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The United States Court of Appeals for the Federal Circuit recently issued a nonprecedential decision in In re McFadden, affirming the Patent Trial and Appeal Board’s rejection of a patent application directed to an “information exchange” system. While nonprecedential, the opinion reinforces several recurring themes in patent eligibility jurisprudence under 35 U.S.C. § 101, particularly for software and data-processing inventions, and provides meaningful guidance for applicants navigating similar claim strategies for software related inventions.
- Background and Claimed Invention
By way of background, the application at issue (No. 15/891,363) was directed to systems and methods for operating an information exchange, such as a social network, advertising platform, or other system that distributes content between producers and consumers. The specification described assigning values to information items from both the producer and consumer perspectives and using those values to determine how information should be distributed.
Claim 14, the sole claim on appeal, was central to the dispute and recited the following:
“An information exchange apparatus for determining an exchange value, comprising of:
a first distribution of information items; a specific point;
a means for generating a second distribution of information items, wherein the means for generating uses the first distribution and the specific point;
a means for computing a distribution difference between the first distribution and the second distribution, whereby the exchange value for the specific point is the distribution difference.”
As reflected in this language, the claim focuses on generating and comparing distributions of information to derive a value metric. As prosecution progressed, however, the examiner rejected the claim on two independent grounds: (1) anticipation under § 102 based on the applicant’s own prior publication, and (2) ineligibility under § 101 as directed to an abstract idea. The Board affirmed both rejections. On appeal, the Federal Circuit addressed § 101 and found it dispositive.
- The Federal Circuit’s § 101 Analysis
Turning to the merits, the court applied the familiar two-step framework articulated in Alice Corp. v. CLS Bank International. As is often the case in software-related inventions, both steps proved fatal to the applicant’s claims.
First, at Alice step one, the court agreed with the Board that the claim was directed to an abstract idea – specifically, organizing and presenting information. The court characterized the claim, consistent with its express language, as reciting the generation and comparison of information distributions to determine how content should be presented to a user, analogizing this to advertising, marketing, or content curation activities.
Importantly, the court emphasized that the claims merely involved “collecting, analyzing, and presenting information” using generic computing components, a category consistently treated as abstract in prior Federal Circuit precedent. The applicant’s attempt to characterize the invention as a specialized technological system was unavailing, as the specification described only generic computer hardware and software operating at a high level of generality. Accordingly, the claimed invention did not constitute an improvement to computer technology itself.
Second, at Alice step two, the court further agreed that the claim lacked an inventive concept sufficient to transform the abstract idea into patent-eligible subject matter. The court concluded that the claim language – particularly the “means for generating” and “means for computing” limitations – amounted to nothing more than generic computer implementation of routine data processing.
The applicant’s reliance on purported “algorithms” disclosed in the specification did not alter the analysis. The court found that these algorithms were described only at a high level and amounted to generalized mathematical operations. As the court reiterated, improving abstract calculations alone – even if more efficient – does not satisfy § 101 absent a concrete technological improvement.
- Practical Implications for Software Patent Applicants
In light of this decision, several practical considerations emerge. First, claims directed to information processing – particularly those involving ranking, filtering, or distributing content – remain highly vulnerable under § 101 unless clearly tied to a specific technological improvement. The claim at issue here illustrates how even structured apparatus language can be reduced to an abstract idea where the underlying functionality is conceptual rather than technical.
Second, reliance on generic computing infrastructure continues to be a significant weakness. Applicants should ensure that the specification and claims articulate how the invention improves computer functionality itself, rather than merely using a computer as a tool to perform abstract operations.
Third, while algorithms can support patentability, they must be described with sufficient specificity and tied to a concrete technological solution. High-level mathematical descriptions, like those underlying the “distribution difference” in this case, are unlikely to satisfy the “inventive concept” requirement.
Finally, this case highlights the importance of preserving arguments at every stage of appeal. The court declined to consider certain arguments raised for the first time in the reply brief, reinforcing the need for a fully developed record before the Board.
- Conclusion
In affirming the Board’s rejection, the Federal Circuit in In re McFadden reiterates the stringent application of § 101 to software and data-processing claims. Although nonprecedential, the decision aligns with existing precedent and serves as a cautionary example for applicants seeking protection for information exchange or content distribution technologies. From a strategic standpoint, applicants should carefully evaluate whether their inventions can be framed as technological improvements and ensure that both the claims and specification substantiate that position.
Click HERE learn more about Derek Fahey, Esq., the author of this article.
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