Reversing a district court holding, a three-judge panel of the U.S. Court of Appeals for the Federal Circuit ruled that two patents directed to a method for organizing data in a computer database did not claim an unpatentable abstract idea under 35 U.S.C. § 101.

The case, Enfish, LLC v. Microsoft Corporation et al., represents a victory for owners of software patents and potentially broadens the scope of patentable inventions under § 101. Significantly, Enfish is the first Federal Circuit case since the U.S. Supreme Court's decision in Alice v. CLS Bank to hold that patent claims directed solely to managing and organizing data are not abstract under § 101. Enfish could impact the current trend of patent examiners, district courts, and the Patent Trial and Appeal Board holding similar claims invalid under § 101.

The patent claims at issue relate to a "self-referential" database. In traditional "relational" databases, information is stored in multiple tables that are linked together with identifiers stored in each table. In the claimed "self-referential" database, however, all of the information is stored in one table and the columns of the table can be defined by rows in the same table. The district court, in finding the claims invalid for want of patentable subject matter, held that the patents claimed the abstract idea of "organizing information using tabular formats."

The Federal Circuit disagreed, and concluded that the district court's analysis centered around a description of the invention that was "untethered from the language of the claims." The Federal Circuit noted that analyzing claims in this way runs the risk that almost any patent could be found invalid under Alice.

Applying the two-step test described by the Supreme Court in Mayo v. Prometheus and Alice, the Federal Circuit concluded that the claims at issue were not directed to an "abstract idea" and therefore are not invalid under § 101. Under the two-step test, a court must first determine whether a patent claim is directed to an abstract idea and, if so, the court must then determine whether the claim includes a sufficient "inventive concept" to be patent eligible. Because the claims at issue are not directed to an abstract idea, the claims satisfy § 101.

The Federal Circuit's explanation of why the claims did not recite an abstract idea provides an important new insight into the patentable subject matter analysis. Specifically, the Federal Circuit explicitly stated that patent claims directed to improvements in software with no improvement to hardware are not inherently abstract. The Federal Circuit also stated that a relevant consideration under the first step of the Mayo/Alice test is whether the claims are directed to "an improvement to computer functionality" as opposed to being directed to an abstract idea where computers are invoked "merely as a tool." The Federal Circuit did not precisely define "an improvement to computer functionality," but did contrast such improvements to "fundamental economic and conventional business practices." The Federal Circuit concluded that the patent claims are not directed to an abstract idea, but rather "to a specific improvement to the way computers operate, embodied in the self-referential table."

Ballard Spahr's Intellectual Property Group comprises trial lawyers and counselors who are on the cutting edge of patent, trademark, unfair competition, copyright, trade secret, Internet, licensing, and trade dress matters. We bring and defend IP cases in courts throughout the country, and before the PTAB and TTAB. We have a deep bench of lawyers with advanced technical degrees who identify and protect our clients' global intellectual property interests, and offer strategic prosecution and due diligence guidance relating to strategic product development, mergers and acquisitions and licensing, and portfolio restructuring.

Copyright © 2016 by Ballard Spahr LLP.
(No claim to original U.S. government material.)

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.

This alert is a periodic publication of Ballard Spahr LLP and is intended to notify recipients of new developments in the law. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.