Court ruling reversed because Alice test analysis was not thoroughly explained. REALTIME v. REDUXIO

Court ruling reversed because Alice test analysis was not thoroughly explained. REALTIME v. REDUXIO

A patent is a set of exclusive rights granted to the inventor of a new, useful and not obvious invention.  In the United States an inventor gains a patent by filing a patent application with the United States Patent and Trademark Office.  The patent application is reviewed by a patent examiner at the United States Patent and Trademark Office and if the patent application meets all the requirements, the inventor is granted a patent on the invention.  A patent grants its owner the exclusive right to make, use, sell and import the invention in the United States.

A patent is revocable.  A patent can be invalidated after it is granted, at trial or in an administrative proceeding at the United States Patent and Trademark Office.  One of the grounds on which a patent can be invalidated is the subject matter to which the invention relates.  Any new and useful process, machine, manufacture, composition of matter, or any new and useful improvement thereof is eligible for patent protection. §35 U.S.C. 101  Even if an invention falls into one of these categories, a judicially created exception can still make the invention ineligible for patent protection.  Laws of nature, physical phenomena, and abstract ideas are examples of judicially created exceptions to patent eligible subject matter.

The abstract idea exception embodies the longstanding rule that an idea of itself is not patentable.  This exception prevents patenting a result instead of the process or machinery used to accomplish the result.  Courts employ a two step test to determine whether a patent claim directed to an abstract idea is patent eligible.   In step one, a court considers the claim in its entirety to ascertain whether the claim is directed to an abstract idea.  If the claim is directed to an abstract idea the court proceeds to step two. In step two, a  court looks for an inventive concept sufficient to transform the nature of the claim into a patent eligible application.  This test for patent eligibility is generally referred to as the Alice test after the court case that introduced the test.

Applying the Alice test is not always easy, sometimes district courts struggle with the question of patent eligible subject matter.  However, one of the many obligations of a trial court is to explain its decisions so that the parties and appellate courts can understand a trial court’s conclusions.

REALTIME DATA LLC v. REDUXIO SYSTEMS, INC., 19-2198 (C.A.F.C. 2020) is an example of a case where the district court didn’t explain its reasoning well enough with respect to patent eligible subject matter.

Plaintiff in this case owns five different patents related to methods and systems for digital data compression. The patents relate to methods of speeding up the compression of data and the transmission of that compressed data over a computer network.  Plaintiff has enforced its rights related to these patents several different times and in the past district courts have found the patents directly to more than merely an abstract idea.

Plaintiff sued Defendant for patent infringement in the District Court of Delaware in 2017.  In 2019 Defendant moved for dismissal on the grounds that the patents were patent ineligible subject matter.  After oral arguments on the motion to dismiss were made the district court announced it was “prepared to rule on the pending motions” and explained it would “not be issuing written opinions.” The district court delivered an oral analysis of patent eligibility and concluded that the patents invalid because they were directed to an abstract idea.  Plaintiff appealed this decision to the Court of Appeals for the Federal Circuit.

The Federal Circuit held that the district court’s ruling was too cursory to allow for meaningful appellate review.  The Federal Circuit vacated the district court’s decision and remanded for the district court to give additional consideration to the eligibility question and elaborate on its reasoning.

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