By Robert R. Sachs
On January 18, 2017 the Federal Circuit issued an opinion in Trading Technologies Int’l., Inc. v. CQG, Inc., its first decision finding a user interface to be patent eligible subject matter. The court designated the opinion as non-precedential. On Monday SHzoom LLC filed a motion under Federal Circuit Rule 32.1(e), which allows any person to request that the court reissue a decision as precedential. The text of the motion is set forth below. Fenwick represented SHzoom.
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Introduction
Third party SHzoom LLC (“SHzoom”) hereby moves this court to reissue its January 18, 2017 decision (Dkt. No. 73), in Trading Technologies Int’l., Inc. v. CQG, Inc., No. 2017 U.S. App. LEXIS 834 (Fed. Cir. Jan. 18, 2017) (“Trading Technologies”) as precedential, pursuant to Federal Circuit Rule 32.1(e). As the appellant CQG, Inc. (“CQG”) has filed a petition for Rehearing En Banc, Shzoom’s request is filed to meet the stated deadline of Rule 32.1(e), and as such need only be considered if CQG’s request is denied. The parties to the case have been notified of this request.
Federal Circuit Rule 32.1(b) states that “An opinion or order which is designated as nonprecedential is one determined by the panel issuing it as not adding significantly to the body of law.” Trading Technologies, while entirely consistent with precedent, nevertheless adds significantly to the body of patent eligibility for a number of reasons. First, it is the first Federal Circuit decision to find a specifically claimed user interface patent eligible, and thus provides an important positive example of patent eligible technology. Second, it shows that an improvement in the functioning of a computer includes an improvement in the usability of the computer to perform an information processing task. Third, it clarifies that being “long standing” is a “threshold criterion” for a concept to be identified as an abstract idea, thereby providing an objective framework for this aspect of Step 1 of the Alice test.
I. The Law of Patent Eligibility Needs Precedential Examples of Patent Eligible Inventions
The law of patent eligible subject matter is still in its early stages of development following the Supreme Court’s decision in Alice Corporation Pty. Ltd. v. CLS Bank International, 134 S.Ct. 2347 (2014). In Alice, the Supreme Court expressly declined to define an “abstract idea.” The Federal Circuit has thus recognized that “a search for a single test or definition [of an abstract idea] in the decided cases concerning § 101 from this court, and indeed from the Supreme Court, reveals that at present there is no such single, succinct, usable definition or test.” Amdocs (Israel) Limited v. Openet Telecom, Inc., 841 F.3d 1288, 1294 (Fed. Cir. 2016). Accordingly, this court has stated that “the decisional mechanism courts now apply is to examine earlier cases in which a similar or parallel descriptive nature can be seen—what prior cases were about, and which way they were decided.” Id.
Currently, there are many examples of ineligible subject matter, but very few positive examples of eligible subject matter. As of March 7, 2017, since Alice, the Federal Circuit has decided eighty-one cases involving Section 101. Of those, seventy-three decisions (90%) found ineligible subject matter, and twenty-seven of these are precedential. Only eight decisions to date have found eligible subject matter, and all but Trading Technologies have been designated as precedential.
Given the express guidance that the ‘decisional mechanism’ is essentially eligibility-by-analogy, a persistent disparity in precedential outcomes can directly influence the development of the patent law, and indirectly influence the types of inventions that get approved by the USPTO and in turn ultimately filed upon by inventors. This is because the USPTO has specifically instructed that "examiners should avoid relying upon or citing non-precedential decisions (e.g., SmartGene, Cyberfone) unless the facts of the application under examination uniquely match the facts at issue in the non-precedential decision." Memorandum of Robert W. Bahr, "Recent Subject Matter Eligibility Decisions," November 2, 2016. When considering patent eligibility, therefore, examiners rely on precedential Federal Circuit cases as guidance for both eligible and ineligible subject matter. As a result, patent examiners are simply more likely to find any given patent claim ineligible since there are so many more precedential examples of ineligible decision and patents.[1] This, in turn, creates a feedback cycle: the more examples of ineligible patents, the more patent applications that will be rejected as ineligible (even when there are no prior art rejections). This impact on innovation is largely hidden from the view of this court, which for the most part sees issues of eligibility as they arise in issued patents. To date, the court has only ruled on five ex parte appeals of Section 101 rejections (less than 0.5% of the court's post-Alice eligibility decisions), and has affirmed them all; only one of them dealt with the patent eligibility of computer-implemented inventions and did not involve any type of specifically claimed graphical user interface. Thus, the effective boundaries of eligibility will incrementally recede, as patentees abandon pending applications or simply do not file on potentially eligible inventions, to begin with. In short, the Supreme Court’s warning in Alice may well become prophecy: “At the same time, we tread carefully in construing this exclusionary principle lest it swallow all of patent law.” Alice, 134 S.Ct. at 2354.
While it is not expected that the Federal Circuit will produce a perfectly equal distribution of eligible and ineligible outcomes, the case law cannot develop adequately by negative examples alone. Put another way, it is not sufficient for this court to articulate what a patentee can not claim: the law needs guideposts for what can be claimed. This is particularly true in regards to the Alice test, which has been characterized as “I know it when I see it.” McRO, Inc. v. Activision Pub., Inc., No. CV 14-336-GW FFMX, 2014 WL 4759953, at *5 (C.D. Cal. Sept. 22, 2014). Or more simply: patent examiners and the district courts only know it when the Federal Circuit sees it. Thus, without Federal Circuit approved examples of eligible subject matter in a wide array of technology types, examiners and district courts are simply less likely to find eligible subject matter in these cases before them.
II. Trading Technologies is the First Patent Eligible Functional User Interface Invention Found by this Court
Graphical user interfaces are the core mechanisms by which we functionally interact with physical devices—from our computers and smartphones to our appliances and automobiles. The design and operation of user interfaces is a technical engineering field in the same way that the design and operation of physical interfaces made up of switches, knobs, dials, levers and the like is an engineering field, and just as subject to patent protection as these more mechanical implementations. Companies invest significant resources in the user interface design of their products. Innovative and inventive user interfaces, while they may appear simple and elegant, often result from extensive research, development, and testing. Graphical user interfaces can offer distinct competitive advantages that can be easily copied if not properly protected. Graphical user interfaces have been subject to patent protection for well over forty years, and the technology community has accordingly developed settled expectations regarding their patent eligibility.
The Federal Circuit has evaluated a number of patent claims that relate to user interfaces. In every such case, the court has found the claims ineligible. The consistent reasoning in these cases is that generically claimed user interfaces that merely present information that had been collected and analyzed are ineligible. See, Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1370 (Fed. Cir. 2015) (“[T]he interactive interface limitation is a generic computer element.”); Affinity Labs of Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1258 (Fed. Cir. 2016) (generically claimed “graphical user interface”); Affinity Labs of Texas, LLC v. Amazon.com, Inc., 838 F.3d 1266 (Fed. Cir. 2016) (claimed “graphical user interface,” is “simply description[] of well-known computer component[]”); Apple, Inc. v. Ameranth, Inc., 2016 U.S. App. LEXIS 21277, *19 (Fed. Cir. Nov. 29, 2016) (claims “do not claim a particular way of programming or designing the software to create menus that have these features, but instead merely claim the resulting systems”); FairWarning IP, LLC v. Iatric Sys., Inc., 2016 U.S. App. LEXIS 18313 (Fed. Cir. 2016) (“the use of generic computer elements like a microprocessor or user interface do not alone transform an otherwise abstract idea”); Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343 (Fed. Cir. 2015) (claim for user interface “describes the effect or result dissociated from any method by which maintaining the state is accomplished upon the activation of an icon.”); Elec. Power Grp. v. Alstrom S.A., 830 F.3d 1350, 1351–52 (Fed. Cir. 2016) (“collecting information, analyzing it, and displaying certain results of the collection and analysis” is ineligible).
Trading Technologies recognized several important aspects of graphical user interfaces. First, and most simply, the court acknowledges that graphical user interfaces are a form of technology by extending the analysis in Enfish LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016), which dealt only with “invisible” database and memory operations, to the visible and functional nature of graphical user interfaces: “For some computer-implemented methods, software may be essential to conduct the contemplated improvements. Enfish, id. at 1339 (“Much 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.”)”. Trading Technologies, slip op. at 8.
Second, the Federal Circuit panel specifically found the lower court’s analysis of the claimed functionality of the graphical user interface is “in accord with precedent”:
The district court explained that the challenged patents do not simply claim displaying information on a graphical user interface. The claims require a specific, structured graphical user interface paired with a prescribed functionality directly related to the graphical user interface’s structure that is addressed to and resolves a specifically identified problem in the prior state of the art.
Trading Technologies, slip op. at 6 (emphasis added).
The court distinguished this system from the routine or conventional use of computers or the Internet, and concluded that the specific structure and concordant functionality of the graphical user interface are removed from abstract ideas, as compared to conventional computer implementations of known procedures.
Trading Technologies, slip op. at 7.
The court went on to say:
Precedent has recognized that specific technologic modifications to solve a problem or improve the functioning of a known system generally produce patent-eligible subject matter.
Id.
These statements make clear that a specifically claimed user interface that ties a functional operation to a particular graphical structure to provide a solution to an information related activity, is patent eligible technology. The specifically claimed graphical structure is the feature that removes the graphical interface from the category of “generically claimed interfaces” seen by the Federal Circuit thus far.
Trading Technologies’ express general statement of precedent, coupled with a specific example of a lower court analysis as being consistent with this framework, gives the district courts and the USPTO a clear example of the proper analysis for the patent eligibility of graphical user interfaces.
III. Trading Technologies Demonstrates That Improved Usability is an “Improvement in Computer Functionality”
In Alice, the Supreme Court identified improvements in the “functioning of the computer itself” as sufficient for patent eligible subject matter. Alice, 134 S. Ct. at 2359. However, the Court did not provide any definition or explanation of what constitutes either an “improvement” or the “functioning of the computer itself.” The Federal Circuit has stated that “the focus of the claims is not on such an improvement in computers as tools, but on certain independently abstract ideas that use computers as tools.” Electric Power, 830 F.3d at 1354. Nonetheless, some courts, and many patent examiners, have interpreted this court's statement in Enfish that the invention results in "faster searches, and required less programmer time and memory than other tables" as requiring mechanical improvements in the operation of the computer, for example, faster processing, more efficient memory or networking operations, or the like. 822 F.3d at 1337. See, e.g., Gust, Inc. v. Alphacap Ventures, LLC, 15cv6192 (DLC) (S.D.N.Y. 2016) slip. op. at 20 (distinguishing, Enfish, "The claims here, by contrast, do not purport to enhance the speed or otherwise improve upon the well-known data collection and classification functions of the computer.").
Consistent with Electric Power, Trading Technologies is an example of “an improvement in computers as tools” that is not limited to purely mechanical improvements. An eligible improvement in computer functionality includes making the overall operation on the computer as a tool easier, faster, or more accurate, without in any way making the computer itself perform physically faster. The panel here noted with approval the district court’s statement that “the challenged patents “solve problems of prior graphical user interface devices . . . in the context of computerized trading[] relating to speed, accuracy, and usability.” Trading Technologies, slip op. at 6. The panel itself emphasized this analysis, stating “For Section 101 purposes, the claimed subject matter is directed to a specific improvement to the way computers operate, for the claimed graphical user interface method imparts a specific functionality to a trading system directed to a specific implementation of a solution to a problem in the software arts." Id at. 9 (internal quotations and citations omitted).
This analysis is particularly important because, as a general rule, a graphical user interface rarely makes the computer itself operate physically faster—rather it enables users to perform complex functions more quickly, more easily, and with less error. A user of computer with a “slow” processor but an excellent graphical user interface will generally complete a complex information processing task more quickly and accurately than a user of a computer with the physically faster processor but a terrible interface. Just as an inventive hand tool such as a wrench or saw itself does not operate faster, but enables a user to perform a manual task more quickly, a specifically designed graphical user interface can likewise enable user to complete a task more quickly or accurately---and in some circumstances the task can be life-saving or life-threatening (e.g., the user interface for controlling an automobile, airplane, or medical equipment).[2] Innovations that increase human productivity are prototypical examples of “useful” inventions, the near-forgotten touchstone of § 101.
IV. Trading Technologies Clarifies that Abstract Ideas Must Be “Long Standing”
One of the questions in determining whether a claim is directed to an abstract idea is whether the concept identified in the claim must be of well-known and of long standing. In Alice, the Court made repeated statements that suggested this requirement. Discussing Bilski, the Alice Court “explained that “‘[h]edging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class,” and “hedging is a longstanding commercial practice.” Alice, 134 S.Ct. at 2356. The Court then held that “the concept of intermediated settlement is “‘a fundamental economic practice long prevalent in our system of commerce.’” Id.
The Federal Circuit appears to have endorsed this requirement. See, buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014). (“The claims are squarely about creating a contractual relationship—a “transaction performance guaranty”—that is beyond question of ancient lineage.”); Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363 (Fed. Cir. 2015) (“This sort of information tailoring is “a fundamental. . . practice long prevalent in our system . . . .”; “An advertisement taking into account the time of day and tailoring the information presented to the user based on that information is another “fundamental . . . practice long prevalent in our system . . . .”); Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307 (Fed. Cir. 2016) (“Here, it was long-prevalent practice for people receiving paper mail to look at an envelope and discard certain letters,”; “Performing virus screening was along prevalent practice in the field of computers”); LendingTree, LLC v. Zillow, Inc., 2016 U.S. App. LEXIS 13462 (Fed. Cir. July, 25, 2016) (“the concept of applying for loans and receiving offers is also long prevalent in our financial system”); In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607 (Fed. Cir. 2016) (“attaching classification data, such as dates and times, to images for the purpose of storing those images in an organized manner is a well-established “basic concept” sufficient to fall under Alice step 1.”); Content Extraction and Transmission LLC v. Wells Fargo Bank, N.A., 776 F.3d 1343 (Fed. Cir. 2014) (“The concept of data collection, recognition, and storage is undisputedly well-known. Indeed, humans have always performed these functions.”); DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) (claims do not “recite a commonplace business method”); Affinity Labs of Texas, LLC v. DIRECTV, LLC et al, 838 F.3d 1253 (Fed. Cir. 2016) (“providing out-of-region access to regional broadcast content is an abstract idea… It is a broad and familiar concept”, “out-of-region broadcasts have been commonplace since the late 20th century”).
However, these statements are all in the context of specific individual examples of abstract ideas. This court has never expressly enunciated the “long-standing” or “prevalent” attribute as a general criterion for finding an idea “abstract.” In other words, the court has only identified individual species of the unmentioned rule but never articulated the rule itself in its own terms. Trading Technologies corrects this oversight by stating:
We agree with this conclusion, for all of the reasons articulated by the district court, including that the graphical user interface system of these two patents is not an idea that has long existed, the threshold criterion of an abstract idea and ineligible concept, as the court explained in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66, 73 (2012).
Trading Technologies, slip op, at 6 (emphasis added).
This clarification is necessary because the USPTO and some courts have taken the position that it is not necessary for the abstract idea in the claim to be long-standing or prevalent. See, e.g., USPTO's "July 2015 Update Subject Matter Eligibility", (“When identifying abstract ideas, examiners should keep in mind that judicial exceptions need not be old or long‐prevalent”). However, this statement ignores the fact that the Supreme Court in both Bilski and Alice expressly relied on textbooks (in one case, one over 100 years old) and other resources to establish that practices recited in the claims were, in fact, long-standing ideas, ideas that “long existed.” “Bilski v. Kappos, 561 U.S. 593, 3231 (U.S. 2010) (citing three publications for the proposition that hedging is fundamental and “taught in any introductory finance class”); Alice, 134 S.Ct. at 2356 (citing three publications).[3]
By requiring the abstract idea to be long-existing, the Supreme Court and this court impose an objective criterion on what is otherwise a highly subjective determination, one that is consistent with the underlying “core concern” of the judicial exceptions, preemption. The role of the judicial exception is to “distinguish [the] patents that claim the "'buildin[g] block[s]'" of human ingenuity.” Yet, unless an idea is demonstrated to be in long use and commonplace, a court is merely speculating that it is a fundamental building block.[4] Indeed, there is no case which has ever found a truly new “abstract idea” to be a building block of human ingenuity.[5] The Federal Circuit’s “threshold criterion” approach will ensure a more consistent and principled treatment of the Step 1 analysis.[6]
These aspects of Trading Technologies are not cumulative of the existing body of the Federal Circuit post-Alice eligibility cases. Rather, each one highlights a key and distinct contribution that the case makes to the law. For these reasons, assuming that the court does not grant CQG’s motion for rehearing en banc, the panel should reissue Trading Technologies as a precedential opinion.
Footnotes:
[1] Viewed in terms of patents, the Federal Circuit's precedential decisions have found 55 patents (with 1094 claims) ineligible, and found only 14 patent (with 127 claims) eligible.
[2] See, e.g., John Hillabin, “6 Diasasters Caused by Poorly Designed User Interfaces,” April 17, 2012, http://www.cracked.com/article_19776_6-disasters-caused-by-poorly-designed-user-interfaces.html (noting incidents of a civilian plane being shot down, and plane crashes due to poorly designed user interfaces).
[3] The Federal Circuit as well on occasion has relied on documentary evidence to establish the long existing nature of idea. See, Buysafe, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (citing an article from 1927 to show that a contractual performance guaranty is of “ancient lineage”).
[4] See, In re Zurko, 258 F.3d 1379, 1383, 1385 (Fed. Cir. 2001) (holding that “basic knowledge” and “common sense” cannot be substituted for claim limitations that are not present in the cited art in the legal determination of obviousness. By extension, courts should not use basic knowledge or common sense to answer the legal question of whether something is an abstract idea.
[5] The well-worn example of Einstein’s law (“E=mc2) is inapposite. Einstein’s equation is not an abstract idea, it is a physical law. Laws of nature are like seams of gold hidden underground: they necessarily exist (since they are inherent in the physical universe) before they are discovered; only the knowledge of the law is new, not the actual law itself. Abstract ideas on the other hand are created entirely by the human mind. They never exist beforehand. Thus, an abstract idea cannot be a building block of human ingenuity or a fundamental tool of basic science until it comes to be used, replied upon or otherwise recognized as such by the relevant community of interest (as was Einstein’s equation was in physics, or hedging in finance).
[6] The use of “long standing” here does not violate the rule against using novelty considerations within the context of patent eligibility; rather it serves as an way of distinguishing between specific ideas and concepts, and well-known (“long standing”) general categories into which they fall. The general categories are the abstract ideas of concern.
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