RCT v. Microsoft – Fed. Cir. Attempts to Shift Focus Away from MOT Test


Clement S. RobertsThe following post comes from Clement S. Roberts (Partner at Durie Tangri and Practice Center Contributor).

On December 8 the Federal Circuit issued its first post-Bilski opinion on patentable subject matter when it decided Research Corporation Technologies Inc. v. Microsoft .

In RCT the court was asked whether RCT’s patents on digital image halftoning were directed to patentable subject matter.  Digital image halftoning is a technique for displaying tones (either shades of grey or colors) that lie between those that a monitor or printer can natively produce by creating a matrix of dots that blur together when viewed from a distance.  The patent was directed to a method for creating a halftoned image using a mask (essentially a series of prearranged dots of known values which can be compared to the pixels in a given image) and, in particular, for creating an improved mask through the use of a particular kind of mathematical operation.  For example, claim 1 of one of the two relevant patents called for:

A method for the halftoning of gray scale images by utilizing a pixel-by-pixel comparison of the image against a blue noise mask in which the blue notice mask is comprised of a random non-deterministic, non-white noise single valued function which is designed to produce visually pleasing dot profiles when thresholded at any level of said gray scale images.

The court found that this claim (along with the other challenged claims) passed muster under 101.  The court began by noting that, in Bilski, the Supreme Court had “reemphasized the significance of [the] broad statutory categories” of patentable subject matter and “has articulated only three exceptions … ‘laws of nature, physical phenomena, and abstract ideas.”

The court concluded that the challenged claims were directed to a process (i.e. for halftone imaging) and did not fall within any of these three exceptions. The only exception it really considered, however, was the exception for abstraction.  Here the court held that because the “Supreme Court did not presume to provide a rigid formula or definition for abstractness” it would not do so either “beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act.”

The Court went on to note that it “perceives nothing abstract in the subject matter of the processes claimed in the [asserted] patents” and that “the invention presents functional and palpable applications in the field of computer technology.”  It supported its conclusion that the claims were not abstract by pointing to the fact that “some claims … require a ‘high contrast film,’ ‘a film printer,’ ‘a memory,’ and ‘printer and display devices.’”  And, the court noted “that inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.”

In order to understand RCT it is important to put it in context.  In particular, RCT was authored by C.J. Rader and Judge Newman – both of whom strongly dissented from the en banc decision in In re Bilski establishing the machine or transformation test.  Judge Newman’s dissent in Bilski argued that the PTO should have allowed Bilski’s patent (on a method of hedging risk), while Judge Rader’s dissent argued that there was nothing wrong with patenting business methods or natural phenomena so long as the claims “achieve a useful, tangible and concrete result.”

Thus, one way to understand RCT is as an attempt by Rader and Newman to shift the focus of a section 101 analysis away from the machine or transformation test adopted by the en banc decision in Bilski and endorsed as a “useful clue” by the Supreme Court.  Rader and Newman never use that test in RCT and claim that Bilski stands for the proposition that the test is nonstatutory.  They also take the position that the proper test is whether or not the claim is “manifestly abstract” – a standard to which they make reference multiple times.  See e.g. page 14 and 16.

RCT justifies the move away from machine or transformation and to this more forgiving standard by pointing to the fact that section 101 is “merely a gating analysis” and by arguing that poor patents can be screened out using 112.  Id. at 14 (noting that abstractness must be judged in the context of a statutory scheme “that directs primary attention on the patentability criteria of the rest of the patent act”) and at 16 (“In section 112, the Patent Act provides powerful tools to weed out claims that may present a vague or indefinite disclosure of the invention.”).

While it is clearly true that 112 can be used to get rid of vague or indefinite patents, it is somewhat hard to see how that fact should make a difference to what section 101 does and does not require.  It is true, of course, that the “abstraction” exception to patentable subject matter is non-statutory.  Thus, it may be that Rader and Newman see it a matter of judge-made-public-policy in the first place and hence something that can properly be narrowed based on public policy arguments grounded in other statutory provisions.  On the other hand, given the extent to which that public policy has been endorsed by the Supreme Court, it is somewhat awkward for the Federal Circuit to try to narrow the policy by arguing that the public is better served by relying on a different statutory section to address the problem of overly abstract patents.

The RCT opinion also argues that the plaintiff’s claims are not abstract because other claims in the same patents refer to devices like high contrast film, a film printer and a computer memory.  This argument is also difficult to support.  First, it is really a version of the machine or transformation test insofar as it amounts to the argument that a claim should be held valid so long as some other claim in the patent is tied to some kind of machine.  Second, this analysis looks at all of the claims as a whole, rather than asking whether a particular claim does or does not claim an abstraction.  That is a fairly dramatic departure from the prior case law and it seems unlikely that it will get much traction with other members of the Federal Circuit.

Indeed, shortly after RCT was handed down, another panel (which also included Rader) decided Prometheus Lab v. Mayo Collaborative.  An excellent discussion of that case is available elsewhere on this blog so I won’t repeat it – but it is interesting to note that the panel in Prometheus both signals that the machine or transformation test is one way to ascertain the patentability of a given invention and upholds the patentability of the claim before it using that test.

Strictly speaking, of course, the two cases aren’t in conflict with one another insofar as RCT provides an alternative to the machine or transformation test in line with the Supreme Court’s guidance in Bilski that the machine or transformation test was not the exclusive test of patentability under 101.  But it is hard to read both opinions back to back and not get the sense that RCT is an attempt to use the Supreme Court’s non-specific expression of support for alternative tests to undermine the machine or transformation test by providing a looser (and easier to meet) alternative of “manifest abstraction.”  Seen from this perspective, Rader does not need to undo the machine or transformation test, he just needs to provide a back-up, easier-to-meet standard, when the machine or transformation test would result in ineligibility.  Whether he will succeed in doing that will (in the short run) depend on how the lower courts interpret RCT and (in the long run) on how other panels rule on those lower court decisions.

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One Response to “RCT v. Microsoft – Fed. Cir. Attempts to Shift Focus Away from MOT Test”

  1. patent_litigation says:

    In the wake of the Bilski patent litigation and the quite-vague opinion issued by the Supreme Court in that case, it’s helpful to obtain a little more clarification from the courts regarding the “abstract idea” exception to patent-eligibility. However, I anticipate that this issue will continue to be litigated, and (hopefully) further clarified, for years to come.

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