Business and Legal Insights

Two recent decisions by the Court of Appeals for the Federal Circuit provide some helpful insights into the application of the two-step framework for assessing patent-eligible subject matter under 35 USC 101 (“Section 101”) as set forth by the Supreme Court in Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) (“Alice”).  We discussed the Court’s July opinion in Rapid Litigation Management Ltd. v. Cellzdirect, Inc. (“Cellzdirect”) in a previous blog post.  Here, we look at the Federal Circuit’s recent application of the Alice test in Electric Power Group, LLC v. Alstom S.A. (“Alstom”) to determine whether claims to systems and methods for real-time performance monitoring of an electric power grid were directed to patent-eligible subject matter.   Unlike its previous decision in Cellzdirect, the Court did not find patent-eligible subject matter.

In Alstom, the Federal Circuit considered whether the claims of several patents were directed to patent-eligible subject matter.  In general, the claims involved a method for detecting events on an electric power grid in real-time and included the following steps: 1) receiving data in real-time from various points in the grid; 2) receiving other data from a non-grid sources; 3) analyzing and diagnosing the data to detect events, grid stress or grid instability; 4) displaying the results; and 5) deriving a composite indicator of power grid vulnerability.  The district court had previously applied the Alice test and concluded that the claims were invalid because they were directed to the abstract idea of monitoring and analyzing data from disparate sources, and lacked an inventive concept in the application of that abstract idea.

The Federal Circuit agreed.  First, the Court determined that the focus of the patent claims was a patent-ineligible concept (collecting and analyzing information and displaying certain results), and thus required a two-stage analysis under Alice.  Under the second prong of the test, the Court concluded that the gathering and analysis of analyzing information from an electric grid is an essentially mental process within the abstract-idea category, and that merely presenting the results of such an abstract process without more is only merely an ancillary part of such collection and analysis, and is therefore, also an abstract concept.  The Court determined that limiting the gathering and analysis of information to information from an electric grid was insufficient to transform the claimed methods into patent-eligible applications of the abstract idea at their core.  The Court also determined that the claimed methods did not require an inventive set of components or methods to generate the data, and utilized conventional computers as tools (unlike the computer-functionality improvements the Federal Circuit had identified previously in Enfish).  Accordingly, the Court concluded that the claims did not include any particular assertedly-inventive technology and did not satisfy the second prong of the test from Alice test.

The Court added that the district court had recognized an “important common-sense distinction” between ends sought and particular means of achieving those ends.  The Court quoted the district court’s comments regarding such a distinction: “rather than claiming ‘some specific way of enabling a computer to monitor data from multiple sources across an electric power grid’…they ‘purport to monopolize every potential solution to the problem’….”   The Federal Circuit affirmed the judgment of the district court.

The Federal Circuit’s decision in Alstom illustrates that claiming an invention too broadly or too abstractly can be risky.  Accordingly, practitioners should avoid relying too heavily on result-focused and functional claim language which adds little or no inventive “meat” to the abstract bones of the claims.  This guidance is particularly relevant to patent applications for methods or processes which rely on computers for their implementation.

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