U.S. patent law needs a definition of “abstract idea”

Recent U.S. Patent and Trademark Office actions relating to software patents have confused and frustrated many patent applicants. After the U.S. Supreme Court published its opinion in Alice Corporation Pty Ltd. v. CLS Bank Int’l, the USPTO’s application of the Court decision to software inventions has been anything but consistent. Does the USPTO’s action signal a need for Congressional action or another Supreme Court decision with more concrete guidelines?

In Alice, and as explained by the recent USPTO Preliminary Examination Instructions in view of the Supreme Court Decision in Alice, the determination of subject matter eligibility involves a two part test:  (1) Is the claim directed to an abstract idea?  (2) If so, are there other elements in the claim sufficient to ensure that the claim amounts to significantly more than the abstract idea itself?

However, rather than a rigorous application of any test, in the past few months the USPTO’s patent-eligibility determinations contain little analysis of any specific claim language. Instead, they primarily consist of a boilerplate paragraph stating that the claimed invention is directed to an abstract idea.

To illustrate this problem, the USPTO recently issued a rejection asserting that the following claim was patent-ineligible because it is directed to a “fundamental economic practice:”

8.   A device for predicting a future occurrence of a transportation system incident, the device comprising:
  a processor; and
  a computer readable medium operably connected to the processor, the computer readable medium containing a set of instructions configured to instruct the processor to perform the following:
          collect historic operating information related to the previous operation of a vehicle along a transportation route,
          determine schedule deviation information for the transportation route based upon the historic operating information and observed schedule adherence for the vehicle along the transportation route, the schedule deviation information comprising at least an identification of a driver and a sequence number for a period of time associated with the historic operating information and the observed schedule adherence,
          construct a plurality of models, each of the plurality of models including at least one combination of factors that contribute to schedule deviation,
          rank each of the plurality of models according to at least one information criterion,
          assess an impact of the driver and the sequence number on a highest ranked model to produce a results set, wherein the results set comprises at least a highest ranked model showing at least one combination of factors that most contributes to schedule deviation, and
          present the results set.

The rejection did not explain what “fundamental economic practice” exists in a transportation schedule management process.  Nor did the rejection point to any particular claim terms to say what “abstract idea” existed in the claim.

Nineteen days later, the USPTO awarded a patent with the following claim:

18. A system comprising: one or more processors configured to obtain a captured state of vehicles that are actually traveling in a transportation network according to associated schedules, the captured state representing actual locations of the vehicles in the transportation network at a selected time, the one or more processors also configured to obtain a proposed modification to one or more selected schedules for one or more of the vehicles, the proposed modification directing the one or more of the vehicles to deviate from the one or more selected schedules, the one or more processors further configured to simulate continued movement of the vehicles from the actual locations and the selected time of the captured state according to the proposed modification, the one or more processors also configured to identify impacts on the movement of the vehicles that is simulated due to the proposed modification and to actually change at least one of the selected schedules using the proposed modification so that continued actual travel of the vehicles is modified by the proposed modification.

It is difficult to understand why software that helps transportation system providers manage their schedules is patent-eligible in one instance, but a mere abstract idea in another. This also illustrates how difficult it is for patent applicants to understand exactly what constitutes an “abstract idea.”

Which leads to the root of the problem:  neither Congress nor the Court decisions have provided the USPTO with sufficient guidance for determining when a software claim passes or fails the “abstract idea” test. While the Supreme Court has made it clear that laws of nature and mathematical formulas are not patent-eligible, the Court has yet to precisely define why and when other inventions will be patent-eligible.

It may be that the USPTO’s recent actions are intended to send a signal to Congress and the courts that it needs clear guidance in this area. Unfortunately, that guidance does not appear to be imminent.

Instead, the Federal Circuit decisions that followed Alice may add to the confusion. For example, in Digitech Image Technologies, Inc. v. Electronics for Imaging, Inc., the Federal Circuit said that “[w]ithout additional limitations, a process that employs mathematical algorithms to manipulate existing information to generate additional information is not patent-eligible.” While the Federal Circuit may have reached the correct result for the claims at issue in Digitech, the quoted statement to seems embody the very definition of software — and it thus suggests that software isn’t patentable.

Then, in Planet Bingo LLC v. VKGS LLC, the Federal Circuit applied the abstract idea test not to the claim itself but instead to the problem that the claim was intended to solve. In Planet Bingo, the court said that claims for a computer-implemented bingo gaming system were directed to the abstract idea of “solv[ing a] tampering problem and also minimiz[ing] other security risks” during bingo ticket purchases. This text came not from the claims themselves, but instead from the patentee’s arguments describing why the invention was useful. By not analyzing whether the invention is an abstract idea, but instead asking whether the motivation for the invention is an abstract idea, the Federal Circuit’s reasoning suggests that no invention is patentable under the “abstract idea” test.

In nearly every court and PTAB decision that applied Alice between July 1, 2014 and September 30, 2014, the court or Board found the claim to be ineligible for patenting. However, even the few decisions that didn’t overturn or deny a claim have provided little insight into when a software or business method patent will be patent-eligible.

In Alice, the Court said:  “we need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.” However, given the confusion that has resulted, it seems that the time for that labor has come.

4 responses to “U.S. patent law needs a definition of “abstract idea”

  1. I don’t believe this is true: “In each court and PTAB decision that applied Alice between July 1, 2014 and September 30, 2014, the court or Board found the claim to be ineligible for patenting.”

    See e.g. PTAB decisions: U.S. Bank v. Solutran (Aug. 7, 2014) and PNC Bank v. Secure Axcess (Sept. 9, 2014).

    • You are correct – thanks for pointing that out, and I have made the correction. There have also been a few additional cases in the past month that found claims to be patent-eligible (or at least denying motions of summary judgment on ineligibility). As of of yesterday, findings of ineligibility still outnumbered findings of eligibility. Out of the 24 District Court cases that I’ve seen so far, 16 cases found some or all claims to be ineligible.

      • Thanks Jim, great article! I think about 2:1 upholding at the PTAB is what I’ve seen too.

        Since you’ve alread found them, any chance you would be willing to share the list of those 24 cases identifying which are the 8 that overturned the Alice rejections?

      • @Dannon: Yes, in fact that’s a great idea for a follow-up post. I will put that together and post within the next couple of days. Thanks!

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