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”).  In its July opinion in Rapid Litigation Management Ltd. v. Cellzdirect, Inc. (“Cellzdirect”), the Federal Circuit applied the Alice test to assess whether claims for a method of producing a collection of a particular type of human cells for use in medical research were directed to patent-eligible subject matter within the scope of Section 101. In its August opinion, the Federal Circuit again applied 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.   The Federal Circuit’s opinion in Cellzdirect is discussed below, and its decision in Alstom will be discussed in a future blog post.

Cellzdirect involved a challenge under Section 101 to the validity of a competitor’s patent for a method of producing a preparation of human liver cells (hepatocytes) for use in a wide variety of research applications.  The patent’s claims set forth a three-step process:  1) separating viable cells from non-viable cells in a collection of previously frozen and thawed cells; 2) collecting the viable cells; and 3) refreezing the collected viable cells.  The patentee had discovered that a substantially larger percentage of hepatocytes remain viable after freezing and thawing if the batch of hepatocytes is made up of cells which had previously survived an earlier freeze/thaw cycle when compared to hepatocytes which have undergone a single freeze/thaw cycle.  As a result, a thawed preparation of twice-frozen cells includes enough viable cells to be used without first screening out the non-viable cells.

The Court applied the two-part Alice test to determine whether the claimed subject matter was a “useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” within the scope of Section 101, or alternatively, whether the claims were directed to a patent-ineligible concept (i.e., a law of nature, a natural phenomenon, or an abstract idea).  The lower court had concluded that the patent’s claims were invalid because they are directed to a patent-ineligible law of nature, i.e., that some hepatocytes are capable of surviving multiple freeze/thaw cycles.  The Federal Circuit disagreed.  Under step one of the Alice test, the Court determined that the challenged claims were not directed to a patent-ineligible concept, but instead were directed to a new and useful method of preserving hepatocyte cells which was better than the previously known process of preserving hepatocytes by freezing the cells only once.  The Court explained that though the process was described in terms of the natural ability of some hepatocytes to survive multiple freeze/thaw cycles and such a patent-ineligible concept may underlay the challenged claims, such a relationship did not cause the claims to be directed to that natural ability.

Despite finding that the claims passed the first step of the Alice test and application of the second step of the test was unnecessary, the Court further determined that the claimed subject matter also passes the second part of the test.  Under the second prong, the Court determined that even if the patent’s claims were directed to a patent-ineligible concept, the improvement to an existing technological process transformed the process into an “inventive application” of the patent-ineligible process.  Accordingly, the Court vacated the district court’s finding of invalidity, and remanded the case for further proceedings consistent with its opinion.

For practitioners, the Federal Circuit’s decision in Cellzdirect illustrates the importance of identifying and claiming at least one particular aspect of an invention which comprises an inventive concept in its application.  This guidance is especially relevant to patent applications for methods or processes which heavily depend upon so-called “laws of nature."