CAFC Applying the Two-Part Alice Test Affirms Wagering
not Patent Eligible Subject Matter Under 35 U.S.C.
San Diego Patent Prep & Pros, Inc. – Mary
March 22, 2015
The CAFC’s recent
decision in In re Smith, No.
2015-1664 (March 2016), is interesting, because of their application of the
two-part test from Alice. The Smith’s
U.S. Patent Application No. 12/912,410 claims 1-18, had claimed a method of
conducting a wagering game (e.g. Baccarat variant). The claims basically
recited steps for playing the game that could be virtual or physically
implemented. The CAFC affirmed the PTAB’s
decision that claims 1-18 were not patent eligible under 35 U.S.C. § 101. In
reaching their decision, the CAFC applied the two-part test from Alice.
First, the Court
states that the claims were an abstract idea, because they equated the wagering
portion of the game to the financial obligation methods in Alice and Bilski. In re Smith at 5. The Court specifically
states “Applicant’s claims, directed to rules for conducting a wagering game,
compare to other ‘fundamental economic practice[s]’ found abstract by the
Supreme Court.” Id. This seems like a stretch, because the Alice subject matter was basically about
escrows being done by a computer. And Bilski’s
subject matter was about hedging risks in commodity trading. Both of
which are clearly e-commerce. However, the Smith’s claims are more about gaming
than e-commerce. Yet, the Court did state that they had held other games,
ineligible as well. Thus, Applicant's argument that the claims were “physical” and
therefore not abstract, wasn’t an application of the current law. Id. at 6.
Court applied the second part test of Alice
to see if the claims held some inventive concept to enable them to be
patentable. The Court held, citing to Alice,
that shuffling and dealing a standard deck of cards was “purely conventional activities.”
In re Smith at 6. The Court’s
decision basically boils down to the fact that the Smith claims did not amount to significantly more than the judicial
exception itself. The Court viewed the Smith game rules as well understood,
routine, and conventional, in spite of the inventors claiming a new game. In addition, the Court stated that not all
gaming patents would be ineligible, and that they could envision claims directed
towards a “new or original deck of cards potentially surviving step two of
take away: it appears that the Smith
claims were trying to create a new type of Baccarat, so one would think this
was “non-conventional” enough to be patent eligible. And other poker type games
have been allowed. For example, see U.S. Patent 9,293,007 just issued on March
22, 2016 twelve days after this In re
Smith decision. What is obvious as a take away, is that the key to
obtaining patentable claims under § 101 has more to do with the art of arguing step-two
of the Alice test than the claimed
subject matter. If Applicants had argued the novel features of their claims, instead
of referring to old law, they may have had a different outcome.
 Planet Bingo, LCC v. VKGS LLC, 576 F.
App’x 1005, 1007 (Fed. Cir. 2014).