The Federal Circuit Pushes the Pause Button on Section 101 Challenges

Last week, the Federal Circuit Court of Appeals imposed important limitations on the post-Alice doctrine of software patent invalidity—patent owners everywhere could be heard sighing in relief. In Enfish, LLC v. Microsoft Corp. (No. 2015-1244, available at http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1244.Opinion.5-10-2016.1.PDF), the Federal Circuit reversed a Central District of California judge’s finding that software claims directed to an “innovative logical model for a computer database” were invalid under 35 U.S.C. § 101 as directed to an abstract idea. Under Alice Corp. Pty Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014), the familiar two-step process for determining § 101 validity is: first determining whether the claim at issue is directed to a patent-ineligible concept, i.e., an abstract idea; and if it is, second, considering whether the claim’s additional elements transform the nature of the claim into a patent-eligible application. While most post-Alice software patent cases have turned on the second step, Enfish makes the first step more meaningful, imposing a greater burden on parties attempting to invalidate a software claim.

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News
May 16, 2016
© 2016 Brownstein Hyatt Farber Schreck, LLP
www.bhfs.com
410 17th Street, Suite 2200
Denver, Colorado 80202
The Federal Circuit Pushes the Pause Button on Section 101 Challenges
Last week, the Federal Circuit Court of Appeals imposed important limitations on the post-Alice doctrine
of software patent invalidity—patent owners everywhere could be heard sighing in relief. In Enfish, LLC
v. Microsoft Corp. (No. 2015-1244, available at http://www.cafc.uscourts.gov/sites/default/files/opinions-
orders/15-1244.Opinion.5-10-2016.1.PDF), the Federal Circuit reversed a Central District of California
judge’s finding that software claims directed to an “innovative logical model for a computer database”
were invalid under 35 U.S.C. § 101 as directed to an abstract idea. Under Alice Corp. Pty Ltd. v. CLS
Bank Int’l, 134 S. Ct. 2347, 2355 (2014), the familiar two-step process for determining § 101 validity is:
first determining whether the claim at issue is directed to a patent-ineligible concept, i.e., an abstract
idea; and if it is, second, considering whether the claim’s additional elements transform the nature of the
claim into a patent-eligible application. While most post-Alice software patent cases have turned on the
second step, Enfish makes the first step more meaningful, imposing a greater burden on parties
attempting to invalidate a software claim.
In Enfish, the patents (U.S. Patent Nos. 6,151,604 and 6,163,775) claimed a self-referential model of
data tables allowing the storage of information in a single table that could otherwise only be stored in
multiple relational tables. Consistent with many courts that have analyzed software patent claims under
Alice, the district court concluded that the claims were directed to the abstract “concept of organizing
information using tabular formats,” and found them invalid under Section 101.
The Federal Circuit reversed, and in doing so rejected the notion “that claims directed to software, as
opposed to hardware, are inherently abstract and therefore only properly analyzed at the second step of
the Alice analysis.” Instead finding that,
Software can make non-abstract improvements to computer technology
just as hardware improvements can, and sometimes the improvements
can be accomplished through either route. We thus see no reason to
conclude that all claims directed to improvements in computer-related
technology, including those directed to software, are abstract and
necessarily analyzed at the second step of Alice, nor do we believe that
Alice so directs. Therefore, we find it relevant to ask whether the claims
are directed to an improvement to computer functionality versus being
directed to an abstract idea, even at the first step of the Alice analysis.
Applying this holding to the patents at issue, the Federal Circuit found that, unlike in Bilski and Alice, the
Enfish claims focused on a specific asserted improvement in computer capabilities. The Federal Circuit
panel rejected the district court’s broad summary of the claims, cautioning that “describing the claims at
such a high level of abstraction and untethered from the language of the claims all but ensures that the
exceptions to § 101 swallow the rule.” Instead, the panel found that the claims were specifically directed
to a self-referential table for a computer database. In support of its conclusion that the claims were

News
May 16, 2016
© 2016 Brownstein Hyatt Farber Schreck, LLP
www.bhfs.com
410 17th Street, Suite 2200
Denver, Colorado 80202
patent eligible, the Federal Circuit noted that the claims improve upon and function differently from
conventional database structures. Accordingly, the Federal Circuit did not proceed to the second step of
Alice, as most district courts have in post-Alice software cases. The Federal Circuit added that where
there are closer calls about how to characterize the claims, the analysis of whether there are arguably
concrete improvements in the recited computer technology should take place under step two. In so
finding, the Federal Circuit, for only the second time of 20 opportunities, found a patent eligible under
Section 101.
Enfish also limited two common arguments that have been broadly wielded to support invalidity. First,
the panel clarified that a claim does not automatically fail by virtue of the invention’s ability to run on a
general purpose computer. Instead, the key inquiry is whether the claims are directed to an
improvement in the functioning of a computer, rather than merely adding conventional computer
components to well-known business practices. The Federal Circuit also clarified that a claim is not
invalid just because the improvement is not defined by reference to physical components. To the
contrary, the panel noted, “[m]uch of the advancement made in computer technology consists of
improvements to software that, by their very nature, may not be defined by particular physical features
but rather by logical structures and processes.”
Enfish cabins the post-Alice invalidity doctrine in ways that are bound to benefit software patentees and
give life to plaintiffs in patent litigation. Indeed, the opinion provides plaintiffs with a new framework for
preventing the Alice analysis from effectively beginning at step two, and imposes a heavier burden on
defendants to clearly articulate both Alice steps. This is especially important in that defendants in patent
cases often invoke Section 101 and Alice on motions to dismiss, and have been increasingly successful
in disposing of lawsuits early on. But now, no longer can an accused infringer simply cite Alice and Bilski
and immediately proceed to an analysis of whether a software claim has certain transformative
elements. Instead, following Enfish, accused infringers should be prepared to articulate more carefully
how an asserted claim is directed to ineligible subject matter. On the other hand, patentees may have
more comfort in opposing Section 101 challenges and would be wise to focus on how the asserted
claims improve upon and function differently from the prior art.
This document is intended to provide you with general information regarding Enfish, LLC v. Microsoft
Corp. The contents of this document are not intended to provide specific legal advice. If you have any
questions about the contents of this document or if you need legal advice as to an issue, please contact
the attorneys listed or your regular Brownstein Hyatt Farber Schreck, LLP attorney. This communication
may be considered advertising in some jurisdictions.
Evan Rothstein
Shareholder
erothstein@bhfs.com
T 303.223.1116

Patrick B. Hall
Associate
phall@bhfs.com
T 303.223.1244

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