[ authors: Circuit Judge Paul R. Michel (Ret.) and John T. Battaglia]
The esteemed authors of Patent Docs have written of the need to reconsider the Federal Circuit's approach to section 101 eligibility, given the court's latest expansion and en-banc vote on subject-matter eligibility in AAM v. Neapco (Fed. Cir. July 31, 2020). Is It Time for Federal Circuit to Rethink Its Subject Matter Eligibility Jurisprudence? by Kevin E. Noonan, Ph.D., Patent Docs (Aug. 24, 2020). Among other points, we agree that such a need exists and suggest that the first step should lie with correcting the Federal Circuit's decisions in Enfish and Affinity Labs—the precedents that set forth the Federal Circuit's interpretation of "directed to" in the Mayo-Alice "framework" for testing a patent claim's ineligibility. See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334-35 (Fed. Cir. May 12, 2016); Affinity is Labs of Texas, LLC v. DirecTV, LLC, 838 F.3d 1253, 1257-58 (Fed. Cir. Sept. 23, 2016); 35 U.S.C. §101.
To be sure, Enfish was (and largely remains) one of the rare Federal Circuit precedents that upheld the claims' eligibility. But we are not concerned with particular outcomes; only legal reasoning and an even-handed rule of law. And Enfish's analysis and resulting rule of law on §101 does not track even the Supreme Court's Mayo-Alice §101 framework, itself fraught with controversy. More specifically, Mayo-Alice established the two-step "framework" to assess patent-eligibility: step one asks whether the claim-at-issue "is directed to" an ineligible topic, such as an abstract idea or natural law; and if so, step two asks whether the claim's elements nevertheless add "something more" and demonstrate an "inventive concept" over what was "routine, conventional, or well-understood" at the time. Alice Corp. Pty Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347, 2355 (2014); Mayo Collaborative Servs v. Prometheus Labs, Inc., 132 S.Ct. 1289, 1298 (2012) (all emphases added unless otherwise noted).
Enfish in particular interpreted Alice's "directed to" language, as used in step one. With that backdrop, we analyze Enfish's transformation of what was once a one-step eligibility test into a framework that, at both steps of Mayo-Alice, delves into the claim's patentability or "patentable advances."
I. The Enfish Focus: What Does "Directed to" in Alice Step One Mean?
In Enfish, the Federal Circuit applied the Mayo-Alice ineligibility framework to a patent claiming an improved "self-referential database" design for computers. 822 F.3d at 1333. Microsoft had successfully challenged these claims as "abstract," persuading the district court to grant summary judgment of ineligibility. Id. at 1330. The Federal Circuit panel agreed these claims were sufficiently similar to claims deemed "abstract" in other precedents. Id. at 1334-35. But then it turned to the issue that resulted in the Federal Circuit's unique §101 rule: Namely, the issue of interpreting Alice's step one "directed to" language.
A. Enfish Misinterprets "Directed to."
Enfish started well enough. It rejected the notion that "directed to" meant "involved," since such a broad interpretation would sweep in and put at risk myriad patent claims. 822 F.3d at 1335 ("That formulation plainly contemplates that the first step of the inquiry is a meaningful one, i.e., that a substantial class of claims are not directed to a patent-ineligible concept. The 'directed to' inquiry, therefore, cannot simply ask whether the claims involve a patent-ineligible concept, because essentially every routinely patent-eligible claim involving physical products and actions involves a law of nature and/or natural phenomenon") (citation omitted) (emphasis in original).
But then Enfish ceased any effort to deconstruct "directed to." It didn't consider, for example, its own case law, the decisions for which have been using "directed to" for decades before Alice issued. Nor did it consider how the Supreme Court's pre-Mayo-Alice precedents had applied the eligibility exceptions for §101. If Enfish had, it would've fairly discerned that "directed to" and variations thereof meant the claim-at-issue was "in practical effect on" or "essentially" on an ineligible topic "itself"—such as the "formula itself" for computing an "updated alarm limit," Parker v. Flook, 437 U.S. 584, 587 (1978), or an "algorithm itself," Gottschalk v. Benson, 409 U.S. 63, 67-72 (1972); accord Diamond v. Diehr, 450 U.S. 175, 182 (1981). The Supreme Court specifically re-affirmed these precedents in its 2012 Mayo opinion. 132 S.Ct. at 1298, 1302.
B. Enfish Relies on Dicta in Alice Step Two to Define the Different Test in Step One.
Enfish took a different approach when interpreting step-one's "directed to" formulation. Primarily, it latched onto a sentence of dicta at the tail-end of Alice. In Enfish's reading, this Alice dicta "suggested that claims 'purport[ing] to improve the functioning of the computer itself,' or 'improv[ing] an existing technological process' might not succumb" to the abstract idea exception in step one. 822 F.3d at 1335 (citing "see" Alice, 134 S.Ct. at 2358-59). Enfish admitted, however, that it was taking this "improved computer" dicta from the Alice Court's discussion on step two (the "inventive-concept" step) in order to define step one (the "directed to" ineligibility step). Id. But Enfish had a reason: "While it is true that the Court discussed improvements to computer-related technology in the second step of its analysis in Alice, …, that was because the Court did not need to discuss the first step of its analysis at any considerable length, …." Id.
C. The Bottom Line: How Enfish Changed Alice Step One into a Test That Examines the Claim's "Patentable Advance" Over the Prior Art.
In sum, the Federal Circuit in Enfish took the following to answer what "directed to" means in Alice's step-one eligibility framework: (1) a sentence of Alice dicta; (2) on a specific technology ("improvements in computer technology"); and (3) that Alice addressed only when discussing step two's "inventive-concept" test. Based on those points, Enfish effectively extended Alice to conclude that this step-two dictum was now (1) binding; (2) on all technologies subject to a §101-ineligibility challenge; and (3) applicable to Alice's step-one "directed-to" test. In doing all this, Enfish transformed Alice step one from a test that asked "whether the claims at issue are directed to" a patent-ineligible concept to the "inquiry [that] … look[s] at the 'focus of the claimed advance over the prior art' to determine if the claim's 'character as a whole' is directed to excluded subject matter." Affinity Labs, 838 F.3d at 1257-58; accord Enfish, 822 F.3d at 1327, 1335; American Axle & Manufacturing LLC v. Neapco Holdings, --F.3d--, No. 18-1763, at *9 (Fed. Cir. July 31, 2020) (applying Enfish-Affinity Labs' "patentable advance" inquiry to claimed process for manufacturing auto-parts).
II. Enfish Couldn't Justify Its Step-One "Directed-to" Interpretation By Relying on Alice "Computer" Dicta in Step-Two's "Inventive Concept" Test.
In our view, Enfish cannot reasonably rely on Alice step-two dicta—dicta focused on a specific technology, no less—to fashion what has become the Federal Circuit's across-the-board step-one test. Dicta is of course non-binding. And the terse Alice sentence on "computer" technology hardly seems like a sufficient foundation on which to substantially transform the Federal Circuit's step-one inquiry, applicable in all circumstances.
These factors alone should've counseled against Enfish's approach. Arguably as well, so too should have the differences between Alice's two steps, with one step focused on "ineligibility," the other on an "inventive-concept" test "analogous" to patentability. Contrast, e.g., SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1163, 1167 (Fed. Cir. 2018) (addressing ineligibility of claimed calculation under Alice and explaining that, no matter how "new" or even ingenious that claimed mathematical calculation might be, it was "still an [ineligible] abstract idea") (emphasis in original) with Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346-48 (Fed. Cir. 2015) (explaining how step two's "inventive-concept" search requires an analysis "analogous to those of § 102 [anticipation] and §103 [obviousness]" and comparing claims to "the prior art").
Moreover, the lone justification Enfish offered for such cross-step borrowing—its belief that Alice simply "didn't need to discuss the first step of its analysis at any considerable length"—seems to rest on speculation. As we read it, the proper deduction is that Alice didn't discuss this "patentable advance" test (or anything similar) in its step-one eligibility analysis precisely because the Supreme Court doesn't consider such a "patentable advance" relevant to step one. If anything, "claimed" or "patentable advances" are the stuff of Alice step two, and certainly for the Patent Act's substantive patentability requirements, 35 U.S.C. §§102-103. But not for Alice step one.
III. Affinity Labs Solidifies the "Patentable Advance" Inquiry as Part of Step One—Without Discussion or Debate.
Given Enfish's various pressure points, as described above, one would've thought subsequent cases would've tried to limit or distinguish Enfish, whether because it was technology-focused, predicated on dicta in a different step (step two), or otherwise so unique as to be limited to its facts. See, e.g., Miller v. U.S. Steel Corp., 902 F.2d 573, 575 (7th Cir. 1990) (the "polite formula for overruling"). Not so. Four months later, in Affinity Labs, the court effectively sealed Enfish's transformation of step one. 838 F.3d at 1257-58.
Whether in Enfish or another imminent case, the Federal Circuit was right to interpret "directed to," as used in Alice step one. The problem is that Enfish and its subsequent cases (such as Affinity Labs) proceeded to make its "patentable advance" interpretation not just inconsistent with Alice's "directed to" step; but nearly unrecognizable in view of it. And it is wholly unclear that Enfish did much to stem the ineligibility tide. After all, a recent study documenting §101 outcomes at the Federal Circuit (in published post-Alice cases) concluded that, regardless of technology or other such distinctions, some 82.1% of claims before the Federal Circuit "succumb" (in Enfish's words) to Mayo-Alice step one. See Lessons From a Quantitative Analysis of the Federal Circuit's Section 101 Decisions Since Alice, by C. Graham Gerst & Paul Choi, IP Watchdog (Sept. 2, 2020). Accordingly, as to the Federal Circuit's "patentable-advance" interpretation and the reasoning and process that produced it, patent lawyers should ask the court to revisit and correct this misinterpretation.