“Keeping in mind the distinction between preemption and novelty/non-obviousness should aid in understanding Supreme Court and Federal Circuit case law on patent eligibility even if the courts continue to blur these terms.”

Recently, the United States Court of Appeals for the Federal Circuit issued its opinion in Solutran, Inc. v. Elavon, Inc., 2019-1345, 2019-1460 (Fed. Cir., July 30, 2019) in which the Court held claims 1-5 of Solutran’s U.S. Patent No. 8,311,945 invalid under 35 U.S.C. § 101 for failing to recite patent eligible subject matter. In reversing the District Court, the Federal Circuit found that the claims of the patent recited an abstract idea (electronically processing paper checks) and that the claims failed to transform that abstract idea into patent-eligible subject matter. More importantly, the Federal Circuit dismissed Solutran’s argument that the claims were patent eligible simply because they were novel and non-obvious, noting that:

“We have previously explained that merely reciting an abstract idea by itself in a claim—even if the idea is novel and non-obvious—is not enough to save it from ineligibility.”

Not the First Time

The Solutran decision is not the first time the Federal Circuit has held that novelty/non-obviousness does not bear on the question of patent eligibility. In the case of Intellectual Ventures, I LLC v. Symantec Corp., 838 F.3d 1307 (Fed. Cir. 2016), the Federal Circuit offered the following caveat:

“Here, the jury’s general finding that Symantec did not prove by clear and convincing evidence that three particular prior art references do not disclose all the limitations of or render obvious the asserted claims does not resolve the question of whether the claims embody an inventive concept at the second step of Mayo/Alice.”

At first blush, the willingness of the Federal Circuit to invalidate claims as patent-ineligible despite their admitted novelty and non-obviousness seems illogical. Isn’t subject matter that is novel and non-obvious inventive? So why would subject matter that is inventive nonetheless lack an “inventive concept”? To answer such questions, it is important to understand that the Supreme Court and the Federal Circuit have both used the term “inventive concept” with regard to patent eligibility in a manner different than what would be understood by giving that term its ordinary meaning. Normally, the term “inventive”, as used in the context of patents, would connote a machine, an article of manufacture, or composition of matter that is new and unique. However, in the context of patent eligibility, the U.S. Supreme Court, in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U. S. ___ (2012), has defined the term “inventive concept” as follows:

an element or combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”

The Importance of Preemption

To properly understand the term “inventive concept” in connection with patent eligibility, this term must be viewed through the lens of preemption, the bedrock principle underlying the judicial exceptions to 35 U.S.C. § 101 imposed by the Supreme Court. The term preemption can best be understood in terms of the following statement made by the Supreme Court in Mayo:

“In applying the §101 exception, this Court must distinguish patents that claim the “’buildin[g] block[s]’” of human ingenuity, which are ineligible for patent protection, from those that integrate the building blocks into something more”

Note that the concern expressed by the Supreme Court about inventors preempting the building blocks of invention is not new. Indeed, the Supreme Court expressed such concerns many years ago in the case of O’Reilly et al. v. Morse et al, 56 U.S. 62, 122 (1853) in which the Court questioned the patent eligibility of Morse’s claims directed to the use of electromagnetism to print intelligible characters without reciting any structure to accomplish that task. In finding such claims invalid, the Court held:

“Why, therefore, should he be required and permitted to disclaim in the one case and not in the other? The evil is the same if he claims more than he has invented, although no other person has invented it before him. He prevents others from attempting to improve upon the manner and process which he has described in his specification — and may deter the public from using it, even if discovered. He can lawfully claim only what he has invented and described, and if he claims more his patent is void. And the judgment in this case must be against the patentee, unless he is within the act of Congress which gives the right to disclaim.”

Understanding the importance of preemption in connection with patent eligibility will help in better understanding the language in some recent Federal Circuit decisions that appear to have blurred the distinction between preemption and novelty/non-obviousness. Consider, for example, the recent decision of the Federal Circuit in Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F. 3d 1288 (Fed. Cir. 2016). In that case, the Federal Circuit reversed and remanded a holding of patent invalidity under 35 U.S.C. § 101 by the District Court. In finding the patents in suit patent-eligible, the Federal Circuit noted that:

“In other words, this claim entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows, which previously required massive databases). The solution requires arguably generic components, including network devices and “gatherers” which “gather” information. However, the claim’s enhancing limitation necessarily requires that these generic components operate in an unconventional manner to achieve an improvement in computer functionality.”

Here, the Federal Circuit did not intend its reference to the “unconventional technical solution” recited in claims to refer to the novelty/non-obviousness of such claims. Rather, by referring to the claimed invention as an “unconventional technical solution,” the Federal Circuit made clear that the claims of the patent had integrated one of the building blocks of technology into something more, thereby rendering the claims patent eligible by avoiding preemption.

Keeping in mind the distinction between preemption and novelty/non-obviousness should aid in understanding Supreme Court and Federal Circuit case law on patent eligibility, even if the courts continue to blur these terms. Moreover, focusing on preemption and avoiding novelty and non-obviousness in arguments for patent eligibility will increases the chances of success both in patent prosecution and patent litigation.

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