Third-Ever Post-Grant Review Decision Invalidates Patent Under § 101

Last week the Patent Trial and Appeal Board (PTAB) issued its third-ever Post-Grant Review (PGR) decision (PGR2015-00009), following the first two decisions issued earlier this summer which held that the challenged claims of two livestock patents were unpatentable subject matter under 35 U.S.C. § 101.

In these two previous decisions, the PTAB determined the claims were unpatentable under § 101 using the two-step framework set forth by the Supreme Court in Alice and Mayo. First, a determination is made as to whether the claims at issue are directed toward a patent-ineligible concept. If so, the PTAB then considers additional elements of the claim, individually and as an ordered combination, to determine whether they transform the nature of the claim into a patent-eligible application of the abstract idea, or whether the elements of the claim amount to “significantly more” than the abstract idea itself.

In this third-ever PGR decision, the PTAB, relying on the U.S. Supreme Court’s Alice decision, ruled that a patent for tracking container storage and shipping is invalid under § 101 because the patent describes a long-standing industry practice. Applying the first step of the two-step framework set forth in Alice, the PTAB determined that the claims of U.S. 8,756,166, the patent at issue, were directed to a patent-ineligible concept because they fall into the computer-as-a-tool category articulated by the Federal Circuit in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335-36 (Fed. Cir. 2015). In particular, the PTAB explained that the steps of the ’166 patent “use computers as a tool to facilitate the receipt, storage, and transmission of information ancillary to operating a bailment scheme—an economic task, or method of conducting business.” The PTAB then addressed the second step set forth in Alice by identifying three concepts of the claims of the ’166 patent that amount to more than the abstract idea itself, which is a bailment scheme in this case.1 However, these concepts did not amount to “significantly more” than the abstract idea (emphasis added). Instead, these three concepts, the PTAB reasoned, amounted to “little more than the computerized application of a bailment scheme using storage containers.”

This is the third PGR decision, out of three, that invalidates a patent claim under § 101. However, due to the small number of PGR petitions filed to-date, it is too soon to tell whether these first three decisions are indicators of future outcomes.

1. The first concept, the PTAB explained, is that “each of the steps is performed ‘by a computing system’ and that several steps involve communication of data between that computing system and a remote device.” The second concept the PTAB identified is the nature of the data passed between the computers to determine if the data provide an inventive concept. Finally, the third concept the PTAB identified as amounting to more than an abstract idea is the step of facilitating delivery of more boxes than requested.


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