Addressing for the first time the issue of patent validity in the context of an America Invents Act post-grant review, the Patent Trial and Appeal Board (PTAB) invalidated two livestock patents as unpatentable under Section 101. American Simmental Association v. Leachman Cattle of Colorado, LLC, Case Nos. PGR-2015-00003; -00005 (PTAB, June 13, 2016) (Kim, APJ).

The patents at issue were directed to computer-implemented methods of evaluating the relative market value of livestock based on genetic quality considerations. In both cases, the patent owner argued that the patents were subject matter eligible under Alice, but also provided proposed amended claims that purported to cure any alleged § 101 deficiency. The PTAB rejected both arguments and further noted certain procedural imperfections in the patent owner’s requests to amend the claims. 

The PTAB began its § 101 analysis by applying the first step of the Alice test, which requires a determination of “whether the claim is ‘directed to’ a patent-ineligible abstract idea.” On that issue, the PTAB concluded that the claims were directed to an abstract idea: namely, the fundamental principle of “determining an animal’s relative economic value based on its genetic and physical traits.” 

The PTAB then turned to step two of the Alice test, which requires a “search for an ‘inventive concept’—an element or combination of elements sufficient to ensure that the claim amounts to ‘significantly more’ than the abstract idea itself.” Finding that the “significantly more” requirement had not been met, the PTAB explained that “all computer recitations in the challenged claims are recitations to generic computer hardware used in a conventional manner, which are insufficient to impart patentability under Alice.” The patentee argued that “the claimed invention involves novel technical software that ‘transforms genetic and performance information associated with the sale group into a dynamically-generated [sic] scorecard available to users on-demand.’” The PTAB rejected this argument, explaining that “the recitation of software in the claim . . . is at a highly abstract level” because the claims require only “taking in and outputting data, with no detail as to how that data is manipulated between input and output.” Without such detail, the claims recite no more than simply “‘applying to software’ the fundamental concept of ‘determining an animal’s relative economic value based on its genetic and physical traits.’” 

Turning to the patent owner’s motions to amend, the PTAB explained that in post-grant review proceedings, the patent owner “has the burden of proving patentability of a proposed substitute claim.” To meet this burden, “at a minimum” two requirements must be satisfied: (1) “the substitute claims [must] overcome all the grounds under which” the claims were found unpatentable, and (2) the patent owner’s request must “meet[] all the procedural requirements concerning motions to amend set forth in [the] rules.” In both cases, the patent owner failed to meet its burden on all claims from a substantive standpoint and on a subset of claims from a procedural standpoint.  

With respect to the ‘005 case, the PTAB found that the patent owner failed to properly construe a new claim term as required for substitute claims. The PTAB explained that “when there is no clear relationship between claim language and the patent specification, it is incumbent on Patent Owner to provide either a claim construction or explanation to bridge the apparent gap.” In the ‘003 case, the patent owner’s proposed substitute claim did not include all of the limitations of the original claim, which was improper because the rules do not permit “enlarg[ing] the scope of the claims of the patent or introduc[ing] new matter.” The PTAB elaborated that because “the natural inference is that removal of claim language is broadening . . . it was incumbent on Patent Owner to explain the justification for the removal of the claim language.”