From court decision MCRO, INC., DBA PLANET BLUE, Plaintiff-Appellant. http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1080.Opinion.9-9-2016.1.PDF From court decision MCRO, INC., DBA PLANET BLUE,
Plaintiff-Appellant. http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1080.Opinion.9-9-2016.1.PDF

For the fourth time in four months, the U.S. Court of Appeals for the Federal Circuit has reversed a trial court decision that found a patent ineligible for protection under Section 101 of the Patent Act.

The court ruled that a graphics company that patented a computerized process for synchronizing the lip movements and facial expressions of animated figures can move forward with an infringement suit against Sega Inc., Electronic Arts Inc. and other large video game companies.

“We hold that the ordered combination of claimed steps, using unconventional rules that relate sub-sequences of phonemes, timings, and morph weight sets, is not directed to an abstract idea and is therefore patent-eligible subject matter under Section 101,” Judge Jimmie Reyna wrote for a unanimous panel in McRO v. Bandai Namco Games America.

Companies accused of infringement have been aggressive with Section 101 motions since the U.S. Supreme Court’s game-changing 2014 decision in Alice v. CLS Bank. Accused infringers say Section 101 gives them an early, inexpensive opportunity to challenge overly broad or vaguely written patents. Patent owners reply that the Alice abstract idea test is an unprincipled standard ginned up by the Supreme Court and applied by district judges on an “I know it when I see it” basis.

Caught in the middle are the Federal Circuit judges, who have been trying to flesh out the Alice rules while sometimes openly chafing at them. Last year, the Federal Circuit did not reverse a single trial court order that found a patent ineligible, and even with the more recent decisions it is still affirming at about a 90 percent clip since Alice was issued, according to research by Fenwick & West.

But since May the court has found software patents eligible in Enfish v. Microsoft and Bascom Global Internet Services v. AT&T Mobility, and found a life sciences method patent eligible in Rapid Litigation Management v. CellzDirect.

“This is good news, but I cannot say that the tide has turned,” Fenwick partner Robert Sachs said of Tuesday’s ruling. “It will depend on how lower courts respond,” said Sachs, who has argued on the firm’s Bilski Blog that federal courts have swept too broadly with Section 101.

Santa Monica-based McRO, also known as Planet Blue, claims a computerized process for lip-syncing animated characters to prerecorded voice streams. The company says the process both improves animation and saves money by eliminating the work of human animators. Larger companies such as Disney, EA, LucasArts and Warner Bros. Entertainment Inc. used to contract out animation projects to McRO, the company says, but now they and others simply infringe McRO’s patented process.

The video companies argued that McRO’s process is little more than an unpatentable algorithm that can be performed with pencil and paper. McRO’s patent simply uses a general-purpose computer to speed up a pre-existing animation process, they argued. Plus, McRO’s claims are so broad, they will pre-empt any other attempt to patent a process on computerized animation, they contended.

Reyna began his decision by stating that the claim construction performed by U.S. District Judge George Wu of the Central District of California “is helpful to resolve the question of patentability under Section 101.” While the Federal Circuit did not appear to be setting down a hard-and-fast rule about claim construction, that line will no doubt be cited by many patent owners in future cases, as there’s disagreement among district judges about when and whether claim construction is necessary before deciding 101 issues.

The pre-emption issue “has appeal,” Reyna continued, but it wasn’t supported by evidence. The patent described a specific set of rules, “and the description of one set of rules does not mean that there exists only one set of rules, and does not support the view that other possible types of rules with different characteristics do not exist.”

“This is very significant in my view,” Fenwick’s Sachs said. “The court distinguishes between claiming a result and claiming a process that creates the result, when there are other possible ways to obtain that result.”

Or as Reyna put it, “The claim uses the limited rules in a process specifically designed to achieve an improved technological result in conventional industry practice.”

Judges Richard Taranto and Kara Stoll concurred in Reyna’s ruling.

Jeffrey Lamken of MoloLamken LLP had the winning argument for McRO, with help from Mishcon de Reya New York. Durie Tangri partner Sonal Mehta represented the video game companies along with Weil, Gotshal & Manges and other firms.

Scott Graham can be reached at sgraham@alm.com. On Twitter: @ScottKGraham