Alice v. CLS Bank Applied Broadly by the Federal Circuit

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On Friday, the Federal Circuit released its first opinion citing the Supreme Court’s June 2014 decision in Alice Corp. v. CLS Bank. This opinion is significant because it shows how the Federal Circuit intends to follow the clear guidance from the Supreme Court in limiting method claims even when they relate to technical applications. In this case concerning camera and printer technology, the Federal Circuit still found a method unpatentable where the claims were essentially limited to manipulating data.

In Digitech Image v. Electronics for Imaging, Inc. the Federal Circuit affirmed that claims in Digitech’s US Patent 6,128,415 are not patentable under 35 USC § 101. The Digitech patent is owned by Acacia, a non-practicing patent assertion entity (“patent troll”). The ‘415 claims attempted to cover a method for creating “device profiles” which contain and manipulate spatial and color properties in a digital image processing system like digital cameras and also cover the “device profiles” themselves.

The device profile claims merely claimed data and nothing else—no machine or other tangible thing. They were clearly unpatentable since they did not fall under one of the four categories of 35 U.S.C. § 101.

The method claims for generating a device profile were also not patentable. The Federal Circuit noted that in Alice the Supreme Court, “reaffirmed that fundamental concepts, by themselves, are ineligible abstract ideas.” The Court said that manipulating data to create a device profile was “an abstract idea because it describes a process of organizing information through mathematical correlations and is not tied to a specific structure or machine.”

The Supreme Court’s decision in Alice relied heavily on its previous Bilski decision. Both Alice and Bilski involved fundamental economic concepts such as hedging risk or acting as a transaction clearing house. The Federal Circuit’s Digitech decision helps move the needle past merely economic concepts to other categories of abstract ideas. In light of Alice and now Digitech, both the Federal Circuit and the Supreme Court are trending towards finding dubious method claims unpatentable. Broad method claims are prevalent in many patents, but these types of claims are most often asserted by non-practicing entities. These decisions throw another roadblock in front of patent trolls.

Notably, the motion for summary judgment was granted in the Central District of California very early in the litigation, before any significant discovery or claim construction. But that was not an impediment to finding the patent invalid. The lesson is: defendants with colorable 101 arguments should assert them early.

Greg Tamkin and Case Collard of Dorsey’s Denver office represented Buy.com against Digitech. Paul Meiklejohn and Mudit Kakar of Dorsey’s Seattle office represented Toshiba. Buy.com and Digitech were part of an appeal group that included over 30 defendants. The appeal was lead-authored and argued by Mark Lemley of Stanford Law and Durie Tangri.

 


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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