“Curiouser and Curiouser!”: Federal Circuit Affirms PTAB Patent-Ineligibility Decision Under Alice

On March 11, 2021, in an Opinion by Judge Reyna, along with Chief Judge Prost and Judge Lourie, the Federal Circuit affirmed the Patent Trial and Appeal Board (PTAB) decision that the rejected claims of a patent application owned by The Board of Trustees of Leland Stanford University (Stanford), “are drawn to abstract mathematical calculations and statistical modeling, and similar subject matter,” and thus are patent-ineligible subject matter under 35 U.S.C. § 101.1 

The Examiner’s Rejections and PTAB Affirmation

In April 2012, Stanford filed Patent Application No. 13/445,925 (‘925 Application), “directed to methods and computing systems for determining haplotype phase . . . a process for determining the parent from whom alleles—i.e., versions of a gene—are inherited.”2   The specification of the ‘925 Application discloses that “improved haplotype phasing techniques ‘promise[] to revolutionize personalized health care by tailoring risk modification, medications, and health surveillance to patients’ individual genetic backgrounds.’”3   The specification further discloses that “in the prior art, methods of determining haplotype phase based on inheritance state yielded an incomplete number of the alleles’ haplotypes.”4

The ‘925 Application claims “involve using two types of information, namely genotype data and pedigree data, to determine alleles’ inheritance state using a method published in the prior art, namely Roach et al., Analysis of Genetic Inheritance in a Family Quartet by Whole Genome Sequencing, 328 SCIENCE 636 (2010).”5  The examiner rejected the claims as “covering patent ineligible abstract mathematical algorithms and mental processes.”6  According to Stanford, “[t]he increase in haplotype phase predictions is made possible by factoring additional data into the analysis,” including “linkage disequilibrium data”7 and “transition probability data.”   According to the specification of the ‘925 Application, “[t]hese two types of additional data . . . enable haplotype phase to be inferred in regions where inheritance state is uninformative.”Stanford appealed the examiner’s final rejection of the claims of the ‘925 Application, which were affirmed by the PTAB in July 2019.9 Stanford subsequently appealed the PTAB’s decision to the Federal Circuit.

Alice Two-Step Analysis and Federal Circuit Affirmation

“The Supreme Court has articulated a two-step analysis to determine patent eligibility under 35 U.S.C. § 101.”10 The Court noted that “[i]n the first step [of Alice], we examine whether a claim is directed to patent ineligible subject matter, such as an abstract idea,”11 and “[i]f so, we turn to the second step and examine whether the claims contain an inventive concept sufficient to transform the abstract idea into patent eligible subject matter.”12 In analyzing the examiner’s rejections, the PTAB applied the two-step Alice framework.13 Applying “step one of the Alice inquiry” the PTAB determined that “the eight steps in claim 1 are directed to either the ‘mental steps of receiving, storing, or providing information’ or ‘mathematical concepts,’” and “recite[] steps for receiving and analyzing information, which humans could process in their minds, or by mathematical algorithms, which are mental processes within the abstract-idea category.”14   

Distinguishing Enfish, LLC v. Microsoft Corp.15  and  McRO, Inc. v. Bandai Namco Games America Inc.,16 the PTAB determined the claims of the ‘925 Application “do not improve computer technology but rather use off-the-shelf computing equipment to perform an improved mathematical analysis.”17 Applying “step two of the Alice inquiry,” the PTAB determined “the claims did not include additional limitations that, when taken individually or as a whole, provide an inventive concept that transforms the abstract idea into patent eligible subject matter,” finding “the steps of receiving data, performing calculations using that data, storing the results, and providing the results upon request using a computer did not go beyond the well-known, routine, and conventional.”18 The PTAB applied the same analysis to the other rejected claims.19 

The PTAB “separately addressed claims 9 and 19, which recite certain steps culminating in a final step of  ‘providing the drug for treatment,’” determining “that claims 9 and 19 are drawn to patent ineligible subject matter because they ‘are not directed to a specific method of treatment, do not identify specific patients, do not recite a specific compound, do not prescribe particular doses, and do not identify the resulting outcome.’”20 The PTAB distinguished Vanda Pharmaceuticals. Inc. v. West-Ward Pharmaceuticals International Ltd.21 “because the claims in Vanda were directed to a ‘specific method of treatment for specific patients using a specific compound at specific doses to achieve a specific outcome.’”22 

After distilling claim 1 into a three-step process of receiving data, processing the data, and storing or outputting the data, the Federal Circuit affirmed that the PTAB correctly found the claims patent-ineligible because “Claim 1 recites no concrete application for the haplotype phase beyond storing it and providing it upon request.”23 Stanford argued “claim 1 is not directed to an abstract idea because the specific application of the steps is novel and enables scientists to ascertain more haplotype information than was previously possible.”24  The Court, however, was “not persuaded that claim 1 is not directed to an abstract mathematical calculation” even if the Court were to accept the claimed process results in improved data or the proffered advancement in genetic analysis.25  

Having found no legal error in the PTAB's determinations regarding step one of the Alice inquiry, “[b]ecause claim 1 is directed to a patent ineligible mathematical algorithm” the Court turned to Alice step two.26  Again, the Court found no legal error in the PTAB's determinations regarding step two of the Alice inquiry, because “claim 1 recites no steps that practically apply the claimed mathematical algorithm;” instead, claim 1 ends at storing the haplotype phase and “providing’ it ‘in response to a request,’” and therefore, “is not transformed at step two into patent eligible subject matter.”27 The Court then doubled down and confirmed patent ineligibility because “claim 1 neither requires, nor results in, a specialized computer or a computer with a specialized memory or processor.  Indeed, it is hard to imagine a patent claim that recites hardware limitations in more generic terms than the terms employed by claim 1.”28 Stanford argued that the PTAB failed to assess the elements of claim 1 as an ordered combination of elements.29  

The Court, however, determined that “[t]he alleged innovation accomplished in claim 1 is in the mathematical analysis itself, namely, in the receipt of data, executing mathematical calculations, and storing the resulting data. The alleged innovation therefore subsists in ‘the basic tools of scientific and technological work,’” and thus does not move the claimed subject matter from the abstract to the practical.30 The remaining claims—including those directed towards drug treatment—were found by the Court to “contain no limitations that, when considered individually or as an ordered combination, transform them into patent eligible applications.”31  

Takeaways 

Although this decision is not surprising given the data processing/bioinformatics context, it is just another curious example in a string of cases since Alice that have foreclosed protection entirely for certain important inventions in the diagnostics, biopharmaceutical, and life sciences industries. Since Alice, patent eligibility has become a serious concern for IP stakeholders attempting to build a strong patent portfolio directed to technology that includes software-related or data processing features, such as bioinformatic technology. Because of the unpredictability and risk of an invention being deemed patent ineligible, the mere association of an invention to software or data processing has reduced incentives to invest and innovate in this technology space, and negatively impacted the overall competitiveness of American industries. 

Consequently, IP stakeholders should proactively address potential patent ineligibility issues through well thought out and comprehensive patent application drafting that provides adequate detail and disclosures that can potential overcome patent ineligibility issues. For example, avoid general data processing that, when broadly read, covers analysis that can be simply done in the human mind. Instead, describe the complexity of the data processing in sufficient detail making it easily recognizable that the processing could not be practically performed in the human mind. Recite additional limitations that capture and utilize the abstract idea in a meaningful manner (e.g., controls a system or downstream process, gates a reflex diagnostic test, analytical process, or treatment, controls a specific method of treatment or treatment for a specific population of patients or treatment with a specific compound or results in prescribing particular doses of treatment in accordance with a determined protocol, and the like). Lastly, avoid reciting mathematical concepts or formula in claims, if possible. Instead, break down any mathematical concepts or formula to the detailed steps of what is happening within the logic or data processing such that the claim limitations are based on mathematical concepts as opposed to simply reciting a mathematical relationship, formula, or calculation. 

We anticipate Stanford will petition the U.S. Supreme Court to hear their case. As discussed in our March 12, 2021 post related to patent-eligible subject matter, a petition for a writ of certiorari raising the question of patent eligibility is currently before the Supreme Court in Ariosa Diagnostics, Inc. v. Illumina, Inc. Will this be the year the Supreme Court grants a writ of certiorari to address the patent eligibility question of Alice/Mayo? Please, contact the authors with any questions, and stay tuned for updates regarding this important topic.
 

Footnotes

1 In re Bd. of Trs. of the Leland Stanford Junior Univ., No. 2020-1012, 2021 U.S. App. LEXIS 7148, __, F.3d __, at *1 (Fed. Cir. Mar. 11, 2021)
2 Id. at *2.
3 Id.
4 Id. at *3.
5 Id. at *2-3.
6 Id. at *4.
7 Id.
8 Id.
9 See id. at *1-5.  Interestingly, according to Public PAIR, https://portal.uspto.gov/pair/PublicPair (last accessed Mar. 17, 2021), the following events transpired during prosecution of the ‘925 Application: a Notice of Allowance was mailed on May 4, 2016; an Issue Notification was mailed on May 24, 2016; the ‘925 Application issued as U.S. Patent No. 9,443,056 on September 13, 2016; and the next day, the patent was withdrawn from issue by Technology Center 1600 for further action at the initiative of the USPTO pursuant to 37 C.F.R. 1.313(b).
10 Id. at *10 (citing Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208 (2014)).
11 Id.
12 Id
13 Id. at *6.
14 Id. at *6-7.
15 822 F.3d 1327 (Fed. Cir. 2016).
16 837 F.3d 1299 (Fed. Cir. 2016).
17 In re Bd. of Trs. of the Leland Stanford Junior Univ., 2021 U.S. App. LEXIS 7148, __ F.3d __, at *7.
18 Id. at *7-8.
19 Id. at *8.
20 Id. at *8-9.
21 887 F.3d 1117 (Fed. Cir. 2018).
22 In re Bd. of Trs. of the Leland Stanford Junior Univ., __ F.3d __, at *9-10.
23 Id. at *12.
24 Id. at *12-13.
25 Id. at *13.
26 Id. at *13-14.
27 Id. at *14.
28 Id. at *14.
29 Id. at *15.
30 Id. at *15-16.
31 Id. at *16-17.
32 Petition for Writ of Certiorari, Ariosa Diagnostics, Inc. v. Illumina, Inc., No. 20-892 (U.S. Dec. 30, 2020), https://www.supremecourt.gov/DocketPDF/20/20-892/165010/20201230142207902_Ariosa%20Diagnostics%20Inc.%20v.%20Illumina%20Inc.%20--%20cert.%20petition.pdf.

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