Recognicorp, owner of U.S. Patent No. 8,005,303, sued Nintendo for infringement in the U.S. District Court for the District of Oregon.  After a transfer to the U.S. District Court for the Western District of Washington and reexamination proceedings in the U.S. Patent and Trademark Office, Nintendo moved for judgment on the pleadings.  Particularly, Nintendo asserted that the patent's claims recited ineligible subject matter under 35 U.S.C. § 101.  The District Court agreed, and Recognicorp appealed to the Federal Circuit.

The Supreme Court's Alice Corp. Pty. Ltd. v. CLS Bank Int'l case set forth a two-part test to determine whether claims are directed to patent-eligible subject matter.  One must first determine whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further determine whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But generic computer implementation of an otherwise abstract process does not qualify as "significantly more."  On the other hand, a claimed improvement to a computer or technological process is not abstract.

Claim 1 of the '303 patent recites:

A method for creating a composite image, comprising:
    displaying facial feature images on a first area of a first display via a first device associated with the first display, wherein the facial feature images are associated with facial feature element codes;
    selecting a facial feature image from the first area of the first display via a user interface associated with the first device, wherein the first device incorporates the selected facial feature image into a composite image on a second area of the first display, wherein the composite image is associated with a composite facial image code having at least a facial feature element code and wherein the composite facial image code is  derived by performing at least one multiplication operation on a facial code using one or more code factors as input parameters to the multiplication operation; and
    reproducing the composite image on a second display based on the composite facial image code.

As described by the Court, storing facial images in traditional file formats (e.g., bitmaps, JPEGs, and GIFs) is inefficient due to the large resulting file sizes, and compressing these files often decreases image quality.  The '303 patent, however, "solves this problem by encoding the image at one end through a variety of image classes that required less memory and bandwidth, and at the other end decoding the images."

The District Court, prior to claim construction, stated that the claims are "directed to the abstract idea of encoding and decoding composite facial images using a mathematical formula."  The District Court made an analogy between the claimed invention and painting by numbers to support this conclusion.  Regarding part two of the Alice test, the District Court concluded that "the entirety of the '303 Patent consists of the encoding algorithm itself or purely conventional or obvious pre-solution activity and post-solution activity insufficient to transform the unpatentable abstract idea into a patent-eligible application."

On review, the Federal Circuit generally agreed.  Considering part one of Alice, the Court characterized the invention as being directed to an even broader abstract idea -- that of "encoding and decoding image data."  The Court acknowledged that the claim recites a specific type of encoding and decoding, but stated that encoding and decoding of information is "an abstract concept long utilized to transmit information."

Recognicorp invoked Enfish v. Microsoft to support its position that "the district court mischaracterized the invention using an improperly high level of abstraction that ignored the particular encoding process recited by the claims."  But the Court disagreed in a conclusory fashion, stating that the claims are "clearly directed to encoding and decoding image data," and that "claim 1 does not claim a software method that improves the functioning of a computer."  This latter statement was made despite the Court implying that the invention solved a technical problem related to digital image encoding and transmission just a few pages earlier.  The only reasoning the Court used to support its holding was that claim 1 was similar to the claims of Digitech Image Technologies v. Electronics for Imaging, where an invention directed to organizing information through mathematical correlations was found to be abstract.

Moving on to part two of Alice, the Court rebutted Recognicorp's argument that "facial feature element codes" and "pictorial entity symbols" in the claims (the latter not in claim 1) rendered the claims patent-eligible.  Particularly, the Court found these additional elements also to be abstract, and noted that adding more abstract elements to an abstract idea does not lift a claim over the § 101 hurdle.  The Court also noted that claim 1 did not require computer implementation, and could be performed by hand.  Another claim of the '303 patent did make use of a computer, but "it does exactly what we have warned it may not: tell a user to take an abstract idea and apply it with a computer."

Consequently, the Court concluded that there was no inventive concept in the claims, they failed the Alice test, and were invalid under § 101.

For the better part of a year, it has been understood that an invention that improves the operation of a computer or another technology is not abstract under § 101, and one should review the specification to make this determination.  While this case does not exactly throw that notion under the bus, it may serve to narrow the holdings of Enfish and McRO v. Bandai Namco Games America.  Here, the Court refused to acknowledge the possibility that the claimed invention resulted in such an improvement, and did not analyze the specification in detail.

Further, the disconnect between the Court's characterization of the claims under part one of Alice and the actual claimed invention is remarkable.  In the Court's view, there was no substantive difference between claim 1 and "Morse code, ordering food at a fast food restaurant via a numbering system, and Paul Revere's one if by land, two if by sea signaling system."  As many have noted, evaluating claims at such a high level does violence to the actual invention, which is the specific method recited by the claim.  Indeed, Enfish and McRo specifically warned against over-generalizing claims and reducing them to a subjective "gist" in part one of the Alice analysis.

Taking a step back, claim 1 is broader in substance than it might appear at first blush, and perhaps that breadth and its lack of specificity regarding exactly how the encoding is performed doomed the claims to abstractness.  So all is not lost for image processing and data compression inventions.  Many will be clearly patent-eligible, especially ones that claim specific solutions to specific problems and result in a technological improvement.  But, as we have learned over the last several years, the proverbial devil is in the details.

Recognicorp, LLC v. Nintendo Co. (Fed. Cir. 2017)
Panel: Circuit Judges Lourie, Reyna, and Stoll
Opinion by Circuit Judge Reyna