On July 11, the Federal Circuit released its decision in Digitech v. Electronics for Imaging, the court’s first case involving the boundaries of patent eligible subject matter under Section 101 of the Patent Act in the wake of the Supreme Court’s decision in Alice Corp v. CLS Bank. The Federal Circuit applied the Supreme Court’s reasoning from Alice broadly to categorize a technical process as a patent ineligible abstract idea.

In Alice, issued on the 19th of June, the Supreme Court clarified the judicial exceptions to patent eligibility: namely those of abstract ideas and laws of nature. The Court held that a patent for a method of using an intermediary to mitigate settlement risk was not made eligible simply because it recited such a method when performed by a computer. Fundamental concepts, such as intermediated settlement, are patent ineligible abstract ideas.

In holding the method patent ineligible, the Supreme Court held that the two-step test for determining patent eligibility outlined in Mayo v. Prometheus with respect to patents involving laws of nature also applies to abstract ideas. First, one must ask whether a claim recites or is directed to one of the judicial exceptions. However, an invention is not necessarily invalid merely because it relies upon a law of nature or abstract idea. The court must also ask whether the claim includes additional inventive features that cause the claim to avoid solely capturing the abstract idea. This can be accomplished by describing an element or combination of elements that demonstrate significantly more inventive material than the abstract idea itself. Therefore, if an invention involves an application of a law of nature or fundamental concept it may well be patent eligible as long it adds sufficient additional subject matter to distinguish it from a patent of the abstract idea itself. The questions remain to be answered of how much additional matter is necessary to avoid this pitfall, and what, exactly constitutes an abstract idea. Bancorp provides one example of insufficiency where the Court held that a mere application of an abstract principle is not sufficient to distinguish the invention from the principle itself.

In Digitech, the Federal Circuit, following the reasoning in Alice, found a method for generating a device profile within a digital image processing system patent ineligible because the claims encompassed a fundamental concept. Citing Alice, the court held that fundamental concepts, such as the one at issue, are abstract ideas and are therefore patent ineligible.

Digitech’s claim was found to be invalid because it was directed towards an abstract idea, that of the creation of a device profile and because it failed to add sufficient material to distinguish the invention from the abstract idea itself. Something more was necessary to induce eligibility in the claim for the method of creating a device profile. Citing Parker v. Flook, the court held that the process directed to the mere manipulation of data to create a device profile and was not tied to any specific structure or machine. While Digitech argued that it had indeed included hardware limitations in its claim, the court held the limitations insufficient to limit the scope of the claim because the limitation of a “digital image reproduction system” was included in the preamble of the claim rather than the body. The court reiterated that terms in the preamble of a claim are insufficient to limit the scope of the claim.

Ultimately, Digitech indicates that the Federal Circuit intends to apply the Supreme Court’s reasoning in Alice to method claims broadly. Mere manipulation of data in a method is insufficient to create a patent eligible invention. The Federal Circuit also appears to be making continued use of the machine or transformation test as a valuable tool in determining whether an invention is patent eligible. The inclusion of detail as to the actual method of transforming the data, rather than merely stipulating a transformation, would bring the patent closer to, if it does not actually induce, patent eligibility. In addition, the court reiterated that generic computer implementation of an abstract concept is insufficient to induce patentability. However, it did not rule on the issue of whether more specific hardware limitations, such as including an image processor limitation in the body of the claims, would be sufficient to induce patent eligibility, and, in fact, it seemed to imply that such limitation would be sufficient.

Peter McLellan

One Response to No Big Surprises in Digitech v. Electronics for Imaging

  1. Neil Issar says:

    Solid case summary – some related questions to think about:
    - Do you think the recently released USPTO Interim Guidance on Patent Subject Matter Eligibility helps clarify the contours of the Alice/Mayo test?

    - Does DDR Holdings, LLC v. Hotels.com, LP (in which the Federal Circuit held that a software patent constituted patent-eligible subject matter under § 101 and the Alice framework) signify to the software industry that software technology continues to be fully eligible for patent protection?

    - Is the Federal Circuit’s analysis in DDR Holdings in sufficient tension with the court’s prior decision in Ultramercial, Inc. v. Hulu, LLC to push the Supreme Court to grant certiorari to resolve the issue, or does the USPTO guidance document accomplish that task?