Saturday, May 4 2019

Win Some, Lose Some

James Watson

In February of 2019, the U.S. Court of Appeals for the Federal Circuit issued a nonprecedential opinion finding that claims involving an improvement to a GUI for software that enabled traders to place orders at a particular price level (not necessarily the highest bid or lowest asking price) were technological in nature. The Court reasoned in IBG LLC v. Trading Techs. Int’l, Inc., No. 2017-1732, 2019 U.S. App. LEXIS 4299 (Fed. Cir. Feb. 13, 2019) (nonprecedential), that by keeping the price static in position using the GUI, the price would not change under the pointer of a trader, reducing the risk that a miss-click would cause the trader to place an unintended trade. The panel quoted a still earlier decision where some of the claims on appeal had been challenged for lacking patent-eligible subject matter, where it characterized this kind of Graphical User Interface functionality as “a specific implementation of a solution to a problem in the software arts.” Trading Techs. Int’l, Inc. v. CQG, Inc., 675 Fed. Appx. 1001 (Fed. Cir. 2017) (nonprecedential). As a result, the Federal Circuit found that the claims were not eligible for Covered-Business-Method patent review at the U.S. Patent Office because they were directed to a technological invention, not a covered business method.

In April of 2019, however, two different panels of the Federal Circuit confirmed that different sets of patent claims also owned by Trading Technologies and involving similar subject matter were subject to CBM review and were invalid for lack of patent-eligible subject matter. In Trading Techs. Int’l, Inc. v. IBG LLC, No. 2017-2257, 2019 U.S. App. LEXIS 11311 (Fed. Cir. April 18, 2019), the Court analyzed claims directed to a GUI for trading software that would display trades along a price axis and enable a user to place trades by clicking and dragging an “order icon” to a location on the price axis or selecting a point on the price axis. The Court analyzed claims directed to a GUI for a trading system that would display trades along a profit and loss axis, rather than a price axis, in Trading Techs. Int’l, Inc. v. IBG LLC, No. 2017-2323, 2019 U.S. App. LEXIS 12940 (Fed. Cir. April 30, 2019). In both cases, the panel characterized the claims as being essentially financial in character because they improved the speed and efficiency of the trader, not the implementing computer. The panels used that as a basis to conclude that the claims were eligible for CBM review because they were not technological. It also used the same basis to conclude that the claims were directed to an abstract idea, not a patent-eligible application, because they amounted to data processing analogous to a mental process. Only one of the panels addressed the prior decision, and it did not provide a detailed explanation for the different outcome. The Court merely pointed out that it was not bound by prior nonprecedential decisions involving different patents with different disclosures and claims.

One difference in the patented functionality that may account for the different outcomes may be that the claims confirmed patent-eligible involved a situation that arises particularly within trading software as a result of dynamic, real-time updates in trading conditions. The claims adopted an unconventional approach (keeping price static despite changes in trading conditions) that solved a problem particularly arising in the context of trading software (price shifting out from under a cursor and clicking on a different trade than intended). By contrast, the invalidated claims applied conventional software techniques (clicking and dragging or clicking a desired point) to existing software solutions or automated a mental process (calculating profit and loss) and displayed the results. That said, the Court relied heavily on the patents’ own descriptions of what the advance over the prior art was, what problems were addressed by the innovation, and how the claimed subject matter solved those problems to reach its conclusions. Accordingly, it is more important than ever to carefully draft patent applications to ensure that those evaluating claims are able to see the invention in the light most favorable to the patent owner.

The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation.