Shzoom Requests The Federal Circuit Reissue Trading Technologies As Precedential Opinion

On January 18, 2017 the Federal Circuit issued an opinion in Trading Technologies Int'l., Inc. v. CQG, Inc., its first decision finding a user interface to be patent eligible subject matter. The court designated the opinion as non-precedential. On Monday SHzoom LLC filed a motion under Federal Circuit Rule 32.1(e), which allows any person to request that the court reissue a decision as precedential. The text of the motion is set forth below. Fenwick represented SHzoom

Introduction

Third party SHzoom LLC ("SHzoom") hereby moves this court to reissue its January 18, 2017 decision (Dkt. No. 73), in Trading Technologies Int'l., Inc. v. CQG, Inc., No. 2017 U.S. App. LEXIS 834 (Fed. Cir. Jan. 18, 2017) ("Trading Technologies") as precedential, pursuant to Federal Circuit Rule 32.1(e). As the appellant CQG, Inc. ("CQG") has filed a petition for Rehearing En Banc, Shzoom's request is filed to meet the stated deadline of Rule 32.1(e), and as such need only be considered if CQG's request is denied. The parties to the case have been notified of this request.

Federal Circuit Rule 32.1(b) states that "An opinion or order which is designated as nonprecedential is one determined by the panel issuing it as not adding significantly to the body of law." Trading Technologies, while entirely consistent with precedent, nevertheless adds significantly to the body of patent eligibility for a number of reasons. First, it is the first Federal Circuit decision to find a specifically claimed user interface patent eligible, and thus provides an important positive example of patent eligible technology. Second, it shows that an improvement in the functioning of a computer includes an improvement in the usability of the computer to perform an information processing task. Third, it clarifies that being "long standing" is a "threshold criterion" for a concept to be identified as an abstract idea, thereby providing an objective framework for this aspect of Step 1 of the Alice test.

1. The Law of Patent Eligibility Needs Precedential Examples of Patent Eligible Inventions

   The law of patent eligible subject matter is still in its early stages of development following the Supreme Court's decision in Alice Corporation Pty. Ltd. v. CLS Bank International, 134 S.Ct. 2347 (2014). In Alice, the Supreme Court expressly declined to define an "abstract idea." The Federal Circuit has thus recognized that "a search for a single test or definition [of an abstract idea] in the decided cases concerning § 101 from this court, and indeed from the Supreme Court, reveals that at present there is no such single, succinct, usable definition or test." Amdocs (Israel) Limited v. Openet Telecom, Inc., 841 F.3d 1288, 1294 (Fed. Cir. 2016). Accordingly, this court has stated that "the decisional mechanism courts now apply is to examine earlier cases in which a similar or parallel descriptive nature can be seen—what prior cases were about, and which way they were decided." Id.

   Currently, there are many examples of ineligible subject matter, but very few positive examples of eligible subject matter. As of March 7, 2017, since Alice, the Federal Circuit has decided eighty-one cases involving Section 101. Of those, seventy-three decisions (90%) found ineligible subject matter, and twenty-seven of these are precedential. Only eight decisions to date have found eligible subject matter, and all but Trading Technologies have been designated as precedential.

   Given the express guidance that the 'decisional mechanism' is essentially eligibility-by-analogy, a persistent disparity in precedential outcomes can directly influence the development of the patent law, and indirectly influence the types of inventions that get approved by the USPTO and in turn ultimately filed upon by inventors. This is because the USPTO has specifically instructed that "examiners should avoid relying upon or citing non-precedential decisions (e.g., SmartGene, Cyberfone) unless the facts of the application under examination uniquely match the facts at issue in the non-precedential decision." Memorandum of Robert W. Bahr, "Recent Subject Matter Eligibility Decisions," November 2, 2016. When considering patent eligibility, therefore, examiners rely on precedential Federal Circuit cases as guidance for both eligible and ineligible subject matter. As a result, patent examiners are simply more likely to find any given patent claim ineligible since there are so many more precedential examples of ineligible decision and patents.[1] This, in turn, creates a feedback cycle: the more examples of ineligible patents, the more patent applications that will be rejected as ineligible (even when there are no prior art rejections). This impact on innovation is largely hidden from the view of this court, which for the most part sees issues of eligibility as they arise in issued patents. To date, the court has only ruled on five ex parte appeals of Section 101 rejections (less than 0.5% of the court's post-Alice eligibility decisions), and has affirmed them all; only one of them dealt with the patent eligibility of computer-implemented inventions and did not involve any type of specifically claimed graphical user interface. Thus, the effective boundaries of...