Alice § 101 Does Not Equal § 102, 103: The Blurring Line in the Federal Circuit McRO v Bandai Decision
1. McRO decision points to the need for a better framework for deciding the § 101 question than what the Supreme Court has provided in Alice.
2. Alice is being used by courts to turn the § 101 question into a §§ 102, 103 analysis.
3. Now is the time for the Supreme Court to revisit the physical or virtual links test and other tests that the patent community has proposed for deciding § 101 questions; a test is needed that is not vague and ambiguous, won’t be subjectively applied, and will allow for more predictability in § 101 jurisprudence.
In McRO, Inc. v. Bandai Namco Games America, decided on September 13, 2016, the Federal Circuit reversed the trial court on § 101 in finding software patent claims were not abstract and patent eligible. This is an important § 101 case on the one hand because it adds to the Enfish LLC v. Microsoft Corp. and Bascom v. AT&T body of law decided by the Federal Circuit the past few months that illustrates how far claims may push up against the § 101 patent eligibility boundary line (i.e., that line inside of which defines what subject matter is eligible for patent and outside which defines what is not) and still be found to be patent eligible. On the other hand, McRO points to what may be a serious shortcoming in the Alice two-step framework for deciding § 101 questions. To wit, an overly broad analytical tool that is causing courts to interject §§ 102, 103 thinking into the § 101 analysis.
At issue in McRO was the patent eligibility of software tools for automating a preexisting 3-D animation method. Animation is a series of pictures, called frames, quickly played along a timeline or reel. Under a theory known as Persistence of Vision, an after image exists in the mind of a person for a fraction of a second after perception by a retina. This allows for moving frames to bleed into one another to create the perception of motion. Animation has evolved from basic flipbooks in the days of Mr. Walt Disney to software of the kind in the McRO patent that morphs adjacent frames into a series of pictures more seamlessly together when played. The McRO patent makes use of new rules to bleed the frames together that relate sub-sequences of phonemes, timings, and morph weight to automatically automate lip synchronization and facial expression of animated character sets.
In finding the software to be not abstract at Alice step one, the Federal Circuit explained that the defendants “provided no evidence that the process previously used by animators is the same as the process required by the claims.” Op. 24. The prior art animator would decide what the animated face should look like at key points in time between the start and end times, and then manually determine the appropriate morph weight sets for each keyframe based on the phoneme timings in the timed transcript to draw the face at those times. Id. at 8, 24. “The computer here [in McRO] is employed to perform a distinct process to automate a task previously performed by humans.” Id. at 24.
In so finding, the Federal Circuit seems to have treated the prior art technical rules of animation used by animators since the days of Mr. Disney like the abstract principles of risk hedging, the patenting of which troubled the Supreme Court and lead to the Bilski, Mayo, and Alice decisions. But are they really the same?
In McRO, the Federal Circuit found, arguably correctly, that the method steps employing technical formulae to be “new” under § 101 (e.g., not an expression of a law of nature as in Einstein’s theory of relativity) and patent eligibly “useful” (e.g., technical formulae (not common knowledge) that improved technical animation), and so the Federal Circuit found the claims to be not abstract and patent eligible under Alice step one. Where the Federal Circuit arguably went wrong is that it should have ended its analysis there. Instead, the Federal Circuit went on to engage in a comparison of the claims in the McRO patent to the prior art. That’s the stuff of a 102/103 jurisprudence and entirely unnecessary in the § 101 analysis under Alice.
That this is occurring with greater frequency is symptomatic of a fatal flaw in the Alice decision which has essentially opened the floodgates to § 101 challenges being decided on the grounds of §§ 102, 103 jurisprudence. Alice and its progeny have created a tension between § 101 and §§ 102, 103. Instead of limiting § 101 challenges to what is “new” and “useful” as prescribed by § 101 in order to make § 101 serve as the “gateway” to patentability as Congress intended (See Mayo), Alice is being used by courts to turn the § 101 question into a §§ 102, 103 analysis.
The unintended consequences of these case developments is the introduction of even greater uncertainty into the subject matter eligibility of software, medical methods, and other claims. For example, while the decision of patent eligibility in Enfish, Bascom, and McRO are arguably the right decisions under Alice, the decision in Ultramercial v. Hulu, LLC is arguably wrongly decided under Alice since the method steps employed common knowledge formulae that arguably did “transform the claim into a patent-eligible application” where the claim improved a product delivery system over the Internet and so arguably those claims satisfied the second step of Alice. As another example, the outcome of a § 101 decision may turn on the panel of Federal Circuit judges deciding the case. See for example Judge Mayer who believes all software patents to be not eligible for patent. See concurring opinion filed in Intellectual Ventures I LLC v. Symantec Corp. (“Alice sounded the death knell for software patents.”) Now, as we see illustratively in McRO, the Federal Circuit is arguably interjecting §§ 102, 103 jurisprudence into deciding a § 101 question.
In the wake of Ultramercial, Enfish, Banscom, and the McRO decisions it has become clear that the two-step framework in Alice doesn’t work without further Supreme Court guidance. Now may be the time for the Supreme Court to revisit its Alice test for determining patent eligibility and if ultimately revalidated to be good law, to provide more jurisprudential meat to its bones. The two step analysis pronounced in Alice sounds good on paper. But on the first step of “determin[ing] whether the claims at issue are directed to a patent-ineligible concept,” the Supreme Court should provide clearer judicial guidance on what makes a concept a “patent-ineligible concept” (e.g., what make a concept abstract). As to the second step of Alice, what does the signpost “transform the claim into a patent-eligible application” really mean?
Practical applications of the analysis shows Alice to have an Achilles heel. The test is vague and ambiguous and it doesn’t provide needed guidance on § 101 questions, especially in case of close calls where the claims lie just inside the boundary of what makes a claim patent eligible. On further reflection, the Supreme Court might want to take a time-out and reconsider alternative tests proffered by the patent community for determining patent eligibility such as the physical or virtual links test that may be more useful than the one articulated in Alice. These alternative analytical approaches are not vague and ambiguous, won’t be subjectively applied, and will allow for more predictability in § 101 jurisprudence. Until the Supreme Court finishes the job it set out to do in Alice, the body of case law under Alice and its progeny will continue to flounder.