January 20, 2017
On January 18, 2017, in Trading Technologies International, Inc. v. CQG, Inc. et al., the Federal Circuit affirmed the subject matter eligibility under 35 U.S.C. § 101 of two patents directed to a graphical user interface invention. The decision was nonprecendential. The case involved U.S. Patent No. 6,7772,132 (’132) and U.S. Patent No. 6,766,304 (’304), both titled “Click Based Trading with Intuitive Grid Display of Market Depth.” Claim 1 of the ’304 patent is reproduced below:
1. A method for displaying market information relating to and facilitating trading of a commodity being traded in an electronic exchange having an inside market with a highest bid price and a lowest ask price on a graphical user interface, the method comprising:
dynamically displaying a first indicator in one of a plurality of locations in a bid display region, each location in the bid display region corresponding to a price level along a common static price axis, the first indicator representing quantity associated with at least one order to buy the commodity at the highest bid price currently available in the market;
dynamically displaying a second indicator in one of a plurality of locations in an ask display region, each location in the ask display region corresponding to a price level along the common static price axis, the second indicator representing quantity associated with at least one order to sell the commodity at the lowest ask price currently available in the market;
displaying the bid and ask display regions in relation to fixed price levels positioned along the common static price axis such that when the inside market changes, the price levels along the common static price axis do not move and at least one of the first and second indicators moves in the bid or ask display regions relative to the common static price axis;
displaying an order entry region comprising a plurality of locations for receiving commands to send trade orders, each location corresponding to a price level along the common static price axis; and
in response to a selection of a particular location of the order entry region by a single action of a user input device, setting a plurality of parameters for a trade order relating to the commodity and sending the trade order to the electronic exchange.
In Alice Corp. v. CLS Bank International, the U.S. Supreme Court applied a two-part “abstract idea” test that the lower courts are still struggling to apply in a consistent manner. The two-part Alice framework requires that courts first determine whether the claims are directed to a judicial exception (i.e., an abstract idea, law of nature, or natural phenomena) and then determine whether the claim recites additional elements that supply an inventive concept sufficient to transform the nature of the claim into a patent-eligible application of the exception such that the patent is directed to something significantly more than the ineligible subject matter itself.
In applying the two-part Alice framework in the Trading Technologies case, the Federal Circuit found that the subject matter met the eligibility standard of the first step of Alice. Specifically, the court noted that “the graphical user interface system of these two patents is not an idea that has long existed, [which would be] the threshold criterion of an abstract idea and ineligible concept.” The court also observed that the claims did not recite merely mathematical algorithm, fundamental economic practice, long-standing commercial practice, or a business challenge. Instead, the patents at issue solve problems of previous graphical user interfaces relating to speed, accuracy, and usability by providing improvements to existing graphical user interfaces that have no previous trading analog. Specifically, the court noted that the claimed graphical user interface included prescribed functionality directly related to the interface’s structure that addresses and resolves an identified problem in the prior art.
Thus, with respect to part one of the Alice inquiry, the court found that the claims were not directed to an abstract idea. The case was therefore in accordance with the court's earlier holding in DDR Holdings, LLC v. Hotels.com, where the Federal Circuit upheld the patent eligibility of claims “necessarily rooted in computer technology” that “overcome a problem specifically arising in the realm of computer networks.” The court concluded that "[f]or Section 101 purposes, the claimed subject matter is ‘directed to a specific improvement to the way computers operate’” and therefore was patent-eligible.
In regard to part two of the Alice inquiry, the court also found that the claims included additional elements amounting to an inventive concept by reciting specific structure and concordant functionality thereby distinguishing from mere abstract ideas. The court also stated that “specific technologic modifications to solve a problem or improve the functioning of a known system generally produce patent-eligible subject matter.” The court noted that claim elements are to be considered in combination for evaluation under step one of Alice and then individually when considering step two of Alice.
In closing, the court stated, “applying an overview of this evolving jurisprudence, the public interest in innovative advance is best served when close questions of eligibility are considered along with the understanding flowing from review of the patentability criteria of novelty, unobviousness, and enablement, for when these classical criteria are evaluated, the issue of subject matter eligibility is placed in the context of the patent-based incentive to technologic progress.”
Although a nonprecedential decision, the Trading Technologies case is informative in that it upholds the patent eligibility of graphical user interface technology. The decision appears to provide guidance for future such cases.
For more information, please contact Fitch Even partner Amanda Lowerre O'Donnell, author of this alert.
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