The Federal Circuit Invalidates Patents Yet Again in Another Controversial Subject Matter Case

The Federal Circuit Invalidates Patents Yet Again in Another Controversial Subject Matter Case

The issue of patentable subject matter continues to be litigated at the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”). In the recent case of ChargePoint, Inc., v. SemaConnect, Inc., the court affirmed the decision of the U.S. District Court for the District of Maryland, which held that ChargePoint’s patents related to networked charging stations for electrical vehicles claimed patent-ineligible subject matter under 35 U.S.C. § 101.^[1] In this blog post, I will summarize this case after introducing the relevant backdrop.

Under Section 101 of the Patent Act, “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”^[2] The subject matter eligibility requirement clearly comes from the Act’s express listing of “process, machine, manufacture, or composition of matter…”^[3] Additionally, there are three judicially created exceptions that are patent-ineligible: laws of nature, natural phenomena, and abstract ideas.^[4] For the purposes of this post, I will only discuss the patentable subject matter requirement, as this is the focus of the case.

There exists a two-step Alice/Mayo test to determine if claims are patent-eligible under the patentable subject matter requirement. First, the court must “determine whether the claims at issue are directed to one of th[e] patent-ineligible concepts.”^[5] If the claims are directed to a patent-ineligible concept, such as an abstract idea, then the court must look to the elements of the claims—both individually and as an ordered combination—to determine if there is an “inventive concept” that sufficiently transforms the otherwise ineligible claim into a patent-eligible application.^[6] The inventive concept must be “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [abstract idea] itself.”^[7] The factors considered for this determination are not clear cut. However, the basic rationale is that allowing someone to patent something as broad as the abstract idea or law of nature itself would harm society by preventing everyone else from using and applying such fundamental concepts to create useful innovations. Therefore, there is an important distinction between patents that simply claim these fundamental concepts and those that integrate the fundamental concepts into “something more.”^[8]

A good example of this is the Bilski v. Kappos case from 2010.^[9] The patent at issue claimed a process for hedging risk in investments by providing a series of instructive steps, and creating a mathematical formula to apply this concept.^[10] The patent also provided claims limiting the use of hedging specifically to the energy markets.^[11] The Court noted that “hedging is a fundamental economic practice long prevalent in our system of commerce and taught in any introductory finance class.”^[12] It concluded by invalidating the patent as an “unpatentable abstract idea”^[13] because “patent[ing] risk hedging would preempt use of this approach in all fields, and would effectively grant a monopoly over an abstract idea.”^[14] The Court rejected the patentee’s preemption argument by citing precedent establishing that “limiting an abstract idea to one field of use or adding token post solution components did not make the concept patentable.”^[15]

In ChargePoint, the Federal Circuit had to evaluate eight claims describing ChargePoint’s “networked” charging stations for electric vehicles.^[16] ChargePoint contends that it addressed various needs in the electric vehicle charging space by creating networked charging stations.^[17] For example, network connectivity “allows the stations to be managed from a central location, allows drivers to locate charging stations in advance, and allows all users to interact intelligently with the electricity grid.”^[18] The Court analyzed all eight claims and invalidated each of ChargePoint’s patents, but for the sake of this post, I will discuss the asserted claims in the first patent (‘715 patent).^[19]

As the Court describes, the two claims “recite an apparatus that is controlled by a remote server, where the server controls whether electricity is flowing.”^[20] Claim 2 is a dependent claim, and “adds a component that physically connects the charging station to an electric vehicle and that can activate or deactivate charging at the connection.”^[21] At step one of the Alice inquiry, the Court initially concludes that the language of claim 1 clearly involves the abstract idea of communication over a network.^[22] However, the Court then looks to the specification and the claim itself to determine whether “the focus of claim 1, as a whole, is the abstract idea.”^[23] With respect to the specification, the Court concludes that the invention is “nothing more than the abstract idea of communication over a network for interacting with a device, applied to the context of electric vehicle charging stations.”^[24] This idea of limiting the application of an abstract idea to a specific industry or field was rejected previously with the hedging process in Bilski. The Court returns to the language of the claim itself and concluded that “the broad claim language would cover any mechanism for implementing network communications on a charging station, thus preempting the entire industry’s ability to use networked charging stations.”^[25]

After concluding that the claims are directed to a patent-ineligible abstract idea, the Court must search for an “inventive concept” that is sufficient to transform the nature of the claim into a patent-eligible application of the abstract idea.^[26] ChargePoint argues that its patents provide “an unconventional solution to technological problems in the field,” and therefore contain an inventive concept.^[27] The Court rejects this argument by concluding that the alleged “inventive concept” that solves these problems is the fact that the charging stations are network-controlled, but network control “is the abstract idea itself, [which] cannot supply the inventive concept at step two.”^[28] Therefore, the Court held that the claims were patent-ineligible.^[29]

Some critics argue that the Federal Circuit incorrectly invalidated these patents under 35 U.S.C. § 101 patentable subject matter, and that claim 1 is clearly a “machine” within the Patent Act.^[30] Slifer argues that according to the Federal Circuit’s reasoning, “all Internet of Things (IoT) inventions are merely claiming the ‘abstract’ idea of network communications” and as such, would be patent-ineligible.^[31] Others who think the opinion is entirely incorrect claim that the Federal Circuit “ignored the apparently tangible, technical contribution of the invention and decided that it was really nothing more than a claim to the abstract idea itself.”^[32] We will have to wait and see if the Supreme Court will step back in to address the patentable subject matter mess.