Patents may be found ineligible under Section 101 if the claims recite an abstract idea, law of nature, or a natural phenomenon without reciting something more that transforms the claims into patent eligible subject matter. The above applies even if the claims otherwise recite something that is novel or non-obvious over the prior art.
` For example, recently in Mortgage Application Tech. v Meridianlink, Inc. (Fed Cir., January 12, 2021) (Nonprecedential) the U.S. Court of Appeals for the Federal Circuit found that patent claims directed to an online loan origination service for creating and populating loan applications did not recite patent eligible subject matter under Section 101. The Court therefore affirmed a decision by the U.S. District Court for the Central District of California that found the patent claims invalid as reciting an abstract idea.
In viewing the lower court’s decision, the Federal Circuit noted that whether a patent claim recites patent eligible subject matter is governed by a two-part test. Step 1 asks whether the claims are directed to a patent-ineligible idea such as an abstract idea, a law of nature, or a natural phenomenon. If the claims are directed to a patent-ineligible concept such as an abstract idea, then step 2 of the test asks whether the patent claims recite an inventive concept or something else that would nonetheless render the patent clams patent-eligible.
The Federal Circuit found that claim 1 was directed to “a process in which data is received in one format, automatically extracted, compared to a set criteria, populated into a second document, and then stored for and retrieved by a user.” Opinion p. 9. During prosecution of the patent application the applicant argued that the claims were superior to previous art because the previous art taught a manual process whereas the patent claimed a fully automated system. This did not help.
The Federal Circuit first noted that “We have previously held that a process that can be and has been performed by humans without the use of a computer, as the prosecution history shows here, is an abstract idea.” Opinion p. 10. Based on this, the claims were held to recite an abstract idea. The patent claims had failed step 1.
Turning to step 2, the Federal Circuit found that claims did not do significantly more than simply recite the abstract idea and did not transform the abstract idea into patent-eligible subject matter. In particular, the claims were held not to recite an inventive concept. For example, there was nothing in the claims that rose to the level of improving “technological infrastructure” or providing solutions to “challenges particular to loan application processing.” While the claims did recite an automated system that was faster and more efficient than a manual system, it was noted that merely adding speed or efficiency is not sufficient to transform an abstract idea into patent-eligible subject matter. Opinion p. 11.
The patent owner did argue that “the technological solution of the patent is a universal protocol or software that deals with multiple non-compatible third-party software and the issue of transferring information from one format into another format.” Id. Thus, this was an argument that there was indeed an inventive concept that transformed the abstract idea into something patent-eligible. The recitation of a “universal protocol or software” that allowed a system to work with non-compatible third-party software might very well have been a transformative inventive concept.
But the Federal Circuit found that these alleged inventive concepts did not appear in the claims. Further, the claims did not recite any “indication of how the innovative feature is achieved or applied.” The Federal Circuit concluded that “claims that do not define the particular features used the achieve the alleged advantage cannot be said to pass step two “ of the test. Id. The District Court’s finding of patent ineligibility was therefore affirmed.
Recent decisions such as this one provide some hints for drafting patent applications to avoid or overcome objections that the claims recite an abstract idea. First, the patent application should preferably be drafted to show that the invention solves a previous technological problem. Second, specific features that are used to overcome the previous technological problem should ideally be described. That is, not only should there be a solution to a previous technological problem, but there should also be a teaching of the “how.” Third, the above should be recited in the claims.
In the above case, the patent owner identified a potential technological breakthrough provided by the invention. This might have saved the claims from being found invalid, but according the Federal Circuit, the patent claims failed to recite any features providing this breakthrough.