By Paul McAdams, Shumaker & Sieffert, P.A.

On January 18, 2017, the Federal Circuit in Trading Technologies International, Inc. v. CQG, Inc.[1] issued a non-precedential opinion finding claims directed to a specifically structured graphical user interface paired with functionality directly related to the specific structure of the graphical user interface as being patent eligible under 35 U.S.C. § 101.  The opinion was predicated on the holdings of the following recent Federal Circuit opinions finding claims patent eligible under § 101:  DDR Holdings, LLC v. Hotels.com,[2] McRO, Inc. v. Bandai Namco Games America Inc.,[3] and Enfish LLC v. Microsoft Corp.[4]  In this regard, while the Trading Technologies opinion is non-precedential, it nonetheless shows the willingness of the Federal Circuit to keep the Enfish jurisprudence and similar jurisprudence around.

In Trading Technologies, the Federal Circuit was tasked with determining whether the district court’s finding of patent eligibility under § 101 was proper.  At the district court level, the patent owner accused the defendants of infringing claims from U.S. Patent Nos. 6,772,132 and 6,766,304.  The defendants appealed the district court holding that the asserted claims of both patents recite patent-eligible subject matter.

The Federal Circuit described the patents as sharing a common specification and being broadly directed at “a method and system for the electronic trading of stocks, bonds, futures, options and similar products.”[5]  Setting the stage for reliance on DDR Holdings, McRO, and Enfish, the Federal Circuit analyzed the problem the patents seek to resolve—as described in the common specification—and the claimed solution found in representative independent claim 1 of the ‘304 patent, provided 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.

The Federal Circuit stated that “[t]he patents explain problems that arise when a trader attempts to enter an order at a particular price, but misses the price because the market moved before the order was entered and executed”[6] and that “[i]t also sometimes occurred that trades were executed at different prices than intended, due to rapid market movement.”[7]  Quoting the common abstract of the patents, the Federal Circuit then noted that “[t]he patents are for ‘[a] method and system for reducing the time it takes for a trader to place a trade when electronically trading on an exchange, thus increasing the likelihood that the trader will have orders filled at desirable prices and quantifies.’”[8]  Having established this backdrop, the Federal Circuit then proceeded to analyze Steps 1 and 2[9] of the patent eligibility framework (also called the Mayo test) relied on by the U.S. Supreme Court in Alice Corp. v. CLS Bank International.[10] 

Regarding Step 1, the district court found that the claims are “directed to improvements in existing graphical user interface devices that have no ‘pre-electronic trading analog,’ and recite more than ‘setting, displaying, and selecting’ data or information that is visible on the [graphical user interface] device.”[11]  The district court was careful, however, not say that all graphical user interfaces are patent eligible.  Indeed, as the Federal Circuit noted, the district court further explained that “the challenged patents do not simply claim displaying information on a graphical user interface”;[12] rather, “[t]he claims require a specific, structured graphical user interface paired with a prescribed functionality directly related to the graphical user interface’s structure that is addressed to and resolves a specifically identified problem in the prior state of the art.”[13]

Based on this reasoning, the district court then concluded—a conclusion with which the Federal Circuit completely agreed—that the claims were patent eligible under Step 1.  Additionally, the Federal Circuit felt it prudent to note that the claims met the eligibility requirement under Step 1 because “the graphical user interface system of these two patents is not an idea that has long existed, the threshold criterion of an abstract idea and ineligible concept, as the court explained in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66, 73 (2012) (the patent must ‘amount to significantly more in practice than a patent upon the [ineligible concept itself]).”[14]

The Federal Circuit also confirmed the district court’s analysis under Step 2, despite having already determined that the claims met the requirements of Step 1.  Specifically, the district court distinguished the claimed system “from the routine or conventional use of computers or the Internet, and concluded that the specific structure and concordant functionality of the graphical user interface are removed from abstract ideas, as compared to conventional computer implementations of known procedures.”[15]

Having agreed with the district court’s holdings with respect to patent eligibility under Steps 1 and 2, the Federal Circuit noted that its agreement was predicated on the district court’s holdings being in accordance with the recent decisions in DDR Holdings,[16] McRO,[17] and Enfish.[18]  In view of these cases, the Federal Circuit stated that “[p]recedent has recognized that specific technologic modifications to solve a problem or improve the functioning of a known system generally produce patent-eligible subject matter.”[19]  For example, citing Enfish, the Federal Circuit noted that “[a]bstraction is avoided or overcome when a proposed new application or computer-implemented function is not simply the generalized use of a computer as a tool to conduct a known or obvious process, but instead is an improvement to the capability of the system as a whole.”[20]  Although Trading Technologies is non-precedential, the opinion provides a good overview of the evolving § 101 jurisprudence and a straightforward application of subject matter eligibility principles set down by the Federal Circuit in recent precedent.  Trading Technologies may be particularly helpful to patent practitioners where citation of non-precedential decisions is allowed, or when analyzing claims directed at graphical user interfaces or other computer-implemented functions under § 101.

 

[1] No. 2016-1616, slip op. (Fed Cir. Jan. 18, 2017).

[2] 773 F.3d 1245 (Fed Cir. 2014).

[3] 837 F.3d 1299 (Fed. Cir. 2016).

[4] 822 F.3d 1327 (Fed. Cir. 2016).

[5] No. 2016-1616, slip op. at 3 (Fed Cir. Jan. 18, 2017).

[6] Id.

[7] Id.

[8] Id.

[9] Steps 1 and 2 are often respectively referred to as Steps 2A and 2B in the subject matter eligibility test promulgated by the USPTO.  See, e.g., 79 Fed. Reg. 74621-22 (Dec. 16, 2014), available at https://www.gpo.gov/fdsys/pkg/FR-2014-12-16/pdf/2014-29414.pdf.

[10] 134 S. Ct. 2347 (2014).

[11] Trading Techs., No. 2016-1616, slip op. at 6 (Fed Cir. Jan. 18, 2017).

[12] Id.

[13] Id.

[14] Id.

[15] Id. at 7.

[16] Id. (noting that “the court [in DDR Holdings] upheld the patent eligibility of claims ‘necessarily rooted in computer technology’ that ‘overcome a problem specifically arising in the realm of computer networks.’”) (quoting DDR Holdings, 773 F.3d 1245, 1257 (Fed Cir. 2014)).

[17] Id. (noting that “‘claimed process[es] us[ing] a combine order of specific rules’ that improved on existing technological processes were deemed patent-eligible.”) (quoting McRo, 837 F.3d 1299, 1315 (Fed. Cir. 2016)).

[18] Id. (noting that “[c]laims that were ‘directed to a specific improvement to the way computers operate, embodied in [a] self-referential table,’ were deemed eligible . . . .”) (quoting Enfish, 822 F.3d 1327, 1334 (Fed. Cir. 2016)).

[19] Id..

[20] Id. at 8.