarding its pending appeals involving three email virus- and spam-battling patents, telling the Federal Circuit that the Enfish opinion is “relevant to the eligibility of the three software-improvement patents at issue in these appeals.”  In earlier proceedings, Judge Stark of U.S. District Court of Delaware granted summary judgement motions by Symantec and Trend Micro, invalidating the asserted claims of two of the three patents at issue.  Intellectual Ventures appealed.  Symantec cross-appealed.  Argument was held on April 6, 2016.  In response to the Intellectual Ventures letter to the Federal Circuit, Symantec and Trend Micro responded with letters on May 16 and May 18 respectively, claiming that unlike the claims in the Enfish case, the claims at issue are not directed to “specific asserted improvement in computer capabilities” or “specific improvement to the way computers operate.”  The Federal Circuit has not issued an opinion on the appeals.

U.S. district courts took notice of the Enfish decision as well.  On May 12, 2016, the same day the Enfish decision came out, Judge Lynn of U.S. District Court of Northern District of Texas issued a written opinion, explaining her reasoning in invalidating two mobile email patents asserted against BlackBerry on §101 subject matter eligibility.  Judge Lynn found one patent to be directed to an abstract idea of sending and storing messages and the other patent to be directed to an abstract idea of communicating using codes.  Becoming aware of the Enfish decision, Judge Lynn on the next day issued an order, directing the parties to file supplemental briefs addressing any effect of the Enfish decision on the § 101 issues.  The parties’ briefs were due on May 31, 2016.

USPTO also reacted to the Enfish decision swiftly.  Within one week of the Enfish decision, on May 19, 2016, USPTO’s Deputy Commissioner for Patent Examination Policy issued a memo [click here] to Patent Examining Corps relating to the Enfish decision explaining the holding and reasoning of the Enfish decision and their impacts in examining pending patent applications.  Specifically, the memo cautioned against “describing a claim in a high level of abstraction untethered from the language of the claim” and clarifies that “an invention’s ability to run on a general purpose computer does not automatically doom the claim.”

PTAB also didn’t wait long to apply the Enfish decision in post-grant proceedings.  Within two weeks of the Enfish decision, on May 25, 2016, PTAB cited Enfish in its ruling that a document management patent asserted against Apple does not claim patent-ineligible abstract idea.  In its opinion, PTAB compared the asserted claims with those in Enfish and reasoned that the asserted claims are directed to “an improvement in computer functionality.”

In short, the Enfish decision will have significant impacts on how pending claims are examined at USPTO and how issued claims are reviewed at PTAB and in courts.  One cautionary note, however:  The Enfish decision focuses on the “specific improvement” recited in the claims.  It should be considered clarification or fine-tune of the Alice analysis framework, and does not alter the fundamental framework of the Alice analysis.  For example, on May 17, 2016, five days after the Enfish decision, the Federal Circuit upheld nixing of a photo-sharing patent asserted against Twitter, Snapchat and others in TLI Communications v. AV Automotive, et al. on §101 ground, holding that Enfish is not applicable there because the claims at issue are not directed to a specific improvement to computer functionality.

Whether the Enfish decision is a new hope or turns the tide for software or other related patents is still too early to tell.  But at least it has added a new weapon to the arsenal of software patent or application owners.   We will continue monitoring any development relating to the Enfish decision and the Alice analysis in general.

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Michael J. McNamara is a Mintz attorney whose practice focuses on patent litigation in technology and communication networks. He has experience in transactional matters, including patent drafting and prosecution, managing and analyzing patent portfolios, and license negotiation.