October 15, 2021

Recent Section 101 Patent Challenges in the Southern District of New York

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Ever wonder how patent eligibility challenges are faring in the "Mother Court"? Two recent SDNY decisions offer an indication.

As a U.S. Patent and Trademark Office report confirms, "the U.S. patent system experienced a major change" in 2014, when the U.S. Supreme Court Alice Corp. Pty. v. CLS Bank Int'l, 573 U.S. 208 (2014) decision ("Alice") altered the law on patent eligibility. While the USPTO report focused on how Alice has affected examination of U.S. patent applications, Alice has led to a large increase in challenges to eligibility in court proceedings as well.

Under the U.S. patent statutes, "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor[.]" See 35 U.S.C. § 101 ("Section 101"). However, laws of nature, natural phenomena and abstract ideas are not eligible for patenting. See Perry Street Software, Inc. v. Jedi Techs., Inc., Civ. No. 20-04539, 2021 WL 3005597, at *9 (S.D.N.Y. July 13, 2021), citing Alice Corp. Pty., 573 U.S. at 216.

To determine patent eligibility post Alice, courts assess whether the claims of a patent-in-suit are directed to a patent-ineligible concept such as an "abstract idea." Under this first step, claims directed to longstanding commercial practices have been found to be abstract. See Elec. Commc'n Techs., LLC v., LLC, 958 F.3d 1178, 1182 (Fed. Cir. 2020). If a court finds that the patent does claim an abstract idea, it proceeds to examine whether elements of the claims provide an "inventive concept" sufficient to transform the abstract idea into patent-eligible subject matter. Under this second step, courts have held that merely implementing an abstract idea on a computer without more is not an inventive concept.

This past summer, the U.S. District Court for the Southern District of New York issued two notable decisions wrestling with these issues—ultimately finding the patents at issue invalid under Section 101 and the Alice framework. Both are currently on appeal to the Federal Circuit.

In Perry Street Software, the court granted a motion for judgment on the pleadings that the patent-in-suit related to matchmaking was invalid. Applying the first step of Alice, the court reiterated the principle that "facilitating human interactions or relationships - which could occur offline and without automation - is not a patent-eligible idea." Applying Alice step two, the court reasoned that the claims did nothing more than "automate" a process that had long been performed manually and did not contain any discernable inventive concept.

More recently, in Weisner v. Google, the court considered the eligibility of four patents related to the collection and recording of a user's movement and location history. Applying Alice step one, the court ruled that the patents were directed to an abstract idea, in that people have long kept records of location and travel history in travel logs, diaries, journals, and calendars. Applying Alice step two, the court found no inventive concept because the patents relied on existing technology and did not provide any improvement to the relevant technology.

While New York-area defendants mounting 101 challenges may be celebrating these decisions, those defending patents against a Section 101 attack are waiting to see whether the Federal Circuit sees things differently on appeal. CSG will continue to monitor both appeals and provide updates accordingly.

If you have a question about how Section 101 may impact your business or patent portfolio, please contact one of the authors listed.

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