Federal Circuit Adds Arrow to Quiver for Defending Against an Alice Challenge

October 19, 2016

By Nikola L. Datzov

Target and Archer IllustrationThe Federal Circuit’s recent patent eligibility opinion in McRO Inc. v. Bandai Namco Games America, 2016 WL 4896481 (Fed. Cir. Sept. 13, 2016) is the latest to find claims involving computer technology that survive a § 101 challenge. The decision has been widely viewed as a powerful arrow in the quiver of software patent holders facing an Alice challenge. It also provides further guidance on the application of the Alice framework to patents directed to automating previously existing processes. However, the Court’s analysis also created buzz for its repeated references to improvements over prior art as part of step one in the Alice framework.

The Technology

The McRO litigation involved two patents related to automating preexisting 3-D animation methods for lip synchronization and facial expressions of animated characters. Prior art used 3-D models of character’s faces for showing facial expressions and morphing the various models in a smooth transition while the character speaks. Each facial model was associated with the pronunciation of a phoneme. Under the prior art, animators manually set facial expressions at particular keyframes of the animation with the assistance of computers. A computer program then created the intermediary frames through interpolation.

The claimed invention of the two asserted patents was to “automate a 3-D animator’s tasks, specifically, determining when to set keyframes and setting those keyframes . . . through rules” identifying the settings of the 3-D face model. McRO, 2016 WL 4896481, at *2. The patents also provided exemplary rules for specific facial transitions.

Alice Framework

As the Court reiterated in McRO, the framework set forth by Alice requires the court to first “determine whether the claim at issue is ‘directed to’ a judicial exception, such an abstract idea.”  Id. at *6. “[T]he claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter.”  Id. (internal quotation marks omitted).

If the court finds the claims are not directed to an abstract idea, then they are patent eligible. If they are directed to an abstract idea, then the court moves on to step two of the Alice framework to decide if they “contain an ‘inventive concept’ sufficient to ‘transform the nature of the claim into a patent-eligible application.”  Id. at *7 (quoting Alice). The key for this inquiry is “whether the claims contain an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.”  Id. (internal quotation marks omitted). Importantly, though, “the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the idea to a particular technological environment.”  Id. (internal quotation marks omitted).

The District Court’s Decision

Applying Alice on a Rule 12(c) motion for judgment on the pleadings, the district court agreed with the defendants that McRO’s asserted claims were ineligible under § 101 because they were directed to an abstract idea. Although the district court noted that on their face the claims “do not seem directed to an abstract idea,” the district court explained that the claims “must be evaluated in the context of the prior art.” McRO, Inc. v. Sony Comput. Entm’t Am. LLC, 55 F. Supp. 3d 1214, 1224 (C.D. Cal. 2014). Because a claim may “recite[] tangible steps, but the only new part of the claim is an abstract idea,” the relevant “question is therefore whether the inclusion of that [new part] in the claims satisfies § 101 given [] the prior art.” Id. at 1225-26. The district court found that “what the claim adds to the prior art is the use of rules, rather than artists, to set the morph weights and transitions between phonemes.” Id. at 1227. “Because the claim purports to cover all such rules, in light of the prior art, the claim merely states ‘an abstract idea while adding the words ‘apply it.’’” Id. (quoting Alice).

Federal Circuit Opinion

The Federal Circuit panel parted ways from the district court’s finding that the claims covered all rules rather than specific rules for lip synchronization. The panel held that the “the claims are limited to rules with specific characteristics” and that “[t]he specific, claimed features of these rules allow for the improvement realized by the invention.”  McRO, 2016 WL 4896481, at *7. Finding no evidence that animators previously employed the rules required by the claims, the Court found that the claims were “a specific asserted improvement in computer animation” even though they employed a computer “to automate a task previously performed by humans.” Id. at *8. “It is the incorporation of the claimed rules, not the use of the computer, that ‘improved the existing technological process’ by allowing the automation of further tasks.” Id.

After considering the improvement of the claims to the prior art, the Court focused on the preemptive effect of the claims. At the outset, the Court noted that “[t]he concern underlying the exceptions to § 101 is not tangibility, but preemption.”  Id. at *9.  Because the claims provided for specific rules, they did not preempt the entire field of using rules for lip synchronization. “By incorporating the specific features of the rules as claim limitations, claim 1 is limited to a specific process for automatically animating characters using particular information and techniques and does not preempt approaches that use rules of a different structure or different techniques.”  Id. at *10.

Additionally, although the Court’s analysis was based only on step one of the Alice framework, it focused on the patent claims’ technological improvement over the existing prior art. The Court’s repeated references to “improving the prior art,” “improv[ing] the relevant technology,” “technological improvement,” and “improved technological result” make clear that the issue was of primary concern. In Alice, the Supreme Court’s noted that “the claims in Diehr were patent eligible because they improved an existing technological process, not because they were implemented on a computer,” but that language was part of the second step of the § 101 analysis. Nevertheless, in Enflish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016), the Federal Circuit rejected the argument that considering technological improvements is relevant only at step two of the Alice analysis: “[I]t [is] relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea, even at the first step of the Alice analysis.”  Although McRO appears to simply build on Enflish, the references to improvements in McRO have led some to comment that the analysis might “muddy the waters” of applying the Alice two-step framework. In fact, the defendants raised that concern as the lead issue in their petition for rehearing en banc, accusing the panel of “eschew[ing]” the Alice analysis in favor of a different standard and challenging the existence of any exception for “technology improvements” under Supreme Court precedent.


The panel opinion in McRO provides additional arguments for patent holders facing an Alice challenge related to software patents or patents directed to automating previously existing processes. The opinion also provides guidance to district courts in the application of the Alice framework, particularly with regard to consideration of preemption and improvement of prior art. Those potentially impacted by the decision, however, should watch the case closely at least until the full Court rules on the petition for rehearing en banc.

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