Federal Circuit Erases Signature Patent Challenged by Adobe

The Federal Circuit has affirmed a California district court ruling that a patent for e-signature technology was invalid under Section 101.

The case is eSignature Software, LLC v. Adobe Inc.

According to Deloitte,

In 2020, estimates of the size of the global e-signing market reached between USD 2.3 and USD 2.8 billion, depending on the source. The global COVID-19 pandemic and its profound impact on ways of doing business has accelerated the adoption of e-signing, making the market one of the fastest-growing in the world.

The market is projected to grow further into a USD 4.5-5 billion market by 2023 and over USD 14 billion by 2026…

The e-signature market is dominated by DocuSign, with an estimated 75% market share. Adobe has about a 5% market share.

As DocuSign notes,

In 2000, the U.S. federal government passed the Electronic Signatures in Global and National Commerce Act (ESIGN), which, in tandem with the Uniform Electronic Transactions Act (UETA), confirms that electronic signatures constitute legally binding documents if all parties choose to sign digitally.

According to a 2023 post by drysign, another e-signature company, “Global electronic signature transactions have risen from 89 million to 754 million over just five years.”

eSignature Software sued Adobe for allegedly infringing its patent entitled “System and Method for Embedding a Written Signature into a Secure Electronic Document.”

The patent application was filed in 2007, and the patent was granted in 2011.

Claim 1 is representative, and recites:

A method for embedding a written signature into a secure electronic document, comprising:

forming a placeholder electronic document containing content to be attested to by a signature;

selecting a signing individual from a signer list; placing a signature tag into the placeholder electronic document at a signature location chosen, wherein the signature tag is associated with the signing individual and defines the signature location within the placeholder electronic document for the signing individual to sign;

securing the placeholder electronic document to form the secure electronic document having content configured to be uneditable;

sizing an unsigned signature bounding box on a signature capture device based on the type of signature tag at the signature location, wherein the signature bounding box is displayed independently of a display of the secure electronic document;

and capturing a signature with the signature capture device within the signature bounding box as the signature is written by the signing individual, the signature capture device being configured to enable the signing individual to write the signature to be embedded into the secure electronic document at the signature location indicated by the signature tag to mimic a real world experience of signing paper documents.

Adobe moved for judgment on the pleadings, arguing that the patent’s claims were ineligible for patenting under 35 U.S.C. § 101.

The district court granted the motion, and eSignature appealed.

The district court concluded that claim 1 is directed to a “method to apply a signature digitally, in a designated place, within a secure electronic document.”

The district court observed that claims directed to longstanding business practices are directed to an abstract idea. In this case, the court said the patent “itself recognizes that signatures have been used for centuries to notarize and authenticate documents.”

The district court concluded that the claim is directed to an abstract idea because it “simply recite[s] that existing business practice with the benefit of generic computing technology.”

By simply deleting the word “electronic” from the claim, said the court, “the method description would be indistinguishable from the process of signing a paper document.”

The district court then considered whether the claim contains an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application. It concluded that it didn’t.

Rather, as the federal circuit explained, the district court “determined that claim 1 simply recites the use of generic computer features to implement the underlying abstract idea.”

The patent, said the district court, “does not invent much of anything, but purports to preempt all forms of digital signature capture.”

On appeal, eSignature argued that because secure electronic documents were not digitally signed before the patent at issue, this was not a longstanding business practice and, therefore, not an abstract idea.

Said the federal circuit:

Esignature’s argument misunderstands both the district court’s analysis and governing case law. The district court did not conclude that applying digital signatures in an electronic document was a longstanding business practice. Nor did it need to. Instead, it concluded that applying signatures in designated places on documents was a longstanding business practice—and that claim 1, due to its purely functional and generic implementation, amounts to little more than saying: do that on a computer.

Also, the court added in a footnote,

To the extent, Esignature’s argument is intended to show claim 1’s purported novelty—i.e., that applying a signature digitally to an electronic document as claimed had never been done before—novelty alone “does not avoid the problem of abstractness.”

eSignature also argued that the district court failed to consider its purported “inventive aspects,” such as:

• facilitating remote signatures;
• capturing a signature at the time a transaction occurs; and
• saving the embedded signature in a secure electronic document.

However, as Adobe pointed out, eSignature never raised these arguments before the district court.

In related news, the US Patent and Trademark Office (USPTO) has only allowed patent correspondence to be signed electronically using DocuSign®, Acrobat® Sign, and similar third-party e-signature software since March 22, 2024.

According to USPTO Director Kathi Vidal,

The change will provide additional flexibility and convenience to patent applicants and owners, practitioners, and other parties who sign patent-related correspondence and promote consistency by establishing signature requirements that are common to both patent and trademark matters.

This new rule requires that electronic signatures must preserve signature data, including a digital certificate, token, or audit trail that can be reviewed. Also, an e-signature must have an indication that a document was electronically signed.

The final rule on this issue, with additional details, is here.