Definitely Consisting Essentially Of: Basic and Novel Properties Must Be Definite Under 35 U.S.C. §112

Michael Caridi | November 15, 2019

HZNP Medicines, LLC, Horizon Pharma USA, Inc. v. Actavis Laboratories UT, Inc.

October 15, 2019

Before: Prost, Reyna and Newman; Opinion by:  Reyna; Dissent-in-part by:  Newman

Summary:  Horizon appealed a claim construction that the term “consisting essentially of” was indefinite. The district court evaluated the basic and novel properties under the Nautilus definiteness standard and found that the properties set forth in Horizon’s specification where indefinite. Horizon maintained this was legal error.  The CAFC found that having used the phrase “consisting essentially of,” Horizon thereby incorporated unlisted ingredients or steps that do not materially affect the basic and novel properties of the invention.  They asserted that a drafter cannot later escape the definiteness requirement by arguing that the basic and novel properties of the invention are in the specification, not the claims.  Newman dissents, noting that no precedent has held that “consisting essentially of” composition claims are invalid unless they include the properties of the composition in the claims and that the majority’s ruling “sows conflict and confusion.”

Details: 

  1. Background

HZNP Medicines, LLC, Horizon Pharma USA, Inc (“Horizon”) owns a series of patents directed to a methods and compositions for treating osteoarthritis.  Actavis Laboratories UT, Inc (“Actavis”) sought to manufacture a generic version.  Horizon sued Actavis for infringement in the District of New Jersey.  Most of Horizon’s claims were removed by Summary Judgment on multiple issues.  One claim survived to trial and was found valid and infringed.  The CAFC taking up the appeal and cross-appeal on a number of issues (induced infringement, obviousness of a modified chemical formula and indefiniteness) affirmed the District Court. 

This paper focuses on the ruling that Horizon claims using the “consisting essentially of” transitional phrase where invalid based on the basic and novel properties being indefinite under 35 U.S.C. §112.

  • The CAFC’s Decision

Several of the claims in the Horizon patents recited  a formulation “consisting essentially of” various ingredients.  Claim 49 of the ’838 patent was used as the example.

49. A topical formulation consisting essentially of:

1–2% w/w diclofenac sodium;

40–50% w/w DMSO;

23–29% w/w ethanol;

10–12% w/w propylene glycol;

hydroxypropyl cellulose; and

water to make 100% w/w, wherein the topical formulation has a viscosity of 500–5000 centipoise.

The claims had been found invalid by the District Court under Summary Judgement following a Markman hearing.  The parties’ dispute focused on the basic and novel properties of the claims.  The CAFC agreed with the District Court that these properties are implicated by virtue of the phrase “consisting essentially of,” which allows unlisted ingredients to be added to the formulation so long as they do not materially affect the basic and novel properties.

The district court held that the specification of the patents identified five basic and novel properties: (1) better drying time; (2) higher viscosity; (3) increased transdermal flux; (4) greater pharmacokinetic absorption; and (5) favorable stability.  Further, the district court reviewed the characteristics and found that at least “better drying time” was indefinite because the specifications provided two separate manners of determining drying time which were inconsistent.  Based thereon, they concluded that the basic and novel properties of the claimed invention were indefinite under Nautilus

The CAFC evaluated whether the Nautilus definiteness standard applies to the basic and novel properties of an invention.  Horizon had argued that the Nautilus definiteness standard focuses on the claims and therefore does not apply to the basic and novel properties of the invention. The majority found this argument to be “misguided” and asserted that by using the phrase “consisting essentially of” in the claims, the inventor in this case incorporated into the scope of the claims an evaluation of the basic and novel properties.

The use of “consisting essentially of” implicates not only the items listed after the phrase, but also those steps (in a process claim) or ingredients (in a composition claim) that do not materially affect the basic and novel properties of the invention. Having used the phrase “consisting essentially of,” and thereby incorporated unlisted ingredients or steps that do not materially affect the basic and novel properties of the invention, a drafter cannot later escape the definiteness requirement by arguing that the basic and novel properties of the invention are in the specification, not the claims.

They supported this position by noting that a patentee can reap the benefit of claiming unnamed ingredients and steps by employing the phrase “consisting essentially of” so long as the basic and novel properties of the invention are definite.

In evaluating the district courts finding of indefiniteness, the CAFC maintained that two questions arise when claims use the phrase “consisting essentially of.” The first focusing on definiteness: “what are the basic and novel properties of the invention?”  The second, focusing on infringement: “does a particular unlisted ingredient materially affect those basic and novel properties?”   The definiteness inquiry focuses on whether a person of ordinary skill in the art (“POSITA”) is reasonably certain about the scope of the invention.  If the POSITA cannot as-certain the bounds of the basic and novel properties of the invention, then there is no basis upon which to ground the analysis of whether an unlisted ingredient has a material effect on the basic and novel properties.  Keeping with this logic, the CAFC maintained that to determine if an unlisted ingredient materially alters the basic and novel properties of an invention, the Nautilus definiteness standard requires that the basic and novel properties be known and definite.

Hence, the CAFC concluded that the district court did not err in considering the definiteness of the basic and novel properties during claim construction.

The majority then looked to the specific finding of indefiniteness by the district court regarding the basic and novel property of “better drying time.”   They noted that the  specification discloses results from two tests: an in vivo test and an in vitro test.  The district court had found that the two different methods for evaluating “better drying time” do not provide consistent results at consistent times. Accordingly, CAFC affirmed the district court’s conclusion that the basic and novel property of “better drying rate” was indefinite, and consequently, that the term “consisting essentially of” was likewise indefinite.

In sum, we hold that the district court did not err in: (a) defining the basic and novel properties of the formulation patents; (b) applying the Nautilus definiteness standard to the basic and novel properties of the formulation patents; and (c) concluding that the phrase “consisting essentially of” was indefinite based on its finding that the basic and novel property of “better drying time” was indefinite on this record.

However, they noted that the Nautilus standard was not to be applied in an overly stringent manner.

To be clear, we do not hold today that so long as there is any ambiguity in the patent’s description of the basic and novel properties of its invention, no matter how marginal, the phrase “consisting essentially of” would be considered indefinite. Nor are we requiring that the patent owner draft claims to an untenable level of specificity. We conclude only that, on these particular facts, the district court did not err in determining that the phrase “consisting essentially of” was indefinite in light of the indefinite scope of the invention’s basic and novel property of a “better drying time.”

Judge Newman’s Dissent

Judge Newman dissented.  She asserted that the majority holding that “By using the phrase ‘consisting essentially of’ in the claims, the inventor in this case incorporated into the scope of the claims an evaluation of the basic and novel properties”  is not correct as a matter of claim construction, it is not the law of patenting novel compositions, and it is not the correct application of section 112(b).

First, she noted that there is no precedent that when the properties of a composition are described in the specification, the usage “consisting essentially of” the ingredients of the composition invalidates the claims when the properties are not repeated in the claims.

            Second, in regard to the specifics of “drying time” for the case at hand, she noted that whatever the significance of drying time as an advantage of the claimed composition, recitation and measurement of this property in the specification does not convert the composition claims into invalidating indefiniteness because the ingredients are listed in the claims as “consisting essentially of.”

The role of the claims is to state the subject matter for which patent rights are sought.  The usage “consisting essentially of” states the essential ingredients of the claimed composition. There are no fuzzy concepts, no ambiguous usages in the listed ingredients. There is no issue in this case of the effect of other ingredients…

Noting that there was no evidence that a POSITA would not understand the components of the composition claims with reasonable certainty, Newman concluded that since in the current case there are no other components asserted to be present, no “unnamed ingredients and steps” that even adopting the construction taken by the majority the claims are not subject to invalidity for indefiniteness.

Takeaways: 

            Added caution must be taken by patent prosecutors when electing to use the transitional phrase “consisting essentially of”.  The specification needs to be clear as to what the basic and novel properties are and how they are determinable. 

            When using “consisting essentially of” incorporating the properties that are considered to be basic and novel into the claim language may help prevent ambiguity.

Presenting multiple arguments in prosecution risks prosecution history estoppel on each of them

Ching Kwok | November 8, 2019

Amgen Inc. v. Coherus BioSciences Inc.

July 29, 2019

Before Reyna, Hughes, and Stoll. Opinion by Stoll.

Summary

The CAFC affirmed a district court decision holding that Amgen had failed to state a claim and dismissed Amgen’s suit against Coherus for patent infringement under the doctrine of equivalents, in view of Amgen’s clear and unmistakable disclaimer of claim scope during prosecution.

Details

Amgen Inc. and Amgen Manufacturing Ltd. (“Amgen”) sued Coherus BioSciences Inc. for infringement of U.S. Patent No. 8,273,707 (the ‘707 patent). The patent relates to methods of purifying proteins using hydrophobic interaction chromatography (“HIC”), in which a buffered salt solution containing the desired protein is poured into a HIC column and the proteins are bound to a column matrix while the impurities are washed out. However, only a limited amount of protein can bind to the matrix. If too much protein is loaded on the column, some of the protein will be lost to the solution phase before elution.

Conventionally, a higher salt concentration in a buffer solution is provided to increase the dynamic capacity of the HIC column, but the higher salt concentration causes protein instability. Amgen’s ‘707 patent discloses a process that increases the dynamic capacity of a HIC column by providing combinations of salts instead of using a single salt.

According to the ‘707 patent, any one of the three combinations of salts – citrate and sulfate, citrate and acetate, or sulfate and acetate – allows for a decreased concentration of at least one of the salts to achieve a greater dynamic capacity without compromising the quality of the protein separation.

During prosecution, the Examiner rejected the claims as being obvious in view of U.S. Patent No. 5,231,178 (“Holtz”). In reply to the Examiner’s rejection, Amgen argued that:

(1) The pending claims recite a particular combination of salts. No combinations of salts are taught nor suggested in Holtz;

(2) No particular combinations of salts recited in the pending claims are taught or suggested in Holtz; and

(3) Holtz does not teach dynamic capacity at all.

Amgen also attached a declaration from the inventor. The declaration stated that the use of the three salt combinations leads to substantial increases in the dynamic capacity of a HIC column and “[use] of this particular combination of salts greatly improves the cost-effectiveness of commercial manufacturing by reducing the number of cycles required for each harvest and reducing the processing time for each harvest.”

The Examiner again rejected Amgen’s argument and took the position that the prior art does disclose salts used in a method of purification and that adjustment of conditions was within the skill of an ordinary artisan.  This time, in response to the Examiner’s position, Amgen replied that Holtz does not disclose any combination of salts and does not mention the dynamic capacity of a HIC column. In particular, Amgen stated that it was a “lengthy development path” when choosing a working salt combination and that merely adding a second salt would not have been expected to result in the invention. The Examiner allowed the claims.

In 2016, Coherus sought FDA approval to market a biosimilar version of Amgen’s pegfilgrastim product. In 2017, Amgen sued Coherus for infringing the ‘707 patent under the doctrine of equivalents because Coherus’s process did not match any of the three explicitly recited salt combinations in the ‘707 patent. Coherus moved to dismiss Amgen’s complaint for failure to state a claim.

The district court agreed to dismiss the complaint. The district court noted that during prosecution, Amgen had distinguished Holtz by repeatedly arguing that Holtz did not disclose “one of the particular, recited combinations of salts” in the two responses and in the declaration. The district court held that “[t]he prosecution history, namely, the patentee’s correspondence in response to two office actions and a final rejection, shows a clear and unmistakable surrender of claim scope by the patentee.”  In addition, the district court held that “by disclosing but not claiming the salt combination used by Coherus, Amgen had dedicated that particular combination to the public.”

Amgen appealed.

The CAFC affirmed the district Court’s dismissal and found that the “prosecution history estoppel has barred Amgen from succeeding on its infringement claim under the doctrine of equivalents.”

In the appeal, Amgen argued that it only had distinguished Holtz by stating that Holtz does not disclose increasing any dynamic capacity or mention any salt combination. Amgen also argued that the prosecution history should not apply here because the last response filed prior to allowance did not make the argument that Holtz failed to disclose the particular salt combinations.

Regarding Amgen’s first point – that during prosecution, only dynamic capacity had been used to distinguish Holtz – the CAFC noted the three grounds on which Amgen has relied for distinguishing Holtz, and the fact that Amgen had quoted the declaration in support of the particular combination of salts recited in the claims.  The CAFC explained that “separate arguments create separate estoppels as long as the prior art was not distinguished based on the combination of these various grounds.”

The CAFC also disagreed with Amgen’s second point (that prosecution history estoppel should not apply because of their last response), commenting that “there is no requirement that argument-based estoppel apply only to arguments made in the most recent submission before allowance…  We see nothing in Amgen’s final submission that disavows the clear and unmistakable surrender of unclaimed salt combinations made in Amgen’s response.”

The CAFC held that the prosecution history estoppel applied and affirmed the District Court’s order dismissing Amgen’s complaint for failure to state a claim. The CAFC did not discuss whether Amgen dedicated unclaimed salt combinations to the public.

Takeaway

  • Prosecution history estoppel can be triggered, not only by narrowing amendments, but also by arguments, even without any amendments.
  • Presenting multiple arguments does not eliminate the risk of triggering estoppel for each of them.
  • When writing an argument, avoid using expressions that are not recited in the claims (when discussing the claimed invention) or the cited documents (when discussing the state of the art).

The CAFC’s Holding that Claims are Directed to a Natural Law of Vibration and, thus, Ineligible Highlights the Shaky Nature of 35 U.S.C. 101 Evaluations

Stephen Parker | November 1, 2019

American Axle & Manufacturing, Inc. v. Neapco Holdings, LLC

October 9, 2019

Opinion by:  Dyke, Moore and Taranto (October 3, 2019).

Dissent by:  Moore.

Summary: 

            American Axle & Manufacturing, Inc. (AAM) sued Neapco Holdings, LLC (Neapco) for alleged infringement of U.S. Patent 7,774,911  for a method of manufacturing driveline propeller shafts for automotive vehicles.  On appeal, the Federal Circuit upheld the District Court of Delaware’s holding of invalidity under 35 U.S.C. 101.   The Federal Circuit explained that the claims of the patent were directed to the desired “result” to be achieved and not to the “means” for achieving the desired result, and, thus, held that the claims failed to recite a practical way of applying underlying natural law (e.g., Hooke’s law related to vibration and damping), but were instead drafted in a results-oriented manner that improperly amounted to encompassing the natural law.

Details: 

  1. Background

            The case relates to U.S. Patent 7,774,911 of American Axle & Manufacturing, Inc. (AAM) which relates to a method for manufacturing driveline propeller shafts (“propshafts”) with liners that are designed to attenuate vibrations transmitted through a shaft assembly.   Propshafts are employed in automotive vehicles to transmit rotary power in a driveline.  During use, propshafts are subject to excitation or vibration sources that can cause them to vibrate in three modes: bending mode, torsion mode, and shell mode.

            The CAFC focused on independent claims 1 and 22 as being “representative” claims, noting that AAM “did not argue before the district court that the dependent claims change the outcome of the eligibility analysis.”

Claim 1 Claim 22
1. A method for manufacturing a shaft assembly of a driveline system, the driveline system further including a first driveline component and a second driveline component, the shaft assembly being adapted to transmit torque between the first driveline component and the second driveline component, the method comprising:   providing a hollow shaft member;   tuning at least one liner to attenuate at least two types of vibration transmitted through the shaft member; and   positioning the at least one liner within the shaft member such that the at least one liner is configured to damp shell mode vibrations in the shaft member by an amount that is greater than or equal to about 2%, and the at least one liner is also configured to damp bending mode vibrations in the shaft member, the at least one liner being tuned to within about ±20% of a bending mode natural frequency of the shaft assembly as installed in the driveline system. 22. A method for manufacturing a shaft assembly of a driveline system, the driveline system further including a first driveline component and a second driveline component, the shaft assembly being adapted to transmit torque between the first driveline component and the second driveline component, the method comprising:   providing a hollow shaft member;   tuning a mass and a stiffness of at least one liner, and   inserting the at least one liner into the shaft member;   wherein the at least one liner is a tuned resistive absorber for attenuating shell mode vibrations and wherein the at least one liner is a tuned reactive absorber for attenuating bending mode vibrations.

        

    As explained by the CAFC, “[i]t was known in the prior art to alter the mass and stiffness of liners to alter their frequencies to produce dampening,” and  “[a]ccording to the ’911 patent’s specification, prior art liners, weights, and dampers that were designed to individually attenuate each of the three propshaft vibration modes — bending, shell, and torsion — already existed.” The court further explained that in the ‘911 patent “these prior art damping methods were assertedly not suitable for attenuating two vibration modes simultaneously,” i.e., “shell mode vibration [and] bending mode vibration,” but “[n]either the claims nor the specification [of the ‘911 patent] describes how to achieve such tuning.”

            The District Court concluded that the claims were directed to laws of nature: Hooke’s law and friction damping.  And, the District Court held that the claims were ineligible under 35 U.S.C. 101.  AAM appealed.

  • The CAFC’s Decision

            Under 35 U.S.C. 101, “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” may be eligible to obtain a patent, with the exception long recognized by the Supreme Court that “laws of nature, natural phenomena, and abstract ideas are not patentable.”

            Under the Supreme Court’s Mayo and Alice test, a 101 analysis follows a two-step process.  First, the court asks whether the claims are directed to a law of nature, natural phenomenon, or abstract idea.  Second, if the claims are so directed, the court asks whether the claims embody some “inventive concept” – i.e., “whether the claims contain an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.” 

            At step-one, the CAFC explained that to determine what the claims are directed to, the court focuses on the “claimed advance.”  In that regard, the CAFC noted that the ‘911 patent discloses a method of manufacturing a driveline propshaft containing a liner designed such that its frequencies attenuate two modes of vibration simultaneously.   The CAFC also noted that AAM “agrees that the selection of frequencies for the liners to damp the vibrations of the propshaft at least in part involves an application of Hooke’s law, which is a natural law that mathematically relates mass and/or stiffness of an object to the frequency that it vibrates.  However, the CAFC also noted that “[a]t the same time, the patent claims do not describe a specific method for applying Hooke’s law in this context.”

            The CAFC also noted that “even the patent specification recites only a nonexclusive list of variables that can be altered to change the frequencies,” but the CAFC emphasized that “the claims do not instruct how the variables would need to be changed to produce the multiple frequencies required to achieve a dual-damping result, or to tune a liner to dampen bending mode vibrations.”

            The CAFC explained that “the claims general instruction to tune a liner amounts to no more than a directive to use one’s knowledge of Hooke’s law, and possibly other natural laws, to engage in an ad hoc trial-and-error process … until a desired result is achieved.”

            The CAFC explained that the “distinction between results and means is fundamental to the step 1 eligibility analysis, including law-of-nature cases.”  The court emphasized that “claims failed to recite a practical way of applying an underlying idea and instead were drafted in such a results-oriented way that they amounted to encompassing the [natural law] no matter how implemented.

            At step-two, the CAFC stated that “nothing in the claims qualifies as an ‘inventive concept’ to transform the claims into patent eligible matter.”  The CAFC explained that “this direction to engage in a conventional, unbounded trial-and-error process does not make a patent eligible invention, even if the desired result … would be new and unconventional.”  As the claims “describe a desired result but do not instruct how the liner is tuned to accomplish that result,” the CAFC affirmed that the claims are not eligible under step two.

NOTE:  In response to Judge Moore’s dissent, the CAFC explained that the dissent “suggests that the failure of the claims to designate how to achieve the desired result is exclusively an issue of enablement.”  However, the CAFC expressed that “section 101 serves a different function than enablement” and asserted that “to shift the patent-eligibility inquiry entirely to later statutory sections risks creating greater legal uncertainty, while assuming that those sections can do work that they are not equipped to do.”

  • Judge Moore’s Dissent

            Judge Moore strongly dissented against the majority’s opinion.  Judge Moore argued, for example, that:

  1. “The majority’s decision expands § 101 well beyond its statutory gate-keeping function and the role of this appellate court well beyond its authority.”
  2. “The majority’s concern with the claims at issue has nothing to do with a natural law and its preemption and everything to do with concern that the claims are not enabled. Respectfully, there is a clear and explicit statutory section for enablement, § 112. We cannot convert § 101 into a panacea for every concern we have over an invention’s patentability.”
  3. “Section 101 is monstrous enough, it cannot be that now you need not even identify the precise natural law which the claims are purportedly directed to.” “The majority holds that they are directed to some unarticulated number of possible natural laws apparently smushed together and thus ineligible under § 101.”
  4. “The majority’s validity goulash is troubling and inconsistent with the patent statute and precedent. The majority worries about result-oriented claiming; I am worried about result-oriented judicial action.”


Takeaways:  

  1. When drafting claims, be mindful to avoid drafting a “result-oriented” claim that merely recites a desired “result” of a natural law or natural phenomenon without including specific steps or details setting establishing “how” the results are achieved.
  2. When drafting claims, be mindful that although under 35 U.S.C. 112 supportive details satisfying enablement are only required to be within the written specification, under 35 U.S.C. 101 supportive details satisfying eligibility must be within the claims themselves.

What’s a tool? What is functionality? Network monitoring claim held patent-eligible in split opinion

Ching Kwok | October 29, 2019

SRI International, Inc., v. Cisco Systems, Inc.

March 20, 2019

Before Lourie, O’Malley, and Stoll. Opinion by Stoll. Dissenting opinion by Lourie.

Summary

The CAFC affirmed a district court decision holding that claims related to network security monitoring are patent-eligible. In the 2-1 opinion, the CAFC held that all of the asserted claims are patent eligible under §101 as not “directed to” an abstract idea under the first step of the Alice test, because the claims focus on an improvement in the functionality of computers and computer network technology.  

The CAFC also affirmed the district court’s construction of the claim term “network traffic data,” summary judgment of no anticipation, and award of ongoing royalties but willful infringement and attorneys’ fees issues were vacated and remanded.   

This presentation only addresses the issue of patent eligibility.

Details

SRI International, Inc. (“SRI”) sued Cisco Systems, Inc. (“Cisco”) for infringement of U.S. Patent Nos. 6,711,615 (‘615 patent) and 6,484,203 (‘203 patent). The ‘615 patent is a continuation of the ‘203 patent. The patents relate to network security by using network monitors to analyze the data on the network and generating and integrating reports of suspicious activity. 

SRI proposed claim 1 of the ‘615 patent as representative claim while Cisco proposed claim 1 of the ‘203 patent. The CAFC noted that the claims are substantially similar, the difference in the list of categories of data not being material to any issue on appeal, and adopted claim 1 of ‘615 patent as the representative claim. 

Claim 1 of the ‘615 patent:

1. A computer-automated method of hierarchical event monitoring and analysis within an enterprise network comprising:

deploying a plurality of network monitors in the enterprise network;

detecting, by the network monitors, suspicious network activity based on analysis of network traffic data selected from one or more of the following categories: {network packet data transfer commands, network packet data transfer errors, network packet data volume, network connection requests, network connection denials, error codes included in a network packet, network connection acknowledgements, and network packets indicative of well-known network-service protocols};

generating, by the monitors, reports of said suspicious activity; and

automatically receiving and integrating the reports of suspicious activity, by one or more hierarchical monitors.

As a preliminary matter, the CAFC noted that SRI spent considerable investment on network intrusion detection and developed the Event Monitoring Enabling Response or Anomalous Live Disturbances (“EMERALD”) project prior to the filing of the patents. In addition, the CAFC also noted that the Defense Advanced Research Projects Agency of the Department of Defense, which helped fund the project, called it a “gem in the world of cyber defense” and “‘a quantum leap improvement over’ previous technology.”

As to the issue of patent eligibility, the District Court held that the claims do more than merely recite the performance of a known business practice on the Internet and are better understood as being necessarily rooted in computer technology in order to solve a specific problem in the realm of computer networks.  The CAFC agreed.

The CAFC explained that by the recitation of detecting an activity, receiving and integrating the reports, the claim does more than just the normal, expected operation of a conventional computer network. The CAFC specifically described the technological improvement as “a network defense system that monitors network traffic in real-time to automatically detect large-scale attacks,” with reference to Enfish, LLC v. Microsoft Corp.  

In addition, the CAFC noted that the specification provided an explanation of both the technological problem – the network becomes more valuable when the technology become more interoperable and integrated but also makes it more vulnerable to attack – and the technological solution, by providing “a framework for the recognition of more global threats to interdomain connectivity, including coordinated attempts to infiltrate or destroy connectivity across an entire network enterprise.” Unfortunately, here, the CAFC simply cited the specification of the SRI patent but did not provide any details regarding how the specification presents the technological solution in relation to the claim language.

When arguing that the claims are directed to an abstract idea, Cisco had raised three main arguments, which the CAFC addressed in turn:

1.  the claims are “directed to generic steps required to collect and analyze data,” therefore, “the claims are analogous to those in Electric Power Group, LLC v. Alstom S.A.” in which the claims were simply using the computers as tools. Thus, “the claims are directed to an abstract idea”;

2.  “the invention does not involve an improvement to computer functionality itself”; and

3.  the claims correspond generally to what people can “go through in their minds”.

Regarding Cisco’s first argument, the CAFC disagreed with Cisco’s view that the SRI patent claims are similar to the claims in Electric Power Group,[i] because the claimed invention in Electric Power Group was only “using computers as tools to solve a power grid problem.” The CAFC emphasized that the claims are similar to the claims in DDR Holdings, LLC v. Hotels.com, which were “directed to more than merely requiring a computer network operating in is normal, expected manner.” 

Next, in rejecting Cisco’s second argument, the CAFC asserted that the representative claim is not about “automating a conventional idea on a computer” but “improv[ing] the technical functioning of the computer and computer networks by reciting a specific technique for improving computer network security.” 

The CAFC also rejected Cisco’s third argument that the claims recite a mental process, by countering that “the human mind is not equipped to detect suspicious activity by using network monitors and analyzing network packets.”

In conclusion, the CAFC held that the claims at issue are not “directed to” an abstract idea under step one of Alice, because the claims are not just using the computer as a tool to analyze data from multiple sources to detect suspicious activity. Instead, the claims define using network monitors to detect suspicious network activity based on analysis of network traffic data, generating reports of that suspicious activity, and integrating those reports using hierarchical monitors to identify hackers and potential intruders. Thus, the claims provide an improvement in the functionality of computers and computer networks, and, therefore, the claims are patent eligible.

            Dissent

            Dissenting Judge Lourie thought that the claims of the SRI patent were similar to the claims in Electric Power Group because, in his view, the SRI claims “recite nothing more than deploying network monitors, detecting suspicious network activity, and generating and handling reports.” Judge Lourie noted that in Electric Power Group, the claims that were held patent-ineligible recited “receiving data,” “detecting and analyzing events in real time,” “displaying the event analysis results and diagnoses of events,” “accumulating and updating measurements,” and “deriving a composite indicator of reliability.”

Further, he pointed out that the portions of the SRI specification to which the majority refers “only recites results, not means for accomplishing them,” and that the SRI claims as written “do not recite a specific way of enabling a computer to monitor network activity.” Since he considered that the SRI claims do not provide any specifics as to how the steps are performed and show no improvement to computer technology, he would have held that the claims were directed to an abstract idea. 

Takeaway

As this decision shows, there is much uncertainty regarding whether a claim would be treated as patent-eligible or not under the Alice test. It seems that a different set of judges might have easily sided with Judge Lourie’s analysis and invalidated the claims.

In the meantime, the explanations and details given in the patent description regarding the technical problem solved by the invention, instead of referring to generic computer or network components, helped these claims survive the patent-eligibility challenge.  


[i] Claim 12 of U.S. Patent 8,401,701 at issue in Electric Power Group, LLC v. Alstom S.A.:

12. A method of detecting events on an interconnected electric power grid in real time over a wide area and automatically analyzing the events on the interconnected electric power grid, the method comprising:

receiving a plurality of data streams, each of the data streams comprising sub-second, time stamped synchronized phasor measurements wherein the measurements in each stream are collected in real time at geographically distinct points over the wide area of the interconnected electric power grid, the wide area comprising at least two elements from among control areas, transmission companies, utilities, regional reliability coordinators, and reliability jurisdictions;

receiving data from other power system data sources, the other power system data sources comprising at least one of transmission maps, power plant locations, EMS/SCADA systems;

receiving data from a plurality of non-grid data sources;

detecting and analyzing events in real-time from the plurality of data streams from the wide area based on at least one of limits, sensitivities and rates of change for one or more measurements from the data streams and dynamic stability metrics derived from analysis of the measurements from the data streams including at least one of frequency instability, voltages, power flows, phase angles, damping, and oscillation modes, derived from the phasor measurements and the other power system data sources in which the metrics are indicative of events, grid stress, and/or grid instability, over the wide area;

displaying the event analysis results and diagnoses of events and associated ones of the metrics from different categories of data and the derived metrics in visuals, tables, charts, or combinations thereof, the data comprising at least one of monitoring data, tracking data, historical data, prediction data, and summary data;

displaying concurrent visualization of measurements from the data streams and the dynamic stability metrics directed to the wide area of the interconnected electric power grid;

accumulating and updating the measurements from the data streams and the dynamic stability metrics, grid data, and non-grid data in real time as to wide area and local area portions of the interconnected electric power grid; and

deriving a composite indicator of reliability that is an indicator of power grid vulnerability and is derived from a combination of one or more real time measurements or computations of measurements from the data streams and the dynamic stability metrics covering the wide area as well as non-power grid data received from the non-grid data source.

[1] Claim 12 of U.S. Patent 8,401,701 at issue in Electric Power Group, LLC v. Alstom S.A.:

12. A method of detecting events on an interconnected electric power grid in real time over a wide area and automatically analyzing the events on the interconnected electric power grid, the method comprising:

receiving a plurality of data streams, each of the data streams comprising sub-second, time stamped synchronized phasor measurements wherein the measurements in each stream are collected in real time at geographically distinct points over the wide area of the interconnected electric power grid, the wide area comprising at least two elements from among control areas, transmission companies, utilities, regional reliability coordinators, and reliability jurisdictions;

receiving data from other power system data sources, the other power system data sources comprising at least one of transmission maps, power plant locations, EMS/SCADA systems;

receiving data from a plurality of non-grid data sources;

detecting and analyzing events in real-time from the plurality of data streams from the wide area based on at least one of limits, sensitivities and rates of change for one or more measurements from the data streams and dynamic stability metrics derived from analysis of the measurements from the data streams including at least one of frequency instability, voltages, power flows, phase angles, damping, and oscillation modes, derived from the phasor measurements and the other power system data sources in which the metrics are indicative of events, grid stress, and/or grid instability, over the wide area;

displaying the event analysis results and diagnoses of events and associated ones of the metrics from different categories of data and the derived metrics in visuals, tables, charts, or combinations thereof, the data comprising at least one of monitoring data, tracking data, historical data, prediction data, and summary data;

displaying concurrent visualization of measurements from the data streams and the dynamic stability metrics directed to the wide area of the interconnected electric power grid;

accumulating and updating the measurements from the data streams and the dynamic stability metrics, grid data, and non-grid data in real time as to wide area and local area portions of the interconnected electric power grid; and

deriving a composite indicator of reliability that is an indicator of power grid vulnerability and is derived from a combination of one or more real time measurements or computations of measurements from the data streams and the dynamic stability metrics covering the wide area as well as non-power grid data received from the non-grid data source.

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