KPN is a Dutch telecom company that owns a U.S. patent for detecting errors in data transmission. Last year, the U.S. District Court for the District of Delaware invalidated the patent as ineligible subject matter, but on Friday, a panel of the U.S. Court of Appeals for the Federal Circuit (CAFC) reversed. So, let’s look at what the CAFC said about this data-processing patent.

Check data methods

Error-Checking Patent Held Patent EligibleAnytime you send data, there is a possibility that some of the data gets garbled. One way to check for transmission errors uses “check data.” Check data methods are good at detecting random errors in data, but traditional check data methods can fail to detect some non-random, systematic errors. KPN’s patent discloses the improvement of a check data method that succeeds in detecting systematic errors.

So, what is check data? Computers represent a block of data as a binary number, a long string of 1’s and 0’s that stands for the texts, photos, and payments we send electronically. Check data is a smaller number — i.e., a shorter string of 1’s and 0’s — that is computed from the block of data.

When a device sends a block of data, it also sends the check data for that block. Then, when another device receives the data, the receiving device recomputes the check data. If the receiving device gets a different answer than the sending device told it to expect, there was an error in the data transmission.

Check data methods are good at detecting most random errors. But some errors slip through because sometimes a particular change to the data does not change the check data computed on it. In that case, when the receiving device computes the check data, it gets the answer it was told to expect, and the error goes unnoticed.

If the errors are random, that will not happen too often. But if the undetected error is a non-random, repeating, systematic error, then the check data methods will miss it every time. Enter KPN’s patent.

The ’662 Patent

In U.S. Patent No. 6,212,662, KPN improves check data methods by varying the function that generates the check data. Though a systematic error might escape one check data function, it won’t escape every check data function. So, by changing the check data function, the receiver will eventually notice the systematic error.

The ’662 patent makes four claims, though only claims 2-4 were preserved for appeal.

  1. A device for producing error checking based on original data provided in blocks with each block having plural bits in a particular ordered sequence, comprising:
    a generating device configured to generate check data; and
    a varying device configured to vary original data prior to supplying said original data to the generating device as varied data;
    wherein said varying device includes a permutating device configured to perform a permutation bit position relative to said particular ordered sequence for at least some of the bits in each of said blocks making up said original data without reordering any blocks of original data.
  2. The device according to claim 1, wherein the varying device is further configured to modify the permutation in time.
  3. The device according to claim 2, wherein the varying is further configured to modify the permutation based on original data.
  4. The device according to claim 3, wherein the permuting device includes a table in which subsequent permutations are stored.

The ’662 Patent is a device patent. The device of claim 1 comprises a generating device and a varying device. The varying device permutes the data block — alters the order of the 1’s and 0’s — before computing the check data. Claim 2 explains that the varying device permutes data blocks differently at different times. Claim 3 describes modifying the permutation based on the original data. And Claim 4 further explains storing permutations in a table.

District Court: ’662 Patent is abstract and fails Alice

The District Court held that the ’662 Patent attempts to claim an “abstract idea” with no inventive concept, but under the Supreme Court’s guidance in Alice, claims that are directed to abstract ideas are not patent-eligible, unless the claims contain a saving inventive concept. So, the District Court invalidated all claims of the ’662 Patent.

Specifically, the District Court found that the claims were directed to “the abstract idea of reordering data and generating additional data.” The claims were abstract because they do not tell “how data is reordered, how to use the reordered data, how to generate additional data, that any data is transmitted [or] how the permutations are modified in time or modified based on the data.”

Having decided that the claims were abstract, the District Court then looked for an inventive concept. Interestingly, the District Court thought that the specification might have disclosed such an inventive concept. But, it concluded that even if so, the inventive concept was “not captured in the claims.”

Federal Circuit: ’662 Patent is not even abstract

The CAFC, on the other hand, never reached the question of inventive concept. The court decided claims 2-4 were not directed to an abstract idea in the first place. Instead, the ’662 patent is a “non-abstract improvement in an existing technological process.”

Specifically, the court read the claims as a non-abstract improvement in error checking with data transmissions. The court drew parallels with last year’s decision in Finjan Inc. v. Blue Coat Systems.

The Finjan patent had claimed a method of providing computer security by identifying potentially dangerous operations. It improved on earlier methods that only identified known dangerous operations. The court affirmed the validity of the patent. Its claims were not abstract, because they were a concrete improvement of a computer security system.

In Finjan’s wake, the court reversed the District Court’s holding of invalidity. It reasoned that the claims were also directed to a non-abstract improvement over the prior art because they “employ a new way of generating check data that enables the detection of persistent systematic errors in data transmissions that prior art systems were previously not equipped to detect.”

In reaching its decision, the court leaned heavily on the specification. One argument against the patents was that “the specification does not mention any technological benefit of using permutations to generate check data.” But the court did find the benefits by tying together passages columns apart. The court did not quite go so far as to require that specifications discuss a technological benefit, but it was helpful to KPN that theirs did.

Practice points

Though the bar for software and related patents remains high, the CAFC’s opinion offers a few pointers.

First, spend the time to flesh out the specification. The claims, not the specification, largely define the scope of the patent. Consequently, we tend to devote effort to get claims into eligible shape, but the court leaned on the specification for two important factors in its decision that the claims were not abstract.

The specification established that the claims were an “improvement in an existing technological process.” The specification gave a good picture of the prior art and the existing error checking processes. The court cited the specification — not the claim itself — for the fact that claim 2 “improves the ability of prior art error detection systems to detect systematic errors.”

The specification also established the technological benefit of the matter claimed. Again, the court did not hold that specifications must discuss a technological benefit, but the appellees argued as much. KPN is probably relieved that the specification did clearly express the benefit of the permutation of claim 1. That saved the court the trouble of a difficult legal decision.

Second, take care that the claims recite a specific implementation. For KPN, this meant specifically reciting the last application step: that the varying device be configured to “vary original data prior to supplying said original data to the generating device”; that the original data is varied by a “permuting device configured to perform a permutation”; and that the generating device “generate check data.”

But keep in mind that a claim of improvements to a tool “that is part of an existing system … does not necessarily need to recite how that tool is applied in the overall system.” Instead, it should be enough to claim a specific means or method. Still, it will be best — if not exactly required — for at least the specification to describe how the improved tool is used in the existing system. Doing so goes along with the first point above to flesh out the specification.

Last week, the Federal Circuit confirmed that Idenix Pharmaceuticals will not be the proud recipient of what was previously regarded as the largest damages award ever recorded in a U.S. Yet Another Pharmaceutical Patent Falls Under the Scrutiny of 35 U.S.C. § 112

patent case.  In fact, the majority’s opinion in Idenix Pharmaceuticals LLC v. Gilead Sciences Inc. not only affirmed the district court’s grant of judgment as a matter of law (JMOL) against Idenix and finding that the asserted claims of U.S. Patent No. 7,608,597 were invalid for lack of enablement under 35 U.S.C. § 112, it added insult to injury when it also held that the claims were invalid for lacking written description.

Background

Idenix (acquired by Merck & Co. in 2014) owns the ʼ597 patent, which includes claims directed to a method of treating hepatitis C virus.  In an effort to thwart the launch of Gilead’s first drug for the treatment of chronic hepatitis C, Sovaldi®, which was then awaiting approval by the FDA, Idenix sued its rival for patent infringement in the District of Massachusetts in 2013.  While the suit, which was ultimately transferred to the District of Delaware, was percolating, both Sovaldi® and a second drug Harvoni® were approved by the FDA for market.  The drugs were quickly considered blockbuster drugs for their ability to cure hepatitis C in a large percentage of patients.  However, there was also major controversy over the list price of the drugs—$84,000 for a 12-week regimen of Sovaldi® and $94,500 for a 12-week regimen of Harvoni®.  Not surprisingly, the high price tag and cure rate resulted in huge revenue for Gilead.  In fact, in 2015, Gilead reported it earned over $20 billion on the two drugs.  Suffice it to say, there was a lot at stake in the dispute for both sides.

Claim 1 is illustrative of the asserted claims:

  1. A method for the treatment of a hepatitis C virus infection, comprising administering an effective amount of a purine or pyrimidine β-D-2′-methyl-ribofuranosyl nucleoside or a phosphate thereof, or a pharmaceutically acceptable salt or ester thereof.

After Idenix argued that the key to the claimed invention was the use of nucleosides having a methyl group (CH3) at the 2’ up position, the district court construed the structural limitation “β-D-2′-methyl-ribofuranosyl nucleoside” to require “a methyl group in the 2’ up position and non-hydrogen substituents at the 2’ down and 3’ down positions.”  The 2’ up position is Yet Another Pharmaceutical Patent Falls Under the Scrutiny of 35 U.S.C. § 112shown in the green circle in the structure to the left.  The district court also construed the claims to use a β-D-2′-methyl-ribofuranosyl nucleoside that is effective for the treatment of hepatitis C.

Based on the claim construction, Gilead ultimately conceded infringement before trial.  But, it argued that under the claim construction, the asserted claims of the ʼ597 patent were invalid for both lack of enablement and written description under U.S.C. § 112(a).  Gilead’s rationale was that there are billions of potential nucleosides with a methyl group in the 2’ up position and that a person of ordinary skill in the art would not know, without undue experimentation, which of these nucleosides would be effective for treating hepatitis C.  So, while the jury was relieved of considering infringement, it was tasked with deciding whether the claims were valid under § 112 and if so, what damages were to be paid by Gilead.

In late 2016, the jury sided with Idenix when it upheld the validity of the asserted claims of the ʼ597 patent and awarded Idenix over $2 billion (based on a 10% royalty rate from the sales of both drugs).  Gilead pleaded with the district court in post-trial motions to overturn the verdict and also hold that the claims were invalid for failing to satisfy the written description requirement under § 112(a).  While the district court granted Gilead’s JMOL on enablement, it denied the motion with respect to written description.  Idenix appealed.

The Majority’s Opinion

The Federal Circuit affirmed the lower court’s decision on enablement but reversed the denial of JMOL on written description.  In explaining its affirmation of the lack of enablement finding, the majority weighed each of the Wands factors that the jury had before it:

(1) the quantity of experimentation necessary;

(2) how routine any necessary experimentation is in the relevant field;

(3) whether the patent discloses specific working examples of the claimed invention;

(4)  the amount of guidance presented in the patent;

(5) the nature and predictability of the field;

(6) the level of ordinary skill; and

(7) the scope of the claimed invention.

In re Wands, 858 F.2d 731, 737 (Fed. Cir. 1988).  The parties themselves had agreed on the high level of ordinary skill and experts from both sides concurred as to the unpredictability of the field.  As such, both of these factors were found to weigh in favor of non-enablement.  As to the quantity of experimentation necessary, the court agreed with the lower court’s finding that excessive experimentation would have been required to determine which 2’-methyl nucleosides would be effective for treating hepatitis C virus.  In addition, the majority explained that the working examples and guidance in the ʼ579 patent merely provided a starting point for further research, but did not go so far as to allow a skilled artisan to know which 2’-methyl nucleosides are or are not effective against hepatitis C virus.  The final factor—scope (overbreadth) of the claims—also weighed in favor of non-enablement.  Thus, weighing each of the factors, the majority concluded as a matter of law that the asserted claims of the ʼ597 patent were invalid for lack of enablement.  In further supporting its decision, the majority likened the facts of this case to those in Wyeth and Cordis Corp. v. Abbott Laboratories, where the claims encompassed millions of compounds, while only a much smaller subset of those compounds would have actually had the functional effect required by the claims.  As here, the court in Wyeth found that having to synthesize and screen each potential compound for effectiveness was undue experimentation.

On the written description issue, the majority held that the ʼ579 patent did not adequately demonstrate that the inventors possessed the full scope of the claimed invention, and certainly not if the scope covered Gilead’s Sovaldi® and Harvoni® drugs.  The majority’s opinion explained that, even though “a nucleotide-by-nucleotide recitation of the entire genus” is not required to find adequate written description, the absence of explicit disclosure in the ʼ597 patent of the particular species found in Gilead’s drugs (2’ methyl up/2’ fluoro down nucleoside), and further absence in the ʼ597 patent of a sufficient number of species to define a genus that includes the species found in Gilead’s drugs, or structure/function relationships that would necessarily include the species found in Gilead’s drugs make it clear that the ʼ597 patent fails to satisfy the written description requirement.  Interestingly, even though its lack of enablement affirmation was partially based on the rationale that the ʼ579 patent was insufficient with its working examples and guidance, the court supported its finding of failure to the written description requirement with reference to “tens or hundreds of thousands of possible nucleosides, substituent-by-substituent, with dozens of distinct stereochemical structures…”

In Judge Newman’s dissent, she sets forth her view that there is no lack of enablement or written description because the claims are limited by what is set forth in the specification, such that interpreting claim scope necessarily restricts the scope to that disclosure.  She also concludes that even though Gilead stipulated to infringement, the proper outcome of the case should be that the asserted claims are valid based on the scope supported by the specification, but not infringed since the species of 2’-methyl nucleosides used in Gilead’s accused drugs were not included in the scope of the asserted claims.  The majority responded that Judge Newman’s preferred outcome on appeal would disregard binding claim construction, ignore the stipulation of infringement by Gilead, and analyze a case not before the court on appeal.  In any event, the majority’s conclusion and the dissenting opinion result in the same outcome for Gilead, i.e., no damages.  The major difference is that the majority’s opinion has eviscerated yet another pharmaceutical patent, whereas the dissent’s view would have preserved the patent while clearing Gilead of infringement.

Federal District Court Finds Claims Directed to Dog Chew Toy Patent EligibleFew subjects have drawn as much interest among patent stakeholders and practitioners as understanding the framework used to determine a patent claim’s eligibility. Courts continue to address different factual situations in applying the two-step test for patent eligibility under 35 USC § 101 that the Supreme Court set out in Alice Corp. Pty. Ltd. V. CLS Bank Int’l., 537 U.S. 208, 217 (2014).Courts generally ask whether a claim is directed to patent eligible subject matter or a patent-ineligible concept, such as an abstract idea or natural phenomenon. If a claim is drawn to a patent ineligible concept, the court asks whether the claim includes an inventive concept or is simply an abstract idea without significantly more.

So, should a court disregard “well-understood, routine, and conventional” components of a claimed device when deciding whether a claim is directed to a patent-ineligible “natural phenomenon” under the first step of the Alice test?

Not according to the United States District Court for the Northern District of Illinois in FYF-JB LLC v. Pet Factory, Inc., which denied a motion to dismiss a patent infringement suit making this argument in the context of claims covering a dog chew toy. In Pet Factory, the accused infringer of U.S. Patent No. 9,681,643 (the “’643 Patent,” entitled “Tug Toy”), Pet Factory, Inc., argued that claims directed to a dog chew toy that makes noise when tugged or stretched were patent ineligible under § 101. Claim 1, which is one of several asserted claims, reads as follows:

  1. A tug toy comprising:

at least one gripping member and a central portion, wherein said at least one gripping member is attached to said central portion, and

wherein said central portion further includes a noise maker,

wherein said at least one gripping member is adapted to transmit force to said central portion and

wherein said force comprises a first lateral force directed away from the central portion in the direction of a first gripping member.

According to Pet Factory, even though the claims of the ‘643 Patent recited tangible chew toy devices, the devices’ components were “well-understood, routine and conventional.” Aside from these tangible components, Pet Factory argued that the claims recite nothing more than the natural phenomenon of “force and its direction” for purposes of Step 1 of the Alice inquiry. As a result, Pet Factory argued the patent infringement complaint against it brought by patent holder FYF-JB LLC should be dismissed.

The court disagreed, pointing out that whether components of a claimed device are “well-understood, routine and conventional” is not relevant to the determination under Step 1 of Alice of whether the claims are directed to a patent-ineligible concept.  The court noted that “the ‘well-understood, routine, and conventional’ language that Pet Factory cites comes from Alice and Mayo in the context of describing under step two of the Alice test why the addition of routine steps does not transform an otherwise unpatentable method into a patent-eligible application.” Because the claims were “anchored in the tangible form of a tug toy,” the court found the claims patent eligible, although it noted that simply reciting “concrete, tangible components is not necessarily enough to escape the reach of Alice step one.” The court apparently found persuasive cases cited by the patent holder which similarly rejected the notion that patents directed to circular swings that could move in any direction simply involved the natural phenomenon of a pendulum, and thus patent ineligible. Similarly, the court found the claims of the ‘643 Patent “involve force but are not directed to force itself.” They “describe the features of the tug toy, and how the apparatus is designed to transmit force and activate the noise maker.”

The court’s interpretation seems to be that tying a natural phenomenon to the operation of a claimed device is different from claiming the phenomenon itself. This decision suggests that whether a claim’s components are commonplace is not likely to be a relevant consideration under the analysis in Step 1 of Alice. Practitioners also should understand whether their claims are directed to the components of a claimed device, which are free to operate according to principles of a natural phenomenon, or simply to the operation of the phenomenon itself.

If you have questions regarding patent eligible subject matter under 35 USC § 101, please contact a member of Bradley’s Intellectual Property Practice Group.