How Does Patent-Eligibility Relate to Novelty and Non-obviousness?

Is prior art relevant to determining patent-eligibility under 35 U.S.C. § 101, or isn't it?  In finding, on a motion for summary judgment, that claims drawn to "presenting information on a space-constrained display of a portable device" were patent-eligible, Judge Sparks of the Western District of Texas invited this question.  In Versata Software, Inc. v. Zoho Corp., No. A-13-CA-00371-SS (W.D. Texas Oct. 26, 2015), the court stated that arguments that a patent "implements an idea using only conventional and well-known technologies" were "best submitted to the Court in conjunction with the well-established body of law addressing the novelty and non-obviousness of patents."

U.S. Patent Number 7,092,740 recites claims based on the "discovery" that "a high-density information presentation may be provided on a space-constrained display device by associating individual display indications with user-definable states."  According to the court, some claims "cover displays combining graphical and textual representations while other claims cover displaying the data in two-dimensional arrays."

The court stated the now-familiar test for Section 101 patent-eligibility under Alice Corp. v. CLS Bank Int'l.: (1) are the claims directed to a patent-ineligible concept such as an abstract idea and, (2) if so, do "additional elements of each claim represent an "inventive concept' sufficient to 'transform' the claimed abstract idea into a patent eligible application?" After stating the test, the court summarized the parties' arguments:

In this case, Zoho alleges the '740 Patent claims patent-ineligible subject matter, because it is directed at "the disembodied idea of using symbols on a display to represent external information and updating these symbols as that information changes." According to Zoho, the '740 Patent fails to disclose any technological advance and instead "recites only functional steps implemented using generic computing equipment and functionality." In response, Versata argues that at the time the '740 Patent was issued, the growth of mobile device usage led to a corresponding increase in the demand for rich information content; however, the "inevitable" space constraints on mobile devices "limit[ed] the richness of information content available to a user." The '740 Patent, then, had "the specific technical objective of allowing status updates to be displayed more efficiently within the limited display screen of a mobile phone, pager, PDA or similar mobile device."

Having summarized the parties' arguments, the court provided no more than the following analysis in finding the claims patent-eligible:

Indulging every inference in Versata's favor, the Court concludes the '740 Patent does not embody an impermissibly abstract idea. Therefore, the Court need not determine whether the claims at issue contained an inventive concept sufficient to transform the allegedly abstract idea into patent-eligible subject matter.

Thus, the court unfortunately provided little instruction to anyone looking to understand how the court distinguished this case from the myriad of cases finding claims patent-ineligible. And, compounding the  confusion, the court explained in a footnote that:

In denying Zoho's motion for summary judgment, the Court recognizes the potentially meritorious arguments Zoho proffered under the second Alice step; indeed, it may well be that the '740 Patent implements an idea using only conventional and well-known technologies. However, these arguments are best submitted to the Court in conjunction with the well-established body of law addressing the novelty and non-obviousness of patents.

This is not a new thought: patent-eligibility analysis is so murky, why not use well-established principles of prior art analysis to dispose of patent claims where ever possible?  Conversely, if claims pass muster under prior art standards, then mustn't they be patent-eligible under Section 101?

I will offer two thoughts on these notions.  First, if Judge Sparks' approach were widely adopted, regardless of your position in the debate over the law of patent-eligibility, you would have to agree that, although life would be much simpler, the Alice / Mayo test would be eviscerated.  Many might think that a good thing, but that is not the world we now live in.  It is hard to dispute that the idea of an "inventive concept" saving an otherwise unpatentable abstract idea suggests that no novel or non-obvious claim can be patent-ineligible.  Yet, if this were the case, then in every instance where patent-eligibility under Section 101 were an issue, the USPTO or the court could simply ignore the issue, or at least do what this court effectively did, and defer it to the prior art analysis.

This leads to my second thought, which is that the USPTO and the courts overwhelmingly do not follow the court here, and do not merge the patent-eligibility analysis with the prior art analysis.  If claims are unpatentable under Section 101, in the interests of judicial economy, should not the court analyze and dispose of them as early as possible?   Whether you like the law of Alice and Mayo or hate it, the reality is that they do.  As one can see from case after case under Section 101, the PTAB and the courts consider patent-eligibility without applying the law of novelty and non-obviousness, and often before the claim construction and discovery requisite to considering arguments under 35 U.S.C. §§ 102 and 103.  For further example, as anyone who has dealt with USPTO rejections under Section 101 knows, patent examiners generally dismiss arguments that claims are patent-eligible simply because they are novel and non-obvious.

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