Written by Michael Fluhler of Fishman Stewart PLLC
Earlier this week, on September 13, 2016, the United States Court of Appeals for the Federal Circuit released a strong decision for owners of software-related patents in McRo, Inc. dba Planet Blue v. Bandai Namco Games America, Inc. (Case 15-1080 (Fed. Cir. 2016) (“McRo”). The McRo decision follows Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) (“Enfish”) to uphold the patent eligibility of software patents in the wake of Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (Supreme Court 2014) (“Alice”). Not only did the McRo decision uphold the patentability of certain patents related to automating part of a preexisting method, but the decision supports the broader proposition that a process specifically designed to achieve an improved technological result is patent eligible despite manual techniques being conventional industry practice. This is a big win for owners of software-related patents, especially those relevant to computer automation.
Leading into its analysis, the Federal Circuit emphasized the proper application of the two-part analysis for subject matter eligibility in light of Alice. In applying part one to determine whether the claims are “directed to” a judicial exception such an abstract idea, the Court emphasized that “the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter.” (Emphasis added) (McRo, pages 19-20 (citing to Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015).) In applying part two, the Court expressed the need to “look to both the claim as a whole and the individual claim elements” to determine whether they amount to significantly more than the abstract idea. (Emphasis added.) (Id. at 20 (citing to Alice, 134 S. Ct. at 2355).) The Federal Circuit further cautioned to “avoid oversimplifying the claims” by looking at them generally and failing to account for the specific requirements of the claims.” (Id. at 21, (citing to In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607, 611 (Fed. Cir. 2016)).) Moreover, the Court emphasized that “whether at step one or step two of the Alice test” the claims must be considered as “an ordered combination, without ignoring the requirements of the individual steps.” (Emphasis added.) (Id., pages 21-22.) Thus, consideration of the whole claim as well as the underlying elements is crucial to the determination of patent eligibility.
In applying this to the patent at issue, the Federal Circuit determined that “the claims are limited to rules with specific characteristics” (page 21), specifically “computer automation … realized by improving the prior art through the use of rules, rather than artists” (page 22). The Court focused on “a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery.” (Id. (citing to Enfish at 1336).) In doing so, the Court determined that the claims are “focused on a specific asserted improvement in computer animation, i.e., the automatic use of rules of a particular type.” (Page 24.) The Court further stated that “[t]he computer here is employed to perform a distinct process to automate a task previously performed by humans.” (Emphasis added.) (Id.) “It is the incorporation of the claimed rules, not the use of the computer, that “improved [the] existing technological process” by allowing the automation of further tasks.” (Id. (Citing to Alice, 134 S. Ct at 2358.).) “While the result may not be tangible, there is nothing that requires a method ‘be tied to a machine or transform an article’ to be patentable.” (Id. at 25 (citing Bilski v. Kappos, 561 U.S. 593, 603 (2010).) “When looked at as a whole” the patent claim “is directed to a patentable, technological improvement over the existing, manual 3-D animation techniques.” (Id. at 27.) Thus, the Federal Circuit determined that “[t]he claim uses the limited rules in a process specifically designed to achieve an improved technological result in conventional industry practice … [and] therefore, is not directed to an abstract idea.” (Id.)
As such, the McRo decision affirms patent eligible aspects of certain automated methods as well as specific processes that provide improved technological results over conventional industry practices.