Enfish=Patent-Eligibility for Software License Enforcement

Reversing a District Court decision, the Federal Circuit had held that patent claims directed to enforcing software licenses are patent-eligible under 35 U.S.C. §101 and the Alice abstract idea test. Ancora Technologies, Inc. v. HTC America, Inc.No. 2018-1404 (Nov. 16, 2018) (precedential) (opinion by Judge Taranto, joined by Judges Dyk and Wallach).  Claims of U.S. Patent No. 6,411,941 recite “methods of limiting a computer’s running of software not authorized for that computer to run.”  Relying on Enfish, LLC v. Microsoft Corp., (Fed. Cir. 2016), the Federal Circuit reversed the lower court’s Rule 12(b)(6) dismissal, holding that “the claimed advance” was patent-eligible as “a concrete assignment of specified functions among a computer’s components to improve computer security.”

Claim 1 of the ’941 patent recites

1. A method of restricting software operation within a license for use with a computer including an erasable, non-volatile memory area of a BIOS of the computer, and a volatile memory area; the method comprising the steps of:

selecting a program residing in the volatile memory,

using an agent to set up a verification structure in the erasable, non-volatile memory of the BIOS, the verification structure accommodating data that includes at least one license record,

verifying the program using at least the verification structure from the erasable non-volatile memory of the BIOS, and

acting on the program according to the verification.

The District Court had held the claims directed to the patent-ineligible “abstract concept of selecting a program, verifying whether the program is licensed, and acting on the program according to the verification,” the recited BIOS storage, the District Court said, not constituting a significant technical improvement.  But just before the District Court’s decision the USPTO’s Patent Trial and Appeal Board (PTAB) had held the ’941 patent no eligible for Covered Business Method (CBM) review because the PTAB thought that the claims recited a “technical solution” and thus were excluded from CBM review under Section 18(d)(1) of the America Invents Act.

The Federal Circuit inclined toward the PTAB’s view of the ’941 patent claims.  The Specification, the Court explained, provided good support for an “innovation” concerning

where the license record is stored in the computer and the interaction of that memory with other memory to check for permission to run a program that is introduced into the computer. The inventive method uses a modifiable part of the BIOS memory—not other computer memory—to store the information that can be used, when a program is introduced into the computer, to determine whether the program is licensed to run on that computer.

The court thought the ’941 patent claims fit within precedent holding various patent claims patent-eligible, including Enfish(self-referential database table was patent-eligible), Finjan, Inc. v. Blue Coat System, Inc. (computer virus scan was patent-eligible); Visual Memory LLC v. NVIDIA Corp. (Fed. Cir. 2017) (categorical data storage improved computer memory and was patent-eligible);  Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc. (Fed. Cir. 2018) (website menus for small-screen devices patent-eligible); Data Engine Technologies LLC v. Google LLC (Fed. Cir. 2018) (navigation of three-dimensional spreadsheets held patent-eligible).  Perhaps I am reading into Judge Taranto’s opinion, but it seems almost as if, in walking through these cases, the court was making the point that that claims including recitations to computer components such as memories are not really that controversial.

Even though the claims were not directed to an abstract idea and therefor it was not necessary to consider Alice step two, the court addressed the overlap between Alicesteps one and two, and explained that the step two analysis supported the conclusion under step one. As in BASCOM Global Internet Services v. AT&T Mobility (Fed. Cir. 2016), there was a technical improvement resulting from a particular claimed arrangement of technical features. On the other hand, there was an instructive contrast with Intellectual Ventures I LLC v. Symantec Corp. (Fed. Cir. 2016), where installing a virus greater on a telephone network did not include any technical improvement.

Lessons for Practice

This is yet another case that reinforces the wisdom of emphasizing technical problems and solutions in patent specifications. But this case may be more significant for another reason, which is that it seems to really emphasize a recent trend toward patent-eligibility even of claims that do no more than process data and/or solve business problems if those claims are situated in a technical environment and can be argued to provide a technical solution.

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