Upcoming Federal Circuit Decision Presents Opportunity for Clarification of Patentable Subject Matter

by BakerHostetler

Since Alice,[1] consistently defining the bounds of statutory subject matter in computer arts confounds even the most experienced attorneys. E-commerce software combining visual elements of multiple parties’ websites is patent eligible,[2] but a motion-tracking system claiming inertial sensors is not.[3] While the results have cut sharply against patent holders asserting or prosecuting software properties, legal logic unifying post-Alice outcomes in a coherent manner is wanting.[4]

Enter McRO Inc., DBA Planet Blue, asserting two of its lip-synchronizing animation patents against a list of accused infringers including Namco Bandai Games America Inc. After its consolidated suits in the Central District of California were resolved on the pleadings in favor of the defendants,[5] McRO appealed to the Court of Appeals for the Federal Circuit.[6] With oral argument heard last December, the Court’s upcoming opinion presents the possibility of sorely needed guidance in reference to § 101.

The District Court’s Approach

McRO asserted two patents (6,307,576 and child 6,611,278) for automatically generating three-dimensional facial expressions matching a prerecorded track of speech. These patents, McRO argues, improve quality and consistency in animating processes. Various phonemes – speech sounds – are associated with visemes – the arrangement of the mouth and surrounding face for a particular phoneme – in the animating process. Using a time-aligned phonetic transcription, a neutral face is rearranged to non-neutral visemes based on the phoneme ascertained from the transcription. In an effort to increase realism between successive visemes without requiring human interaction, McRO’s claims recite “morph weight sets” and “transition parameters,” which in effect soften viseme expressions and transitions therebetween to avoid what McRO’s counsel describes as a “flappy,” artificial, and over-articulated animation. The ’278 patent’s first independent claim is representative for purposes of subject matter analysis:

  1. A method for automatically animating lip synchronization and facial expression of three-dimensional characters comprising: obtaining a first set of rules that defines a morph weight set stream as a function of phoneme sequence and times associated with said phoneme sequence; obtaining a plurality of sub-sequences of timed phonemes corresponding to a desired audio sequence for said three-dimensional characters; generating an output morph weight set stream by applying said first set of rules to each sub-sequence of said plurality of sub-sequences of timed phonemes; and applying said output morph weight set stream to an input sequence of animated characters to generate an output sequence of animated characters with lip and facial expression synchronized to said audio sequence.

As other animation systems antedated the claimed techniques for automated facial synchronization, the rules related to morph weight were identified as the inventive aspects of the claims.

In September 2014, the district court granted the defendants’ motion for judgment on the pleadings based on invalidity for lack of statutory subject matter. The ruling underscores the complexity and ambiguity now present in all software cases. In discussing the two-step analysis set forth by Alice and Mayo,[7] Judge Wu stated it “may be more like a one-step test evocative of Justice Stewart’s most famous phrase […] ‘I know it when I see it.’”

Several considerations nibbling at peripheral tests from other inquiries were evaluated. Turning to considerations of preemption, the district court looked to the balance of interests in view of overbroad applications analyzed under the written description and enablement requirements codified in § 112. The district court also asked whether the function-way-result test employed under the doctrine of equivalents may be pertinent to § 101 analysis. Despite blurring of the lines between obviousness and subject matter eligibility invited by the “inventive concept” language of Alice, § 103 is mentioned only once in the ruling, to reject the notion that a “revolutionary” invention (which might otherwise be suggestive of secondary considerations of nonobviousness) should be found patent eligible.

Novelty, on the other hand, was abundantly referenced. From the language of Mayo and Alice, the district court fashioned a technique for assessing the adequacy of the claims’ inventive concept by deducting understood activity of the prior art which Mayo defined as insufficient to establish patentability of an abstract idea. Providing claim charts comparing each element of the asserted claims to “Admitted Prior Art,” the district court concluded that the claims added “the use of rules, rather than artists, to set the morph weights and transitions between phonemes.” However, turning to the specification, Judge Wu found evidence that the software user provides such rules (rather than the software inventor), and so the inventive concept on which patentability rests is undefined and abstract.

Claim construction likely played an impactful role in this analysis of the inventive concept. McRO successfully argued for a broad interpretation of its claimed rules. In its Reply Claim Construction Brief, McRO expressly stated that the claimed method is responsive to user input and contended that a narrower construction would improperly exclude this preferred embodiment. McRO further insisted that “rules” be defined simply as “instructions” rather than the defendants’ sought “logic statements,” maintaining that “[n]owhere in the Patents-in-Suit are the claimed first set of rules limited to any logic statement or computer program” and that “the rules are never described as embodied in a single computer program or as ‘used together’” (emphasis original). In arguing against an automated implementation reliant on specific rules, McRO’s advanced claim construction may have undercut its later arguments addressing statutory subject matter.

So while providing some seemingly favorable discussion – stating the claims were specific and tangible, and did not appear abstract on their face – the district court ultimately found the claims as construed patent ineligible when the contributions exceeding the prior art were specifically weighed for their inventive step.

McRO appealed. The Federal Circuit panel includes two judges – Judge Reyna and Judge Taranto – with previous experience analyzing statutory subject matter since Alice. In each of their combined seven cases, the Court of Appeals affirmed district court findings of invalidity.

McRO’s Argument for Patentability

In its appeal, McRO argued that its claims independently satisfy both steps of the Alice/Mayo framework, and that the district court’s approach for finding otherwise was erroneous. In particular, McRO asserted that it was improper to read out tangible steps of the claims, and that the consequence of doing so was a point of novelty test contrary to the precedent of Diamond v. Diehr,[8] which states that the novelty of any element is of no relevance to determining abstractness. McRO also noted that the lower court’s approach was later criticized in the same district in Cal. Inst. of Tech. v. Hughes Commc’ns. Inc.[9]

During oral argument, McRO argued that its claimed process is unconventional, specific, and produces a tangible result. The court probed more generally at McRO’s counsel’s sentiments on the two-step framework, stating that “under one view, stage one is meaningless because there is an idea in everything.”

As to the district court approach, the panel inquired whether stripping out claim elements in the prior art is appropriate, and if so, whether such should be performed in step one or step two. McRO did not provide a definitive answer, instead urging review of the claims as a whole. McRO’s counsel was asked point-blank, “What is it that the district court should have done?” In response, McRO asserted that the transition rules and morph weights were beyond the prior art and should have been accepted as possessing inventive concept sufficient for patentability in step two.

Defendants’ Argument for Invalidity

Responding to McRO’s brief, appellees submit that the asserted claims are at their core another example of “doing it on a computer.” Appellees treat the first step of the Alice/Mayo framework stating that the claims are directed to an abstract idea because, without a clear definition or listing of morph weight rules, the user definitions required for practice are preexisting fundamental truths existing in the mind of the user. Appellees then assert that no inventive concept is present to satisfy the requirements for patentability under step two analysis because, even if the claims were narrowed to specify particular rules, such rules would merely provide a more specific elaboration of computer automation for activity previously established as conventional and well understood.

While appellees’ counsel introduced its description of the claims’ abstractness at trial, the court interjected that capturing what goes on in the human brain to recognize facial positions seems “unbelievably patentable” and asked whether appellees contest that premise. Bandai’s response distinguished claiming of concrete rules (what the court identified) from the abstract concept of using rules without defining them in a way that patentably grounded the ineligibly abstract (what McRO did). Bandai urged that the claims are ultimately “just math,” predictable outputs from variable inputs, and remain abstract in the absence of clear rule definitions.

When asked by the court whether anything could be done to make the claims eligible, appellees indicated that specifying the “secret sauce” of rules would be helpful, but declined to insist that every phoneme and viseme be exhaustively listed when further surveyed by the panel. Bandai’s counsel defined part of McRO’s problem as a mismatch between enablement and eligible subject matter inasmuch as the scope of the enabled claims was abstract for need of definite rules required to achieve the intended results.

Permitting Bandai to discuss the district court approach, the panel inquired as to whether stripping out the prior art constituted a third step not provided by the Alice/Mayo framework. Appellees submitted that the district court did fully analyze the “overall concept” and properly found it to be abstract.

McRO’s Rebuttal

Following appellees’ arguments, McRO’s rebuttal returned to issues regarding claim construction. The time spent on this topic during oral argument indicates the importance of comprehensive construction treating not only issues of infringement but also interpretations on which subject matter eligibility might turn.

McRO’s parting shot to the court indicated that the district court “mixed up all the tests,” alluding to the lower ruling’s invocation of novelty, enablement, written description, and the doctrine of equivalents, as well as apparently unresolved issues in claim construction. Despite acknowledgments in the community that “inventive concept” analysis at times appears to take on the character of an obviousness analysis based on intuition rather than art, this point was not raised during oral argument. The Federal Circuit could nonetheless clarify the issue in its forthcoming opinion when addressing the litany of statutory and non-statutory analyses leveraged (or ignored) in recent § 101 jurisprudence.

The Bigger Picture

Because of the nature of the claims and specification in McRO’s patents, the approach applied by the district court, and the questions raised by the panel at oral argument before the Federal Circuit, it is possible that the opinion will provide badly needed guidance in this area of law. Affirming the district court would solidify clearer techniques for focusing on a claim’s inventive concept, and possibly authorize the approach of dissecting the claim into known versus novel elements. Upholding the lower court would also provide guidance for refining defendant strategies in claim construction by creating competition between subject matter eligibility and breadth for proving infringement. On the other hand, a rejection of the district court’s approach should be accompanied by an alternative analysis that is repeatable beyond the immediate facts of the case. While it may be impossible to create a precise and comprehensive test for subject matter eligibility in accordance with Alice, this instance at least seems to present opportunity for greater delineation between the requirements of Sections 101, 102, 103, and 112 (or an explanation of their interdependence).

BakerHostetler represents a defendant-appellee in this matter. Attorney Michael Stein contributed to this article.


[1] Alice Corp. v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347 (2014).

[2] DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014).

[3] Thales Visionix v. USA and Elbit Systems, 122 Fed. Cl. 245 (Ct. Fed. Clm. 2015).

[4] For background on how the USPTO has been dealing with Alice and its progeny, see our prior posts on July 2, 2014, August 5, 2014, December 15, 2014, March 23, 2015, and July 31, 2015.

[5] McRO, Inc. v. Namco Bandai Games America, 2014 WL 4749601 (C.D. Cal. 2014).

[6] McRO, Inc. v. Namco Bandai Games America, Case No. 15-1080 (Fed. Cir. 2016).

[7] Mayo v. Prometheus, 566 U.S. ___ (2012).

[8] Diamond, Commissioner of Patents and Trademarks v. Diehr, et al., 450 U.S. 175 (1981).

[9] Cal. Inst. of Tech. v. Hughes Commc’ns. Inc., 59 F.Supp.3d 974 (C.D. Cal. 2014).

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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