Chapter 8: Patent Protection of Software:
Statutory Subject Matter in the
Supreme Court and the Federal Circuit
D. Statutory Subject Matter in Computerized
Methods of Doing Business (Continued)
Case-Law Developments After State Street and AT&T (Cont’d):
After Alice in the Supreme Court: Down the Rabbit Hole? Or Push-Back?
DDR Holdings, LLC v. Hotels.com, L.P.
United States Court of Appeals for the Federal Circuit
773 F.3d 1245 (Fed. Cir. Dec. 5, 2014)
Before WALLACH, MAYER, and CHEN, Circuit Judges.
Chen, Circuit Judge
Defendants appeal from a final judgment of the United States District Court for the Eastern District of Texas following a jury verdict in favor of plaintiff DDR and a denial of a JMOL motion.
DDR [a NPE] is the assignee of U.S. Pat. No. 7,818,399 (the ’399 patent). The patent is directed to systems and methods of generating a composite web page that combines certain visual elements of a “host” website with content of a third-party merchant. For example, the generated composite web page may combine the logo, background color, and fonts of the host website with product information from the merchant.
The specification of the patent that prior art systems allowed third-party merchants to “lure the [host website’s] visitor traffic away” from the host website because visitors would be taken to the third-party merchant’s website when they clicked on the merchant’s advertisement on the host site. The patent discloses a system that provides a solution to this problem (for the host) by creating a new web page that permits a website visitor, in a sense, to be in two places at the same time. On activation of a hyperlink on a host website—such as an advertisement for a third-party merchant—instead of taking the visitor to the merchant’s website, the system generates and directs the visitor to a composite web page that displays product information from the third-party merchant, but retains the host website’s “look and feel” Thus, the host website can display a third-party merchant’s products, but retain its visitor traffic by displaying this product information from within a generated web page that “gives the viewer of the page the impression that she is viewing pages served by the host” website.
Representative claim 19 of the ’399 patent recites:
19. A system useful in an outsource provider serving web pages offering commercial opportunities, the system comprising:
(a) a computer store containing data, for each of a plurality of first web pages, defining a plurality of visually perceptible elements, which visually perceptible elements correspond to the plurality of first web pages;
(i) wherein each of the first web pages belongs to one of a plurality of web page owners;
(ii) wherein each of the first web pages displays at least one active link associated with a commerce object associated with a buying opportunity of a selected one of a plurality of merchants; and
(iii) wherein the selected merchant, the outsource provider, and the owner of the first web page displaying the associated link are each third parties with respect to one other;(b) a computer server at the outsource provider, which computer server is coupled to the computer store and programmed to:
(i) receive from the web browser of a computer user a signal indicating activation of one of the links displayed by one of the first web pages;
(ii) automatically identify as the source page the one of the first web pages on which the link has been activated;
(iii) in response to identification of the source page, automatically retrieve the stored data corresponding to the source page; and
(iv) using the data retrieved, automatically generate and transmit to the web browser a second web page that displays: (A) information associated with the commerce object associated with the link that has been activated, and (B) the plurality of visually perceptible elements visually corresponding to the source page.
System claim 19 of the ’399 patent requires that a “data store” hold “visually perceptible elements” (or ’look and feel’ elements) that “visually . . . correspond” to a host web page. The host web page must include a link associated with a “buying opportunity” with a merchant. Once a visitor activates this link, the claimed system generates and transmits to the website visitor’s web browser a composite web page that includes product information of the merchant and the “look and feel” of the host website (i.e., “the plurality of visually perceptible elements visually corresponding to the [host web] page”).
Claim 19 further requires that the data store must store “look and feel” descriptions for multiple hosts and that each link must be associated with a particular merchant’s product catalog. Claim 19 also requires that the merchant, system operator, and host website be “third parties with respect to one another.” When a website visitor activates a link associated with a merchant’s product catalog, the claimed system identifies the host web page and then transmits a composite web page using the proper “look and feel” elements of the host website in the data store and the product information from the associated merchant.
Defendant NLG is a travel agency that sells cruises in partnership with travel-oriented websites and major cruise lines through the Internet. DDR’s suit accused NLG of infringing the patent by providing a system for cruise-oriented (host) websites that allows visitors to book cruises on major cruise lines (merchants). In particular, when a visitor on one of these cruise-oriented (host) websites clicks on an advertisement for a cruise, NLG’s system generates and directs the visitor to a composite web page that incorporates “look and feel” elements from the host website and product information from the cruise line (merchant).
. . . Patent-eligible subject matter
NLG contends that the district court erred by denying its motion for JMOL that the asserted claims of of the ’399 patent. We conclude, as did the district court, that the asserted claims of the ’399 patent clear the § 101 hurdle.
. . . Distinguishing between claims that recite a patent-eligible invention and claims that add too little to a patent-ineligible abstract concept can be difficult, as the line separating the two is not always clear. At one time, a computer-implemented invention was considered patent-eligible so long as it produced a “useful, concrete and tangible result.” State Street Bank (finding a machine that transformed data by a series of patent-eligible). This understanding rested, in large part, on the view that such inventions crossed the eligibility threshold by virtue of being in the technological realm, the historical arena for patented inventions. See, e.g., In re Bilski, 545 F.3d 943, 952, 954–56 (Fed. Cir. 2008) (en banc) (concluding that a patent-eligible process must either be “tied to a particular machine or apparatus” or transformed into a different state or thing, i.e., the “machine-or-transformation test”).
While the Supreme Court in Bilski v. Kappos noted that the machine-or-transformation test is a “useful and important clue” for determining patent eligibility, it is clear today that not all machine implementations are created equal. For example, in Mayo, the Supreme Court emphasized that satisfying the machine-or-transformation test, by itself, is not sufficient to render a claim patent-eligible, as not all transformations or machine implementations infuse an otherwise ineligible claim with an “inventive concept.” “[S]imply implementing a mathematical principle on a physical machine, namely a computer, [i]s not a patentable application of that principle.” And after Alice, there can remain no doubt: recitation of generic computer limitations does not make an otherwise ineligible claim patent eligible. The bare fact that a computer exists in the physical rather than purely conceptual realm “is beside the point.” Although the Supreme Court did not “delimit the precise contours of the ‘abstract ideas’ category” in resolving Alice, over the course of several cases the Court has provided some important principles. We know that mathematical algorithms, including those executed on a generic computer, are abstract ideas. See Benson. We know that some fundamental economic and conventional business practices are also abstract ideas. See Bilski (finding the “fundamental economic practice” of hedging to be patent ineligible); Alice (same for intermediated settlement).
In some instances, patent-ineligible abstract ideas are plainly identifiable and divisible from the generic computer limitations recited by the remainder of the claim. For example, the Supreme Court in Alice determined that the claims at issue “simply instruct[ed] the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” In Ultramercial (Fed. Cir. Nov. 14, 2014), the claims merely recited the abstract idea of using advertising as a currency as applied to the particular technological environment of the Internet. In buySAFE (Fed. Cir. 2014), the claims recited no more than using a computer to send and receive information over a network in order to implement the abstract idea of creating a “transaction performance guaranty.” In Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1344–45 (Fed. Cir. 2013), the claims merely recited “generalized software components arranged to implement an abstract concept [of generating insurance-policy-related tasks based on rules to be completed upon the occurrence of an event] on a computer.” And in Bancorp Servs., L.L.C. v. Sun Life Assur. Co., 687 F.3d 1266, 1278 (Fed. Cir. 2012), the claims recited no more than the use of a computer “employed only for its most basic function, the performance of repetitive calculations,” to implement the abstract idea of managing a stable-value protected life insurance policy. Under Supreme Court precedent, the above claims were recited too broadly and generically to be considered sufficiently specific and meaningful applications of their underlying abstract ideas. Although many of the claims recited various computer hardware elements, these claims in substance were directed to nothing more than the performance of an abstract business practice on the Internet or using a conventional computer. Such claims are not patent eligible.
Against this background, we turn to the ’399 patent’s asserted claims. We begin our § 101 analysis at Mayo/Alice step one: determining whether the computer-implemented claims at issue here are “directed to” a patent-ineligible abstract idea. Here, we note that the ’399 patent’s asserted claims do not recite a mathematical algorithm. Nor do they recite a fundamental economic or longstanding commercial practice. Although the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet.
Indeed, identifying the precise nature of the abstract idea is not as straightforward as in Alice or some of our other recent abstract idea cases. NLG’s own varying formulations of the underlying abstract idea illustrate this difficulty. NLG characterizes the allegedly abstract idea in numerous ways, including “making two web pages look the same,” “syndicated commerce on the computer using the Internet,” and “making two e-commerce web pages look alike by using licensed trademarks, logos, color schemes and layouts.” The dissent characterizes DDR’s patents as describing the entrepreneurial goal “that an online merchant’s sales can be increased if two web pages have the same ’look and feel.’ ” But as discussed below, under any of these characterizations of the abstract idea, the ’399 patent’s claims satisfy Mayo/Alice step two.
As an initial matter, it is true that the claims here are similar to the claims in the cases discussed above in the sense that the claims involve both a computer and the Internet. But these claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.
In particular, the ’399 patent’s claims address the problem of retaining website visitors that, if adhering to the routine, conventional functioning of Internet hyperlink protocol (HTTP), would be instantly transported away from a host’s website after “clicking” on an advertisement and activating a hyperlink. For example, asserted claim 19 recites a system that, among other things, 1) stores “visually perceptible elements” corresponding to numerous host websites in a database, with each of the host websites displaying at least one link associated with a product or service of a third-party merchant, 2) on activation of this link by a website visitor, automatically identifies the host, and 3) instructs an Internet web server of an “outsource provider” to construct and serve to the visitor a new, hybrid web page [is this an iframe?] that merges content associated with the products of the third-party merchant with the stored “visually perceptible elements” from the identified host website.
In more plain language, upon the click of an advertisement for a third-party product displayed on a host’s website, the visitor is no longer transported [by link] to the third party’s website. Instead, the patent claims call for an “outsource provider” [“redirect”]having a web server which directs the visitor to an automatically-generated hybrid web page that combines visual “look and feel” elements from the host website and product information from the third-party merchant’s website related to the clicked advertisement. In this way, rather than instantly losing visitors to the third-party’s website, the host website can instead send its visitors to a web page on the outsource provider’s server that 1) incorporates “look and feel” elements from the host website, and 2) provides visitors with the opportunity to purchase products from the third-party merchant without actually entering that merchant’s website.
The dissent suggests that the “store within a store” concept, such as a warehouse store that contains a kiosk for selling a third-party partner’s cruise vacation packages, is the pre-Internet analog of the ’399 patent’s asserted claims. While that concept may have been well-known by the relevant timeframe, that practice did not have to account for the ephemeral nature of an Internet “location” or the near-instantaneous transport between these locations made possible by standard Internet communication protocols, which introduces a problem that does not arise in the “brick and mortar” context. In particular, once a customer enters a physical warehouse store, that customer may encounter a kiosk selling third- party cruise vacation packages. There is, however, no possibility that by walking up to this kiosk, the customer will be suddenly and completely transported outside the warehouse store and relocated to a separate physical venue associated with the third-party—the analog of what ordinarily occurs in “cyberspace” after the simple click of a hyperlink—where that customer could purchase a cruise package without any indication that they were previously browsing the aisles of the warehouse store, and without any need to “return” to the aisles of the store after completing the purchase. It is this challenge of retaining control over the attention of the customer in the context of the Internet that the ’399 patent’s claims address.
We caution, however, that not all claims purporting to address Internet-centric challenges are eligible for patent. For example, in our recently decided Ultramercial opinion, the patentee argued that its claims were “directed to a specific method of advertising and content distribution that was previously unknown and never employed on the Internet before.” But this alone could not render its claims patent-eligible. In particular, we found the claims to merely recite the abstract idea of “offering media content in exchange for viewing an advertisement,” along with “routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Internet.”
The ’399 patent’s claims are different enough in substance from those in Ultramercial because they do not broadly and generically claim “use of the Internet” to perform an abstract business practice (with insignificant added activity). Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink. Instead of the computer network operating in its normal, expected manner by sending the website visitor to the third-party website that appears to be connected with the clicked advertisement, the claimed system generates and directs the visitor to the above-described hybrid web page that presents product information from the third-party and visual “look and feel” elements from the host website. When the limitations of the ’399 patent’s asserted claims are taken together as an ordered combination, the claims recite an invention that is not merely the routine or conventional use of the Internet.
It is also clear that the claims at issue do not attempt to preempt every application of the idea of increasing sales by making two web pages look the same, or of any other variant suggested by NLG. Rather, they recite a specific way to automate the creation of a composite web page by an “outsource provider” that incorporates elements from multiple sources in order to solve a problem faced by websites on the Internet. As a result, the ’399 patent’s claims include “additional features” that ensure the claims are “more than a drafting effort designed to monopolize the [abstract idea].” Alice. In short, the claimed solution amounts to an inventive concept for resolving this particular Internet-centric problem, rendering the claims patent eligible.
In sum, the ’399 patent’s claims are unlike the claims in Alice, Ultramercial, buySAFE, Accenture, and Bancorp that were found to be “directed to” little more than an abstract concept. To be sure, the ’399 patent’s claims do not recite an invention as technologically complex as an improved, particularized method of digital data compression. But nor do they recite a commonplace business method aimed at processing business information, applying a known business process to the particular technological environment of the Internet, or creating or altering contractual relations using generic computer functions and conventional network operations, such as the claims in Alice, Ultramercial, buySAFE, Accenture, and Bancorp. The claimed system, though used by businesses, is patent eligible under § 101.6 The district court did not err in denying NLG’s motion for JMOL of invalidity under 35 U.S.C. § 101 as to these claims.
MAYER, Circuit Judge, dissenting.
I respectfully dissent. The claims asserted by DDR fall outside 35 U.S.C. § 101 because they simply describe an abstract concept—that an online merchant’s sales can be increased if two web pages have the same “look and feel”—and apply that concept using a generic computer.
The common specification of DDR’s patents notes that an online merchant will often lose customers when those customers click on an advertisement from a third-party vendor that has been displayed on the original merchant’s web page. The specification explains, however, that the original merchant could potentially avoid “the loss of hard-won visitor traffic,” if he were able to dupe customers into believing that they were still on the merchant’s web page even when they were actually viewing goods from a third-party vendor. Notably, though, DDR’s patents are very vague as to how this duping is to occur, indicating only that the web page of the original merchant and that of the third-party vendor should be made to look alike using “visually perceptible elements.” DDR’s patents fail to meet the demands of section 101 because they describe a goal—confusing consumers by making two web pages look alike—but disclose no new technology, or “inventive concept,” Mayo, for achieving that goal. See O’Reilly v. Morse, 56 U.S. (15 How.) 62, 120 (1854) (rejecting a claim which covered “an effect produced by the use of electro-magnetism distinct from the process or machinery necessary to produce it”).
DDR’s patents are long on obfuscation but short on substance. Indeed, much of what they disclose is so rudimentary that it borders on the comical. For example, the patents explain that two web pages are likely to look alike if they are the same color, have the same page layout, and display the same logos. The recited computer limitations, moreover, are merely generic. The claims describe use of a “data store,” a “web page having a link,” and a “computer processor,” all conventional elements long-used in ecommerce. Because DDR’s claims, like those at issue in Alice, “simply instruct the practitioner to implement [an] abstract idea . . . on a generic computer,” they do not meet section 101.
The court concludes that the asserted claims of DDR’s ’399 patent fall within section 101 because “they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet.” This is incorrect. DDR’s claims do, in fact, simply take a well-known and widely-applied business practice and apply it using a generic computer and the Internet. The idea of having a “store within a store” was in widespread use well before the dawn of e-commerce. DDR’s patents are directed to the same concept as BJ’s Wholesale Clubs. Just as visitors to BJ’s Wholesale Clubs could purchase travel products from NLG without leaving the BJ’s warehouse, the claimed system permits a person to purchase goods from a third-party vendor, but still have the visual “impression that she is viewing pages served by the [original host merchant].” ’399 patent (explaining that DDR’s claimed system “permits a website visitor, in a sense, to be in two places at the same time”). Indeed, any doubt as to whether the claimed system is merely an Internet iteration of an established business practice is laid to rest by the fact that one of the named inventors acknowledged that the innovative aspect of his claimed invention was “[t]aking something that worked in the real world and doing it on the Internet.”
Alice articulated a technological arts test for patent eligibility—explaining that the claimed method fell outside section 101 because it did not “improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.” Here, the court correctly recognizes Alice’s technological arts standard, but applies it in a deficient manner. According to the court, DDR’s claims fall within section 101 because the “solution” they offer “is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” The solution offered by DDR’s claims, however, is not rooted in any new computer technology. Its patents address the problem of preventing online merchants from losing “hard-won visitor traffic,” and the solution they offer is an entrepreneurial, rather than a technological, one. DDR has admitted that it did not invent any of the generic computer elements disclosed in its claims. There is no dispute, moreover, that at the time of the claimed invention the use of hyperlinks to divert consumers to particular web pages was a well-understood and widely-used technique. While DDR’s patents describe the potential advantages of making two web pages look alike, they do not disclose any non-conventional technology for capturing the “look and feel” of a host website or for giving two web pages a similar appearance. See Alice (“[W]hat petitioner characterizes as specific hardware . . . is purely functional and generic.”); Accenture (rejecting claims that contained no “detailed software implementation guidelines”). DDR’s patents fall outside section 101 because they simply “tak[e] existing information”—the visual appearance of a host merchant’s website—and use conventional technology to “organiz[e] this information into a new form.” Digitech; see Mayo (emphasizing that reciting “well-understood, routie, [or] conventional activity” does not impart patent eligibility).
In concluding that DDR’s claims meet the demands of section 101, the court focuses on the fact that “they recite a specific way to automate the creation of a composite web page . . . .” The Supreme Court, however, has emphatically rejected the idea that claims become patent eligible simply because they disclose a specific solution to a particular problem. See Bilski (concluding that claims fell outside section 101 notwithstanding the fact that they disclosed a very specific method of hedging against price increases); Flook (rejecting the argument '“that if a process application implements a principle in some specific fashion, it automatically falls within the patentable subject matter of § 101”). Indeed, although the claims at issue in Alice described a very specific metho for conducting intermediated settlement, the Court nonetheless unanimously concluded that they fell outside section 101.
Nor is the fact that the claims address an “Internetcentric problem” sufficient to render them patent eligible. The Supreme Court has repeatedly made clear that “limiting the use of an abstract idea to a particular technological environment” is insufficient to confer patent eligibility. Accordingly, the fact that DDR’s system operates “in the context of the Internet” does not bring it within patentable subject matter.
The potential scope of DDR’s patents is staggering, arguably covering vast swaths of Internet commerce. DDR has already brought infringement actions against ten defendants, including Digital River, Expedia, Travelocity, and Orbitz. DDR’s claims are patent ineligible because their broad and sweeping reach is vastly disproportionate to their minimal technological disclosure. See Mayo (in assessing patent eligibility, “the underlying functional concern . . . is a relative one: how much future innovation is foreclosed relative to the contribution of the inventor.”).
Alice made clear that claims untethered to any advance in science or technology do not pass muster under section 101. Viewed as a whole, DDR’s claims contain no more than an abstract idea for increasing sales implemented via “some unspecified, generic computer.” The inventive concept, if any, embedded in DDR’s claims is an idea for “retaining control over the attention of the customer.” Because this purported inventive concept is an entrepreneurial rather than a technological one, DDR’s claims are not patentable.
1. This is the first post-Alice decision of the Federal Circuit upholding a patent against a § 101 challenge. Professor Crouch commented: “The case is close enough to the line that I expect a strong push for en banc review and certiorari. Although Judge Chen’s analysis is admirable, I cannot see it standing up to Supreme Court review and, the holding here is in dreadful tension with the Federal Circuit’s recent Ultramercial decision.”
2. This case reflects clearly post–Internet issues, ones that could not exist before the 1990s. The court observes:
But these claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.
Before the Internet, presumably nobody would want to make one webpage look like another. But should that fact carry the day for patent eligibility? Suppose I decide to make a website on which I collect links to sports events all over the United States, so that viewers can keep abreast of whatever sports interest them almost in real time. Until the Internet developed, nobody could possibly have had such a website (or linked anything to anything). Does that mean my concept “is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks”? To the extent that it is so, does that call for anything more than a “So what?” in terms of patent eligibility? The court points out that “purporting to address Internet-centric challenges” does not guarantee patent eligibility, pointing to Ultramercial, in which the claims may have been “directed to a specific method of advertising and content distribution that was previously unknown and never employed on the Internet before,” but they were nevertheless ineligible because the idea was implemented in a conventional and routine manner. Similarly, buySAFE v. Google involved issues unique to the Internet. As you will see, however, later decisions uncritically take this Internet-centric statement as a talisman.
The “store within a store” metaphor that the court uses (the dissent gives BJ’s Wholesale Clubs as an example) may not be the best way to look at this claimed invention. It may be more apt to characterize it as placing a frame around someone else’s webpage and incorporating the frame and its content into another webpage (the host’s), so that it appears on a user’s screen like this:
3. It is not clear from the patent how this claimed invention works. As Judge Archer commented in In re Grams, the patent’s “specification does not buldge with disclosure.” The court says that the invention works this way, but does not explain how it accomplishes the function:
[The system] instructs an Internet web server of an “outsource provider” to construct and serve to the visitor a new, hybrid web page that merges content associated with the products of the third-party merchant with the stored “visually perceptible elements” from the identified host website.
One way to do this would be with an <iframe> tag (or a <frameset> tag, which HTML no longer supports), an expedient which is discussed in the copyright part of these cases and materials. Links are found there to additional materials giving examples of how to take somebody else’s webpage and make it appear on a display screen surrounded by your own material, so that the other person’s webpage is made to look like part of your webpage. The priority date of this patent is September 17, 1998, by which time framing was well known (Netscape 2 supported it in early 1996). The Ninth Circuit has held in a leading decision that framing is not copyright infringement, at least when “transformative” of the original content. Anyhow, if the way this claimed invention works is by using an <iframe>, or an earlier equivalent, it is old hat. But it is old hat under § 103. Is it old hat for purposes of a § 101 analysis?
Technical note: The <iframe> tag first appeared as a proprietary tag in the ver. 3.0 release of Internet Explorer (released on August 13, 1996). This technique, called inline frames or floating frames, originally worked only with Internet Explorer. The World Wide Web Consortium (W3C) subsequently included the iframe feature in HTML 4.01. Framing, a similar technique that requires more complicated HTML coding, and one which W3C dropped in HTML 5, first appeared in Netscape Navigator 2.0 (March 1996). Before that, a comparable effect could be had only by writing your own HTML code, or other code, as did computer science professor Dan Wallach (then at Princeton, now at Rice) in January 1996. He provided his own “look and feel” for a Dilbert page because he thought that the layout that United Features Syndicate used was “really lame.” He describes his resulting misadventures with the publisher’s lawyers at the Dilbert Hack Page Archives. To iframe a third-party webpage. you simply use the <iframe> tag in much the same manner as you would use an image tag. (The page source for this page has an iframe at the top for the logo and heading of all of these course materials. After the end of this table, an iframe of the patent law bulletin board for this course is shown. It uses much the same iframe material at its top.)
For an extremely irritating example of the kind of framing that the ’399 patent appears to claim, click on this link. (It may take a while to load.) The page shown hijacks copyright law materials from this course and surrounds them with the annoying “look and feel” of the hijacker’s website.
The specification of the ’399 patent mentions framing briefly and in a puzzling manner. It says (col. 2, lines 34-38):
Once a visitor clicks on an affiliate ad and enters an online store, that visitor has left the affiliate’s site and is gone. At best, affiliates are able to use “frames” to keep a shell of their own website around the vendor’s site, but this is only a marginally effective solution.
That simply is not so, as examination of the Professor Nefarious and other framing materials cited above shows. What is marginally effective about it?
4. The core of the court’s determination of patent eligibility under the Alice test is this passage, which is followed up by an assertion that the claims are non–preemptive because they limit the expedient to a particular technological environment:
The ’399 patent’s claims are different enough in substance from those in Ultramercial because they do not broadly and generically claim “use of the Internet” to perform an abstract business practice (with insignificant added activity). Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink. Instead of the computer network operating in its normal, expected manner by sending the website visitor to the third-party website that appears to be connected with the clicked advertisement, the claimed system generates and directs the visitor to the above-described hybrid web page that presents product information from the third-party and visual “look and feel” elements from the host website. When the limitations of the ’399 patent’s asserted claims are taken together as an ordered combination, the claims recite an invention that is not merely the routine or conventional use of the Internet.
Does this analysis stand up to scrutiny? That may well depend on how the claimed invention really works—just what it does to make the desired functionality happen. Suppose, for the sake of argument (this may not be so), the system uses iframing or its equivalent to incorporate the advertiser’s webpage display into the host’s webpage display. If that is so, then this is what happens:
The claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides, it is said, the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink. Instead of the computer network operating in its normal, expected manner by sending the website visitor to the third-party website that appears to be connected with the clicked advertisement, the claimed system generates a frame containing the content of the third-party website. It then embeds that frame among the host’s HTML code to form a composite acreen display (or “virtualwebsite”), but again this occurs in a normal and to-be-expected manner.
The frame operates the way frames and iframes always operate and are expected to operate. That “composite website” presents product information from the third-party and surrounds it with visual “look and feel” elements from the host website, since that is how framing operates. Thus, when the limitations of the ’399 patent’s asserted claims are taken together as an ordered combination, the claims recite a claimed invention that is merely the routine and conventional interaction of the Internet and framing ever since Netscape 2 and IE 3 (and then the publication of HTML 4) made framing and iframing available to Internet users—see, for example, Professor Nefarious’s promises (in HTML 3 days) of how he will operate his existing framing operation in a similar manner to the present invention once HTML 4 makes iframing available, at this link—you will need to scroll down in the top frame).
Compare the majority opinion passage quoted at the beginning of note 4 with this passage from Judge Mayer’s dissent:
The recited computer limitations, moreover, are merely generic. The claims describe use of a “data store,” a “web page having a link,” and a “computer processor,” all conventional elements long-used in ecommerce. Because DDR’s claims, like those at issue in Alice, “simply instruct the practitioner to implement [an] abstract idea . . . on a generic computer,” they do not meet section 101.
Can you reconcile these two views of DDR’s patent claims?
5. Here’s another take. The majority opinion says that the cases in which patents failed the Alice test involved “the performance of an abstract business practice on the Internet or using a conventional computer.” They claimed abstract ideas that are “plainly identifiable and divisible from the generic computer limitations recited by the remainder of the claim.” The claims in those cases “were recited too broadly and generically to be considered sufficiently specific and meaningful applications of their underlying abstract ideas.” Does the majority announce a version of the Alice test under which claimed inventions are patent eligible when they are “specific and meaningful applications” of their underlying abstract idea. Does that echo the State Street Bank test? Will such a test be generally accepted?
6. Now for a completely different view. This is what Arizona State Professor Karjala says:
Alice says that software as patent subject matter must claim some sort of improvement in computer-use technology. These claims seem to do that and therefore should pass the section 101 hurdle. They are likely anticipated or obvious, but that should be a separate question. If my interpretation of Alice is correct, there will not be many software inventions that are actually patented (because most programs are obvious in that a skilled programmer can write code to achieve the functional result), but some will be. Software is the technology for using computers.
Whatever can be done with software can be done in hardware. No one seriously disputes that a completely hard-wired device that achieves a given result (like framing someone else's web page) is patent subject matter, right – like a radio (patent-eligible subject matter but likely anticipated or obvious today)? So, a machine “wired” by software should also be patent eligible. This brings the patentability focus where is should be, namely, on novelty and obviousness.
Software-related inventions (i.e., those that claim no specific code or way of managing computer function), like Bilski, Alice, and the many others must be distinguished and analyzed under the abstract-idea rubric. Denying patent-eligible subject matter in most of them is not theoretically problematic to me. But categorically denying patent elgibility to an entire field of technology (i.e., computer software) on the ground that most of it is routine simply confuses analysis. If software is routine, patentability can and should be denied under sections 102 and 103.
Does this approach adequately separate computer-improvement cases from cases with fact patterns like that of Ultramercial, that involved routine and conventional implementations of ideas for improvement of an aspect of something using a computer (i.e., something Internet-centric)? Is the present case more like Ultramercial or more like Caltech v. Hughes? What would the Alice Court say? Considering the several preceding post–Alice decisions of the Federal Circuit, what would the rest of the Federal Circuit say? Does the fish-slapping parable whose URL is at the beginning of this note predict an answer?
7. IP Watchdog’s Gene Quinn, although a fervent enthusiast for patenting sotware, found it difficult to distinguish Ultramercial claim 1 from ’399 claim 19. He found the difference “thin” and one “that is not at all likely to lead to a repeatable and consistent test that can be applied in a predictable way.” He added:
I don’t think it is fair to say that the claim language describes “how interactions with the Internet are manipulated to yield a desired result.” That level of detail would require code, or at least detailed algorithms. Therefore, I think the difference Judge Chen is seeing is more about philosophy than about anything else.
Do you agree with Quinn?
8. Regardless of whether you agree with the treatment of framing as an invention, here, you can find several good passages in the opinion that are helpful in analysis of other cases. Judge Robinson’s opinion in the Joao Bock case below does just that.
For example, DDR Holdings points out the satisfying the machine-or-transformation test is not a sufficient condition for patent eligibility: “For example, in Mayo, the Supreme Court emphasized that satisfying the machine-or-transformation test, by itself, is not sufficient to render a claim patent-eligible, as not all transformations or machine implementations infuse an otherwise ineligible claim with an ‘inventive concept.’ ” Another useful sound bite: “We know that mathematical algorithms, including those executed on a generic computer, are abstract ideas. See Benson.”
9. Because DDR Holdings is the only post-Alice Federal Circuit decision so far to uphold a patent against a § 101 challenge, patentees have been quick to cite it and accused infringers have found ways to distinguish it. For example, in KomBea Corp. v. Noguar L.C., 2014 U.S. Dist. LEXIS 177186 (D. Utah Dec. 23, 2014), the patents covered systems of automating telemarketing calls while “allowing a telemarketing agent to personalize the calls to fit the needs of the potential customer and give the impression that the potential customer is speaking to a real salesperson, as opposed to listening to a recorded sales presentation.” The user of the invention employs a computer to select an appropriate pre-recorded script to give a customer a telemarketing spiel that will “best meet the needs of a customer to create an effective sales call.” The court distinguished DDR Holdings this way:
The patents-in-suit are distinguishable from the patents in DDR Holdings. First, the patents-in-suit are not directed toward solving a new problem, unique to a technological field. Rather the patents-in-suit are directed toward performing fundamental commercial practices more efficiently. Second, the patents-in-suit are not a new solution to a unique problem; they only employ a combination of sales techniques and basic telemarketing technology to create an efficient system. Lastly, the patents-in-suit do not describe a new way of manipulating technology beyond its conventional or routine use. For these reasons, the patents-in-suit are more akin to those described in Bilski and Alice, than the patents at issue in DDR Holdings.
After finding no inventive concept, the court turned to the patentee’s argument that the claimed invention did not involve conventional practices as in Bilski and Alice, but rather a new solution to a long-unsolved problem:
Defendant argued that the patents-in-suit are “the solution of a problem that's been tackled for years and . . . never been effectively solved.” Further, Defendant argued that the patents-in-suit have an inventive concept because they do not “merely [implement] with a computer something that has been done by hand before because it never has been able to have been done manually with the kind of accuracy and all of the other parameters that are required by these systems. You know, it was just heretofore impossible.” It is immaterial to the Court’s analysis whether anyone has combined the sales techniques within the claimed patents as accurately and efficiently as Defendant. In Bancorp Services, LLC v. Sun Life Assurance Co. of Canada, the Federal Circuit held that “the fact that the required calculations could be performed more efficiently via a computer does not materially alter the patent eligibility of the claimed subject matter.” In this case, the fact that Defendant’s patents-in-suit are directed toward abstract ideas that are more efficiently executed with the use of a generic computer does not make the patents eligible for protection. Therefore, the Court finds that the claims, individually and collectively, do not transform the abstract ideas within the claims into an inventive concept. As such, the patents-in-suit fail to transform the abstract ideas they claim into patent-eligible subject matter.
10. In MyMedicalRecords, Inc. v. Walgreen Co., 2014 U.S. Dist. LEXIS 176891 (C.D. Cal. Dec. 23, 2014), the patentee sought to invoke DDR Holdings. The claimed invention was a “method for providing a user with the ability to collect, access, and manage personal health records in a secure and private manner.” The claims required use of computer functionality to implement the claimed method by employing such hardware elements as a “server”, “storage medium,” “computing device,” and also “image file format files&rdquo and a “user interface.” The court found DDR Holdings “inapposite to this case.” The court said:
Unlike the claims in DDR these claims are directed to nothing more than the performance of a long-known abstract idea “from the pre-Internet world”— collecting, accessing, and managing health records in a secure and private manner— on the Internet or using a conventional computer. The patent claims are not “rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks” [as in] DDR. Rather, the patent recites an invention that is merely the routine and conventional use of the Internet and computer with no additional specific features.
2014 Interim Guidance on Patent Subject Matter Eligibility
United States Patent and Trademark Office
37 CFR Part 1 – 79 Fed. Reg. 74618 (Dec. 16, 2014)
On December 16, 2014, the PTO published Interim § 101 guidelines to aid examiners in their examination of patent applications claiming an implementation of an abstract idea or one of the other exceptionms to patent eligibility. PTO Commissioner for Patents Peggy Focarino asserted in the PTO’s blog: “We crafted this guidance to be a more straightforward eligibility analysis, one that promotes examination efficiency and consistency while conforming with the principles in the Supreme Court decisions.” A flowchart showing the examination propcess, based on Alice, is shown below:
The guidelines do not have the force of law. Ultimately, the decisions of the Supreme Coujrt and the Federal Circuit are the law. The guidelines are simply the legal opinion of the PTO staff. But examiners will allow or reject claims on the basis of the guidelines. Presumably, the appellate board within the PTO will follow the guidelines, too. But since it is established law in the Federal Circuit that patent eligibility is an issue of law, to be decided de novo without any deference, the Federal Circuit will feel free to disregard guidelines with which it disagrees.
Counsel for DDR Holdings, after deploring Alice and many of its lower court progeny as “mushy judicial activism,”observed several things the guidelines fail to do, although they should do so:
The Guidelines do not but should demand that examiners bear the burden of setting forth a prima facie case by (1) stating a specific abstract idea, (2) offering articulated reasoning why the proposed claim is “directed to” the abstract idea (without mere say-so or form paragraphs), and (3) providing evidence to support any assertions of “conventionality” or “routineness.”
Do you agree? Should the same principles apply to district judges? To Federal Circuit judges?
The guidelines contain many illustrative examples intended to guide examiners in determin ing whether the implementation of an abstract idea has limitations that qualify as “significantly more” than just the abstract idea. By and large, the examples are reasonably clear examples of what the courts have held eligible or ineligible. Consider the following example, however (79 Fed. Reg. at 74625):
For instance, a claim directed to a complex manufactured industrial product . . . that recites meaningful limitations along with a judicial exception may sufficiently limit its practical application so that a full eligibility analysis is not needed. As an example, a robotic arm assembly having a control system that operates using certain mathematical relationships is clearly not an attempt to tie up use of the mathematical relationships and would not require a full analysis to determine eligibility.
Suppose we make the “using certain mathematical relationships” limitation more specific and concrete for purposes of understanding and analysis; suppose we make the “certain relationship” the Pythagorean Theorem and rewrite the claim as this:
In a robotic assembler system having a horizontal support with regard to which Cartesian X-Y coordinates are established, and having a pivotable, radially extensible robotic arm assembly rotatable around a pivot point located on the support at coordinates 0, 0, the improvement comprising: a control system that operates to extend the robotic arm assembly to a selected location distanced from the pivot point, said selected location having coordinates a, b, wherein said control system extends the robotic arm assembly from the pivot point to said selected location by a distance h such that h2 = a2 + b2.
Is this a self evidently patent-eligible claim? Or is it self evidently patent ineligible? Does placing the Pythagorean Theorem in a particular technological environment (robotics) make it patent eligible? Does the claimed invention do more than just place the Pythagorean Theorem in a particular technological environment? Because robotics is a kind of technology, is that enough to confer patent eligibility? Is surveying a form of technolgy? Flook said that limiting the Pythagorean Theorem to surveying was unavailing (“the Pythagorean theorem would not have been patentable, or partially patentable, because a patent application contained a final step indicating that the formula, when solved, could be usefully applied to existing surveying techniques”).
This hypothetical case illustrates the problem that government counsel had in the Benson case back in the early 1970s. Displeased because the applicant wouldn’t provide a specific “shoe” in which the PTO should search for art (such as PBX systems, which is what applicant Bell Labs said it had in mind), the government said the claim was too sweeping. At the cert petition stage, the government briefs suggest that the government would have been satisfied if the claim had only been limited, for example, to a PBX system, which Bell had refused to do. As the case progressed, however, government counsel became more militant and (in merits stage briefs) demanded both an apparatus-defined technological field of use limitation (a “shoe”) and an inventive application of the underlying principle. Benson pointed in that direction, but not squarely. Flook then held that a technological field of use limitation was insufficient and an inventive application of the underlying principle was required. Three decades later, Mayo and Alice reaffirmed Flook’s view.
So, what is the PTO thinking now—and how do its guidelines square with Flook, Mayo, and Alice? Does this hypothetical case highlight the tension between the Flook and Mackay cases?
On January 27, 2015, the PTO published a set of illustrative examples of patent-eligible claims and patent-ineligible claims, to be used with the Guidelines. One example is based on DDR Holdings, about which the PTO says:
The claimed invention differs from other claims found by the courts to recite abstract ideas in that it does not “merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.”
The PTO then suggests that the claim is not directed to an abstract idea and thus need not be subjected to the second step of an Alice analysis. “Under the 2014 Interim Eligibility Guidance no further analysis would be necessary” because the claim is patent eligible.
Content Extraction & Transmission LLC v. Wells Fargo Bank
United States Court of Appeals for the Federal Circuit
776 F.3d 1343 (Fed. Cir. Dec. 23, 2014)
Before DYK, TARANTO, and CHEN, Circuit Judges.
CHEN, Circuit Judge.
Content Extraction and Transmission LLC CET) appeals from the grant of a motion to dismiss under Rule 12(b)(6) of t(he Federal Rules of Civil Procedure (FRCP), in which the United States District Court for the District of New Jersey held that the claims of CET’s asserted patents are invalid as patent ineligible under 35 U.S.C. § 101. We affirm the district court’s dismissal of CET’s claims.
CET owns U.S. Patent Nos. 5,258,855 (’855 patent), 5,369,508 (’508 patent), 5,625,465 (’465 patent), and 5,768,416 (’416 patent) (collectively, the asserted patents). The ’508, ’465, and ’416 patents are continuations of the ’855 patent, and share substantially the same specification. The four patents contain a total of 242 claims. The claims generally recite a method of 1) extracting data from hard copy documents using an automated digitizing unit such as a scanner, 2) recognizing specific information from the extracted data, and 3) storing that information in a memory. This method can be performed by software on an automated teller machine (ATM) that recognizes information written on a scanned check, such as the check’s amount, and populates certain data fields with that information in a computer’s memory.
Claim 1 of the ’855 patent recites:
A method of processing information from a diversity of types of hard copy documents, said method comprising the steps of:
(a) receiving output representing a diversity of types of hard copy documents from an automated digitizing unit and storing information from said diversity of types of hard copy documents into a memory, said information not fixed from one document to the next, said receiving step not preceded by scanning, via said automated digitizing unit, of a separate document containing format requirements;
(b) recognizing portions of said hard copy documents corresponding to a first data field; and
(c) storing information from said portions of said hard copy documents corresponding to said first data field into memory locations for said first data field.
CET filed infringement actions against appellees Wells Fargo Bank, N.A. (Wells Fargo) and The PNC Financial Services Group, Inc. and PNC Bank, N.A. (collectively, PNC), alleging that they were using ATMs with check deposit software that infringed its patents. Diebold, the manufacturer of Wells Fargo’s and PNC’s ATMs, filed an action against CET seeking 1) a declaratory judgment that its ATMs did not infringe CET’s asserted patents and that CET’s patents were invalid;. CET counterclaimed against Diebold by asserting direct and indirect infringement of its patents.
PNC subsequently moved to dismiss CET’s complaint in its entirety pursuant to Fed. R. Civ. P. 12(b)(6), on the ground that each claim of the asserted patents was invalid as patent-ineligible under 35 U.S.C. § 101. PNC focused its arguments on two claims: claim 1 of the ’855 patent and claim 1 of the ’416 patent. PNC contended that these two claims were representative, and that none of the other claims included anything more than minor changes in format or phrasing. In its opposition to PNC’s motion, CET did not challenge PNC’s characterization of claim 1 of the ’855 patent or claim 1 of the ’416 patent as representative, instead focusing its arguments on defending those two claims.
The district court agreed that all CET’s asserted claims were invalid as patent-ineligible under § 101, granted PNC’s motion, and dismissed CET’s complaints against both PNC and Wells Fargo. In light of this holding, the district court also dismissed Diebold’s request for a declaratory judgment of invalidity and noninfringement as moot.
STANDARD OF REVIEW
We review the district court’s determination of patent eligibility under § 101 de novo. Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012).
We focus here on whether the claims of the asserted patents fall within the excluded category of abstract ideas. The Supreme Court’s two-step framework, described in Mayo and Alice, guides our analysis. We first determine whether a claim is “directed to” a patent-ineligible abstract idea. If so, we then consider the elements of the claim—both individually and as an ordered combination—to assess whether the additional elements transform the nature of the claim into a patent-eligible application of the abstract idea. This is the search for an “inventive concept”—something sufficient to ensure that the claim amounts to “significantly more” than the abstract idea itself.
The Supreme Court has not “delimit[ed] the precise contours of the ‘abstract ideas’ category.” We know, however, that although there is no categorical business-method exception, Bilski, claims directed to the mere formation and manipulation of economic relations may involve an abstract idea. See Alice, 134 S. Ct. at 2356–57. We have also applied the Supreme Court’s guidance to identify claims directed to the performance of certain financial transactions as involving abstract ideas. See buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (creating a transaction performance guaranty for a commercial transaction on computer networks such as the Internet); Accenture Global Servs., GmbH v.Guidewire Software, Inc., 728 F.3d 1336, 1338 (Fed. Cir. 2013) (generating rule-based tasks for processing an insurance claim); Bancorp Servs., L.L.C. v. Sun Life Assur. Co., 687 F.3d 1266, 1278 (Fed. Cir. 2012) (managing a stable value protected life insurance policy); Dealertrack, 674 F.3d at 1333 (processing loan information through a clearinghouse).
Applying Mayo/Alice step one, we agree with the district court that the claims of the asserted patents are drawn to the abstract idea of 1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory. The concept of data collection, recognition, and storage is undisputedly well-known. Indeed, humans have always performed these functions. And banks have, for some time, reviewed checks, recognized relevant data such as the amount, account number, and identity of account holder, and stored that information in their records.
CET attempts to distinguish its claims from those found to be abstract in Alice and other cases by showing that its claims require not only a computer but also an additional machine—a scanner. CET argues that its claims are not drawn to an abstract idea because human minds are unable to process and recognize the stream of bits output by a scanner. However, the claims in Alice also required a computer that processed streams of bits, but nonetheless were found to be abstract. Similar to how the computer-implemented claims in Alice were directed to “the concept of intermediated settlement,” and the claims in Dealertrack were directed to the concept of “processing information through a clearinghouse,” CET’s claims are drawn to the basic concept of data recognition and storage.
For the second step of our analysis, we determine whether the limitations present in the claims represent a patent-eligible application of the abstract idea. For the role of a computer in a computer-implemented invention to be deemed meaningful in the context of this analysis, it must involve more than performance of “well-understood, routine, [and] conventional activities previously known to the industry.” Further, “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.”
Applying Mayo/Alice step two, we agree with the district court that the asserted patents contain no limitations—either individually or as an ordered combination—that transform the claims into a patent-eligible application. CET conceded at oral argument that the use of a scanner or other digitizing device to extract data from a document was well-known at the time of filing, as was the ability of computers to translate the shapes on a physical page into typeface characters. CET’s claims merely recite the use of this existing scanning and processing technology to recognize and store data from specific data fields such as amounts, addresses, and dates. There is no “inventive concept” in CET’s use of a generic scanner and computer to perform well-understood, routine, and conventional activities commonly used in industry. At most, CET’s claims attempt to limit the abstract idea of recognizing and storing information from hard copy documents using a scanner and a computer to a particular technological environment. Such a limitation has been held insufficient to save a claim in this context. See Alice, 134 S. Ct. at 2358; Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715–16 (Fed Cir. 2014); buySAFE, 765 F.3d at 1355.
CET next argues that the failure of PNC or the district court to individually address every one of its claims is inconsistent with the statutory presumption of validity that requires proving the invalidity of each claim by clear and convincing evidence. The district court, however, correctly determined that addressing each claim of the asserted patents was unnecessary. After conducting its own analysis, the district court determined that PNC is correct that claim 1 of the ’855 patent and claim 1 of the ’416 patent are representative, because all the claims are “substantially similar and linked to the same abstract idea.” Moreover, CET never asserted in its opposition to PNC’s motion that the district court should have differentiated any claim from those identified as representative by PNC. Nor did CET identify any other claims as purportedly containing an inventive concept. If CET disagreed with PNC’s or the district court’s assessment, CET could have identified claims in its opposition brief that it believed would not be fairly represented by claims 1 of the ’855 and ’416 patents for purposes of PNC’s § 101 challenge. Regardless, we have reviewed all the claims of CET’s asserted patents, and agree with the district court that, for the purposes of PNC’s § 101 challenge, 1) the claims of the asserted patents are substantially similar in that they recite little more than the same abstract idea, and 2) claim 1 of the ’855 patent and claim 1 of the ’416 patent are representative.
CET argues on appeal that certain dependent claims recite additional steps, such as extracting and detecting specific data fields, repeating some steps, and storing data as images or text, rendering those claims patent-eligible. For instance, CET notes that dependent claim 44 of the ’416 patent additionally requires: “defining a set of symbols which designate fields of information required by an application program; and detecting the presence of a particular one of said defined set of symbols on a hard copy document and extracting a field of information required by an application program based on said detecting.” This limitation merely describes generic optical character recognition technology, which CET conceded was a routine function of scanning technology at the time the claims were filed. Indeed, all of the additional limitations in the claims cited in CET’s appeal brief recite well-known, routine, and conventional functions of scanners and computers. Thus, while these claims may have a narrower scope than the representative claims, no claim contains an “inventive concept” that transforms the corresponding claim into a patent-eligible application of the otherwise ineligible abstract idea.
Finally, CET contends that the district court erred by declaring its claims patent-ineligible under § 101 at the pleading stage without first construing the claims or allowing the parties to conduct fact discovery and submit opinions from experts supporting their claim construction positions. Although the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter, claim construction is not an inviolable prerequisite to a validity determination under § 101. See Ultramercial, 772 F.3d at 714–15; Bancorp, 687 F.3d at 1273–74. The district court construed the terms identified by CET “in the manner most favorable to [CET],” necessarily assuming that all of CET’s claims required a machine, even though several claims do not expressly recite any hardware structures. Nonetheless, the district court determined the claims of the asserted patents were patent-ineligible. Likewise, we conclude that even when construed in a manner most favorable to CET, none of CET’s claims amount to “significantly more” than the abstract idea of extracting and storing data from hard copy documents using generic scanning and processing technology. The district court’s resolution of PNC’s motion to dismiss at the pleading stage was therefore proper.
1. This Federal Circuit decision appears to be a fairly straightforward application of Mayo and Alice, as interpreted in previous Federal Circuit opinions. It conveniently summarizes earlier precedent.
2. In a part of the opinion not reproduced here, the Federal Circuit affirmed the district court’s dismissal of Diebold’s claim that the patentee tortiously enforced the patents, knowing that they were invalid. The case was filed in 2012, after the Supreme Court’s Bilski decision (June 28, 2010) and Mayo decision (March 20, 2012), but before Alice (June 19, 2014). Bringing a patent infringement action is a form of petitioning the government for redress of grivances, and therefore presumptively privileged and immune under the First Amendment. The presumption is dissipated, however, if the defendant’s instigation of litigation was merely a “sham.” To be a “sham” the lawsuit must be objectively baseless “in the sense that no reasonable litigant could realistically expect success on the merits.” Because of that the court said in this case:
Given the focus on the act of filing the complaint as the actionable event, CET’s infringement suits, though unsuccessful, were not objectively baseless. This is because the state of the law of § 101 was deeply uncertain at the time CET filed its complaints against Wells Fargo and PNC in 2012. Compare Ultramercial (Fed. Cir. 2011) (subsequently vacated), with Dealertrack. See also CLS Bank Int’l v. Alice Corp. Pty Ltd. (Fed. Cir. 2013) (en banc), (S. Ct. 2014). Under these circumstances, we cannot conclude that as a matter of law, no reasonable litigant in 2012 could have expected success on at least one of CET’s claims.
CET initiated the suit just shortly after Mayo. Diebold filed its counter-suit well after Mayo, at which point CET sued Diebold. The district court dismissed the complaint in July 2013 after Alice, but CET pursued the appeal. First of all, is the right date to consider that on which the suit was filed or all of the subsequent dates when it was continued? Is there a duty to discontinue a baseless suit once it should be recognized as hopeless on the merits? Regardless of that, since the suit was filed after Mayo, should CET have recognized that between Bilski and Mayo as precedents, the case was unmeritorious? But does it make a difference that in CLS Bank half the Federal Circuit judges were willing to keep singing the piano roll blues? Apparently, they couldn’t (or wouldn’t) read Mayo properly. Should you demand more of CET and its counsel? Why? Why not?
All right, here is a partial way around that ruling. Section 285 of the Patent Act authorizes a district court to award attorney's fees in patent litigation in “exceptional cases” – that is, cases which stand out from the others with respect to the substantive strength of a party’s litigating position or the unreasonable manner in which the case was litigated. Until recently, the Federal Circuit held that a case is “exceptional” only if the district court finds either litigation-related misconduct of an independently sanctionable magnitude or determines that the litigation was both “brought in subjective bad faith” and that the claim was “objectively baseless.” (This is essentially the standard used in CET v. Wells Fargo.) In Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014), the Supreme Court held that the Federal Circuit’s framework is too rigid; it “superimposes an inflexible framework onto statutory text that is inherently flexible.” The proper test is whether the patentee acted in subjectively bad faith or pressed an “exceptionally meritless claim.” According to one commentator, this change in law will force patent trolls “to add a new variable to their calculations before pursuing a marginal lawsuit over their intellectual property.” Fisher, Patent Trolls Face Higher Risks As Supreme Court Loosens Fee-Shifting Rule, Forbes (Apr. 29, 2014). Do you think that under Octane Fitness bringing a patent suit on a patent dead in the water after Alice calls for fee-shifting?
3. Content Extraction filed a certiorari petition asking the Court to give further guidance after its Alice decision. On October 5, 2015, the Court denied the petition.
Internet Patents Corp. v. Active Network, Inc.
United States Court of Appeals for the Federal Circuit
790 F.3d 1343 (June 23, 2015)
Before Newman, Moore, and Reyna
Newman, Circuit Judge
Internet Patents Corporation (IPC) appeals the judgments of the United States District Court for the Northern District of California, dismissing the complaints in four related actions for infringement of U.S Patent No. 7,707,505 (the '505 Patent) on the ground of patent ineligibility under 35 U.S.C. § 101.
The '505 Patent claims "the use of a conventional web browser Back and Forward navigational functionalities without data loss in an online application consisting of dynamically generated web pages." The court described the '505 Patent subject matter as "retaining information lost in the navigation of online forms," and deemed this to be an abstract concept and thus ineligible for patenting:
The Court finds that by setting out the abstract idea of a known technological challenge without setting out any specific disclosures, the Patent "added no elements or combination of elements, sometimes referred to as the inventive concept, sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the natural law [or the abstract idea]."
Claim 1 is the broadest claim:
1. A method of providing an intelligent user interface to an online application comprising the steps of:
furnishing a plurality of icons on a web page displayed to a user of a web browser, wherein each of said icons is a hyperlink to a dynamically generated online application form set, and wherein said web browser comprises Back and Forward navigation functionalities;
displaying said dynamically generated online application form set in response to the activation of said hyperlink, wherein said dynamically generated online application form set comprises a state determined by at least one user input; and
maintaining said state upon the activation of another of said icons, wherein said maintaining allows use of said Back and Forward navigation functionalities without loss of said state.
A principal issue is whether the additional limitations in other claims of the '505 Patent rescue this method from ineligible abstraction. IPC argues that the invention is not an abstract idea, but a tangible and useful improvement over prior computer-implemented methods of entering information into online application forms. The specification states: "In contrast to the prior art, the present system, in all its embodiments, maintains virtual application information, relative dependencies, and information context obtained and/or derived from each pane accessed by the user/applicant."
IPC states that the specified limitations remove the claims from abstraction, citing the "maintaining state" limitation, the furnishing of icons as separate hyperlinks to an online application, and using the Back and Forward buttons without losing data previously entered in the application form. IPC states that its method is a technical advance over the prior art, referring to the Court's guidance in Alice.
The district court held that the several claimed steps did not add an inventive concept, including the "maintaining state" limitation on which IPC focuses on appeal.
Recently, the courts have focused on the patent eligibility of "abstract ideas," for precision has been elusive in defining an all-purpose boundary between the abstract and the concrete, leaving innovators and competitors uncertain as to their legal rights. The present framework starts with the case of Bilski v. Kappos, 561 U.S. 593 (2010), where the Court held that the generally known idea of hedging commodities is not rescued from "abstraction" through the use of computer technology.
In Mayo, the Court introduced the "inventive concept" protocol to probe the categories of laws of nature, natural phenomena, and abstract ideas. The Court set forth a two-step methodology for determining patenteligible subject matter. "First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts." Alice, 134 S. Ct. at 2355. If so, the court then considers the elements of each claim "both individually and 'as an ordered combination' to determine whether the additional elements 'transform the nature of the claim' into a patent-eligible application." Id. (quoting Mayo).
The Court described this second step as "a search for an 'inventive concept'—i.e., an element or combination of elements that is 'sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible] concept itself.' " Alice, 134 S. Ct. at 2355 (quoting Mayo, 132 S. Ct. at 1294). By "consider[ing] all claim elements, both individually and in combination, [this methodology] is consistent with the general rule that patent claims 'must be considered as a whole.' " Alice, 134 S. Ct. at 2355 n.3.
Under step one of Mayo/Alice, the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter. However, this determination alone does not render the subject matter ineligible. In Mayo, the excluded subject matter was a law of nature, "namely, relationships between concentrations of certain metabolites in the blood and the likelihood that a dosage of a thiopurine drug will prove ineffective or cause harm." The Court distilled this ineligible concept from the claims as a whole, and found no inventive concept in routine application of this law of nature.
In Alice, the Court found that the claims were directed to the abstract idea of intermediated settlement, and that no claim elements, alone or in combination, provided the inventive concept of patent-eligible subject matter. The Court held that the known practice of reducing financial risk by passing funds through a "third-party intermediary" did not lose its character as an abstract idea. Although computer capability achieved financial activity of a scope not previously available, no inventive concept was found in the claims, for the "computer functions are 'well-understood, routine, conventional activities' previously known to the industry." Id. (quoting Mayo).
The two-step analytic protocol introduced in Mayo directs attention to whether the claim contains an "inventive concept." Determination of what is an inventive concept favors inquiries analogous to those undertaken for determination of patentable invention, for a known idea, or one that is routine and conventional, is not inventive in patent terms, as the Court found in Bilski, Mayo, and Alice. For Bilski and Alice, the conventional idea was based on the use of computers to conduct known forms of financial transactions. For Mayo, the Court held that metabolism of the drug thiopurine is a law of nature, and that instructing physicians to administer the drug according to its presence in the blood "at most add[s] a suggestion that he should take those [natural] laws into account when treating his patient." "The relation is a consequence of the ways in which thiopurine compounds are metabolized by the body—entirely natural processes. And so a patent that simply describes that relation sets forth a natural law."
Other precedent illustrates that pragmatic analysis of § 101 is facilitated by considerations analogous to those of §§ 102 and 103 as applied to the particular case. The courts have recognized that it is not always easy to determine the boundary between abstraction and patent-eligible subject matter. Recent precedent illustrates this boundary in a variety of factual circumstances. E.g., CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011) (claims linked only to a general purpose computer preempted the abstract concept of detecting credit-card fraud based on past transactions); Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333-34 (Fed. Cir. 2012) ("computer aided" mental process claims, unlimited in scope, preempted the idea of "selectively forwarding" credit data); Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1344-45 (Fed. Cir. 2013) (claims that implemented the abstract idea of generating tasks based on rules on the occurrence of an event, held ineligible because they preempted all practical uses of the abstract concept); Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir. 2014) (claims to a general process for combining two data sets into a device profile were "'so abstract and sweeping' as to cover any and all uses of a device profile" (quoting Gottschalk v. Benson, 409 U.S. 63, 68 (1972))).
Precedent illustrates not only the variety of concepts that have been challenged under section 101, but the variety of details that may be included in the specification and the variety of limitations that may be included in the claims. Courts have found guidance in deciding whether the allegedly abstract idea (or other excluded category) is indeed known, conventional, and routine, or contains an inventive concept, by drawing on the rules of patentability. In Alice, the Court elaborated that, for a perceived abstract idea, if the claim "contains an 'inventive concept' sufficient to 'transform' the claimed abstract idea into a patent-eligible application," then the claims pass the test of eligibility under section 101.
The district court applied these principles to the IPC claims. The court determined that the '505 Patent claimed "the use of a conventional web browser Back and Forward navigational functionalities without data loss in an online application consisting of dynamically generated web pages." The district court described "retaining information lost in the navigation of online forms" as an ineligible abstract idea. IPC argues that the "maintaining state" element of the claim comes directly from the patent specification:
In contrast to the prior art, the present system, in all its embodiments, maintains virtual application information, relative dependencies, and information context obtained and/or derived from each pane accessed by the user/applicant. This state maintenance enables use of standard browser Back and Forward button functions without loss of data and without losing the user's "place" in the application process.
Applying the guidance of Bilski, Mayo, and Alice to the present appeal, we start by ascertaining the basic character of the subject matter, and then whether there is an "inventive concept" in a claim drawn to some level of abstraction. For the '505 Patent, the end result of "maintaining the state" is described as the innovation over the prior art, and the essential, "most important aspect": "The most important aspect of the user interface of the present invention is not that it has tabs or that it enables a certain amount of non-sequential (non-linear) access to the various form sets within a virtual application, but that it maintains data state across all panes." IPC stresses the unconventionality of the claim elements of maintaining the state, furnishing icons on a web page with a browser having Back and Forward navigation functions, and displaying an online application form.
We agree with the district court that the character of the claimed invention is an abstract idea: the idea of retaining information in the navigation of online forms. Mayo notes the insufficiency of "well-understood, routine, conventional activities previously known" to found an "inventive concept." The '505 Patent specification refers to the "browser Back and Forward button functionality" as "conventional." The specification also refers to the Back and Forward functionality as "well-known" and "common," e.g., "Furthermore, the common convenience of the 'Back' and 'Forward' buttons (provided in all well-known Internet browsers) generally does not function properly when filling in online forms."
The specification also states that the use of internet web pages for users to fill out online applications was brought about by "[t]he increasing popularity of the Internet and the World Wide Web," and describes these online application systems as generating information to the user based on information inputted by the user. As the district court observed, claim 1 contains no restriction on how the result is accomplished. The mechanism for maintaining the state is not described, although this is stated to be the essential innovation. The court concluded that the claim is directed to the idea itself—the abstract idea of avoiding loss of data. IPC's proposed interpretation of "maintaining state" describes the effect or result dissociated from any method by which maintaining the state is accomplished upon the activation of an icon. Thus we affirm that claim 1 is not directed to patent-eligible subject matter.
[The court dismisses the remaining independent system and Beauregard claims as equivalent in content to the method claim discussed above, and the remaining dependent claims as failing to add an inventive concept because "they represent merely generic data collection steps or siting the ineligible concept in a particular technological environment."]
We affirm the district court's ruling that the claims of the '505 Patent are directed to ineligible subject matter. The judgment of invalidity of the '505 Patent claims in terms of section 101 is affirmed.
Versata Development Group, Inc. v. SAP America, Inc.
United States Court of Appeals for the Federal Circuit
793 F.3d 1306 (July 9, 2015)
Before Newman, Plager, and Hughes.
Plager, Circuit Judge.
A covered business method (CBM) patent is defined in section 18 of the America Invents Act (AIA) as a patent that “claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service,” but is not for a “technological” invention. The AIA statute provides for CBM review in the PTO of CBM patents. This review is an administrative proceeding before the Patent Trial and Appeal Board (PTAB), a newly created adjudicatory arm of the PTO, which determines the validity of the patent under review. Congress created CBM review because of a concern with litigation abuse over business method patents.
A CBM patent is defined further by regulations that the statute directed the PTO to promulgate. Under these regulations, a CBM patent is one relating to monetary matters, and a technological invention is one in which “the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.”
The USPTO has published a Trial Practice Guide explaining CBM procedures and amplifying its regulations on what is not a technological invention. The regulations essentially say that a technological invention is not what the Alice case is patent ineligible.
a) Mere recitation of known technologies, such as computer hardwa
CBM proceedings are tried before the Patent Trial and Appeal Board (PTAB), a newly created adjudicatory arm of the PTO. The standard for whether the PTAB will institute a CBM proceeding is whether a petition by an interested party (ordinarily, a party that the patentee sued for patent infringement) requesting institution of the proceeding establishes that it is more likely than not that at least one claim of the challenged patent is unpatentable. Although the issue was hotly contested for a time, it is now established
This was the first case in the Federal Circuit reviewing a final order in a Covered Business Method (CBM) invalidation proceeding under the America Invents Act (AIA). The case set an important precedent by deciding several unsettled issues in the interpretation of the CBM provisions of the AIA,Covered Business Method, including what are business-method patents under the AIA and whether the AIA authorizes the PTO to hold such patents invalid in CBM proceedings on the ground that they are patent ineligible under 35 U.S.C. § 101 as “abstract ideas.” In parts of its opinion not reproduced here, the court decided Conte
There is some destroyed text here that has to be fixed
Joao Bock Transaction Systems, LLC v. Jack Henry & Associates, Inc.
United States District Court
– F. Supp. 2d –, 2014 U.S. Dist. LEXIS 172567 (D. Del. Dec. 15, 2014)
Sue Robinson, U.S.D.J.
Presently before the court are the parties’ competing motions for invalidity and validity and competing motions for infringement and non-infringement. Plaintiff has filed a motion to strike defendant’s motion for summary judgment of invalidity (and a motion to strike portions of defendant’s motion for summary judgment of non-infringement and portions of defendant’s opposition to plaintiff’s motion for summary judgment of infringement. Defendant has filed a motion to strike new infringement theories and product functionality and a motion to strike portions of the expert infringement report of Alex Cheng. The court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1331 and 1338(a).
The ’003 patent, titled “Transaction Security Apparatus,” was filed on September 10, 2001 and issued on August 22, 2006. The patent is directed to an apparatus and a method for the real-time authorization, notification and/or security of financial transactions involving credit cards, charge cards, debit cards, and/or currency or “smart” cards that enable a cardholder to monitor, in real-time, all activity involving his or her card(s) and the corresponding account numbers. The invention adds transaction security by allowing interaction between the central processing computer and a communication device to enable the point-of-sale terminal operator or the card holder to allow or deny a transaction using the communication device over a communications network.
. . . Although decided before Alice, the court finds the comparison of Bancorp Servs., LLC v. Sun Life Assurance Co., 687 F.3d 1266 (Fed. Cir. 2012), to SiRF Tech., Inc. v. Int’/ Trade Comm’n, 601 F.3d 1319 (Fed. Cir. 2010), instructive. In Bancorp, where the asserted patents disclosed “specific formulae for determining the values required to manage a stable value protected life insurance policy,” the district court granted summary judgment of invalidity under § 101. Under the machine prong of the machine or transformation test, the district court found that “the specified computer components are no more than objects on which the claimed methods operate, and that the central processor is nothing more than a general purpose computer programmed in an unspecified manner.” In affirming the district court’s findings, the Federal Circuit explained that:
the use of a computer in an otherwise patent-ineligible process for no more than its most basic function—making calculations or computations—fails to circumvent the prohibition against patenting abstract ideas and mental processes. As we have explained, “[s]imply adding a ‘computer aided’ limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible.” Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012).
To salvage an otherwise patent-ineligible process, a computer must be integral to the claimed invention, facilitating the process in a way that a person making calculations or computations could not.
Ultimately, the Federal Circuit concluded that “[t)he computer required by some of Bancorp’s claims is employed only for its most basic function, the performance of repetitive calculations, and as such does not impose meaningful limits on the scope of those claims.”
In contrast to Bancorp, the Federal Circuit in SiRF found that a GPS receiver was “integral” to the claims at issue and, therefore, the machine or transformation test was satisfied. As in Bancorp, the SiRF Court emphasized that a machine will only “impose a meaningful limit on the scope of a claim [when it plays) a significant part in permitting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations.” After noting how the GPS receiver was specifically involved in each step of the method, the Court concluded that “the use of [the] GPS receiver is essential to the operation of the claimed methods.”
In sum, although it is clear that computer-based programming constitutes patentable subject matter so long as the basic requirements of § 101 are met, the requirements of § 101 as applied to this area of technology have been a moving target, from the complete rejection of patentability for computer programs referenced above to the much broader enunciation of the test in State Street Bank, abrogated by Bilski, that is, a computer-implemented invention was considered patent-eligible so long as it produced a “useful, concrete and tangible result.” See DDR Holdings. As instructed by the Federal Circuit in DDR Holdings, its most recent attempt to bring clarity to this area of the law:
(1) “recitation of generic computer limitations does not make an otherwise ineligible claim patent eligible,”;
(2) “mathematical algorithms, including those executed on a generic computer, are abstract ideas”;
(3) “some fundamental economic and conventional business practices are also abstract ideas”; and
(4) general use of the Internet “to perform an abstract business practice (with insignificant added activity)” does not pass muster under § 101.
In order for claims addressing “Internet-centric challenges” to be patent eligible,3 the claims must do more than:
recite a commonplace business method aimed at processing business information, applying a known business process to the particular technological environment of the Internet, or creating or altering contractual relations using generic computer functions and conventional network operations, such as the claims in Alice, Ultramercial, buySAFE, Accenture, and Bancorp.
3. Although the court understands that the advent of the Internet inspired countless inventive ways of accomplishing routine tasks better, faster, cheaper—indeed, both the PTO and the Federal Circuit considered such ingenuity sufficiently inventive under § 101 to be patent eligible—apparently such is not the case under the current legal reasoning.
Defendant contends that the asserted claims are directed to banking practices known and used for many years and now performed on a generic computer, in other words, an “abstract idea.” The specification describes that
[t]he present invention provides an apparatus and a method for providing financial transaction authorization, notification and/or security, and, in particular, provides an apparatus and a method for providing financial transaction authorization, notification and/or security in conjunction with credit card, charge card, debit card, and/or currency or “smart” card use, savings and/or checking account activity and use and/or cellular telephone use . . .
The asserted apparatus claims describe “[a] transaction security apparatus.” For example, claim 30 provides:
A transaction security apparatus, comprising:
a memory device, wherein the memory device stores a limitation or restriction regarding a banking transaction, wherein the banking transaction involves a withdrawal from a checking account or a cashing of a check on a checking account, wherein the limitation or restriction contains information for prohibiting a withdrawal from a checking account or for prohibiting a cashing of a check on a checking account, wherein the limitation or restriction is transmitted from a communication device associated with an individual account holder, and further wherein the limitation or restriction is transmitted to a receiver on or over at least one of the Internet and the World Wide Web, wherein the limitation or restriction is automatically received by the receiver, and further wherein the limitation or restriction is automatically stored in the memory device; and
a processing device, wherein the processing device processes information regarding a banking transaction, wherein the processing device utilizes the limitation or restriction automatically stored in the memory device in processing the banking transaction, and further wherein the processing device generates a signal containing information for allowing or disallowing the banking transaction.
Applying the analytical framework of Alice, the court first “determine[s] whether the claims at issue are directed to one of those patent-ineligible concepts.” In Alice, the Supreme Court found that the claims were drawn to the patent-ineligible abstract idea of “intermediated settlement,” which was also a “fundamental economic practice.” In Bilski, the Supreme Court held that the claims involved were drawn to the patent-ineligible abstract idea of “hedging, or protecting against risk,” which was a “fundamental economic practice.” In each of these cases, the claims described more than the central idea put forth by the Supreme Court. For example, in Bilski, claim 1 described “a series of steps instructing how to hedge risk.”
In this regard, defendant offers the following hypothetical: “Mr. Ashley, a bank teller, is sorting the checks presented that day for payment. An account holder, Ms. Samuels, asks (or has asked) Mr. Ashley to stop payment on her check No. 235 for $75.00. Mr. Ashley locates check 235 for $75.00 and does not pay it.” The claim by claim comparison for claim 30 is:
’003 Claim Language
(all parentheticals are added to claim)
Performance Without a Computer A transaction security apparatus, comprising: a memory device (computer memory), wherein the memory device stores Mr. Ashley’s memory or the bank’s written list used for reference regarding holds or stop payment orders. a limitation or restriction regarding a banking transaction, wherein the banking transaction involves a withdrawal from a checking account or a cashing of a check on a checking account, wherein the limitation or restriction contains information for prohibiting a withdrawal from a checking account or for prohibiting a cashing of a check on a checking account, Mr. Ashley has memorized, or recalls to review, the written list of accounts having a hold or stop payment order on checking accounts. wherein the limitation or restriction is transmitted from a communication device (e.g., a personal computer) associated with an individual account holder, and further wherein the limitation or restriction is transmitted to a receiver (computer communications controller) on or over at least one of the Internet and the World Wide Web, An account holder, Ms. Samuels, speaks to Mr. Ashley, or she gives him a note, or calls him, and asks that Mr. Ashley stop payment on Check No. 235 for $75.00 or that he put a hold order on her account. wherein the limitation or restriction is automatically received by the receiver, and further wherein the limitation or restriction is automatically stored in the memory device; Mr. Ashley hears Ms. Samuels request or he reads her note and he memorizes it or writes it onto the bank list of stop payment orders or account hold orders and a processing device, (computer CPU) wherein the processing device processes information regarding a banking transaction, Mr. Ashley as he sorts that day’s presented checks for cashing. wherein the processing device utilizes the limitation or restriction automatically stored in the memory device in processing the banking transaction, and further Mr. Ashley consults the list or remembers Ms. Samuels’ stop payment order or hold order while sorting the presented checks for payment. wherein the processing device generates a signal containing information for allowing or disallowing the banking transaction. Mr. Ashley notices a check on Ms. Samuels’ account that matches the stop payment order of Ms. Samuels and Mr. Ashley’ decides he is not to pay the check.
Plaintiff objects to defendant’s characterization of claim 30 as incomplete, arguing that it is not directed to all bank transactions, nor is it limited to checks. Plaintiff also protests that the hypothetical ignores what may be the most important element of these claims—that the “limitation or restriction” comes from the “communications device associated with an individual account holder”—in other words, that the claim is performed by computers. But that is precisely what defendant seeks to demonstrate, that the abstract idea embodied by the claim is a conventional business practice utilized by bankers or financial institutions in their dealings with individual account holders without the use of computers. Consistent with the analyses in Alice and DDR Holdings, the claims at issue are directed to an abstract idea.
Turning to step two of the Alice framework, the court examines whether the claims are limited by an “inventive concept” such that “the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” To this end, plaintiff argues that the claims use “specific computers” with bank processing software, making them “special purpose computers.” Defendant maintains that the claims use generic computer components. The bank processing software is described in the specification:
The central processing computer 103 will then, at step 133, process the information and/or data pertinent to the transaction and to the particular account. The central processing computer 103 may utilize any of the widely known data processing and/or software routines, which are known to those skilled in that art, in order to process transaction requests and/or authorizations involving the use of the respective account(s) and/or related card(s). [Emphasis added.]
Plaintiff admits that the applicant did not invent the computer components or the banking software. For example, claim 30 utilizes a memory to store a limitation or restriction, a communication device to transmit, a receiver to receive, and a processing device to process information and generate a signal containing information. While plaintiff objects to the characterization of these components as generic, the addition of well known data processing software does not transform these components into a “special purpose computer.” Plaintiff's expert, Cheng, stated that
none of the asserted claims require only a conventional processing device and a memory device. Every asserted claim requires significantly more, including in some claims receivers, transmitters, communications devices (in some claims very specific communications devices), data entry devices, input devices, network computers, central transaction processing computers, the Internet and World Wide Web. . . .
This conclusory statement, however, does not provide any examples of any of the components performing functions other than traditional computing functions such as storing, processing, and transmitting. Cf. In re Katz, 639 F.3d 1303, 1316 (Fed. Cir. 2011) (in analyzing means-plus-function claims, finding that “the functions of 'processing,' 'receiving,' and 'storing' are coextensive with the structure disclosed, i.e., a general purpose processor,” such “functions can be achieved by any general purpose computer without special programming”). The computer components are being employed for basic functions, including storage, transmitting and receiving information, and, the court concludes that such components are not “specific” or “special purpose” computers.7 While the computer components do allow the abstract idea to be performed more quickly, this does not impose a meaningful limit on the scope of the claim. Bancorp.
7. Plaintiff advances the same argument, i.e., that the claims use “special purpose computers,” to assert that the claims are “tied to a particular machine or apparatus,” and satisfy the first prong of the machine-or-transformation test. Using the same analysis, the court disagrees.
As the Federal Circuit explained in DDR Holdings, in order to pass muster under § 101, it is no longer sufficient to use the Internet through generic computer components to achieve a useful result. The “inventive concept” required under the second step of the Alice test must now “specify how interactions with the Internet are manipulated to yield a desired result .... ” DDR Holdings. The claims in DDR Holdings, for example, stood apart “because they [did] not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution [was] necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” The claims at issue fall squarely within the former category of patent ineligible claims.
The fact that the asserted claims are apparatus claims, not method claims, does not change the court's analysis. Indeed, if that were the case, then “applying a presumptively different approach to system [or apparatus] claims generally would reward precisely the type of clever claim drafting that the Supreme Court has repeatedly instructed [the courts] to gnore.” CLS Bank, 717 F.3d at 1289; Mayo, 132 S. Ct. at 1297; see also Walker Digital (finding both the system and method claims invalid, when “the system claims recited ... merely take the abstract idea of [the method] claims . . . and list generic computer components (processor, memory) to implement the abstract idea.”). Here, as in Bancorp, “without the computer limitations nothing remains in the claims but the abstract idea.” Bancorp.
The preemption inquiry8 also persuades the court that the claims at issue are not patent eligible. In this regard, plaintiff argues that the field is not preempted because a bank could communicate with its customers without using the Internet, i.e., via mail, telephone, or in person. Moreover, plaintiff explains that “the claimed limitations or restrictions [could] be entered by bank employees, rather than coming from an account holder's communications device.” In other words, plaintiff argues that there is no preemption as the abstract idea can be performed without computers. However, this argument turns the analysis on its head. With the ubiquity of computers, arguing that a field is not preempted because a claim may be performed “by hand” is not persuasive. “[T]he prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a particular technological environment.” Alice. Allowing the asserted claims to survive would tie up any innovation related to performing banking transactions on computers which would, in turn, monopolize the “abstract idea.” The above analysis applies to each of the independent claims.
8. The preemption inquiry focuses on whether the patent “would risk disproportionately tying up the use of the underlying ideas.” Alice; Mayo (holding that “patents [that] would ... disproportionately t[ie] up the use of the underlying natural laws” are invalid for lacking patentable subject matter); Enfish, LLC v. Microsoft Corp., 2014 WL 5661456, at *5 (C.D. Cal. Nov. 3, 2014) (the court “must then determine whether there is an inventive concept that appropriately limits the claim, such that the claim does not preempt a significant amount of inventive activity.”).
Dependent claims 31 and 106 add a transmitter to send a second signal to a communication device with information regarding the banking transaction. Claim 34 adds a transmitter which transmits an email message with information to a network computer and/or communication devices. Claim 324 requires an Internet transaction. Claims 343 and 416 require the communication device to be a wireless device. The above analysis addressed the “transmitter,” “email messages,” and the use of the Internet. These are each activities which are made possible by generic computers. The restriction to wireless devices does not purposefully limit the claims. Claim 122 describes a certain limitation or restriction type. This limitation does not restrict the claim, instead, it provides a list of common transaction limitations, i.e., limiting the dollar amount of a transaction or authorizing specific vendors. Claim 422 requires that the processing device evaluate a hold and prohibit a withdrawal for a checking account, a savings account, or an automated teller machine account. This claim language describes a specific use of the processing device, thereby describing a particular application of the “abstract idea” discussed above. None of the dependent limitations serve to limit the claims in such a way that the “abstract idea” is meaningfully limited. The court concludes that the asserted claims do not recite patent eligible subject matter and, therefore, are invalid under § 101.
For the foregoing reasons, the court grants defendant’s motion for summary judgment of invalidity and denies plaintiff’s motion for summary judgment of validity with regard to patentable subject matter.
1. Notice that patentee’s counsel still trying to sing the piano roll blues.
2. The Alice and Bob table in this case has been transformed into a Ms. Samuels and Mr. Ashley table. I asked counsel what was the reason, He told me that the court used the names from counsel’s brief, making the blame, if any, his. He said that the name “Ashley” was selected “based on his recollecting the name being used in Gone With The Wind and feeling it carried an ‘old’ or ‘historical’ connotation,” while “Samuels” was “an arbitrary selection.”
3. Notice how quickly the decision in the DDR Holdings case percolates.
Sue Robinson, U.S.D.J.
On July 24, 2013, plaintiffs Intellectual Ventures I LLC and Intellectual Ventures II LLC filed a complaint against defendant Manufacturers and Traders Trust Company alleging direct and indirect infringement of U.S. Patent Nos. 7,664,701, 8,083,137, 7,603,382, and 7,260,587. Presently before the court is defendant's motion to dismiss.
Plaintiffs advocate that “the claims, consistent with [plaintiffs’] arguments . . ., require specific technology to practice the patents and therefore are patent eligible.” Plaintiffs’ arguments throughout the briefing make no mention of how the construction of certain limitations would inform the § 101 analysis. The court concludes that it may proceed on a § 101 analysis, as the parties’ arguments are not focused on specific claim limitations, but instead on the broader concepts of the claims and the computer components used.
The ’137 Patent
The ’137 patent describes “a system and method which allows consumer users to establish self-imposed limits on the user’s spending (borrowing) such that when the limit is reached the consuming user is notified.” There are four independent claims, two system claims and two method claims. Representative independent claim 12 recites:
12. A method comprising:
storing, in a database, a profile keyed to a user identity and containing one or more user-selected categories to track transactions associated with said user identity, wherein individual user-selected categories include a user pre-set limit; and
causing communication, over a communication medium and to a receiving device, of transaction summary data in the database for at least one of the one or more user selected categories, said transaction summary data containing said at least one user-selected category’s user pre-set limit, and wherein said transaction summary data is configured to be presented by the receiving device in a table.
Using the framework set forth in Alice, the court first determines the central idea of the patent. Plaintiffs argue that the ’137 patent “discloses and claims a specific application of administering financial accounts[, or] a practical application of the broader idea of electronically administering financial accounts using computer and database technology.” However, the core idea of the patent is allowing users to set self-imposed limits on their spending and receive notifications regarding such limits, i.e., setting up a budget and tracking their spending. Budgeting is a longstanding and fundamental practice, utilized in personal and business finances.
In the second step of the Alice framework, the court examines whether the claims are limited by an “inventive concept” such that “the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” The steps of independent claims 1, 5, and 12 are: (1) storing a user profile, which contains at least one user-selected category with a user pre-set limit; and (2) presenting or communicating “transaction summary data” for such category and limit. Claim 12 also requires that the transaction summary data be configured in a table. Claim 19 requires: (1) listing the financial transactions in categories from a certain time period; and (2) presenting the amount of such transactions in categories together with the user-identified limit. Plaintiffs conclude that these limitations “create a practical way of self-monitoring financial accounts using computer generated automatic updates.” The steps of storing data from a user, listing data, and presenting summary data (configured in a table), however, are ways “to implement the abstract idea with routine and conventional [computer] activity.” Ultramercial; Fuzzysharp Techs. Inc. v. 3DLabs Inc., Ltd., 447 F. App’x 182, 185 (Fed. Cir. 2011) (computing and storing data are “functions . . . essentially synonymous with the term computer and thus add little or nothing to simply claiming the use of a general purpose computer”).
Plaintiffs also argue that “[t]he concept of having your bank automatically notify you concerning your pre-set limits was inventive and not abstract.” But an automatic notification is an implementation of a conventional step (users comparing amounts spent with their chosen limit) on a computer (or via the Internet). As the Supreme Court has stated, “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea while adding the words ‘apply it’ is not enough for patent eligibility.” Alice. The Internet is described in the specification as being used to send the notification message, change the limits, access the account, and communicate with a third party. For each of these uses, the specification also describes other methods, such as telephone or email. Unlike the claims in DDR Holdings, where “the claimed solution [was] necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks,” the claims at bar “merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet.” DDR Holdings.
As to the type of technology used to implement the claims, plaintiffs argue that: “a computer is used in a specific way to perform the claims and implements the integral steps of setting, storing, monitoring the limits and restrictions and alerting the user based on the data;” practicing the invention without a computer is impossible, because it would require too much manpower and overhead for bank personnel; and, “[w)hile a general computer database was well known or generic, using a specially programmed database in the way claimed by the ’137 patent was not generic or known at the time.” These arguments fail under the Alice framework for analyzing § 101 issues. That the abstract idea implemented on a computer allows for more or faster monitoring of accounts is not the crux of the patentability analysis. See SiRF Tech., Inc (“In order for the addition of a machine to impose a meaningful limit on the scope of a claim, it must play a significant part in permitting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations.”).
The computer and components (central processor) described in the specification are generic.5 The database is also generic; the specification does not describe a “specially programmed database,” but a database used to store data: “Processor 15, in conjunction with database 16 and profiles 17, then categorizes the various purchases being made and stores those purchase amounts and categories in database 16, according to profiles of user 17, as stored, for example, in profile database 17.” The patent describes the “auxiliary database 16-1” as holding any type of information. While plaintiffs argue that the claims use “computer implemented algorithms” as a meaningful and specific use of technology, there are no algorithms described in the claims. Instead, as discussed above, the claims are directed to generic computing functions such as storing and processing data.
5 Describing a user “utilizing keyboard 22 and computer 23 to access his or her account via communication links 201-1 and 210-2 and public network 24 to web portal or phone operator 25.” The “computer 23 . . . could be a telephone, pager, PDA, or the like.” The communication links are “pager network, cellular network or any other type of network, including for example, wireless, wire line or the cable satellite network typically utilized for broadcast signals into the home for entertainment purposes.” The specification also references a “central processor” used to catagorize purchases, communicate, controlling the acceptance of a purchase, send data.
The Supreme Court has explained in Alice that:
what petitioner characterizes as specific hardware—a “data processing system” with a “communications controller” and “data storage unit,” is purely functional and generic. Nearly every computer will include a “communications controller” and “data storage unit” capable of performing the basic calculation, storage, and transmission functions required by the method claims. As a result, none of the hardware recited by the system claims “offers a meaningful limitation beyond generally linking ‘the use of the [method] to a particular technological environment,’ that is, implementation via computers.”
That the system of claim 1 at bar recites a “means for storing” and a “means for presenting transaction summary data,” and claim 19 recites a “means for listing,” does not change the analysis, as only generic computers and components are disclosed in the specification.
In this regard, the inquiry on preemption is whether the patent “would risk disproportionately tying up the use of the underlying ideas.” Alice. Plaintiffs argue that the ’137 patent does not preempt the broader concept of managing financial accounts, as the claims provide specific algorithms to monitor the data and alert the user. The court concludes that the claims are not directed to specific algorithms, instead implementing the conventional concept of budgeting on general computers. As such, the patent would tie up the abstract idea of budgeting and, therefore, is invalid for lack of patentable subject matter.
The ’382 Patent
The ’382 patent describes “a system for selectively tailoring information delivered to an Internet user depending upon the particular needs of the user.” The specification explains that the standard Internet use results in a Web page “appear[ing] identical[ly] to each information user, with no tailoring of information to each information user.” The system of the patent purports to address “current problems with the Internet” by allowing a user to create “a detailed standard profile . . . having a tremendous amount of detail and [then] selectively [use] this profile with any information provider that accepts the standard format.” Multiple profiles may be created. The “profile is stored in a computer memory (not shown) and transferred to an information provider when a [w]eb page is accessed.” “This system allows the information provider to selectively provide information to the information user without the information user’s knowledge or without irking the information user by telling them they need a password, or they need to be a member.” “[A] company [may] tailor the delivery of information to a specific user,” based on the profile. “The web page manager selects [the] most appropriate data streams for the current information user depending upon the currently available data streams and the profile of the individual.” This results in “a virtual panoply of information which is placed in a mosaic most pleasing to the information users.” The specification also describes that “[t]he system includes an interactive interface which provides a medium for information users to communicate with information providers.” The four independent claims consist of one system claim and three method claims. As an example, independent claim 21 discloses:
21. A method comprising:
receiving data from a user profile associated with a user;
in response to a request associated with the user, sending a data stream that is selected based at least in part on the received data from the user profile; and
displaying the data stream via an interactive interface, the interactive interface comprising:
a display depicting portions of a web site visited by the user as a function of web site navigation data; and
a display depicting portions of a web site visited by the user based at least in part on the received data from the user profile.
Following the Alice framework, the parties generally agree that the central idea of the claims is providing a customized web page with content based on the user’s profile and website navigation history. Claims 1, 16, and 21 may be broken down to some or all of the following steps: (1) receiving data from a user profile; (2) storing such data; and (3) using such data to display a web page via an interactive interface where the display contains content based on a user’s navigation data and content based on a user’s personal characteristics. Claim 7 uses “data streams” and consists of: (1) generating data streams (which are matched to a profile) where each data stream is associated with a portion of the web page and stored in memory; and (2) changing the portions of the web page with time. Defendants argue that such an idea is “abstract and non-inventive.”
The Federal Circuit, applying step two of the Alice framework, explained in DDR Holdings that, in order for claims addressing “Internet-centric challenges” to be patent eligible, the claims must do more than “recite a commonplace business method aimed at processing business information [or] applying a known business process to the particular technological environment of the Internet.” Instead of working in a “normal, expected manner,” the ’382 patent describes an idea and solution for customized web page content, thus, “the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.”
The claims do not preempt all applications of providing customized web pages, as they recite a specific method of customizing web pages based on user data. The court concludes that the ’382 patent passes muster under the Alice framework and recites patentable subject matter.
The ’587 Patent
The ’587 patent is directed to “a method, system and apparatus for automatically organizing a large number of images that may be obtained from a variety of different sources.” The specification explains that “if the hardcopy prints are organized in groups (categories) by the customer prior to scanning, the scanning can proceed more efficiently and minimize further organization down the line thus significantly reducing the cost to organize the images.” There are three independent method claims. Claim 18 recites:
18. A method of automatically organizing digital images obtained from a plurality of hard copy prints, comprising the steps of:
obtaining hard copy prints from a plurality of different sources, each of said hard copy prints having an image thereon;
digitally scanning a plurality of hard copy prints each having an image thereon wherein said plurality of hard copy prints have been grouped together into one or more categories, each category being associated with an instruction form to create digital image files of said images and obtaining associated category information for said digital images in accordance with said machine readable instruction executed by a computer;
automatically grouping said digital image files into said categories in accordance with said instruction; and
storing the digital image files and said associated category on a digital storage medium.
The first step of the Alice framework directs the court to determine whether the patent is directed to an “abstract idea”; here, scanning groups of images and organizing them. This is akin to a computerized photo album, a routine and conventional idea. The court turns to step two in the Alice framework and the search for an “inventive concept” such that the patent meaningfully limits the “abstract idea.” The independent claims consist of some or all of the following steps: (1) obtaining hard-copy images from different sources, organized into groups; (2) scanning the hard-copy images (associated with certain information) which have been sorted into groups; (3) categorizing the scanned images into the same groups as the hard-copy images; (4) storing the groups of scanned images (and associated information); and (5) producing products with one or more images. These individual elements describe the steps used to computerize a known idea, e.g., a photo album or organized photo storage. The specification discloses the following computer technology: an “automatic scanner” and a “central computer”, which may be associated with a server hooked up to the Internet. While the independent claims each recite “scanning a plurality of hard copy prints,” the scanner does not place a meaningful limit on the scope of the claims. Instead, it is a computer component used to obtain the digital images needed to practice the claimed method. The specification explains that the “images may be obtained from a variety of different sources” and may be “obtained from other digital memory devices having digital images.” The focus of the claims is not the use of a “scanner,” but the method of organizing digital photos. Compare SiRF Technology, Inc. v. International Trade Com’n, (finding that a “GPS receiver is a machine and is integral to each of the claims at issue” and “the presence of the GPS receiver in the claims places a meaningful limit on the scope of the claims.”). The specification also references a “central computer” used for various functions including “obtaining of the digital record file for each of the images,’’” “coordinating of the images,’’” and associating codes with images. “[A]ppropriate algorithms (software programs)” may be provided to the customers to use with the images and “any appropriate software program for organizing and/or reorganizing images may be appropriately used.” The ordered combination of elements in the claims describe using a computer to store the images and produce products using the images according to a customer’s request. The claims do no more than “computerize” a known idea for organizing images. The dependent claims add no meaningful limitations.
As to preemption, the claims as written would substantially preempt the creation of digital photo albums or storage, the abstract idea. The ’587 patent is directed to patent ineligible subject matter.
The ’701 Patent
The ’701 patent “relates to electronic purchases while maintaining privacy of customer billing data.” The specification explains that “a customer is able to establish accounts with web sites without revealing private billing information such as credit card numbers to a web site/business from whom the customer purchases goods.” The patent describes using a “billing service [to] facilitate commercial transactions by generating substitute billing data that the client can use when engaging in commercial transactions” “Substitute billing data” is “valid billing data that is owned and/or controlled by the billing service [and] temporarily or permanently distributed to clients to replace personal and/or private billing data of the client.” There are five independent claims—two method claims, two apparatus claims, and one article of manufacture claim.
Representative independent claims recite:
1. A method for a user to provide substitute billing data in lieu of personal billing data, comprising:
an electronic device facilitating a request to a billing service for first and second distinct credit card numbers, including identifying each business with which the first and second distinct credit card numbers are to be used;
the electronic device obtaining the first and second distinct credit card numbers from the billing service for use by the user as a substitute for said personal billing data, the first and second distinct credit card numbers associated with each said business by the billing service;
the electronic device facilitating one or more purchasing transactions with a first associated business using the first credit card number; and
the electronic device facilitating one or more purchasing transactions with a second associated business using the second credit card number.
5. A method comprising:
a billing service registering a user;
the billing service receiving identification of a first and a second business with which the user intends to conduct one or more purchasing transactions;
the billing service associating a first and a second billing data, that are separate and distinct, with the first and the second business respectively; and
the billing service providing the first and second billing data for use by the user as substitutes for personal billing data for subsequent purchasing transactions.
Applying the first step of the Alice framework, the court determines that the ’701 patent’s central idea is “providing a user with aliases to use in conducting transactions.” The use of the aliases in the patented invention is directed at online purchases. However, “the claimed solution is [not] necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” Indeed, claim 5 does not require a computer or electronic device. DDR Holdings. The use of aliases to maintain privacy in financial transactions is not limited to Internet transactions; indeed, theft of credit cards and other financial information occurred before the Internet. The court concludes that the ’701 patent is directed at an “abstract idea.”
Step two of the Alice framework requires analyzing the claims for an inventive concept or meaningful limitations. The independent claims involve the following steps: (1) identifying two businesses; (2) associating an alias with billing data or credit card numbers for each business; (3) giving the aliases to the user; and (4) using the aliases to make purchases. Claim 1 recites an “electronic device” used to make requests as well as receive and send data, and claim 10 is an apparatus with “a storage medium” and “a processor.” The specification explains that the clients and businesses communicate with a billing service via the network (the Internet). The specification describes “[a]pparatuses, such as computing devices, and consumer electronic devices such as a telephone,” and explains that “the client comprises a computing device, such as a personal computer [or] may be incorporated into an electronic card, a telephone, a personal digital assistant, a portable audio device, a portable audiovisual device, a cellular telephone, a key-chain dongle, or within an automobile or other transportation device.” Client storage may be on a “separate computing device,” which could be “a handheld (‘palmtop’) personal computer executing the Microsoft Windows operating system.”
The specification also references “remote computing devices,” which are configured like a computing device. The computers and components discussed are not specialized. As to software, the specification mentions “executable instructions” and “a communication program through which to engage in the purchasing activity.” The structures for the means-plus-function limitations of independent claim 15 are likewise limited to generic computers and components. Moreover, the claims are written in broad “means” language and could be practiced with minimal use of or no computer. As noted, claim 5 does not recite a computer or other electronic device.
As the Federal Circuit explained in DDR Holdings, in order to pass muster under § 101, it is no longer sufficient to use the Internet through generic computer components to achieve a useful result. The “inventive concept” required under the second step of the Alice test must now “specify how interactions with the Internet are manipulated to yield a desired result.” DDR Holdings. The claims in DDR Holdings, for example, stood apart “because they [did] not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution [was] necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” The claims at issue fall within the former category of patent ineligible claims. The dependent claims fare no better.
As to preemption, the ’701 patent discloses “using aliases to facilitate transactions,” but does so on the Internet. Allowing the claims to survive would tie up any innovation related to using aliases to purchase goods on the Internet, which would, in turn, monopolize the “abstract idea.” See Alice (“[T]he prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a particular technological environment.”) The patent is not directed to patentable subject matter.
For the aforementioned reasons, defendant’s motion to dismiss is granted in part and denied in part.
1. Do you perceive the difference between the patent-eligible claims and the patent-ineligible claims in this case?
2. The ’382 patent is Internet-centric and addresses a problem that could not have been solved, or could not even have existed, before the Internet. Arguably, it doers not prempt the field. Is that enough to make it patent eligible? Does it have an inventive concept embodied in the way it implements its abstract idea? Does that make any difference when, as here, the invention is rooted in computer technology?
3. Moving from the abstract to the concrete, it may be useful to explore just what the invention in the ’382 patent is. The specification explains that the invention tailors different data streams to different users depending on the particular user’s profile—for example:
The first data stream, for example, pertains to a company's “high end” line of products, the second data stream may comprise a company's “middle end” line of products, and the third data stream may comprise the company's “low end” line of products.For example, the data stream may actually comprise three separate lines of data, one tailored towards very conservative, serious or older individuals, one tailored towards “no frills” type people who seek only raw data regarding a product, such as health conscious individuals, and a third data stream that is playful, light and funny for the common Internet surfer.
As the court explained it, “the parties generally agree that the central idea of the claims is providing a customized web page with content based on the user’s profile and website navigation history.” Let’s translate that into an Alice and Bob table:
Language of Claim 21 A haberdashery store where Ms. Alice waits on crusty old Mr. Bob A method comprising: receiving data from a user profile associated with a user; Ms. Alice remembers having waited on Mr. Bob before, and recalls that he is a conservative and stodgy old customer in response to a request associated with the user, sending a data stream that is selected based at least in part on the received data from the user profile; and Bob says that he needs to buy a necktie. Alice listens to Bob’s request and decides to show him some ties based on her recollection of his taste displaying the data stream via an interactive interface, the interactive interface comprising: Alice thinks about Bob’s previous visits to the store; she recalls the experience a display depicting portions of a web site visited by the user as a function of web site navigation data; and Alice mulls over Bob’s previous shopping visits and his past preferences for neckties (stodgy, conservative); she decides that she will show him that kind of necktie a display depicting portions of a web site visited by the user based at least in part on the received data from the user profile Alice shows Bob a selection of stodgy, conservative neckties of the type he has previously shown a disposition to buy
The customized web page with content based on the user’s profile and website navigation history is the Internet equivalent of a salesperson’s showing a customer a selection of merchandise based on the customer’s known preferences based on his past visits to the store. (The claim elements seem to involve saying the same thing several times using slightly different words.)
Does the implementation in the patent show an inventive concept? Does the claim mention any unconventional expedients for using the past data about the user in order to tailor the screen display to the user’s likes and dislikes? Where’s the invention? What do you think made the court treat this patent differently from the others? Is the court mesmerized by the presence of the Internet? (On other occasions, the same judge pointed to Internet-centric patents and compared them to Ultramercial’s ineligible Internet-centric patent.)
Sue Robinson, U.S.D.J.
Plaintiff Cloud Satchel instituted suit against defendant Amazon.com, Inc. and defendant Barnes & Noble, Inc., alleging infringement of U.S. Patent Nos. 5,862,321and 6,144,997. The defendants sought and obtained leave to file a joint motion for summary judgment of invalidity pursuant to 35 U.S.C. § 101. The joint motion for summary judgment of invalidity is presently pending before the court. 1n Bancorp Services, L.L.C. v. Sun Life Assur. Co., the Federal Circuit held that “claim construction is not an inviolable prerequisite to a validity determination under§ 101.” In the present case, the court does not find that claim construction would alter the outcome of the court's analysis even if the court were to wholly embrace plaintiff's proposed claim constructions.
Plaintiff is a limited liability company organized under the laws of the State of Delaware with its principal place of business in Wilmington, Delaware. Amazon is a corporation organized and existing under the laws of the State of Delaware with its principal place of business in Seattle, Washington. Amazon is the world's leading online retailer and pioneered the eReader, Kindle®. Barnes & Noble is a corporation organized and existing under the laws of the State of Delaware with its principal place of business in New York, New York. Barnes & Noble is the nation's largest retail bookseller and a leading retailer of content, digital media and educational products. In 2009, it launched the NOOK® line of eReaders and tablets that allow users to buy and read eBooks and other digital content.
The ’321 patent, titled “System and Method For Accessing And Distributing Electronic Documents,” was filed on June 21, 1995, and issued on January 19, 1999. The ’997 patent, titled “System and Method For Accessing And Distributing Electronic Documents,” was filed on October 28, 1998, and issued on November 7, 2000. The patents share the same specification.
The asserted patents acknowledge that the state of the art at the time of filing encompassed storing electronic documents on handheld computers and transferring electronic documents from one portable computer to another. However, the patents describe various deficiencies with the current technology, including “very slow” transfer of documents between machines and difficulty storing “large numbers of electronic documents” on portable computers. The patents are directed to systems, devices, and methods for enabling the transmission and storage of document references or “tokens,” each of which is associated with an electronic document stored in a database. This enables mobile users to access all of their electronic documents without being limited by the memory available on a mobile device. The electronic document references, which identify electronic documents stored in a database, can be passed back and forth between the central database and the portable device, or between the portable device and other devices. A device can use the electronic document reference to request delivery of the full electronic document from the database.
Defendants allege that the asserted claims are drawn to unpatentable subject matter under 35 U.S.C. § 101. Claim 1 of the ’321 patent, which is representative of all three independent claims, discloses:
1. A distributed system for accessing and distributing electronic documents using electronic document references, the distributed system comprising:
a) a database of electronic documents and electronic document references stored in a first memory having a first capacity, each electronic document having an associated document reference identifying a location of the electronic document in the first memory, each electronic document having a first memory requirement for storage greater than a second memory requirement for storage of the associated electronic document reference;
b) a distributed document handling subsystem coupled to the database, the document handling subsystem including a transceiver for transmitting an electronic document reference without its associated electronic document at a first location and receiving the electronic document reference without its associated electronic document at a second location, the distributed document handling subsystem responding to receipt of the electronic document reference by producing a copy of the associated electronic document at a third location;
c) a portable electronic document reference transport device for transporting the electronic document reference without its associated electronic document, the portable electronic document reference transport device being physically separate from the first memory and the distributed document handling subsystem, the portable electronic document reference transport device including a second memory for storing the electronic document reference without its associated electronic document, the second memory having a capacity significantly less than the capacity of the first memory, the portable electronic document reference transport device including a transceiver for receiving the electronic document reference without its associated electronic document at the first location and transmitting the electronic document reference without its associated electronic document at the second location.
Defendants allege that the patents “are drawn to the abstract principle of cataloguing documents to facilitate their retrieval from storage,” a principle that has been in existence for “[n]early two millennia.” Plaintiff responds that defendants have “greatly oversimplified” the claims, arguing that although claim 1 of the ’321 patent does facilitate the “identification and retrieval of documents from storage,” it nonetheless “does so in a specific manner.” Plaintiff points to the fact that the portable devices have memory capacities “significantly smaller than that of a centralized database,” as well as the fact that the devices communicate through a “document handling subsystem.” Such limitations serve to “improve the functioning of the computer[s]” that comprise the claimed systems. Plaintiff further contends that the claims describe inventive applications of “storage and retrieval of electronic documents” in addition to implementing the abstract concept of “cataloguing.”
As explained by the Supreme Court in Bilski, “the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the formula to a particular technological environment.” An abstract idea is likewise not saved by the mere fact that the claim is lengthy and recites multiple steps. See Ultramercial (finding that a length claim with eleven steps is nonetheless drawn to the abstract idea of “using advertising as an exchange or currency”). Moreover, “any novelty in implementation of the idea is a factor to be considered only in the second step of the Alice analysis.” Here, the parties agree that the claims facilitate the “identification and retrieval of documents from storage.” Representative claim 1 of the ’321 patent, at its core, describes the implementation of the abstract idea of cataloguing documents to facilitate their retrieval from storage in the field of remote computing. The length or specificity of the asserted claims does not prevent the claims from fundamentally reciting an abstract idea where, as here, the claim language does nothing more than describe the contours of the cataloguing process. Plaintiffs arguments that the claims recite inventive applications of the abstract concept of “storage and retrieval of electronic documents” and that the claims name specific devices are factors more appropriately considered in step two of the Alice framework. Therefore, the court concludes that the ’321 and ’997 patents are drawn to an abstract idea.
Turning to step two of the Alice framework, the court examines whether the claims are limited by an “inventive concept” such that “the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” Alice. Defendants argue that the patents are not patent-eligible applications of an abstract principle because the claims merely recite an abstract principle and instruct the public to apply it with a computer. Defendants identify three instances of generic computer implementation: (1) the “portable electronic document reference transport device;” (2) the “electronic document reference;” and (3) the “distributed document subsystem.”
As for the “portable electronic document reference transport device,” defendants point to the specification, which states that the claimed device may be “any suitable form of portable computer.” The specification further requires that the portable device contain a “processor,” a “solid state memory,” and a “transceiver,” features defendants allege are present in virtually every computer. Defendants add that the requirement that the memory be “significantly less” than the memory of the networked device is not a true limitation, but is rather is a “trivial and inherent limitation” of the hardware. Defendants analogize the limited memory of the portable device to a library patron’s notebook of call numbers, which “takes up considerably less space than the shelves of corresponding books.”
With regard to the “electronic reference,” defendants cite the description that the reference may appear in “any suitable format to suit a desired application.” Defendants argue that, consistent with the specification, the “distributed document subsystem” is merely a “conventional network” connected to “conventional office devices.” The additional recitation of specific computer components such as a “database,” “memory,” “transceiver” and “wire-based network,” and computer functions such as “storing,” “transmitting” and “receiving,” are incapable of conferring the requisite specificity.
Plaintiff responds that, even if the claims are drawn to an abstract idea, the recited steps of “transmitting” and “receiving” limit the claimed system because these steps were not “routine or conventional practices at the time of invention.” Essentially, plaintiff argues that “practicing these limitations permitted the inventors to have a portable device whose memory size was no longer a significant constraint.” Plaintiff is unable to meaningfully address the fact that the specification unambiguously states that the portable electronic reference transport device may be any “suitable” portable computer. Nor is plaintiff able to address the fact that the specification states that the electronic document reference may appear in “any suitable format” and the distributed document subsystem consists of purely “conventional” elements connected by a “conventional” network.
Moreover, even the recitation of specific hardware elements such as a “processor,” a “solid state memory,” and a “transceiver” is insufficient to confer specificity. See Alice (finding that the recitation of “specific hardware” consisting of a “data processing system,” a “communications controller,” and a “data storage unit” were “purely functional generic”). The requirement that the portable device have “significantly less” memory than the networked device does not transform the portable device into a special purpose computer, as the requirement that the portable device have less storage capability than the networked device is an inherent limitation of the underlying abstract concept of cataloguing. Accordingly, the court concludes that the claimed computers and hardware elements of the claimed subsystem are generic.
Although the court understands plaintiff's argument that the steps of “transmitting” and “receiving” may not have been conventional practices in the field of computing a the time of invention, these steps nonetheless do nothing more than recite functions that “can be achieved by any general purpose computer without special programming.” The court also recognizes that the application of document cataloguing in the realm of portable computing usefully addressed the problem of limited memory space in portable computers. The fact that an abstract idea may be usefully applied, however, is not enough to “transform an unpatentable principle into a patentable process.” Flook (reasoning that “the Pythagorean theorem would not have been patentable, or partially patentable, because a patent application contained a final step indicating that the formula, when solved, could be usefully applied to existing surveying techniques.”). Plaintiff's argument that the claims “improve the functioning of the computer” also falls short, as the patents do not claim an improvement to the computer, but rather describe how to apply the abstract idea of cataloguing to pre-existing, conventional computers. Here, as in Bancorp, “without the computer limitations nothing remains in the claims but the abstract idea.”
The pre-emption inquiry focuses on whether the patent “would risk disproportionately tying up the use of the underlying ideas.” Plaintiff argues that the claims at bar do not broadly preempt “cataloguing documents.” Instead, plaintiff asserts that the claims only preempt the concept of retrieving electronic documents from storage through portable devices with memory capacities that are significantly smaller than that of a centralized database, and where the portable devices communicate not with one another but through a document handling subsystem that facilitates transmission of electronic document references and electronic documents separately from one another in order to capitalize on the significant discrepancies in memory capacity. Plaintiff's attempt to limit the scope of preemption by reciting specific computing applications does not disturb the court's conclusion that the patents are directed to an abstract idea. See Alice (“the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a particular technological environment.”) Allowing the asserted claims to survive would curb any innovation related to computerized cataloguing of documents to facilitate their retrieval from storage, which would monopolize the “abstract idea.”
For the foregoing reasons, the court grants defendants' joint motion for summary judgment of invalidity.
Sam Stark, U.S.D.J.
Order [Denying Preliminary Injunction But Preliminarily Finding Patent Valid]
This is a patent infringement action concerning two products designed to address what is known as “the dilemma zone problem,” a longstanding issue in the traffic-control field. The dilemma zone problem arises when a driver is approaching an intersection and the traffic light turns yellow at a moment when the driver is too close to the intersection to comfortably stop the car, yet too far from the intersection to comfortably pass through before the traffic light turns red. The driver is thus faced with the “dilemma” whether to hit the gas or the brakes, increasing the likelihood of a broadside (if the driver hits the gas) or rear-end (if the driver hits the brakes) collision with another vehicle. The dilemma zone is generally defined in the art as the time when an oncoming vehicle is between 2.5 and 5 seconds from the stop bar. The stop bar is the pavement marking indicating the point behind which vehicles approaching the intersection must stop if the traffic light is red.
Wavetronix is the holder of U.S. Patent No. 7,991,542 (the ’542 Patent), which covers the Wavetronix SmartSensor Advance (Advance), Wavetronix’s “dynamic” dilemma zone protection invention. Wavetronix applied for the ’542 Patent in March 2006 and received it in August 2011. Using radar, the Advance tracks the speed and location of vehicles approaching an intersection in real time (dynamically), uses that data to calculate each vehicle’s estimated time of arrival (ETA) at the stop bar, and thereby determines whether any of the approaching vehicles fall within the dilemma zone. If vehicles fall within the dilemma zone, the Advance sends a call to the traffic controller, telling the traffic controller the traffic light ought to remain green rather than turn yellow such that cars may comfortably and safely pass through the intersection.
Wavetronix alleges Iteris’s competing dilemma zone protection device, the Vantage Vector, infringes the ’542 Patent. Like the Advance, the Vantage Vector uses radar to track the speed and location of vehicles approaching an intersection in real time, determines whether oncoming vehicles fall within the dilemma zone, and, if so, calls the traffic controller to tell it the light ought to remain green rather than turn yellow. The key dispute between the parties concerns what the Vantage Vector does with the speed and location data it collects and, relatedly, how the Vantage Vector defines the dilemma zone. According to Iteris, the Vantage Vector, in contrast to the Advance, never calculates any vehicle’s ETA at the stop bar or uses ETA in any other way. Rather, the Vantage Vector merely compares the speed and distance data it collects to speed and distance thresholds configured by the end user—typically a city, county, or state traffic agencyand it is those user-defined thresholds, not any specific window of time, which define the dilemma zone.
Wavetronix and Iteris are currently the only two suppliers competing for Texas job contracts requiring radar-based dynamic dilemma zone protection, as the Advance and the Vantage Vector are the only two products which meet the Texas Department of Transportation’s specifications for radar-based dynamic dilemma zone protection devices. In Wavetronix’s view, “Iteris is trying to buy market share in the market built by Wavetronix by selling the infringing Vantage Vector at deeply discounted prices.” Wavetronix further claims Iteris “has adopted a strategy” of inducing contractors who previously awarded bids to Wavetronix to switch to the Vantage Vector by offering a far lower price, and alleges Iteris has already successfully stolen several of its customers.
The Court finds Wavetronix is not entitled to a preliminary injunction because although it has shown a likelihood of success on the merits, it has failed on the present record to carry its burden to show a substantial threat of irreparable injury, a favorable balancing of the hardships imposed by an injunction, or that granting an injunction will not disserve the public interest. The Court therefore denies the motion without prejudice to Wavetronix’ sright to re-file for injunctive relief along with any motion for summary judgment
Claim 1 states:
1. At a roadway mounted sensor, the roadway mounted sensor monitoring vehicles on a portion of a roadway, a method for monitoring a signalized traffic flow, the method comprising:
[a] an act of receiving sensor data, the sensor data indicating the presence of one or more vehicles within a continuous range of the monitored portion of the roadway, the received sensor data representing a portion of a signal that was transmitted by the roadway sensor into the portion of the roadway;
[b] an act of using the received sensor data to determine estimated times-of-arrival of the one or more vehicles to a traffic control point associated with the monitored portion of the roadway, two or more times while the one or more vehicles are within the continuous range;
[c] an act of determining a level of efficiency and safety for the traffic flow within the vicinity of the traffic control point based upon the estimated times-of-arrival; and
[d] an act of reporting the level of efficiency and safety to a traffic control unit that is actively controlling the monitored signalized traffic flow.
The parties’ key dispute concerns what it means for a device to “determine” a vehicle’s “estimated time-of-arrival” at a traffic control point (such as an intersection’s stop bar). As previously noted, Iteris argues the Vantage Vector never “determines” a vehicle’s ETA because it never calculates one; rather, end users are responsible for defining the boundaries of the dilemma zone by inputting certain speed and location values into the Vantage Vector, and the Vantage Vector does nothing more than compare the speed and location data it collects to the user-defined zone.
As this case is in its infancy, the Court lacks the benefit of a Markman order construing the claim language disputed by the parties. The Court thus looks to the words of the claims, the plain and ordinary meaning of those words, and the teachings of the specification, emphasizing that claim construction at this stage of the proceedings is preliminary. Because it is more likely than not the Vantage Vector embodies all the limitations of Claim 1, the Court finds Wavetronix has demonstrated a likelihood of success on the question of Iteris’s infringement of the ’542 Patent.
Even if a patentee shows it will likely prove infringement, the accused infringer can defeat the likelihood of success on the merits by raising a substantial question as to the validity of the patent in suit. Iteris challenges the validity of the ’542 Patent on the grounds that the Patent is directed at an abstract idea.
The Court is unpersuaded by Iteris’ s abstract-idea argument. In support, Iteris cites the Supreme Court’s recent decision in Alice, in which the Court held the concept of intermediated settlement was abstract and a generic computer process implementing the concept was therefore unpatentable. Claiming the ’542 Patent is similarly directed at an abstract process generically implemented, Iteris contends “a human with no more than a high-school level education can readily accomplish each of the steps taught [by the ’542 Patent] with nothing more than a paper and a pencil.”
The Court disagrees, and is unpersuaded Alice is applicable to this case. Merely employing a mathematical formula does not render a claimed method unpatentable where the method improves upon an existing technological process, Alice, 134 S. Ct. at 2358 (citing Diamond v. Diehr, 450 U.S. 175 (1981)), and the evidence presently before the Court indicates the ’542 Patent significantly improved upon existing technological processes for providing dilemma-zone protection. Some previous purported solutions, for example, were based upon virtual loops or physical loops buried in the ground, and did not really solve the problem: for example, those solutions created delays by overextending green lights, failed to account for faster traffic, and required the end user to correctly estimate the speed of the fastest-moving traffic in order to function effectively. Wavetronix improved upon those solutions by devising a process which by making use of a mathematical formula enables accurate real-time tracking of vehicles as they approach an intersection.
The ’542 Patent does not claim the mathematical formula itself, the concept of the dilemma zone, or an unimproved application of either. The Court therefore finds Iteris’ s argument fails to raise a substantial question as to the validity of the ’542 Patent. See Diehr, 450 U.S. at 187 (rejecting abstract-subject-matter argument where the process at issue “admittedly employs a well-known mathematical equation, but . . . do[es] not seek to pre-empt the use of that equation” and instead “seek[s] only to foreclose from others the use of that equation in conjunction with all of the other steps in the[ ] claimed process”).
A final note: the Court believes once a Markman order construing the disputed claim language is entered, this case will be readily resolvable on summary judgment. Although the Court denies Wavetronix’s request for injunctive relief at the present time, as previously indicated, the denial is without prejudice to Wavetronix’s right to file a request for permanent injunctive relief along with a motion for summary judgment.
1. This decision has been hailed in the patent bar as “a breath of fresh air.” Bilski Blog (Jan. 26, 2015). The blogger comments further: “Bravo! That’s how it’s done.”
2. The opinion is quite thoughtful and informed. But will it be upheld on appellate review? Let’s examine the claim. First, it clearly is not a business method. But are the steps patent eligible?
Step [a] is a data-gathering step, which the cases deprecate. Step [b] is calculating mathematically the times at which the two carts will arrive at the intersection. Step [c] is a determining step—“a level of efficiency and safety”—another mathematical calculation. Step [d] is reporting the results of the calculation in step [c]. Does this sound like Flook? Is there any more than a mathematical calculation?
3. Suppose the claim had one or more additional steps in which some significant post-solution activity occurs: After reporting the results of the calculation in step [d], calculate whether the two cars are going to occupy the same space if things proceed as they are going. If so, send a signal to the traffic control unit that keeps the light red. Would this make the case more like Diehr (where the mold is opened after the calculation) and less like Flook?
LEONARD P. STARK, District Judge.
The plaintiff The Money Suite Company (“Money Suite”) initiated patent infringement lawsuits against defendants 21st Century Insurance and Financial Services, Inc., 21st Century Insurance Group, and Farmers Group, Inc. (collectively, “21st Century”), Farmers Group, Inc. (“Farmers”), and Lending Tree LLC (“Lending Tree”) on June 3, 2013. Money Suite subsequently brought suit against Citigroup Inc. (“Citigroup) and MetLife, Inc. (“MetLife”) on October 23, 2013 (all defendants, collectively, “the Defendants”). Money Suite alleges that the Defendants each infringe U.S. Patent No. 6,684,189 (“the ’189 Patent”).” The Defendants filed a joint motion to dismiss all of the actions based on § 101 invalidity. For the reasons discussed below, the court grants the Defendants’ motion.
Money Suite has alleged patent infringement of the ’189 Patent against each of the Defendants. The Patent describes a computerized method for generating price quotes for financial products. Claim 1—the only independent claim of the Patent’s 887 claims—summarizes the invention:
1. A computer-implemented method using front-end network gateways and search criteria entered at a remote computer terminal to conduct a search of multiple financial products for efficient quoting at a remote location, the method including the steps of:providing at least one data input screen with signals communicated from a digital computer to the remote terminal connected by a communications system, the at least one data input screen at the terminal soliciting entry of financial product selection criteria;receiving the selection criteria from the terminal over the communications system at the digital computer; andusing the front-end network gateways, data accessible by the digital computer representing the multiple financial products, and the selection criteria entered at the terminal to provide a quote at the terminal for a financial product identified from the multiple financial products.
The additional claims impose limitations such as defining the type of financial product at issue, identifying the specific search criteria, and adding hyperlink capability and password protection.
The Defendants argue that the Patent is invalid because it claims an abstract idea: providing price quotes for various financial products and services.
First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts. If so, we then ask, what else is there in the claims before us? To answer that question, we consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application. We have described step two of this analysis as a search for an “inventive concept”—i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.
Thus, the court must determine (1) if the patented technology touches upon ineligible subject matter, and (2) whether there are sufficient inventive elements such that the invention is “significantly more than a patent on an ineligible concept.”
The court applies the two-step framework outlined in Alice to the Patent. In doing so, the court finds that the Patent—and all of its 887 claims—are invalid under § 101, as they claim the abstract concept of assigning prices to financial products and services without meaningfully narrowing the scope of coverage.
A. Abstract Idea
The court agrees with the Defendants that the core invention embodied by the Patent is a “fundamental economic [or] conventional business practice” and therefore an abstract idea. There is no dispute that the claims describe a process used to generate price quotes for various types of financial products, based on a given set of criteria. Although Money Suite attempts to frame it otherwise, this concept is abstract. Indeed, stripped of its limitations and technical jargon, claim 1 recites a “method . . . to conduct a search of multiple financial products for efficient quoting.” See Patent, claim 1. This concept is not dissimilar from those discussed by recent § 101 court cases. See, e.g., Alice (invalidating computer-implemented claims covering intermediated settlement); Bilski (invalidating computer-implemented claims covering “the basic concept of hedging, or protecting against risk”).
Money Suite’s arguments to the contrary are unpersuasive. Money Suite argues that the “front-end network gateways” identified in the claims take the Patent out of the abstract, as they were not used in the prior art. This argument—sounding in § 102 novelty—is beside the point for a § 101 inquiry.
Money Suite appears to take issue with the Defendants’ characterization of the Patent as describing a method of providing price quotes for financial products. But the Defendants succeed in presenting a consistent, coherent argument that the Patent is abstract, whereas Money Suite merely states conclusively that the Patent describes a “concrete, scalable technical solution.” This amorphous definition is of little help. Moreover, even if the court were inclined to view the basic idea of the Patent as something more advanced than simply assigning price quotes, new ideas may be similarly abstract and invalid under § 101. See Ultramercial (rejecting the position that “abstract ideas remain patent-eligible under § 101 as long as they are new ideas, not previously well known, and not routine activity”). The Patent describes an abstract idea, and therefore the second step of the Alice framework is implicated. Money Suite’s assertions that the Patent offers meaningful (and patentable) limitations can be addressed at that step. See Ultramercial (“[A]ny novelty in implementation of the idea is a factor to be considered only in the second step of the Alice analysis.”).
B. Inventive Concept
Although the Patent reads on an abstract idea, it will not be found to cover patent-ineligible subject matter if there is evidence of an inventive concept or contribution: “an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.” Alice. This second step is frequently referred to as a “preemption” analysis, wherein the court “must distinguish between patents that claim the building blocks of human ingenuity and those that integrate the building blocks into something more. . . . The former would risk disproportionately tying up the use of the underlying ideas. . . . The latter pose no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under our patent laws.” Id.
The court is convinced in this case that clear and convincing evidence shows that the Patent fails to claim an inventive contribution sufficient to satisfy § 101. As an illustrative example, claim 1 describes the use of front-end network gateways to allow users to interface with remote servers in order to generate a price quote for financial products. The outlined sequence of steps is neither inventive nor sufficiently narrow to alleviate preemption concerns. The use of front-end network gateways—the “foundational element” that Money Suite argues cements the eligibility of the Patent—is not new; indeed such system elements have been used in the industry for many years. Moreover, the specification’s description is similarly devoid of assurances that “the patent in practice amounts to significantly more” than a patent on price quoting: “the present invention involves processing information in a standardized manner, preferably to package an individually selected mortgage product with an individually selected investment product. . . . The packaging process tailors the financial product to the prospective applicant’s particular needs.”
The remaining dependent claims—which impose additional limitations—also fail to claim patent-eligible subject matter because the limitations cannot be considered inventive. As already explained, the dependent claims ostensibly narrow the scope of the claims by adding elements such as the type of financial product at issue, the specific search criteria, hyperlink capabilities, and password protection. But Money Suite does not contend that it “invented” any of these limitations, and none of these features qualify as a contribution sufficient to transform the abstract idea into a patent-eligible invention. Holding otherwise would provide a blueprint for patent drafters to skirt § 101, merely by tacking on routine, well-known limitations. See Alice (“A claim that recites an abstract idea must include ‘additional features’ to ensure `that the claim is more than a drafting effort designed to monopolize the abstract idea.’ ” Thus, while the Patent may recite slightly more than “wholly generic computer implementation” language, the difference is merely one of degree and not one of kind. See buySAFE, Inc. v. Google, Inc. (invalidating claims under § 101 where the limitations placed on the abstract idea were “not even arguably inventive”); Amdocs (“[T]he claim does not appear to add more than conventional computer functions operating in a conventional manner . . . and is, therefore, invalid under § 101.”); McRO, Inc. v. Activision Publ’g, Inc. (“[W]hen determining whether a patent contains an adequate inventive concept, the Court must factor out conventional activity.”).
Money Suite’s related arguments concerning preemption also miss the mark. Money Suite contends that price quoting can still be done manually or via computer-implemented systems that do not use front-end network gates. Thus, according to Money Suite, “the building blocks of human ingenuity” are not entirely monopolized by the Patent. First, although courts have framed the “second-step” analysis in terms of preemption, there is no rule that ideas that do not preempt an entire field are per se patent eligible. Rather, the test as articulated by Alice is that there must be an inventive contribution on top of the underlying abstract idea. The court has already explained that the Patent lacks the requisite inventive elements.
Second, even focusing purely on preemption, the court finds Money Suite’s arguments unpersuasive. Leaving open the possibility of practicing the idea of price quoting financial products manually does not save the Patent. This was the very concern underlying the court’s rationale in Alice: monopolizing computerized implementations while allowing the public to practice the idea “by hand” does not comport with § 101. See Alice (“The fact that a computer necessarily exists in the physical, rather than purely conceptual, realm is beside the point. There is no dispute that a computer is a tangible system . . ., or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But if that were the end of the § 101 inquiry, an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept.”). The availability of other possible computer-implemented methods—ones not using front-end network gateways—also does not assuage fears of blocking further innovation. See OIP Techs., Inc. v. Amazon.com, Inc., No. C-12-1233 EMC, 2012 WL 3985118, at *12 (N.D. Cal. Sept. 11, 2012) (“[A] patent need not preempt an entire field in order to be ineligible; rather, the question is whether ‘upholding the patents would risk disproportionately tying up the use of the underlying [abstract ideas or] natural laws, inhibiting their use in the making of further discoveries.’ ”.). The use of a front-end network gateway does not place meaningful limitations on the scope of the Patent, resulting in disproportionate monopolization.
Money Suite argues that a recent case out of the Court of Appeals for the Federal Circuit supports its position that the Patent claims patent-eligible subject matter. In DDR Holdings, the Federal Circuit determined that a patent “to systems and methods of generating a composite web page that combines certain visual elements of a ‘host’ website with content of a third-party merchant” was valid under § 101. Importantly, in reaching this conclusion, in DDR Holdings the Federal Circuit stated:
[I]t is true that the claims here are similar to the claims in the cases [invalidating computer-implemented abstract ideas] in the sense that the claims involve both a computer and the Internet. But these claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.
This is a critical distinction. The Patent does precisely what DDR Holdings explains is fatal to many computer-based patents: “recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet.” Id. (emphasis added). The generation of price quotes for financial products is undeniably a pre-Internet concept. Thus, DDR Holdings is readily distinguishable from the case at bar. Money Suite’s contention that it is solely offering an “improvement” to overcome a purely technical problem is belied by the broad, non-limited claim language.
The parties both address whether the Patent satisfies the “machine-or-transformation” test, which remains a “useful and important clue” when assessing § 101 patent eligibility. Bilski. The court agrees that the computer-implementation of the Patent is not a meaningful, tangible limitation. As already stated, the fact that a patent drafter can point to a computer as evidence of a physical manifestation (i.e., a machine) will not suffice to satisfy § 101. See Alice. Further, the ultimate goal of the ’189 Patent’s technology is to assign a price quote—there is no meaningful transformation taking place. Thus, the machine-or-transformation test supports the court’s conclusion that the Patent is invalid under § 101.
The court’s holding is bolstered by Money Suite’s own repeated use of language concerning “scalability.” According to Money Suite, the technology described in the Patent allows the quoting process to be “more functional . . . as the system grows more complex” with more users and connections. But this is the exact same role computers play in many cases involving abstract, non-patentable ideas. The question is almost always one of scale. Using computers to apply commonplace ideas—such as generating price quotes—is not a patentable invention, even if the computer is able to handle volumes and complexity at levels impossible for humans. See Alice (“Neither stating an abstract idea while adding the words ‘apply it,’ nor limiting the use of an abstract idea to a particular technological environment, is enough for patent eligibility.”).
For the foregoing reasons, the Patent is deemed invalid under 35 U.S.C. § 101 because it claims an abstract idea. The court will grant the Defendants’ joint motion that seeks the aforementioned declaration.
1. The court states (correctly) that the second step of the Alice analysis is determining whether there is evidence of an inventive concept or contribution: “an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.” Then the court examined what the patent applicant claimed as the way to implement the concept, which appeared in claim limitations over and beyond the concept. The court found that Money Suite did not contend that it “invented” any of these extra limitations in the claims concerning the way to implement the concept, and accordingly the implementation was not inventive. The extra limitations in the claims were such things as hyperlink capabilities and password protection, which were known in the art.
For an implementation to be inventive, must the elements used be newly invented? Can they not be known elements used or combined in a novel way?
LEONARD P. STARK, District Judge.
[This is a review of an order by a magistrate judge, reversing his order (Nagistrate's Report) finding a representative claim patent eligible. This opinion conveniently summarizes the legal principles applicable to deciding a Rule 12 motion under § 101.]
5. With the exception of the aforementioned sections and subsections, the remainder of the Report is REJECTED IN PART. Defendants' Objections are SUSTAINED IN PART, to the extent they challenge the magistrate's conclusions that claim 1 is not directed to an abstract idea and that claim 1 contains an "inventive concept." For the reasons discussed below, Defendants' Motions are DENIED WITHOUT PREJUDICE to renew as summary judgment motions, after claim construction and discovery. 6. In Cronos Technologies, LLC v. Expedia, Inc., 2015 U.S. Dist. LEXIS 118976, 2015 WL 5234040, at *2 (D. Del. Sept. 8, 2015), this Court outlined "several considerations relevant to deciding a Rule 12 motion that challenges the patent eligibility of multiple patent claims based on analysis of a single representative claim":
First, are all non-representative claims adequately represented by the representative claim (i.e., do all of the challenged claims relate to the same abstract idea and do any of the non-representative claims add one or more inventive concepts that would result in patent eligibility)? Second, are there issues of claim construction that must be decided before resolving the motion? Finally, is there any set of facts that could be proven relating to preemption, questions of patentability, or whether the claims "solve a technological problem," that would result in a determination that one or more of the claims are patent-eligible?
In this case, the Report correctly determined that claim 1 is representative of all claims of the '139 patent for purposes of deciding Defendants' Motions.
7. With respect to the second Cronos consideration – whether there are issues of claim construction that must be decided before resolving the Motions – the Court disagrees in this case with the Report's approach of "presum[ing] that the claims are to be construed in the manner most favorable to Plaintiff." The Report correctly cites Content Extraction, 776 F.3d at 1349, for the proposition that "when a Section 101 motion would be well taken even were a plaintiff's proposed claim construction to be accepted, a court may adopt the plaintiff's construction (or the construction most favorable to the plaintiff) for the purposes of the motion." However, in this case, the Report determined that Defendants' 101 Motions would not be well taken under a construction presumed to be most favorable to Plaintiffs and, accordingly, recommended denying the Motions. Therefore, the situation is significantly different from Content Extraction, because if the Report's recommendation were adopted, Defendants' Motions would be denied based on constructions that may turn out to be incorrectly less favorable to Defendants than the constructions that will ultimately be adopted after formal claim construction takes place.6Link to the text of the note
8. The ultimate question of the proper construction of a patent is a question of law. A Court construes the claims by analyzing the claim language in light of the specification and other intrinsic evidence, including the "prosecution history, if it is in evidence." In some cases, "the district court will need to look beyond the patent's intrinsic evidence and to consult extrinsic evidence in order to understand, for example, the background science or the meaning of a term in the relevant art during the relevant time period." In some cases, the meaning of claim language is clear from the face of the patent, without needing to resort to consultation of the prosecution history (which may not be in evidence at the Rule 12 stage) or extrinsic evidence (which cannot be considered at the Rule 12 stage). This case does not fall into the category of cases where the challenged claims are so clear on their face that formal claim construction is unnecessary.
9. Claim construction is necessary in this case before determinations can be made under either step of the Alice inquiry. Under Alice, courts must first determine if the claims at issue are directed to a patent-ineligible concept — in this case, an "abstract idea." If so, the next step is to look for an "inventive concept — i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself." Relevant to the first step of the Alice inquiry, the Court agrees with the Report's conclusion that "step a is the 'most important aspect' of claim 1." Thus, if claim 1 is directed to an abstract idea, it would most likely be an abstract idea that is substantially reflected by step a — i.e., a user interface.
10. However, in concluding that the "improved user interface" embodied by step a of claim 1 "contains sufficient particularity such that it is not directed to an abstraction," the Report relies on a construction of claim 1 that may read in limitations from the specification. But the Report (because it is simply presuming) does not explain why reading in limitations from the specification would be proper in construing this claim term. "We do not read limitations from the specification into claims; we do not redefine words. Only the patentee can do that. To constitute disclaimer, there must be a clear and unmistakable disclaimer."
11. In this case, the Report relied on constructions that were "most favorable to Plaintiff," but it is unclear what factual or legal determinations may be baked into these "most favorable" constructions. The Report invokes the "most favorable" standard four times in its step-1 analysis under Alice. Because the claim meaning is apparently uncertain enough to turn on multiple uses of this standard, and because the parties were not afforded an opportunity to explain why it may or may not be appropriate to read in limitations from the specification into certain of the steps comprising claim 1, the Court determines that formal claim construction is necessary before deciding whether claim 1 is directed to an abstract idea.
12. Regarding the third Cronos consideration — whether there are facts relevant to patent eligibility — the Federal Circuit has encouraged District Courts to evaluate "considerations analogous to those of [35 U.S.C.] §§ 102 and 103" as part of a "pragmatic analysis of § 101" at the motion to dismiss stage. "Courts have found guidance in deciding whether the allegedly abstract idea (or other excluded category) is indeed known, conventional, [or] routine . . . by drawing on the rules of patentability." The Court agrees with Plaintiff that, in this case, "it is premature [to rule on § 101 eligibility] because Execware has had no opportunity to plan or take discovery on numerous factual issues embedded in the § 101 inquiry." Thus, the Court determines that any renewed motion under § 101 must be filed as a summary judgment motion only after the parties have been afforded an opportunity to take discovery related to any factual issues that may affect the § 101 inquiry.
13. The Report utilizes a "majority of the limitations" inquiry from Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715 (Fed. Cir. 2014), as one of the "methods of analysis undertaken by the Federal Circuit in a few of [its] recent cases." The Court agrees with Defendants' objection to use of this inquiry in the present case. In Ultramercial, the Federal Circuit determined that "the concept embodied by the majority of the limitations describes only the abstract idea of showing an advertisement before delivering free content." However, in performing this analysis, the Federal Circuit was analyzing the claims at issue as an "ordered combination of steps." In other words, the Court was analyzing the claims as a whole "to ascertain whether their character as a whole [was] directed to excluded subject matter." In this case, as the Report correctly concluded, the "character as a whole" of claim 1 is clear from reading the specification (i.e., "step a is the 'most important aspect' of claim 1"), and resort to the "majority of the limitations" inquiry is unnecessary and potentially misleading, given that steps b through e of claim 1 cover database functionality that, while certainly technical, may have been "widely available" and, thus, "conventional."
14. The Report also cites the step-1 analysis in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), as a "method of analysis" to be used in this case. This Court previously addressed the appropriateness of using DDR Holdings as a model for step-1 analysis in Gammino v. Am. Tel. & Tel. Co., 2015 U.S. Dist. LEXIS 118975, 2015 WL 5234028 (D. Del. Sept. 8, 2015):
[I]t is unclear whether DDR Holdings turned on an analysis under step 1 of Alice. In fact, the Federal Circuit stated in DDR Holdings that "[identifying the precise nature of the abstract idea" there was "not as straightforward as in Alice or some of our other recent abstract idea cases," and the Court appeared to rely primarily on its step-2 analysis in deciding the case: "as discussed below, under any of these characterizations of the abstract idea, the [patent-in-suit]'s claims satisfy Alice step two." Thus, the Federal Circuit's step-1 analysis in DDR Holdings may have been dicta. In addition, to the extent DDR Holdings made a determination under step 1, the Federal Circuit did not precisely articulate the abstract idea to which the patent claims were directed. Therefore, Plaintiffs reliance on DDR Holdings for its step-1 analysis is questionable.
In light of the uncertainty as to the significance of the step-1 analysis in DDR Holdings, the Court determines that the Federal Circuit's guidance in Active Network, 790 F.3d at 1346, provides the most useful guidance — out of the three "methods of analysis" identified in the Report — for determining whether claim 1 is directed to an abstract idea. See also generally Intellectual Ventures I LLC v. Capital One Fin. Corp., 2015 U.S. Dist. LEXIS 116740, 2015 WL 5165442, at *16-18 (D. Md. Sept. 2, 2015) (analyzing whether patent claim limitation relating to user interface is directed to abstract idea under Mayo step 1).
15. Regarding the second step of Alice, the Report acknowledges that "its determination with regard to preemption is contingent here on viewing the claims in the light most favorable to the patentee. In this case, that has resulted in a narrow construction of 'query dialog box' that is limited to a 'dialog box' as described in the specification." Again, the Report does not give any reasons why, when this claim term is eventually construed, it will be construed with limitations read into it from the specification. For the reasons already discussed, supra, formal claim construction, including formal construction of the term "query dialog box," is necessary before a determination can be made as to whether claim 1 includes an "inventive concept" sufficient to make it patent-eligible under step 2 of Alice.
16. In addition, the Court agrees with Plaintiff that the "factual issues" identified in Plaintiff's answering brief relevant to the step-2 analysis of Alice could be important, if not dispositive, of the patent-eligibility of claim 1. In particular, discovery must be allowed to explore facts related to, e.g., preemption, questions of patentability, or whether the claims "solve a technological problem" that could result in a determination that the claims are patent-eligible.
Accordingly, for the reasons stated above, Defendants' Motions, all of which are based on the contention that Plaintiffs' patent is ineligible for patentability, are DENIED WITHOUT PREJUDICE to renew as summary judgment motions, after claim construction and discovery have taken place.11Link to the text of the note