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Alice Step 2: The Role of Patent Descriptions in Protecting Software Innovations

In a recent decision, the Federal Circuit Court of Appeals decided that a patent’s specification may be dispositive when examining whether a software invention is patentable under Step 2 of the Alice test. Despite allegations raised in court pleadings, a software invention may be deemed an abstract idea just by looking at the patent specification. Such reasoning makes specification drafting even more critical for software patents. 

Case Background 

In Beteiro, LLC v. Draftkings, Inc, et al., the Federal Circuit addressed patent eligibility for Beteiro’s software inventions under Step 2 of the Alice framework, which interprets 35 U.S.C. § 101. Beteiro holds several patents involving gaming and gambling activities, specifically a software application that determines a user's location and checks if remote gambling activities are permissible based on state law in that jurisdiction. 

Beteiro sued the defendants in district court for infringement of its gaming patents. The defendants successfully moved to dismiss the case, arguing that the patents were invalid under Alice for not claiming patent-eligible subject matter. Beteiro then filed the present appeal. 

Court’s Findings & Reasoning: Abstract Idea Determination  

The Federal Circuit confirmed under Alice Step 1 that Beteiro’s patents were directed toward an abstract idea, namely “exchanging information concerning a bet and allowing or disallowing the bet based on where the user is located.” The court identified several reasons for this conclusion: 

  • The claims broadly encompassed generic steps such as detecting, generating, transmitting, and processing information, all of which have been deemed abstract in prior cases. 
  • The claims were framed in functional language that did not provide a means for performing the claimed steps. 
  • Previous rulings had found that provide information to individuals based on their location to be abstract. 
  • The claims attempted to capture a fundamental economic practice of verifying that a gambler is in a proper location before accepting bets. 

Beteiro’s argument that the patents represented a technological improvement was dismissed. The court noted that the patents merely used conventional computers as tools without enhancing computer-related technology itself. 

Inventive Concept Analysis 

Under Alice Step 2, the Federal Circuit concluded that the patents lacked an inventive concept, despite Beteiro’s argument in the pleadings that the inclusion of GPS technology on mobile phones was not conventional in 2002. The court found this unconvincing for several reasons: 

  • The complaint did not provide any plausible, non-conclusory allegations that GPS technology, as claimed, was anything other than a set of generic computer components. 
  • The patent specification described the use of GPS in a conventional manner on conventional computers, implying that a skilled person in the art would find the technology routine and well-understood. 
  • The brief mention of GPS in the extensive patent text suggested that the application assumed that the inclusion of GPS on mobile devices for the described purposes was already conventional. 

The court highlighted that the patents did not advance GPS or mobile device technology in any significant way. Thus, no factual dispute raised in the pleadings could transform the claims into patent-eligible subject matter. Thus, the Federal Circuit upheld the district court’s decision, emphasizing that the asserted patents simply applied an abstract idea using conventional technology.  

The court’s reasoning underscores the importance of a patent’s description in establishing whether the claimed software innovation includes an inventive concept that is significantly more than an abstract idea. 

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