Proving Patent Eligibility Using Preemption: How the Federal Circuit's Decisions in McRO v. Bandai Expands the Boundaries for Patent?Eligible Inventions

• Author: Richard M. Marsh Jr. - Braden M. Katterheinrich
• Position: Richard M. Marsh Jr. is a partner at Faegre Baker Daniels in Denver, Colorado. He specializes in strategic patent analysis and post-grant patent proceedings. He can be reached at richard.marsh@faegrebd. com. Braden M. Katterheinrich is an associate at Faegre Baker Daniels in Minneapolis, Minnesota. As former in-house counsel, Braden specializes...
• Pages: 32-36

Published in Landslide® magazine, Volume 9, Number 5 , a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2017 by the American Bar Association. Reproduced with permission. All rights reserved. This

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Proving Patent Eligibility

Using Preemption

How the Federal Circuit’s Decision in

McRO v. Bandai

Expands the Boundaries for Patent-Eligible Inventions

By RichardM. Marsh Jr. & BradenM. Katterheinrich

The Supreme Court’s ruling in Alice v. CLS Bank1 cemented a two-step test for determining patent eligibility under 35

U.S.C. §101 in a decision that emphasized preemption as the primary policy driving this doctrine. At the same time,

the Supreme Court’s decision left open many questions for the Federal Circuit to resolve, including the precise role of

preemption in the §101 analysis. Despite the Supreme Court’s emphasis on preemption, many Federal Circuit decisions apply-

ing Alice did not explicitly discuss §101 in terms of preemption, and those that did address preemption interpreted this issue

as one that can only indicate patent ineligibility. This changed with the Federal Circuit’s decision in McRO v. Bandai,2 which

explicitly and substantively analyzed the role of preemption in patent eligibility determinations under §101. The Federal Cir-

cuit’s ruling in McRO, which upheld the claims over a §101 challenge, articulates an approach to preemption that appears to

create more space for patent-eligible inventions. In fact, subsequent cases from the Federal Circuit appear to follow McRO’s

legal framework for preemption, suggesting that McRO may have a signicant and lasting effect and that preemption will

remain a key factor in future cases of patent eligibility.

Alice, §101, and Preemption

The Supreme Court has interpreted 35 U.S.C. §101 as con-

taining implicit exceptions to patent eligibility, holding

that laws of nature, natural phenomenon, and abstract ideas

are simply not eligible for patent protection. The Supreme

Court stated that these exceptions are “basic tools of scien-

tic and technological work” and that “[m]onopolization

of those tools through the grant of a patent might tend to

impede innovation more than it would tend to promote it,

thereby thwarting the primary object of the patent laws.”3

The Supreme Court also explained that it has “described the

concern that drives this exclusionary principle as one of pre-

emption.”4 At the same time, the Supreme Court recognized

the need to retain the positive benets that a preemption-

based patent system provides to promote progress, because

“all inventions ... embody, use, reect, rest upon, or apply

laws of nature, natural phenomena, or abstract idea.”5

In an attempt to strike the correct balance between

improper preemption and progress, the Supreme Court iden-

tied a two-step analysis that rst asks whether the claims at

issue are “directed to” one of the patent-ineligible concepts,

such as an abstract idea. If so, the second step asks whether

the patent claims “integrate” those concepts “into something

more” that would “pose no comparable risk of pre-emption,

and therefore remain eligible for the monopoly granted under

our patent laws.”6

Turning to the facts of the case, the Supreme Court held

that the claims at issue were “directed to” the “abstract idea

of intermediated settlement.”7 Citing a study from 1896, the

Supreme Court concluded that the concept of intermediated

settlement is “a fundamental economic practice long preva-

lent in our system of commerce” and that the claims at issue

were directed to that abstract idea.8 Turning to step two of

the analysis, the Supreme Court held that those patent claims

“fail to transform that abstract idea into a patent-eligible

invention” because they “merely require generic computer

implementation.”9 In other words, according to the Supreme

Court, reciting “some unspecied, generic computer” is “not

enough to transform an abstract idea into a patent-eligible

invention.”10 Accordingly, the Supreme Court held that those

claims did not pass §101.

Post-Alice, Pre-McRO

Despite the Supreme Court’s articulation of a specic test,

Alice left several important issues unaddressed. For example,

the Supreme Court expressly declined to dene what con-

stitutes an “abstract idea.”11 In addition, the Supreme Court

provided little guidance about how to determine when claims

are “directed to” an abstract idea or whether the claims

include “something more” that would transform the discovery

into a patent-eligible invention.12