Three lessons from the Federal Circuit’s recent 101 reversal in XY v Trans Ova Genetics
The CAFC’s opinion overturning a district court decision to invalidate XY’s patent has valuable takeaways for those involved in section 101 litigation, argue John O’Quinn and Hannah L. Bedard of Kirkland & Ellis.
The Federal Circuit has issued a precedential decision in XY LLC v Trans Ova Genetics. Judge Stoll, joined by Judge Wallach and Senior Judge Plager, held that claims directed to a specific improvement to an otherwise-known process are patent eligible under 35 USC section 101. In reversing the district court, the court held that, although the invention applies mathematical equations to effect the claimed improvement, the claims were directed to a specific improvement that separates the invention from the prior art - not to an abstract idea.
The court’s decision details several principles underlying the section 101 analysis and offers lessons for litigants addressing eligibility determinations.
XY’s ‘559 patent involves flow cytometry technology for sorting non-human mammalian particles. This technology is particularly useful in animal breeding to guarantee the sex of offspring, allowing sperm cells to be sorted based on whether the cell carries an X or Y chromosome. While conventional flow cytometry technology made it difficult to discriminate between similar particles of different populations, the ‘559 patent claims an improvement that uses mathematical equations to reconfigure data corresponding to the particles, such as by rotating it, in order to increase spatial separation of data points and make it possible to discriminate between particles. XY’s improved methods allow populations to be selected more accurately than in any other prior art system.
The district court decided the ‘559 patent claims were invalid under section 101. Starting with Alice step one, the court found the claims were directed to the abstract idea of a “mathematical equation that permits rotating multi-dimensional data”. It reasoned that, although the equation helps to discriminate between particles of different populations, the invention reduces down to applying a mathematical concept. Then, at Alice Step Two, the court held the asserted claims lack an inventive concept because it believed the claims offer nothing beyond the prior art.
Reversing the district court, the Federal Circuit decided on 31st July that the ‘559 patent claims are directed to a specific improvement to a flow cytometry method, not an abstract idea. Specifically, the court held the claims are directed to an improved method for classifying and sorting particles based on the specific steps set forth in the claims, thereby facilitating classification and sorting of each individual particle more accurately than any prior art method. Although the patent used mathematical equations to implement the improvement, the court found the claims were directed to an improvement to the method itself that so happened to use math. Because the court held that the claims are not directed to an abstract idea at Alice step one, it did not move on to step two.
The court’s decision and its section 101 analysis offers several valuable lessons for litigants:
- Firstly, the XY decision exemplifies yet another case where the court found asserted claims patentable at Alice Step One and therefore stopped the analysis before addressing Step Two. From 2019 until now, the Federal Circuit has found claims patent-eligible in 11 cases, and in all but one the Court’s decision ended after finding the claims were not directed to an abstract idea at step one.
This pattern underscores the need for both patentees and challengers to make their case at Step One. Is it an improvement to an existing technology that so happens to use an abstract idea to implement that improvement, or are the claims directed to an improvement to the abstract idea itself? In XY, the invention improved a known flow cytometry process by applying a mathematical formula. While the court held that claimed improvement passed the Alice test, a claim directed to improving the mathematical formula by itself would likely not be eligible. XY makes clear that it is critical for patentees and challengers alike to define what the claims are directed to, knowing that step one is likely going to make or break the section 101 decision.
- Second and relatedly, XY shows that the court may consider factual inquiries previously held relevant to Alice Step Two in Step One as well. Traditionally, courts considered whether the invention is “well understood, routine and conventional” and, therefore, whether the invention represents some improvement or advance over prior art solutions, at Alice Step Two. Now, with XY and other recent Federal Circuit decisions, the court seems to consider questions regarding prior art solutions at Step One.
It is therefore critical for litigants to articulate, at Step One, what solutions existed in the prior art and why (or why not) the claims represent an improvement to those solutions. XY confirms the court’s holding in Thales Visionix v United States that improving the accuracy of a prior art solution can be enough to make the claims a patentable improvement. Moreover, if a party can tie the claimed improvement to a physical process or product, all the better. The XY court found important the fact that the claimed method resulted in separation of physical particles, like the claimed improvement in Diamond v Diehr produced a perfectly-cured synthetic rubber product.
- Finally, XY underscores the importance of comparing the case at hand to precedent in order to inform whether the challenged claims are patent-eligible. In XY, the court analogised the challenged claims to those in Diehr and Thales, where the Supreme Court and the Federal Circuit, respectively, held patent-eligible claims that apply a mathematical formula in a structure or process that in order to perform a patentable function. The court rejected Trans Ova’s attempts to compare the ‘559 patent claims to those in Parker v Flook and Cleveland Clinic Foundation v True Health Diagnostics, finding that the claims in those cases did not represent any improvements to a patentable prior art method or system and instead used abstract ideas to update and observe the prior art in a non-meaningful ways.
The Federal Circuit’s decision in XY confirms that claimed improvements to the prior art can be patent-eligible, even if the claims use an abstract idea such as a mathematical formula to execute the improvement. Litigants addressing section 101 challenges should focus on articulating what the claimed invention is, how it relates to the prior art, and how the claims compare to others that courts have already held to be eligible, or ineligible, under section 101.