In McRO v. Bandai, the Federal Circuit provides particular guidance and clarity on the issue of preemption, which it describes as “The concern underlying the exceptions to § 101.” In addition to providing another guidepost towards identifying patent-eligible subject matter for computer-based inventions, the Federal Circuit’s focus on preemption could expand Alice beyond a “technical arts” test—which appears to drive the other Federal Circuit decisions on Alice —and save inventions in other industries from being deemed patent-ineligible.
The patents at issue in McRO relate to “automating part of a preexisting 3-D animation method.” Before those patents, artists seeking to create 3-D animations of a character’s facial expressions and synchronize those expressions to the actual speech had to manually alter the animations, relying in large part on their own judgment. The aim of the patents was “to automate a 3-D animator’s tasks,” and the patents described various rules that enabled computers to “achiev[e] results similar to those previously achieved manually by animators.” The claims of the patents recite “a first set of rules” and how those rules are used to generate 3-D animations. However, the district court held that the claims were ineligible, because they “purport to cover all such rules” for automating animation and thus preempted the field of using rules for this particular application.
The Federal Circuit’s Decision
The Federal Circuit disagreed with the district court, ultimately concluding that, “[w]hen looked at as a whole,” the claims at issue were “directed to a patentable, technological improvement over the existing, manual 3-D animation techniques” and that the claims at issue used “limited rules in a process specifically designed to achieve an improved technological result in conventional industry practice.” As a result, the Court held that these patents were patent-eligible under step one of Alice.
In its decision, the Federal Circuit relies heavily on Supreme Court jurisprudence in describing the contours of Section 101 and the “preemption” aspect of that statute and its interpretation, including the prominent cases of Diamond v. Diehr, Parker v. Flook and O’Reilly v. Morse, among others. For example, citing O’Reilly v. Morse, the Federal Circuit repeatedly describes the “abstract idea exception” as serving to “prevent patenting a result where ‘it matters not by what process or machinery the result is accomplished.’”
Turning to the specific claims at issue, the Federal Circuit began by disagreeing with the district court’s overly general analysis of the claims, stating: “We have previously cautioned that courts must be careful to avoid oversimplifying the claims by looking at them generally and failing to account for the specific requirements of the claims.” The Federal Circuit further emphasized that “[w]hether at step one or step two of the Alice test, in determining the patentability of a method, a court must look to the claims as an ordered combination, without ignoring the requirements of the individual steps.” Here, the Federal Circuit determined that “the claims are limited to rules with specific characteristics.” In other words, even though the rules were broadly and categorically claimed, they were still “limited to rules with certain common characteristics, i.e., a genus.” The Federal Circuit also noted that, although “genus claims create a greater risk of preemption . . . this does not mean they are unpatentable.”
Using preemption as a guide for determining whether the claimed genus is an abstract idea, the Federal Circuit held that the limitations at issue “prevent preemption of all processes for achieving automated lip-synchronization of 3-D characters,” specifically citing McRO’s evidence of an alternative process for automating lip synchronization and facial expressions. At the same time, noting that “the absence of complete preemption does not demonstrate patent eligibility,” the Federal Circuit went on to address a “narrower concern,” namely “whether the claimed genus of rules preempts all techniques for automating 3-D animation that rely on rules.” On this question, the Federal Circuit found that the claimed rules required a “specific structure” that would not preempt the use of all rules for this purpose, and specifically noted that there “has been no showing that any rules-based lip-synchronization process must use rules with the specifically claimed characteristics.” To the contrary, the court noted evidence cited by Amicus that “the interaction between vocalization and facial expression is very complex,” indicating that “alternate rules-based methods of animating lip synchronization and facial expressions” could be developed.
Importantly, the Federal Circuit rejected the argument that the claims “simply use a computer as a tool to automate conventional activity,” noting how “the incorporation of the claimed rules, not the use of the computer” improves the animation process. This, according to the Federal Circuit, makes McRO different than Flook, Bilski, and Alice, “where the claimed computer-automated process and the prior method were carried out in the same way.”
The Federal Circuit also rejected the argument that the claims are ineligible because they do not create a tangible result, i.e., that they merely organize existing data into a new form or carry out a fundamental economic practice. On this point, the Federal Circuit stated “[w]hile 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.” Instead, the court emphasized, the “concern underlying the exceptions to § 101 is not tangibility, but preemption.”
The Federal Circuit’s decision in McRO provides some needed clarity on the issue of preemption and its importance in § 101 analysis. In addition, the approach taken by the Federal Circuit in this case could have far-reaching implications. For example, evidence that new diagnostic techniques for personalized medicine do not preempt all uses of a particular biomarker may ensure that patents covering those techniques survive section 101. Likewise, evidence that particular analytic techniques for processing information (perhaps even financial information) do not preempt all uses of that information may provide patentability for inventions where the “technological improvement” is not as apparent as in this or other Federal Circuit cases. At the same time, several questions remain. For example, while McRO demonstrates that evidence can be used to prove a lack of preemption, it is still unclear whether preemption needs to be addressed both broadly and narrowly, as the court did here, or even how to identify the broad and narrow concerns in other cases. As a result, while McRO should have an immediate impact on computer-implemented inventions, its ultimate effect—and the scope of that effect—remains to be seen.