The application of the Supreme Court’s decision in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347. (2014) has made it almost impossible to patent software. The United States Patent and Trademark Office is increasingly rejecting patent applications for software under the Alice test on the grounds that the software is an abstract idea, and the district courts are invalidating software patents on the same grounds. Last week, however, in McRo, Inc. v. Bandai Namco Games America Inc. (2016 U.S. App. LEXIS 16703), the Federal Circuit Court of Appeals reversed a district court’s ruling of invalidity of a software patent.
McRo owned two software patents that covered methods of automating the 3-D animation of lip synchronization to audible sounds made by the characters in animated films. The prior art animation methods required the animator to draw the face of the character at specific points in time and then use a computer to fill in the face between the points in time.
McRo sued a number of video game developers and publishers, including Electronic Arts, Disney, Sony, and Lucasfilems for patent infringement in the Central District of California. After claim construction, the defendants filed a motion for judgment on the pleadings. The defendants argued that McRo’s patents were invalid under 35 U.S.C. §101 as directed to patent ineligible subject matter. The district court granted the defendants’ motion and held the claims invalid.
The district court appeared to apply the two-part test set forth in Alice, supra. First, the court asked whether the claims were directed to an abstract idea. The court concluded that they were not. Instead of stopping at that point, however, as Alice requires, the district court continued its analysis, asking whether the claims were so broad as to preempt the field. The court concluded that the claims were preemptively broad, and entered judgment of invalidity against McRo.
McRo appealed to the Federal Circuit. On appeal, McRo argued that the claims were not directed to an abstract idea, but instead were directed to a technological process, the automation of lip synchronization of a 3-D animated character. McRo contended that the claims did not preempt the field because there were other methods of automated lip synchronization in animation.
The defendants argued that the claims were invalid because they were directed to mathematical algorithms, a type of abstract idea. In addition, the defendants argued that McRo’s claims preempted the field because they covered the use of any set of rules to animate lip synchronization.
The Federal Circuit reversed the district court’s ruling. The court reiterated the two-part Alice test for determining whether claims are directed to patent ineligible subject matter. Under 35 U.S.C. section 101, “any new and useful process, machine, manufacture, or composition of matter” is patentable. The courts have established three exceptions to patentable subject matter: laws of nature, natural phenomena, and abstract ideas.
Under the Alice test for patentable subject matter, the first step is to decide whether the claims are directed to one of the exceptions, such as abstract ideas. If the answer is no, the inquiry ends and the subject matter is patent eligible. If the answer is yes, the second step is to decide whether the claims contain an inventive concept, an element or combination of elements that take the claim into patent eligible subject matter. The courts have interpretted the second step to mean that the claims cannot preempt the field; they cannot monopolize “the basic tools of scientific and technological work.” Alice, supra, 134 S. Ct. at 2354.
The Federal Circuit emphasized that the district courts should be careful not to oversimplify the claims of a patent. The court found that McRo’s claims covered the use of certain types of rules, but not all rules, that could be used to automate the animation of lip synchronization. There were other ways for animators to automate lip synchronization, and McRo’s claims did not preempt all types of rules. Thus, McRo’s claims were not directed to patent ineligible subject matter, and, therefore, there no further inquiry was required under Alice. Because the district court had erred in applying the second step of the Alice test, the Federal Circuit reversed, holding the claims valid.