'; First Quarter 2015 Newsletter

First Quarter 2015 Newsletter

February 17, 2015

Certain computer-implemented patent claims in flux after recent decisions

The CLS v. Alice ruling, sent down in June 2014 by the U.S. Supreme Court, made clear that there would be new challenges and a host of changes to determine whether patent claims fall within patent-eligible subject matter. Under Alice, the Court declared that when patent claims are directed to an abstract idea, putting the abstract idea into practice through the use of a computer is not enough to transform the idea into a patentable invention.

Patent practitioners have to answer two questions when dealing with claims involving computer-implemented inventions. Step 1: Is the claim directed to an abstract idea? If not, it passes the test and includes patentable subject matter. If the claim is directed to an abstract idea, then we move to the next question. Step 2: Does the claim recite additional elements that meaningfully limit the claim to avoid preempting the abstract idea? If the claim recites such additional elements, the claim qualifies as eligible subject matter. In general, this was also the test before Alice. The Alice decision, however, makes it more difficult in practice to avoid concluding that a claim preempts the abstract idea (step 2) once it is determined the claim is directed to an abstract idea (step 1).

Alice left unanswered a number of questions as to where the line of patent eligibility would be drawn. And there has been a lot of conversation about where the line is now drawn in view of Alice. Two recent rulings from the Court of Appeals for the Federal Circuit (CAFC) offer some ideas of how Alice will be followed and whether the path will be clear.

The CAFC followed Alice with its own decision in Ultramercial v. Hulu, where Judge Mayer states that the claim in question did not recite patent-eligible subject matter. The patent claims in Ultramercial are related to distributing copyrighted media over the Internet in exchange for viewing an advertisement. The decision applies the two-part test as modified by Alice. First, Judge Mayer determines the claim at issue is directed to the abstract idea of using advertising as an exchange of currency. The decision then finds that none of the elements of the claim adds a sufficiently meaningful limitation to transform the nature of the claim from an abstract idea into patent-eligible subject matter. In the decision, Judge Mayer expresses an opinion that nothing meaningful is added to the claim by tying advertising concepts to an Internet-based implementation.

DDR Holdings v. is a second and more recent case by the CAFC that offers a very different result, which is likely to cause some confusion because it is difficult to reconcile with Ultramercial, as pointed out by Judge Mayer in his dissent. In DDR Holdings, Judge Chen wrote the majority decision finding the patent claims at issue to recite patentable subject matter. The claims in DDR Holdings relate to generating a composite Web page that combines elements of a host website with content of a third-party merchant. When applying the two-part analysis of Alice, Judge Chen did not explicitly state whether the claims at issue are directed to an abstract idea. Nor did he decide which purported “abstract idea” should be used for the second part of the two-part Alice analysis. Nevertheless, the decision finds that the claims include such additional features that ensure that the claims do not preempt an abstract idea, regardless of how the abstract idea embodied in the claims might be defined.

Judge Chen states that the patent claims “do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.”

According to John B. Conklin, a member of Leydig’s Chicago office, the decisions in Ultramercial and DDR Holdings are difficult to reconcile.

“Fundamentally, what they are talking about in DDR is a situation in which underlying software tools and other things are required to implement this invention,” Conklin says. “I would not be surprised if there is an en banc review of this decision because the dissent by Judge Mayer makes it clear there is serious disagreement within the CAFC about how to implement Alice uniformly.”

But what specifically about the claims in DDR Holdings sets them apart from the claims in Ultramercial? The key can be found in specificity, says Arthur Bobel, an attorney in Leydig’s San Francisco Bay office.

“The answer in this time of confusion is to make your patent specification and claims as detailed as possible. If you look at the underlying patents in these cases, you will see a stark contrast in the level of detail provided,” Bobel says. “DDR went into great detail about how the software works; whereas, in Ultramercial’s patent, they glossed over the technical aspects, making it read more like a business process or method.”

Conklin also advises focusing on specificity when drafting a claim so that judges have an easy time seeing the claim as tangible, patent-eligible subject matter, rather than an abstraction.

“When you draft a claim, you want to write it in a way that helps a judge who is unfamiliar with the technology decide that it describes something more than just an abstract idea,” says Conklin. “For some software inventions, that may be a significant challenge, depending on how the CAFC cases develop.”

Moving forward from these two rulings, there are some important takeaways for those seeking to apply for new patent applications. “Two questions that patent applicants should ask themselves before filing are: (1) Is there a way to take this claim and replicate it in a time before computers?, and (2) Is there a brick-and-mortar, pen-and-paper analogy that fits? If you answer yes to either question, then you may have to redraft the claim to add some more detail or specificity,” Bobel says. “The key becomes whether you can draft a claim so that your invention would not be deemed an abstract idea in the first place – but we do not have much guidance on how to avoid that yet. It is all in flux.”

“We are going to have to wait for further clarification from the courts,” Conklin says. “When you are drafting claims, anchor them in specific hardware or software to the extent to which the invention allows. Avoid high-level, generic, black-box components. At least then, you have a basis to argue your claims are different than those in Alice and Ultramercial.”

But the point to emphasize is that nothing in Alice should be interpreted as rendering software-based inventions unpatentable.

“Software is patentable, as we can see from DDR Holdings,” Bobel says. “In the context of public policy, if innovators begin thinking that software is not patentable in the United States, then we as a country risk losing a competitive edge.”

As the CAFC issues more decisions based on Alice, a trend will likely develop and answer the question of whether the courts will implement Alice more like the decision in Ultramercial or DDR Holdings.


Judicial Conference approves modification to complaint procedure

A recent proposal by the Judicial Conference of the United States could change the degree of notice given within a patent infringement complaint, potentially requiring plaintiffs to provide more detailed information in the filed complaint. If approved by the U.S. Supreme Court and Congress, these changes could go into effect by year’s end.

The new proposal aims to further clarify Federal Rule of Civil Procedure 8(a)(2), which governs the requirements of what constitutes an acceptable degree of notice in an initial pleading. Within patent law, the correct standard for certain types of patent infringement could be found through the use of Form 18, which sets out five standard paragraphs for pleading patent infringement.

“At times, this standard has been asserted to be impermissibly lower than required by the Supreme Court’s Twombly and Iqbal cases,” says Eley O. Thompson, a member of Leydig’s Chicago office. “Those cases required a plausibility standard and, in certain circumstances, more detailed facts of the alleged infringement than Form 18.”

The new proposal would remove the use of Form 18, as well as other Appendix forms used in developing pleadings. The removal of Form 18 and its five standard paragraphs means that the requirements of Twombly and Iqbal will govern the pleading process.

The change in pleading standards will likely generate additional litigation over the proper level of detail required in the near term. In the long term, greater clarification as to the specific claims within a suit may allow defendants to better challenge claims and provide specific responses.

“In the grand scheme of things, this will not reduce the number of complaints filed. Plaintiffs should have the necessary information already, based on due diligence, but it will take more effort to spell out the infringement,” says John M. Augustyn, a member of Leydig’s Chicago office. “This is especially good for defendants, since they will immediately have more specificity about the accusations and involved products. Historically, it would take much more time to receive this information from the plaintiff.”

Once the standards are established and clarified, it should help expedite the patent litigation process, potentially leading to quicker results for both plaintiffs and defendants. In the meantime, look for added specificity in initial pleadings and litigation around what are the proper requirements.

Trademark protection necessary in the wake of new gTLDs

Trademark owners are facing a new wave of potential infringement from generic top-level domains, such as .clothing, .xyz and .email, among hundreds of others. While purchasing gTLDs might not be top of mind when considering trademark protection, it is something that all trademark holders must be aware of in today’s marketplace.

“From a protection standpoint, it is important to know which new gTLDs have been approved or which are coming down the pipe,” says Anne Naffziger, a member of Leydig’s San Francisco Bay office. “You should know all the details about extensions that are relevant to your trademarks. Identify a list of extensions that you care about, and consider securing and protecting your brands in those domains.”

The goal is to protect a trademark from gTLD “cybersquatters,” a term for those who buy trademark-containing domain names to take advantage of trademark owners or their customers. One way to safeguard a trademark is to register it with the Trademark Clearinghouse (TMCH). Anyone who attempts to register a domain containing a trademark recorded in the TMCH will receive notice that the mark exists and information about the trademark owner’s rights. According to Naffziger, the notification may deter those who unintentionally include the trademark, but will not likely stop cybersquatters since it bears no legal power.

Upon registering with the TMCH, however, trademark owners are eligible to register through the Donuts Domains Protected Marks List (DMPL). Through the DPML, Donuts will block the registration of domain names that include listed trademarks or related terms, to ensure that the particular trademark remains protected from infringement.

Naffziger emphasizes that, while these preventive solutions may be less costly than further legal action, subscriptions to these registration programs can add up quickly. Since the gTLD era is still in its early stages, the long-term need for these and other protection matters remains unknown.

“The need to enforce or secure extensions is going to be driven by the success of these new gTLD extensions and whether they catch on as a mechanism for consumers using the Internet,” Naffziger says. “If gTLDs do not affect how people use the Internet, it may ultimately be a moot point. Even so, it is never too early to consider the safeguards currently available and use them effectively in the protection of your trademarks.”


IPR strategy to change in light of recent case law and PTAB adjustments

Recent U.S. Supreme Court decisions, and new developments from the Patent Trial and Appeals Board (PTAB) in inter partes review (IPR) proceedings, mean changes are coming to the way applicants draft and prosecute their patent applications. Over the past several decades, patent lawyers have generally strived to define inventions within their broadest terms, guided by the presumption that casting a wider net will cover a broader range of potential infringements. However, specificity may now become the rule of the day. In a world where an asserted patent may undergo an IPR, which does not afford the patent a presumption of validity, broad claim scope will broaden the prior art basis for validity attacks.

“Before IPRs, you wanted your patent to be defined in a very broad sense, so that the claims could fit many interpretations,” says Elias P. Soupos, a member of Leydig’s Chicago office. “Now, the rules are changing, which requires one to consider preserving the validity of the patent in the event of a post grant proceeding in the Patent Office – one can no longer count on a presumption of validity for a granted patent.”

One drive for change came through the recent Supreme Court ruling in Nautilus v. Biosig, which stressed the need to avoid “abstraction” when drafting patent claims. Subsequent cases will have to provide a clearer definition of what qualifies as abstract, but, in the meantime, patent applicants can adjust their strategies to avoid complications related to these updates.

Another driver for change contends with what constitutes patentable subject matter. In Alice v. CLS Bank Int’l., the Supreme Court set up a two-part test to determine whether a claim sets forth a concrete technological advance rather than an abstract idea, and whether the claim recites additional components that meaningfully limit the scope of the claim. In this respect, patent applicants should be mindful of, and attempt to work into the claims, any practical applications of the invention tied to the physical world.

In light of such changes, patent applicants can consider reviving some of the claim drafting techniques of the past, including means plus function claims.

“In today’s world, a means plus function claim may be a good thing again. It might survive an IPR. While it may be narrow in scope, it still protects the invention against those seeking to copy it,” Soupos says.

Other claim drafting techniques that may be effective in preserving claim validity in the patent office during an IPR include defining clear claim boundaries, to ensure that prior art relevant to the invention is applied, using dependent claims wisely to provide a variety of coverage, and using different claim types wisely.

Ultimately, in the ever-changing arena of patent law, the most important thing a claimant can have is a dedicated legal team who is able to navigate the various changes as they happen.

“The application drafter should be mindful of the current minefields surrounding patent assertion and the various proceedings that can take place at the District Court and now in the patent office,” Soupos says.

Leydig Awards

U.S. News – Best Lawyers “Best Law Firms” has awarded the firm Tier 1 national rankings in the practice areas of Patent Law and Trademark Law, and Chicago metropolitan first-tier rankings in Litigation Intellectual Property, Litigation Patent, Patent Law and Trademark Law.

LMG Life Sciences magazine has named Leydig attorneys as 2014 Life Science Stars: Bruce GagalaSalim Hasan and John Kilyk, Jr.

Eley O. Thompson was named as a 2014-2015 Global Fellow by the Federal Circuit Bar Association.

Twenty-five Leydig attorneys have been selected for inclusion in the 2015 Illinois Super Lawyers and Rising Stars lists in the practice areas of Intellectual Property and Intellectual Property Litigation.

H. Michael Hartmann has again been nominated as a top 100 Illinois Lawyer by Illinois Super Lawyers.

Leydig Announces

New associate in Washington, D.C.

Chen Gu holds a law degree in intellectual property law from the University of the Pacific. He focuses his practice on patent prosecution in the electronics, software and mechanical technologies.

In recognition of their achievements, the following attorneys have become members of the firm:


Elias P. Soupos holds a law degree from the John Marshall Law School. His practice involves preparation and prosecution of utility and design patent applications, litigation, licensing, protection of trade secrets, patent re-examination and post-grant proceedings under the America Invents Act.

Michelle L. Zimmermann holds a law degree from the University of Illinois College of Law. She is involved in trademark and trade dress prosecution and litigation, copyright law, unfair competition law and Internet law.