Managing Principal Kirby Drake's presentation for the 13th Annual Advanced Patent Litigation course of the Texas Bar CLE. Read more at bit.ly/2vQtju2 Klemchuk LLP is an Intellectual Property (IP), Technology, Internet, and Business law firm located in Dallas, TX. The firm offers comprehensive legal services including litigation and enforcement of all forms of IP as well as registration and licensing of patents, trademarks, trade dress, and copyrights. The firm also provides a wide range of technology, Internet, e-commerce, and business services including business planning, formation, and financing, mergers and acquisitions, business litigation, data privacy, and domain name dispute resolution. Additional information about the intellectual property law firm and its intellectual property attorneys may be found at www.klemchuk.com.

1. © 2016 Klemchuk LLP
PATENT CHALLENGES
UNDER SECTION 101
Kirby B. Drake
July 21, 2017
1
©
2017
Klemchuk
LLP

2. © 2016 Klemchuk LLP
• Invention must involve something “significantly
more” than mere natural phenomenon, abstract
idea, or law of nature to merit patent protection
• Initially, spelled trouble for “business method”
patents as well as many software patents
Alice Corp. v. CLS Bank Int’l (2014)
©
2017
Klemchuk
LLP

3. © 2016 Klemchuk LLP
Guiding Federal Circuit Decisions
Post-Alice
• Enfish - database patent directed to improvements
in computer operations so patent-eligible
• Bascom - combined abstract idea of filtering
content and claim elements known in the art in
inventive way that transformed abstract idea into
patent-eligible practical application
• McRo - claimed process for animating characters
using a computer is patent-eligible because it uses
different techniques from prior animators
©
2017
Klemchuk
LLP

4. © 2016 Klemchuk LLP
TecSec Inc. v. Adobe Systems Inc.,
1:10-cv-115, (E.D. Va. May 23, 2017)
1. A method for providing multi-level multimedia security in
a data network, comprising the steps of:
A) accessing an object-oriented key manager;
B) selecting an object to encrypt;
C) selecting a label for the object;
D) selecting an encryption algorithm;
E) encrypting the object according to the encryption
algorithm;
F) labelling the encrypted object;
G) reading the object label;
H) determining access authorization based on the
object label; and
I) decrypting the object if access authorization is
granted.
©
2017
Klemchuk
LLP

5. © 2016 Klemchuk LLP
TecSec Inc. v. Adobe Systems Inc.,
1:10-cv-115, (E.D. Va. May 23, 2017)
• Claims not directed to abstract idea, law of nature,
or natural phenomenon
• Emphasis on how problem solved by claims is
conventional and not one that exists only because
of the Internet or the computer technology
• Patent challengers should point out why the claims
impermissibly preempt an entire field of ideas
©
2017
Klemchuk
LLP

6. © 2016 Klemchuk LLP
Smart Meter Techs. v. Duke Energy,
16-208-SLR, (D. Del. July 11, 2017)
17. A method of measuring power consumption
information on a power line comprising:
measuring current fluctuations in the power line;
calculating power consumption information from
the current fluctuations in a processor;
converting the power consumption information
into IP-based power consumption information in the
processor; and
transmitting the IP-based power consumption
information from the processor to a destination
autonomously in IP format over an external power line
network.
©
2017
Klemchuk
LLP

7. © 2016 Klemchuk LLP
Smart Meter Techs. v. Duke Energy,
16-208-SLR, (D. Del. July 11, 2017)
• Invention not directed to abstract idea
• Specification supports broader reading of claim
than characterizations that include a number of
embodiments and possible benefits of invention,
only one of which is replacing human meter readers
• “A claim is not ‘directed to’ a specific embodiment
when multiple embodiments are potentially
covered by the claim limitations.”
©
2017
Klemchuk
LLP

8. © 2016 Klemchuk LLP
T-Rex Property v. Cedar Fair, L.P.,
16-2018 (D. Minn. June 2, 2017)
• Emphasis on presumption of validity to deny motion
to dismiss
• Dismissal under Section 101 on a motion to dismiss
“unwarranted unless the only plausible reading of
the patent must be that there is clear and
convincing evidence of ineligibility.”
• Emphasis on procedural context in which the issue
was presented
©
2017
Klemchuk
LLP

9. © 2016 Klemchuk LLP
Preferential Networks IP v. AT&T
Mobility, 2-16-cv-01374
(E.D. Tex. July 15, 2017)
• Denied motion to dismiss
• “Character as a whole” of claims is directed to
manner by which data is transmitted between two
computer systems -- which is not a law of nature, a
natural phenomena, or an abstract idea
• Defendants did not produce evidence about
claimed advance compared to prior art
©
2017
Klemchuk
LLP

10. © 2016 Klemchuk LLP
Credit Acceptance Corp. v. Westlake
Servs. (Fed. Cir. June 9, 2017)
• Claims on storing dealer’s inventory information in a
database, receiving financial information about a
customer in relation to certain products sold by the
dealer via a user terminal, combining these two
sources of information to create a financial
package for each of the inventoried items, and
presenting the financial packages to the user
• Mere automation of a manual process using
generic computer components cannot constitute a
patentable improvement in computer technology
©
2017
Klemchuk
LLP

11. © 2016 Klemchuk LLP
Best Practices – Patent Challengers
• Consider timing of when to raise 101 challenge and
venue to make challenge
• Utilize intrinsic evidence in challenge to support
allegations about the basic nature of the patent
and why the subject matter should not be deemed
patent-eligible
• Minimize claim construction issues and factually
distinguish claims discussed in Federal Circuit
decisions finding subject-matter eligibility
©
2017
Klemchuk
LLP

12. © 2016 Klemchuk LLP
Subject Matter Eligibility Materials
https://www.uspto.gov/patent/laws-and-
regulations/examination-policy/subject-matter-
eligibility
• Business method examples
• Quick reference sheet on decisions holding
claims eligible and identifying abstract ideas
(updated June 28, 2017)
• Index of examples (updated December 15,
2016)
• Chart of subject matter eligibility court
decisions (updated June 28, 2017)
©
2017
Klemchuk
LLP

13. © 2016 Klemchuk LLP
Best Practices – Patent Owners
• Perform Section 101 due diligence before filing,
including venue
• Evaluate if claim construction and/or expert
testimony necessary to evaluate motion
• Consider whether to agree to use of representative
claims related to a Section 101 challenge
• Consider arguing factual record not fully developed
or there are factual disputes that need to be
resolved through Markman proceedings
©
2017
Klemchuk
LLP

14. © 2016 Klemchuk LLP
Thanks!
14
©
2017
Klemchuk
LLP