Federal Circuit Distinguishes Enfish in New Patent Eligible Subject Matter Decision

The patentability of computer-implemented inventions has been in doubt in the United States since the U.S. Supreme Court decision Alice Corp. v. CLS Bank.  However, the recent Enfish v. Microsoft case provided some hope to those who favor patentability of computer-implemented inventions.  The Federal Circuit has issued another patent eligibility decision, TLI Communications v. AV Automotive, et al.  Notably, both Enfish and TLI Communications are authored by Judge Hughes--and reach opposite results, but on different facts.

Same Judge?  Ah, different facts.

On May 12, 2016, the Federal Circuit issued Enfish v. Microsoft, which found a computer-implemented invention patent eligible.  Enfish and DDR Holdings v. Hotels.com are the only Federal Circuit cases which have found computer-implemented inventions patent eligible post-Alice.  Notably, Enfish provides guidance as to how to apply the first step of the Alice test--whether the claims are directed to an abstract idea.  The author of Enfish is Judge Hughes. 

On May 17, 2016, the Federal Circuit issued another patent-eligibility decision, TLI Communications v. AV Automotive, et al, also authored by Judge Hughes.  In TLI, the Federal Circuit decided that a district court properly dismissed a claim based on patent eligible subject matter. 

The invention at issue in TLI Communications "relates generally to an apparatus for recording of a digital image, communicating the digital image from the recording device to a storage device, and to administering the digital image in the storage device."  The problem in the prior art concerned locating and organizing digital images when there are numerous archived images.  The asserted solution provided by the claimed invention is to "[provide] for recording, administration and archiving of digital images simply, fast and in such a way that the information may be easily tracked." 

In distinguishing Enfish, Judge Hughes stated:

"We recently clarified that a relevant inquiry at step one is 'to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea.' [See Enfish v. Microsoft Corp (Fed. Cir. May 12, 2016)]. . . . Contrary to TLI's arguments on appeal, the claims here are not directed to a specific improvement in computer functionality.  Rather, they are directed to the use of conventional or generic technology in a nascent but well-known environment, without any claim that the invention reflects an inventive solution to any problem presented by combining the two.  According to the [patent at issue], the problem facing the inventor was not how to combine a camera with a cellular telephone, how to transmit images via a cellular network, or even how to append classification information to that data.  nor was the problem related to the structure of the server that stores the organized digital images.  Rather, the inventor sought to "provid[e] for recording, administration and archiving of digital images simply, fast and in such a way that the information therefore may be easily tracked." . . . The specification does not describe a new telephone, a new server, or a new physical combination of the two. The specification fails to provide any technical details for the tangible components, but instead predominantly describes the system and methods in purely functional terms." 

Time to count the votes.

Judge Hughes further explains that the structure in the claims concerning a "telephone unit" and server operated as those things ordinarily operate--"the focus of the patentee and of the claims was not on an improved telephone or an improved server."  This also meant that that the claims were "not directed to a solution to a 'technical problem'" or did not "attempt to solve 'a challenge particular to the Internet.'"  Judge Hughes concludes that the claims are "simply directed to the abstract idea of classifying and storing digital images in an organized manner" and thus, satisfy the first step of the Alice test. 

Under step two of the analysis--whether there is an inventive concept, Judge Hughes states: "the components must involve more than performance of 'well understood, routine, conventional activit[ies]' previously known to the industry.  . . . We agree with the district court that the claims' recitation of a 'telephone unit,' a 'server', an 'image analysis unit,' and a 'control unit' fail to add an inventive concept sufficient to bring the abstract idea into the realm of patentability."

Even though Judge Hughes wrote both Enfish and TLI, the composition of the panels is quite different.  The Enfish panel included Judges Moore and Taranto.  The TLI panel included Judges Dyk and Schall.  The DDR Holdings v. Hotels.com decision finding a computer-implemented invention patent eligible was authored by Judge Chen and joined by Judge Wallach.  Judge Mayer dissented.  There are now five Federal Circuit judges who appear to lean toward favoring patentability of computer-implemented inventions: Hughes, Moore, Taranto, Chen and Wallach.  If Enfish is heard en banc, it may be a close decision.  Importantly, Enfish provides important guidance for step one analysis under Alice and a general attitude supporting patent eligibility for computer-implemented inventions.