Last Week in the Federal Circuit (October 4-8): An “Inventive” Authentication Scheme Takes The Cake Under Alice

Even though last week was argument week, that didn’t slow down the issuance of decisions at the Federal Circuit. Below we provide our usual weekly statistics and our case of the week—our highly subjective selection based on whatever case piqued our interest.

Precedential opinions: 9

Non-precedential opinions: 6

Rule 36: 8

Longest pending case from argument: Acceleration Bay LLC v. Take-Two Interactive Software, No. 20-1700 (215 days)

Shortest (non-Rule 36) pending case from argument: In re: SurgiSil, L.L.P., No. 20-1940 (32 days)

Case of the week: CosmoKey Solutions GmbH & Co. KG v. Duo Security LLC, No. 20-2043 (October 4, 2021)

Panel: Judges O’Malley, Reyna, and Stoll, with Judge Stoll writing the opinion and Judge Reyna concurring

You should read this case if: you have a matter involving subject-matter eligibility of patents

In this week’s case of the week, the Federal Circuit held patent claims eligible under 35 U.S.C. § 101 solely based on its analysis of Alice step two. Under Alice, patent eligibility requires determination of (1) whether the asserted claim is directed to a patent-ineligible concept, such as an abstract idea, and (2) whether the claim adds an “inventive concept,” or whether any additional elements transform the nature of the claim into a patent-eligible application of the ineligible concept.

In 2018, CosmoKey sued Duo Security for infringement of a patent that discloses a method of authenticating a user identity via activation of an authentication function on the user’s mobile device. The district court granted Duo’s motion for judgment on the pleadings, holding all asserted claims ineligible under § 101. In so doing, the district court concluded the claims are directed to the abstract idea of authentication (Alice step one) and fail to add an inventive concept because the patent merely teaches generic computer functionality to implement the abstract idea of authentication (Alice step two).

The Federal Circuit reversed. It declined to resolve whether the asserted claims are directed to an abstract idea or a specific improvement, per Alice step one. Instead, the Court held that the claims recite an inventive concept under Alice step two. The Court found that the patent specification describes how a set of ordered claim steps provide “a technical improvement over conventional authentication methods” by making it easier to perform authentication on mobile devices with low complexity. The Court rejected the district court’s view that the patent admitted these steps were prior art. The district court had misread a passage as discussing prior art when in fact the passage describes the advantages of the inventors’ contribution over the listed prior art. Contrary to the district court’s analysis, the claims and specification thus “recite a specific improvement to authentication that increases security, prevents unauthorized access by a third party, is easily implemented, and can advantageously be carried out with mobile devices of low complexity.”

In his concurrence, Judge Reyna agreed with the majority in reversing the district court’s judgment—but on the step-one basis that the claims are directed to patent-eligible subject matter. He criticized the majority for “skipping step one.” In his view, step one is a “loose filter” that prevents the patenting of abstract thoughts whereas step two is a “lifeline” accounting for additional reasons to save otherwise ineligible claims. Bypassing Alice step one, he noted, creates “a risk that claims that are not directed to an abstract idea might be deemed to ‘fail’ at step two.” Judge Reyna also observed that the majority’s reasoning, with which he agreed, is essentially a step-one rationale that distinguishes specific improvements from abstract ideas.