ANCORA TECHNOLOGIES, INC., v. HTC AMERICA, INC., HTC CORPORATION, FEDERAL CIRCUIT 2018 (SOFTWARE PATENTS))

Ancora Technologies, Inc.’s U.S. Patent 6,411,941 is entitled “Method of Restricting Software Operation Within a License Limitation.” The patent describes and claims methods of limiting a computer’s running of software not authorized for that computer to run.

Ancora brought this action against HTC America and HTC Corporation alleging infringement of the patent. HTC moved to dismiss on the ground that the patent’s claims are invalid because their subject matter is ineligible for patenting under 35 U.S.C § 101. The district court granted HTC’s motion to dismiss, concluding that the claims are directed to, and ultimately claim no more than, an abstract idea.

Claim 1 is representative and recites:

1. A method of restricting software operation within a license for use with a computer including

an erasable, non-volatile memory area of a BIOS of the computer, and a volatile memory area; the method comprising the steps of:

selecting a program residing in the volatile memory,

using an agent to set up a verification structure in the erasable, non-volatile memory of the BIOS, the verification structure accommodating data that includes at least one license record,

verifying the program using at least the verification structure from the erasable non-volatile memory of the BIOS, and

acting on the program according to the verification.

The Federal Circuit cited some cases in which software was found to be patentable. They noted that in Enfish, they held that the patent claims were not directed to an abstract idea because the claimed self-referential tables improved the way that computers operated and handled data. The claimed self-referential tables allowed the more efficient launching and adaptation of databases.

In Visual Memory LLC v. NVIDIA Corp., the Federal Circuit drew a similar conclusion about claims focused on a specific improvement in computer memory. The district court had determined that the claims were directed to the abstract concept of categorical data storage. The Federal Circuit determined that the district court had erred because the patent was specifically “directed to an improved computer memory system, not to the abstract idea of categorical data storage,” and therefore was not directed to an abstract idea. The claims were specific and limited to certain types of data to be stored.

In Finjan, the Federal Circuit held that claims to a “behavior-based virus scan” were a specific improvement in computer functionality and hence not directed to an abstract idea. The claimed technique of scanning enabled “more flexible and nuanced virus filtering” and detection of potentially dangerous code. The claims thus were directed to “a non-abstract improvement in computer functionality” having the benefit of achieving greater computer security.

In Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc., the Federal Circuit held that claims to a method for making websites easier to navigate on a small-screen device were not directed to an abstract idea.

In Data Engine Technologies LLC v. Google LLC, the Federal Circuit held that claims to “a specific method for navigating through three-dimensional electronic spreadsheets” were “not directed to an abstract idea.” The method provided “a specific solution to then-existing technological problems in computers and prior art electronic spreadsheets.” The navigation difficulties of prior-art spreadsheets were addressed “in a particular way—by providing a highly intuitive, user-friendly interface with familiar notebook tabs for navigating the three dimensional worksheet environment.” The Federal Circuit distinguished other cases in which we had held claims to be “simply directed to displaying a graphical user interface or collecting, manipulating, or organizing information”; the claims in Data Engine, they concluded, recite “a specific structure (i.e., notebook tabs) within a particular spread-sheet display that performs a specific function (i.e., navigating within a three-dimensional spreadsheet).”

In accordance with those precedents, the Federal Circuit concluded that claim 1 of the patent is not directed to an abstract idea. Improving security—here, against a computer’s unauthorized use of a program—can be a non-abstract computer-functionality improvement if done by a specific technique that departs from earlier approaches to solve a specific computer problem, as was the case in Finjan.

The claimed method here specifically identifies how that functionality improvement is effectuated in an assertedly unexpected way: a structure containing a license record is stored in a particular, modifiable, non-volatile portion of the computer’s BIOS, and the structure in that memory location is used for verification by interacting with the distinct computer memory that contains the program to be verified. In this way, the claim addresses a technological problem with computers: vulnerability of license-authorization software to hacking. In short, claim 1 of the ’941 patent is directed to a solution to a computer- functionality problem: an improvement in computer functionality that has “the specificity required to transform a claim from one claiming only a result to one claiming a way of achieving it.” It therefore passes muster under Alice step one , as it is not directed to patent-ineligible subject matter.

2018 Unfavorable Software Patent Decisions -Alice Year in Review (Software Patents)

Though we had a couple of positive decisions for software patents in 2018, we also had many negative decisions. The pendulum has not yet swung firmly into pro-software patent territory. Software patents were found to be non-statutory in the following 2018 Federal Circuit decisions:

Move v. Real Estate Alliance
The following is a representative claim of a software patent that was found to be abstract without covering more than the use of a computer for a conventional business purpose:

1. A method using a computer for locating available real estate properties comprising the

steps of:

a) creating a database of the available real estate properties;

b) displaying a map of a desired geographic area;

c) selecting a first area having boundaries within the geographic area;

d) zooming in on the first area of the displayed map to about the boundaries of the first area to display a higher level of detail than the displayed map;

e) displaying the zoomed first area;

f) selecting a second area having boundaries within the zoomed first area;

g) displaying the second area and a plurality of points within the second area, each point representing the appropriate geographic location of an available real estate property; and

h) identifying available real estate properties within the database which are located within the

second area.

The Federal Circuit stated that while they do not suggest that every claim involving the collection, organization, manipulation, or display of data is necessarily directed to an abstract idea, this claim is not meaningfully distinct from claims they have previously held were directed to abstract ideas, such as in Electric Power Group, LLC v. Alstom S.A. Further, there were similarities to other claims that “simply use computers to serve a conventional business purpose.” such as in Affinity Labs of Tex., LLC v. DIRECTV, LLC.

Zuili v. Google

The following is a representative claim of a software patent for identifying invalid clicks:

1. A method for identifying invalid click(s) by a system including at least one web page on a server side computing device, the at least web page providing a plurality of links associated with a plurality of other web pages associated with a plurality of merchants, the method comprising the steps of:

generating a first code on the server side computing device, the first code identifying at least one device on a client side;
sending said first code to said at least one device over a communication network;
obtaining from the device on the client side, a second code when said at least one user performs a first click on at least one of said links associated with at least one of said other web pages at a first time;
obtaining from the device on the client side, a third code when said at least one user performs a second click on said at least one link associated with said at least one other web page at a second time; and
determining, by the server side computing device, whether said second click is invalid by examining a difference between said first time and said second time.

The Federal Circuit held that the asserted claims are directed to the abstract idea of collecting, transmitting, analyzing, and storing data to detect fraudulent and/or invalid clicks based on the time between two requests by the same device or client, and found that this was analogous to claims they found patent-ineligible in Electric Power Group., LLC v. Alstom S.A.

Automated Tracking Solutions v. The Coca-Cola Company
The following is a representative claim:

1. A system for locating, identifying and/or tracking of an object, the system comprising:

a first transponder associated with the object;

a reader that is configured to receive first transponder data via a radio frequency

(RF) signal from the first transponder;

an antenna in communication with the reader and having a first coverage area;

a processor coupled to the reader, wherein the processor is configured to receive the first transponder data from the reader and to generate detection information based on the received first transponder data, the detection information comprising first sighting and last sighting of the first transponder in the first coverage area; and

a storage device that is configured to store the detection information.

The Federal Circuit stated that the representative claims are quite broad, reciting uses of RFID system components recognized in the specification to be routine and conventional. The claims do not use these conventional RFID components in a non-conventional combination or arrangement. The Federal Circuit did not see any error in the district court’s ultimate conclusion that the asserted claims are directed to patent-ineligible subject matter under 35 U.S.C. §101.

Evolutionary Intelligence v. Sprint Nextel

The Federal Circuit stated the claims were “directed to selecting and sorting information by user interest or subject matter, a longstanding activity of libraries and other human enterprises.”

They stated that the claims at issue here are directed to an abstract idea. They have held that “tailoring of content based on information about the user—such as where the user lives or what time of day the user views the content—is an abstract idea.” Affinity Labs of Texas, LLC v. Amazon.com Inc.

Intellectual Ventures I & II v Symantec

The following is a representative claim:

A method for remote mirroring of digital data, said method comprising the steps of:

copying the data from a primary network server to a nonvolatile data buffer in a data transfer unit which is digitally connected to the primary network server, the primary network server including an operating system which is capable of accessing a nonvolatile server store, the data copied to the data transfer unit being a substantially concurrent copy of data which is being stored by the operating system in the nonvolatile server store of the primary network server;

copying the data from the data transfer unit to an input end of a communication link which has an output end physically separated from its input end;

generating and sending a spoof packet to the operating system of the primary network server; and

copying the data from the output end of the communication link to a nonvolatile server store on a remote network server.

The Federal Circuit stated that the district court correctly found that the claims were directed to the abstract idea of backing up data , and that the claim limitations lacked an inventive concept as they invoke conventional computer components that do not function in combination in an inventive manner. They concluded that the district court did not err in finding the claims patent ineligible under 35 U.S.C. §101.

West View Research LLC v. AUDI AG
The Federal Circuit stated that the patents-in-suit generally disclose a system and subsystems that use computer hardware, software, and peripheral devices to collect, organize, and display information.

The claims do not go beyond receiving or collecting data queries, analyzing the data query, retrieving and processing the information constituting a response to the initial data query, and generating a visual or audio response to the initial data query. The Federal Circuit, citing again to Electric Power Group., LLC v. Alstom S.A., stated that collecting information, analyzing it, and displaying certain results of the collection and analysis” are “a familiar class of claims ‘directed to’ a patent-ineligible concept.”

Voter Verified v. Election Systems & Software
The following is a representative claim:

85. A method for voting providing for self-verification of a ballot comprising the steps of:

(a) voting by a voter using a computer voting station programmed to present an election ballot, accept input of votes from the voter according to the election ballot, temporarily store the votes of the voter;

(b) printing of the votes of the voter from the votes temporarily stored in the computer for the voting station;

for the voting station;

(d) decision by the voter as to whether a printed ballot is acceptable or unacceptable; and

(e) submission of an acceptable printed ballot for

tabulation.

The Federal Circuit noted that, first, the claims as a whole are drawn to the concept of voting, verifying the vote, and submitting the vote for tabulation. Humans have performed this fundamental activity that forms the basis of our democracy for hundreds of years. Second, there is no inventive concept in the claims sufficient to transform them into patent-eligible subject matter. They concluded that the district court properly determined that the claims of the patent are invalid under §101.

In re Eberra
The following is a representative software patent claim:

1. A process for providing a television network comprising:

(a) opening at least one physical location for a production of a television program;

(b) requiring at least one customer to make a purchase of a product;

(c) allowing said customer to give a performance in said production of said television program, in exchange for making said purchase of said product;

whereby said purchase made by said customer results in said production of said television program

for said performance of said customer on said television network.

Starting at step one of the Mayo/Alice test, the Federal Circuit agreed with the U.S. Patent and Trademark Office Appeals Board’s conclusion that the claims at issue are directed to an abstract idea, namely “promoting the purchase of a product with the incentive being a spot in a television program, i.e. product promotion.” Like the concept of risk hedging, which the Supreme Court found to be an abstract idea in Bilski v. Kappos, the concept of product promotion is a “fundamental economic practice long prevalent in our system of commerce.”

Turning to step two, the Federal Circuit stated that each specific step in the claims—opening a location (which requires nothing more than finding a location), requiring a purchase, and allowing a performance in a television program—is a routine television-production or advertising

activity performed in a conventional way, as described in the specification. Thus, there is no inventive concept, and the claims are not patentable subject matter under §101.

In Re: George Mizhen Wang

The following is a representative claim:

A phonetic symbol system comprising:

a plurality of phonetic symbols, wherein each of said phonetic symbols is defined by one or more than one letter of English alphabet, the case or the style of said letter does not affect the sounds of said phonetic symbols, there are vowel phonetic symbols and consonant phonetic symbols of said phonetic symbols, each vowel is distinctively represented by one of said vowel phonetic symbols, and each consonant is distinctively represented by one of said consonant phonetic symbols.

The Federal Circuit stated that when, as here, claims of a patent application recite an abstract idea, the question becomes whether they contain “additional features” that embody an “inventive concept,” so as to nevertheless make them patent-eligible. The Federal Circuit stated that these claims, however, contain no “additional features” of any kind embodying an inventive concept. The claims merely encompass strings of English letters representing sounds. In short, there is no inventive concept that rescues them from patent ineligibility.

Burnett v. Panasonic Corporation

The following is a representative software patent claim:

1. A geospatial media recorder, comprising:

converting means for converting longitude and latitude geographic degree, minutes, and seconds (DMS) coordinate alphanumeric representations or decimal equivalent geographic coordinate alphanumeric representations and altitude alphanumeric representations into individual discrete all-natural number geographic coordinate and measurement representations; and

combining means for concatenating the individual discrete all-natural number geographic coordinate and measurement representations into a single discrete all-natural number geospatial coordinate measurement representation for identification of a geospatial positional location at, below, or above earth’s surface allowing user to geospatially reference entities or objects based on the identified geospatial positional location and point identification.

Starting at step 1, the Federal Circuit stated that they agreed with the district court’s conclusion that the claims at issue are directed to an abstract idea. Both claims are directed to, first, converting longitude and latitude coordinates into natural numbers—i.e. removing the decimal points and replacing any “+” signs with a “1” and any “–” signs with a 0—and second, concatenating the resulting natural numbers—i.e. joining the strings of resulting numbers together. In sum, the claims apply a mathematical methodology to convert geospatial coordinates into a single string of natural numbers. The Federal Circuit compared this to the concept of using a formula to convert binary-coded decimals into pure binary numerals, which the Supreme Court found to be an abstract idea in Gottschalk,

409 U.S. at 72.

Turning to step 2, the only additional features recited in claim 1 are the preamble providing for “[a] geospatial media recorder,” and the limitation of “allowing user to geospatially reference entities or objects based on the identified geospatial positional location and point identification….” As the district noted, these additional features effectively do no “more than simply state the [abstract idea] while adding the words ‘apply it.’

Interval Licensing v. AOL
The following is a representative claim:

18. A computer readable medium, for use by a content display system, encoded with one or more computer programs for enabling acquisition of a set of content data and display of an image or images generated from the set of content data on a display device during operation of an attention manager, comprising:

[1] acquisition instructions for enabling acquisition of a set of content data from a specified information source;

[2] user interface installation instructions for enabling provision of a user interface that allows a person to request the set of content data from the specified information source;

[3] content data scheduling instructions for providing temporal constraints on the display of the image or images generated from the set of content data;

[4] display instructions for enabling display of the image or images generated from the set of content

data;

[5] content data update instructions for enabling acquisition of an updated set of content data from an information

source that corresponds to a previously acquired set of content data;

[6] operating instructions for beginning, managing and terminating the display on the display device of an image

generated from a set of content data;

[7] content display system scheduling instructions for scheduling the display of the image or images on the display

device;

[8] installation instructions for installing the operating instructions and content display system scheduling

instructions on the content display system; and

[9] audit instructions for monitoring usage of the content display system to selectively display an image or

images generated from a set of content data.

Regarding step 1, the Federal Circuit noted, referring to Electric Power Group, that some software-based claimed inventions have failed to pass section 101 muster, because they did not recite any assertedly inventive technology for improving computers as tools and/or because the elements of the asserted invention were so result-based that they amounted to patenting the patent-ineligible concept itself. In this case, Interval Licensing contended that the claimed “attention manager” provided a technological improvement to a computer system. The Federal Circuit disagreed and said that the focus of the claims here is directed to “providing information to a person without interfering with the person’s primary activity,” i.e. , the result-centric construction of the claimed “attention manager.” It is important to disclose and claim more than results of software methods.

Regarding step 2, the problem for Interval Licensing was that its claims, as construed, are so broad that they encompass the basic concept of displaying two sets of information, using any means to display them without overlap, in which the secondary data set is acquired and organized by generic, conventional steps. Thus, unlike DDR Holdings, the claims here do not offer a particular solution to a problem that, in DDR Holdings, was unique to the Internet. Further, unlike the claims in Amdocs, none of the claims recite anything even akin to a distributed architecture.

SAP America v. Investpic
The following is a representative claim:

1. A method for calculating, analyzing and displaying investment data comprising the steps of:

(a) selecting a sample space, wherein the sample space includes at least one investment data sample;
(b) generating a distribution function using a re-sampled statistical method and a bias parameter, wherein the bias parameter determines a degree of randomness in a resampling process; and,
(c) generating a plot of the distribution function.

The Federal Circuit, referring to Electric Power Group, stated that the focus of the claims, as is plain from their terms, is on selecting certain information, analyzing it using mathematical techniques, and reporting or displaying the results of the analysis. That is all abstract. The Federal Circuit stated that, contrary to InvestPic’s contention, the claims here are critically different from those determined to be patent eligible in McRO, Inc. v. Bandai Namco Games America Inc. The claims in McRO were directed to the creation of something physical—namely, the display of “lip synchronization and facial expressions.” (Malhotra Law Firm does not believe that the claims in McRO recited anything more physical, just that McRO used very complicated math as opposed to reciting a desired result).

Similarly, in Thales Visionix Inc. v. United States, the improvement was in a physical tracking system. The use of mathematics to achieve an improvement no more changed the conclusion that improved physical things and actions

were the subject of the claimed advance than it did in Diamond v. Diehr. Here, in contrast, the focus of the claims is not a physical-realm improvement but an improvement in wholly abstract ideas—the selection and mathematical analysis of information, followed by reporting or display of the results.

BSG Tech v. BuySeasons

The following is a representative claim:

1. A method of indexing and retrieving data being posted by a plurality of users to a wide area network, comprising:

providing the users with a mechanism for posting the data as parametized items;

providing the users with listings of previously used parameters and previously used values for use in posting the data;

providing the users with summary comparison usage information corresponding to the previously used

parameters and values for use in posting the data; and

providing subsequent users with the listings of previously used parameters and values, and corresponding summary comparison usage information for use in searching the network for an item of interest.

The Federal Circuit agreed with the district court that the asserted claims are directed to the abstract idea of considering historical usage information while inputting data. The focus of the claims is in guiding database users by presenting summary comparison information to users before they input data. This is not a method “necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of wide access databases and DDR Holding s, LLC v. Hotels.com is not applicable. Further, claims are not saved from abstraction merely because they recite components more specific than a generic computer. In addition, guiding users’ selection of classifications, parameters, and values through displays of summary comparison usage information, which allows users to quickly and efficiently access hundreds of thousands or even millions of records, and still find only those few records that are relevant, are not improvements to database functionality.

In re Mario Villenna, Jose Villena

The following claim is representative:

57. A system for distributing real-estate related information, comprising:

one or more computers configured to:

receive user-provided information and determine a geographic region based on received user-provided information;

produce a plurality of automated valuation method (AVM) values using residential property information, the residential properties being within the geographic region, the AVM values reflecting current market estimates for the residential properties;

provide display information to a remote terminal over a publically accessible network based on the user-provided information, the display information enabling the remote terminal to generate a map-like display for the geographic region, the map-like display containing at least:

respective icons for each of a plurality of residential properties within the geographic region, the icons being spatially distributed relative to one another based on geographic information also residing in one or more computer-readable mediums; and

an AVM value for at least one of the plurality of residential properties within the map-like display, wherein each AVM value is pre-process [sic] such that an AVM value for the at least one residential property pre-exists before a user query of the respective property is performed,

and wherein the one or more computers update each of the AVM values without requiring a user query.

Beginning with Alice step one, the Federal Circuit easily concluded that claim 57 is directed to an abstract idea—specifically, a fundamental economic practice. Claim 57 merely recites the familiar concept of property valuation. As the Supreme Court explained in Alice, claims involving “a fundamental economic practice long prevalent in our system of commerce,” such as the concepts of hedging and intermediated settlement, are patent-ineligible abstract ideas.

Turning to Alice step two, the Federal Circuit concluded that claim 57 does not contain an inventive concept sufficient to “‘transform the nature of the claim’ into a patent-eligible application.” The elements of claim 57 simply recite an abstract idea executed using computer technology, such as “one or more computers” and a “remote terminal” on a “publically accessible network.” The applicants argued that an inventive concept arises from the ordered combination of steps in claim 57, but the Federal Circuit was not convinced. Claim 57 recites the basic steps of receiving user input, producing property valuations, and providing display information. This is a classic case of implementing an abstract idea on a computer, which is not eligible under Alice. Nor do the pre-processing limitations in the claim add anything more to make the claims eligible. Rather, the pre-processing limitations are directed to using a computer to perform routine computer activity. Nor was the Federal Circuit persuaded by Applicants’ Berkheimer argument that the Board failed to provide substantial evidence to support its rejection. Not every §101 determination contains genuine disputes regarding underlying facts material to the §101 inquiry. Applicants did not point to any unresolved factual disputes that would warrant such consideration here. In sum, the claims are directed to the abstract idea of property valuation and fail to recite any inventive concepts sufficient to transform that abstract idea into a patent-eligible invention.

I have summarized many of the negative software patent decisions of 2018 in a single post because I feel it is more important to focus on and learn from the positive decisions, to try to mold claims of a new patent application based on a similar analogous positive decision, to the extent possible. Therefore, I have made separate posts out of positive decisions and lumped various negative decisions together. It isn’t always possible to recite an inventive hardware improvement. When there isn’t a hardware improvement, the best one can do is analogize the invention to one that was previously held to be patent-eligible and to mold the claims and application to be able to argue that it is analogous to the claims such a patent. These decisions show that the pendulum has not yet started swinging more clearly into positive territory for software patents. But we do have some good news and guidance in cases like Core Wireless, Berkheimer, and Ancora Techs v. HTC America.

Berkheimer v. HP, Federal Circuit 2018 (Software Patents)

Mr. Berheimer sued HP. HP moved for summary judgment that claims 1–7 and 9 of U.S. Patent No. 7,447,713 are patent ineligible under 35 U.S.C. § 101, and the district court granted the motion.

The patent relates to digitally processing and archiving files in a digital asset management system. The system parses files into multiple objects and tags the objects to create relationships between them. These objects are analyzed and compared, either manually or automatically, to archived objects to determine whether variations exist based on predetermined standards and rules. This system eliminates redundant storage of common text and graphical elements, which improves system operating efficiency and reduces storage costs. The relationships between the objects within the archive allow a user to “carry out a one-to-many editing process of object-oriented data,” in which a change to one object carries over to all archived documents containing the same object.

Independent claim 1 recites:
1. A method of archiving an item in a computer processing system comprising:

presenting the item to a parser;
parsing the item into a plurality of multipart object structures wherein portions of
the structures have searchable information tags associated therewith;
evaluating the object structures in accordance with object structures previously
stored in an archive;
presenting an evaluated object structure for manual reconciliation at least where
there is a predetermined variance between the object and at least one of a predetermined standard and a user defined rule.

The Federal Circuit stated that because patent protection does not extend to claims that”monopolize the “building blocks of human ingenuity,” claims directed to laws of nature, natural phenomena, and abstract ideas are not patent eligible. Alice Corp. Pty. Ltd. v. CLS Bank Int’l. The Supreme Court instructs courts to distinguish between claims that claim patent ineligible subject matter and those that “integrate the building blocks into something more.” First, the Federal Circuit is to determine whether the claims at issue are directed to a patent ineligible concept. If so, the Federal Circuit is to 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.

The Federal Circuit noted that, at Alice step one, they must “determine whether the claims at issue are directed to a patent-ineligible concept.” The district court held claim 1 is directed to the abstract idea of “using a generic computer to collect, organize, compare, and present data for reconciliation prior to archiving.” Mr. Berkheimer argued that the district court characterized the invention too broadly and simplistically, ignoring the core features of the claims. The Federal Circuit held that claims 1–3 and 9 are directed to the abstract idea of parsing and comparing data; claim 4 is directed to the abstract idea of parsing, comparing, and storing data; and claims 5–7 are directed to the abstract idea of parsing, comparing, storing, and editing data. The Federal Circuit noted that the claims are similar to claims that they held directed to an abstract idea in prior cases In re TLI Commc’ns LLC Patent Litig. and Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n. In Content Extraction, the claims at issue generally recited 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. The Federal Circuit held those claims were directed 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. Similarly, in TLI, the claims recited a “method for recording and administering digital images,” which involved “recording images using a digital pick up unit in a telephone unit,” digitally storing them, transmitting the digital images and classification information to a server, and storing the digital images in the server based on the
classification information. The Federal Circuit held that those claims used only conventional computer components to implement the abstract idea of classifying and storing digital images in an organized manner.

Even though the parser here separates the documents or items into smaller components than the claims determined to be abstract in Content Extraction and TLI, the concept is the same, according to the Federal Circuit. The parsing and comparing of claims 1–3 and 9 are similar to the collecting and recognizing of Content Extraction, and the classifying in an organized manner of TLI. Claim 4 adds the abstract concept of storing, and claims 5–7 add the abstract concept of editing.

That the parser transforms data from source to object code does not demonstrate non-abstractness without evidence that this transformation improves computer functionality in some way. Visual Memory LLC v. NVIDIA Corp. The second step of the Alice test is satisfied when the claim limitations involve more than performance of ‘well understood, routine, and conventional activities previously known to the industry. Content Extraction.

The interesting holding in this case was that the Federal Circuit held that the question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact. Any fact, such as this one, that is pertinent to the invalidity conclusion must be proven by clear and convincing evidence.

At this stage of the case, there is at least a genuine issue of material fact in light of the specification regarding whether claims 4–7 archive documents in an inventive manner that improves these aspects of the disclosed archival system. Whether claims 4–7 perform well-understood, routine, and conventional activities to a skilled artisan is a genuine issue of material fact making summary judgment inappropriate with respect to these claims.
The Federal Circuit did not decide that claims 4–7 are patent eligible under § 101. They only decided that on this record summary judgment was improper, given the fact questions created by the specification’s disclosure.

Core Wireless Licensing v. LG Electronics Mobilecomm, Federal Circuit 2018 (Software Patents)

In this case, LG Electronics appealed from a district court decision denying summary judgement that claims 8 and 9 of a software patent, No. 8,713,476 and claims 11 and 13 of another software patent, No. 8,434,020 are directed to patent ineligible subject matter under 35 U.S.C. § 101.

The patents disclose improved display interfaces for electronic devices with small screens like mobile telephones. An application summary window is displayed while a software application is in an unlaunched state.

Claims 8 and 9 of the ’476 software patent depend from claim 1, which recites:
1. A computing device comprising a display screen, the computing device being configured to display on the screen a menu listing one or more applications, and additionally being configured to display on the screen an application summary that can be reached directly from the menu, wherein the application summary displays a limited list of data offered within the one or more applications, each of the data in the list being selectable to launch the respective application and enable the selected data to be seen within the respective application, and wherein the application summary is displayed while the one or more applications are in an un-launched state.

Claims 11 and 13 of the ’020 patent depend from claim 1, which recites:
1. A computing device comprising a display screen, the computing device being configured to display on the screen a main menu listing at least a first application, and additionally being configured to display on the screen an application summary window that can be reached directly from the main menu, wherein the application summary window displays a limited list of at least one function offered within the first application, each function in the list being selectable to launch the first application and initiate the selected function, and wherein the application summary window is displayed while the application is in an un-launched state.

The district court held that the claims are not directed to an abstract idea because, even crediting LG’s characterization of the claims as directed to “displaying an application summary window while the application is in an unlaunched state,” the concepts of “application,” “summary window,” and “unlaunched state” are specific to devices like computers and cell phones. The district court explained that LG identified no analog to these concepts outside the context of such devices. It further noted even if claim 1 were directed to an abstract idea, it would still be patent eligible at least because it passes the machine-or-transformation test. The jury found all asserted claims infringed and not invalid.

Citing Alice v CLS, the Federal Circuit noted that because patent protection does not extend to claims that monopolize the building blocks of human ingenuity, claims directed to laws of nature, natural phenomena, and abstract ideas are not patent eligible. The Supreme Court instructs courts to distinguish between claims that claim patent ineligible subject matter and those that integrate the building blocks into something more. First, we determine whether the claims at issue are directed to a patent-ineligible concept. If so, we examine the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.

The Federal Circuit stated that, at step one, we must articulate what the claims are directed to with enough specificity to ensure the step one inquiry is meaningful. Thales Visionix Inc. v. United States Although there is difficulty inherent in delineating the contours of an abstract idea, we must be mindful that all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas. We also ask whether the claims are directed to a specific improvement in the capabilities of computing devices, or, instead, a process that qualifies as an ‘abstract idea’ for which computers are invoked merely as a tool. Enfish, LLC v. Microsoft Corp. in Enfish, the Federal Circuit held claims reciting a self-referential table for a computer database eligible under step one because the claims were directed to a particular improvement in the computer’s functionality, even though the invention ran on a general purpose computer.

The Federal Circuit indicated that the asserted claims in this case are directed to an improved user interface for computing devices, not to the abstract idea of an index, as argued by LG on appeal.3 Although the generic idea of summarizing information certainly existed prior to the invention, these claims are directed to a particular manner of summarizing and presenting information in electronic devices. Claim 1 of the ’476 patent requires “an application summary that can be reached directly from the menu,” specifying a particular manner by which the summary window must be accessed. The claim further requires the application summary window list a limited set of data, “each of the data in the list being selectable to launch the respective application and enable the selected data to be seen within the respective application.” This claim limitation restrains the type of data that can be displayed in the summary window. Finally, the claim recites that the summary window “is displayed while the one or more applications are in an un-launched state,” a requirement that the device applications exist in a particular state. These limitations disclose a specific manner of displaying a limited set of information to the user, rather than using conventional user interface methods to display a generic index on a computer. Like the improved systems claimed in Enfish, Thales, Visual Memory, and Finjan, these claims recite a specific improvement over prior systems, resulting in an improved user interface for electronic devices.

The specification confirms that these claims disclose an improved user interface for electronic devices, particularly those with small screens. It teaches that the prior art interfaces had many deficits relating to the efficient functioning of the computer, requiring a user “to scroll around and switch views many times to find the right data/functionality.”

Because the Federal Circuit held that the asserted claims are not directed to an abstract idea, they did not proceed to the second step of the inquiry. The claims are patent eligible under § 101.

Finjan Inc., v. Blue Coat Systems, Inc., Federal Circuit 2018 (Software Patents)

Finjan brought suit against Blue Coat for infringement of software patents directed to identifying and protecting against malware. One of the software patents is directed to a method of providing computer security by scanning a downloadable and attaching the results of that scan to the downloadable itself in the form of a “security profile.”

Claim 1 of the patent reads:

1. A method comprising:

receiving by an inspector a Downloadable;
generating by the inspector a first Downloadable security profile that identifies suspicious code in the received Downloadable; and
linking by the inspector the first Downloadable security profile to the Downloadable before a web server makes the Downloadable available to web clients.

The parties agreed that “Downloadable” should be construed to mean “an executable application program, which is downloaded from a source computer and run on the destination computer.” Additionally, the district court construed “Downloadable security profile that identifies suspicious code in the received Downloadable” to mean “a profile that identifies code in the received Downloadable that performs hostile or potentially hostile operations.”

The Federal Circuit noted that they had previously determined in Intellectual Ventures I LLC v. Symantec Corp. that, by itself, virus screening is well-known and constitutes an abstract idea. They also found that performing the virus scan on an intermediary computer—so as to ensure that files are scanned before they can reach a user’s computer— is a “perfectly conventional” approach and is also abstract. However, they felt that, here, the claimed method does a
good deal more.

The method of claim 1 scans a downloadable and attaches the virus scan results to the downloadable in the form of a newly generated file: a “security profile that identifies suspicious code in the received Downloadable.”

The district court’s claim construction decision emphasized that this “identify suspicious code” limitation can only be satisfied if the security profile includes “details about the suspicious code in the received downloadable, such as . . . ‘all potentially hostile or suspicious code operations that may be attempted by the Downloadable.’” The security profile must include the information about potentially hostile operations produced by a “behavior-based” virus scan. This operation is distinguished from traditional, “code-matching” virus scans that are limited to recognizing the presence of previously-identified viruses, typically by comparing the code in a downloadable to a database of known suspicious code. The question, then, is whether this behavior-based virus scan constitutes an improvement in computer functionality. The Federal Circuit believes that it does.

The “behavior-based” approach to virus scanning was pioneered by Finjan and is disclosed in the software patent’s specification. Traditional “code-matching” systems simply look for the presence of known viruses.

“Behavior-based” scans can analyze a downloadable’s code and determine whether it performs potentially dangerous or unwanted operations—such as renaming or deleting files. Because security profiles communicate the granular information about potentially suspicious code made available by behavior-based scans, they can be used to protect against previously unknown viruses as well as “obfuscated code”—known viruses that have been cosmetically modified to avoid detection by code-matching virus scans.

The security profile approach also enables more flexible and nuanced virus filtering. After an inspector generates a security profile for a downloadable, a user’s computer can determine whether to access that downloadable by reviewing its security profile according to the rules in whatever “security policy” is associated with the user. Administrators can easily tailor access by applying different security policies to different users or types of users. And having the security profile include information about particular potential threats enables administrators to craft security policies with highly granular rules and to alter those security policies in response to evolving threats.

The Federal Circuit’s cases confirm that software inventions can make “non-abstract improvements to computer technology” and be deemed patent-eligible subject matter at step 1 of the Alice software patent inquiry. In Enfish, for example, the Federal Circuit determined that claims related to a database architecture that used a new, self-referential logical table were non-abstract because they focused on “an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.”

The self referential database found patent eligible in Enfish did more than allow computers to perform familiar tasks with greater speed and efficiency; it actually permitted users to
launch and construct databases in a new way. While deployment of a traditional relational database involved extensive modeling and configuration of the various database, Enfish’s self-referential database could be launched with no or only minimal column definitions and configured and adapted “on-the-fly.”

Similarly, according to the Federal Circuit, the software patent method of claim 1 employs a new kind of file that enables a computer security system to do things it could not do before. The security profile approach allows access to be tailored for different users and ensures that threats are identified before a file reaches a user’s computer. The fact that the security profile identifies suspicious code allows the system to accumulate and utilize newly available, behavior-based information about potential threats. According to the Federal Circuit, the asserted claims are therefore directed to a non-abstract improvement in computer functionality, rather than the abstract idea of computer security at large.

Patent eligibility determinations seem to vary greatly based on the judges on the Federal Circuit panel hearing the case. In this case, the novelty of the method seemed to influence the patent-eligibility determination. If novelty is a main consideration, why even bother with the Alice 35 U.S.C. 101 analysis when reviewing software patents? While the claim was short, many claim terms were construed as requiring very specific steps. That may have helped with the patent-eligibility determination.

Smart Systems Innovations v. Chicago Transit Authority, Federal Circuit 2017 (Software Patents)

The software patents in this case relate to inventions designed to allow riders to access mass transit by using existing bankcards, such as debit and credit cards, without the need for first buying dedicated fare-cards, paper tickets, or tokens. The District Court had held that the patent claims are directed to an abstract idea and otherwise lack an inventive concept, such that they are patent ineligible under 35 U.S.C. § 101.On appeal, the Federal Circuit noted that they needed to use the framework set forth in the Supreme Court’s decision in Alice Corp. Pty Ltd. v. CLS Bank International. A patent claim falls outside § 101 where (1) it is “directed to” a patent-ineligible concept, i.e., a law of nature, natural phenomenon, or abstract idea, and (2) if so, the particular elements of the claim, considered “both individually and ‘as an ordered combination,’” do not add enough to “‘transform the nature of the claim’ into a patent-eligible application.”

Claim 14 of one of the software patents recites:

A method for validating entry into a first transit system using a bankcard terminal, the method comprising:

downloading, from a processing system associated with a set of transit systems including the first transit system, a set of bankcard records comprising, for each bankcard record in the set, an identifier of a bankcard previously registered with the processing system, and wherein the set of bankcard records identifies bankcards from a plurality of issuers;
receiving, from a bankcard reader, bankcard data comprising data from a bankcard currently presented by a holder of the bankcard, wherein the bankcard comprises one of a credit card and a debit card;
determining an identifier based on at least part of the bankcard data from the currently presented bankcard;
determining whether the currently presented bankcard is contained in the set of bankcard records;
verifying the currently presented bankcard with a bankcard verification system, if the bankcard was not contained in the set of bankcard records; and
denying access, if the act of verifying the currently presented bankcard with the bankcard verification system results in a determination of an invalid bankcard.

The district court had taken the position that the software patents here really only cover an abstract concept: paying for a subway or bus ride with a credit card. On appeal, SSI argued that some of the patents disclose inventions that “operate in the tangible world” and satisfy a public demand for more convenient travel that did not exist in the prior art. SSI also argued that other ones of the patents similarly do not concern an abstract idea because their claims “overcome challenges created by the storage limitations that exist with conventional tangible bankcards.

The Federal Circuit stated that the claims are directed to the formation of financial transactions in a particular field (i.e., mass transit) and data collection related to such transactions. The claims of the software patents are not directed to a new type of bankcard, turnstile, or database, nor do the claims provide a method for processing data that improves existing technological processes. Rather, the claims are directed to the collection, storage, and recognition of data. SSI also argued that the asserted claims are not directed to an abstract idea because they apply to a concrete field; namely mass transit.

The Federal Circuit concluded that the software patent’s claims are not directed to a combined order of specific rules that improve any technological process, but rather invoke computers in the collection and arrangement of data. Claims with such character do not escape the abstract idea exception under Alice step one according to the Federal Circuit.

With regard to Alice step two, the Federal Circuit stated that the asserted claims fail to provide an inventive concept. When claims like the asserted software patent claims are directed to an abstract idea and “merely require generic computer implementation, they do not move into section 101 eligibility territory.

Thus, the software patent claims were held to not be patent-eligible.

More interesting than the majority opinion in this case was the well-reasoned dissent.

According to Judge Linn, the language of Section 101 is well-recognized as providing a wide and permissive scope for patent eligibility. He cited to the Supreme Court decision in Bilski v. Kappos, (quoting the Supreme Court’s decision in Diamond v. Chakrabarty) (“In choosing such expansive terms . . . modified by the comprehensive ‘any,’ Congress plainly contemplated that the patent laws would be given wide scope.”). Within this expansive provision, the Supreme Court has recognized “an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.

These three “exceptions” share a common origin and address what the Supreme Court saw and has often reiterated as a related set of common concerns. “A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right.”

According to the dissent, there is no principled difference between the judicially recognized exception relating to “abstract ideas” and those relating to laws of nature and natural phenomena. All three nonstatutory exceptions are intended to foreclose only those claims that preempt and thereby preclude or inhibit human ingenuity with regard to basic building blocks of scientific or technological activity. They are intended to be read narrowly. At some level, all inventions, including software inventions, embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.

Visual Memory LLC v. NVIDIA Corp., Federal Circuit 2017 (Software Patents)

This case concerned an appeal from a district court case which held that Visual Memory’s U.S. Patent No. 5.953,740 was drawn to patent-ineligible subject matter.

The patent teaches that computer systems frequently use a three-tiered memory hierarchy to enhance performance. The three tiers include: 1) a low-cost, low speed memory, such as a magnetic disk, for bulk storage of data; 2) a medium-speed memory that serves as the main memory; and 3) an expensive, high-speed memory that acts as a processor cache memory. Because the cache memory is the most expensive, it is typically smaller than the main memory and cannot always store all the data required by the processor. The memory hierarchy alleviates the limitations imposed by the cache’s size because it allows code and non-code data to be transferred from the main memory to the cache during operation to ensure that the currently executing program has quick access to the required data. Replacement algorithms determine which data should be transferred from the main memory to the cache and which data in the cache should be replaced. As a result, the code and non-code data to be executed by the processor are continually grouped into the cache, thereby facilitating rapid access for the currently executing program. These prior art memory systems lacked versatility because they were designed and optimized based on the specific type of processor selected for use in that system. Designing a different memory system for every processor type is expensive.

The patent purports to overcome these deficiencies by creating a memory system with programmable operational characteristics that can be tailored for use with multiple different processors without the accompanying reduction in performance. It discloses a main memory and three separate caches: an internal cache, a pre-fetch cache, and a write buffer cache.

The three caches possess programmable operational characteristics that are programmable based on the type of processor connected to the memory system. When the system is turned on, information about the type of processor is used to self-configure the programmable operational characteristics. For example, depending on the type of processor, the internal cache can store both code and noncode data, or it can store only code data. Similarly, write buffer cache 20 can be programmed to buffer data “solely from a bus master other than the system processor,” or to buffer data writes by any bus master including the system processor. By separating the functionality for the caches and defining those functions based on the type of processor, the patented system can allegedly achieve or exceed the performance of a system utilizing a cache many times larger than the cumulative size of the subject caches. Using a programmable operational characteristic based on the processor type can also improve the main memory.

Claim 1 recites:
1. A computer memory system connectable to a processor and having one or more programmable operational characteristics, said characteristics being defined through configuration by said computer based on the type of said processor, wherein said system is connectable to said processor by a bus, said system comprising:
a main memory connected to said bus; and
a cache connected to said bus; wherein a programmable operational characteristic
of said system determines a type of data stored by said cache.

Under step one of the Alice test, the district court had concluded that the claims were directed to the “abstract idea of categorical data storage,” which humans have practiced for many years. The court’s step-two analysis found no inventive concept because the claimed computer components—a main memory, cache, bus, and processor—were generic and conventional.

The Federal Circuit noted that two recent cases inform their evaluation of whether the claims are directed to an abstract idea: Enfish and Thales (described in other posts in this blog). In Enfish, the Federal Circuit held claims reciting a self-referential table for a computer database were patent-eligible under Alice step one because the claims were directed to an improvement in the
computer’s functionality. In Thales, the Federal Circuit determined that claims reciting a unique configuration of inertial sensors and the use of a mathematical equation for calculating the location and orientation of an object relative to a moving platform were patent-eligible under Alice step one.

The Federal Circuit’s review of the claims at hand demonstrated that they are directed to an improved computer memory system, not to the abstract idea of categorical data storage. None of the claims recite all types and all forms of categorical data storage.

As with Enfish’s self-referential table and the motion tracking system in Thales, the claims here are directed to a technological improvement: an enhanced computer memory system. Therefore, the claims are patent-eligible.

The dissent contended that the claimed programmable operational characteristic is nothing more than a black box, and that the patent lacks any details about how the invention’s purpose] is achieved. The majority noted some flaws with this conclusion. First, the patent included a microfiche appendix having 263 frames of computer code. The dissent argued that this code would not teach one of ordinary skill in the art the innovative programming effort. The majority stated that such an assumption is improper when reviewing a motion to dismiss for failure to state a claim. Second, whether a patent specification teaches an ordinarily skilled artisan how to implement the claimed invention presents an enablement issue under 35 U.S.C. § 112, not an eligibility issue under § 101. Third, the dissent assumed that the “innovative” effort in the patent lies in the programming required for a computer to configure a programmable operational characteristic of a cache memory. This assumption is inconsistent with the patent specification itself. The specification makes clear that the inventors viewed their innovation as the creation of “a memory system which is efficiently operable with different types of host processors, and the patent discloses how to implement such a memory system.

Thales Visionix Inc. v. United States, Federal Circuit 2017 (Software Patents)

Thales Visionix Inc. appealed from a Claims Court judgment that most claims of its U.S. Patent No. 6,474,159 were directed to patent-ineligible subject matter.

The patent discloses an inertial tracking system for tracking the motion of an object relative to a moving reference frame. Inertial sensors, such as accelerometers and gyroscopes, measure the specific forces associated with changes in a sensor’s position and orientation relative to a known starting position. Such sensors are used in a wide variety of applications, including aircraft navigation and virtual reality simulations. When mounted on a moving object, inertial sensors can calculate the position, orientation, and velocity of the object in 3-dimensional space, based on a specified starting point, without the need for any other external information. Because small errors in the measurement of acceleration and angular velocity translate to large errors in position over time, inertial systems generally include at least one other type of sensor, such as an optical or magnetic sensor, to intermittently correct these errors that compound over time.

The patent disclosure recognized that conventional solutions for tracking inertial motion of an object on a moving platform were flawed because both object and platform-based inertial sensors measured motion relative to earth, and the error-correcting sensors on the tracked object measured position relative to the moving platform. Attempting to fuse this data produced inconsistent position information when the moving platform accelerated or turned.

The inertial sensors disclosed in the patent do not use the conventional approach of measuring inertial changes with respect to the earth. Instead, the platform (e.g., vehicle) inertial sensors directly measure the gravitational field in the platform frame. Object (e.g., helmet) inertial sensors then calculate position information relative to the frame of the moving platform. By changing the reference frame, one can track the position and orientation of the object within the moving platform without input from a vehicle attitude reference system or calculating orientation or position of the moving platform itself.

Claims 1 and 22, the only independent claims, recite:
1. A system for tracking the motion of an object
relative to a moving reference frame, comprising:
a first inertial sensor mounted on the tracked object;
a second inertial sensor mounted on the moving reference frame; and
an element adapted to receive signals from said first and second inertial sensors and configured to determine an orientation of the object relative to the moving reference frame based on the signals received from the first and second inertial sensors.

22. A method comprising determining an orientation of an object relative to a moving reference frame based on signals from two inertial sensors mounted respectively on the object and on the moving reference frame.

The alleged infringing products were helmet mounted display systems (HMDS) in F-35 Joint Strike Fighters. Thales Visionix sued the government and Elbit Systems of America, the government subcontractor that produced the helmets, jointed the case.

The Federal Circuit began its analysis at Alice step one: “whether the claims at issue are directed to a patent-ineligible concept.” While the two steps of the Alice framework are related, the Supreme Court’s formulation makes clear that the first-stage filter is a meaningful one, sometimes ending the § 101 inquiry.

The Federal Circuit noted, citing to Enfish, that the Supreme Court has not established a definitive rule to determine what constitutes an ‘abstract idea’” for the purposes of step one. The Federal Circuit has held claims ineligible as directed to an abstract idea when they merely collect electronic information, display information, or embody mental processes that could be performed by humans. At the same time, according to Alice, “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” The Federal Circuit must therefore ensure at step one that they articulate what the claims are directed to with enough specificity to ensure the step one inquiry is meaningful.

The Federal Circuit compared the claims in this case to the claims in Diamond v. Diehr . In Diamond v. Diehr, the Supreme Court confirmed the eligibility of patent claims despite the inclusion of a mathematical formula in a claimed method for molding raw, uncured rubber into cured rubber products. The claimed method used the well known Arrhenius equation to calculate the optimal cure time using, among other variables, the internal temperature of the mold. The invention in Diamond v. Diehr improved upon prior art molding methods by constantly measuring the actual temperature inside the mold, recalculating the ideal cure time, and automatically opening the press when the ideal cure time equaled the actual time elapsed.

The Supreme Court recognized that a mathematical formula like the Arrhenius equation is not itself patent-eligible subject matter, even if limited to a particular technological environment or accompanied by insignificant post-solution activity. Nonetheless, the Supreme Court held that the claims in Diehr covered patent-eligible subject matter because they described a process of curing rubber beginning with the loading of the mold and ending with the opening of the press and the production of a synthetic rubber product that has been perfectly cured—a result previously unknown in the art. It explained that claims are patent eligible under § 101 “when a claim containing a mathematical formula implements or applies that formula in a structure or process which, when considered as a whole, is performing a function which the patent laws were designed to protect.” In terms of the modern day Alice test, the Diehr claims were directed to an improvement in the rubber curing process, not a mathematical formula.

The Federal Circuit stated that, for the purpose of evaluating patent eligibility, the ’159 patent claims are nearly indistinguishable from the claims in Diehr.

While the claims utilize mathematical equations to determine the orientation of the object relative to the moving reference frame, the equations—dictated by the placement of the inertial sensors and application of laws of physicsserve only to tabulate the position and orientation information in this configuration. This arrangement is analogous to the claims in Diehr.

Just as the claims in Diehr reduced the likelihood that the rubber molding process would result in “overcuring” or “undercuring,” the claims here result in a system that reduces errors in an inertial system that tracks an object on a moving platform.

The ’159 patent claims provide a method that eliminates many “complications” inherent in previous solutions for determining position and orientation of an object on a moving platform. Because the motion of a moving platform like a plane is more dynamic and unpredictable than the earth’s rotation, a traditional system (which measured inertial data with respect to the earth) had difficulty accurately calculating inertial data of an object on a moving platform.

Though the unconventional utilization of inertial sensors as specified by the ’159 patent “may seem somewhat strange” to those within the field, this combination of sensor placement and calculation based on a different reference frame mitigates errors by eliminating inertial calculations with respect to the earth. The resulting system works with any type of moving platform and is simpler to install than conventional systems. The system is also beneficially self-contained: it requires no external information about the orientation or position of the platform.

The Federal Circuit held that the patent claims at issue are not directed to an abstract idea. The claims specify a particular configuration of inertial sensors and a particular method of using the raw data from the sensors in order to more accurately calculate the position and orientation of an object on a moving platform. The mathematical equations are a consequence of the arrangement of the sensors and the unconventional choice of reference frame in order to calculate position and orientation. Far from claiming the equations themselves, the claims seek to protect only the application of physics to the unconventional configuration of sensors as disclosed. As such, the claims are not directed to an abstract idea and thus the claims survive Alice step one.

Because the claims are not directed to an abstract idea, the Federal Circuit did not proceed to step two.

It is possible that the fact that the patent drafter’s indication that the arrangement of the sensors “may seem somewhat strange” helped sway the court.

Trading Technologies International Inc., v. CQG, Inc., Federal Circuit 2017 (non-precedential) (software patents)

This decision should be very interesting to software developers who want software patents on unique graphical user interfaces. The decision is non-precedential, but can be cited to the U.S. Patent and Trademark Office when the facts in a patent application uniquely match those in this case. Up until this case, and after Alice, the Federal Circuit had consistently found the claims to user interfaces patent-ineligible, reasoning that generically claimed user interfaces that merely present information that had been collected and analyzed are ineligible.

Trading Technologies International, Inc. charged CQG with infringement of U.S. Patent Nos. 6,772,132 and 6,766,304. CQG appealed the decision of the district court that the patents recite patent-eligible subject matter.

The software patents describe and claim a method and system for the electronic trading of stocks, bonds, futures, options and similar products. The software patents explain problems that arise when a trader attempts to enter an order at a particular price, but misses the price because the market moved before the order was entered and executed. It also sometimes occurred that trades were executed at different prices than intended, due to rapid market movement. The software patents describe a trading system in which a graphical user interface displays the market depth of a commodity traded in a market, including a dynamic display for a plurality of bids and for a plurality of asks in the market for the commodity and a static display of prices corresponding to the plurality of bids and asks. Bid and asked prices are displayed dynamically along the static display, and the system pairs orders with the static display of prices and prevents order entry at a changed price.

Claim 1 of the ‘304 software patent is representative:

1. A method for displaying market information relating to and facilitating trading of a commodity being traded in an electronic exchange having an inside market with a highest bid price and a lowest ask price on a graphical user interface, the method comprising;

dynamically displaying a first indicator in one of a plurality of locations in a bid display region, each location in the bid display region corresponding to a price level along a common static price axis, the first indicator representing quantity associated with at least one order to buy the commodity at the highest bid price currently available in the market;
dynamically displaying a second indicator in one of a plurality of locations in an ask display region, each location in the ask display region corresponding to a price level along the common static price axis, the second indicator representing quantity associated with at least one order to sell the commodity at the lowest ask price currently available in the market;
displaying the bid and ask display regions in relation to fixed price levels positioned along the common static price axis such that when the inside market changes, the price levels along the common static price axis do not move and at least one of the first and second indicators moves in the bid or ask display regions relative to the common static price axis;
displaying an order entry region comprising a plurality of locations for receiving commands to send trade orders, each location corresponding to a price level along the common static price axis; and
in response to a selection of a particular location of the order entry region by a single action of a user input device, setting a plurality of parameters for a trade order relating to the commodity and sending the trade order to the electronic exchange.

Alice Corporation Pty. Ltd. v. CLS Bank International, provides the framework for patent-eligibility of business methods and software patents. A software patent’s claim falls outside § 101 where (1) it is “directed to” a patent-ineligible concept, i.e., a law of nature, natural phenomenon, or abstract idea, and (2), if so, the particular elements of the claim, considered “both individually and ‘as an ordered combination,’” do not add enough to “‘transform the nature of the claim’ into a patent-eligible application.”

The district court first applied Step 1 of this framework. The district court held that, rather than reciting a mathematical algorithm, a fundamental economic or longstanding commercial practice, or a challenge in business, the challenged software patents solve problems of prior graphical user interface devices . . . in the context of computerized trading relating to speed, accuracy and usability.

The district court found that these patents are directed to improvements in existing graphical user interface devices that have no “pre-electronic trading analog,” and recite more than “‘setting, displaying, and selecting’ data or information that is visible on the [graphical user interface] device.” Id.

The district court explained that the challenged patents do not simply claim displaying information on a graphical user interface. The claims require a specific, structured graphical user interface paired with a prescribed functionality directly related to the graphical user interface’s structure that is addressed to and resolves a specifically identified problem in the prior state of the art. The district court concluded that the patented subject matter meets the eligibility standards of Alice Step 1.

The Federal Circuit agreed with this conclusion, for all of the reasons articulated by the district court.

The district court alternatively continued the analysis under Alice Step 2, and determined that the challenged claims recite an “inventive concept.”

The court identified the static price index as an inventive concept that allows traders to more efficiently and accurately place trades using this electronic trading system. The court distinguished this system from the routine or conventional use of computers or the Internet, and concluded that the specific structure and concordant functionality of the graphical user interface are removed from abstract ideas, as compared to conventional computer implementations of known procedures. Thus the district court held that the criteria of Alice Step 2 were also met.

The Federal Circuit stated that the district court’s rulings are in accord with precedent for software patents. Precedent has recognized that specific technologic modifications to solve a problem or improve the functioning of a known system generally produce patent-eligible subject matter. In DDR Holdings, LLC v. Hotels.com, the Federal Circuit upheld the patent eligibility of software patent claims necessarily rooted in computer technology that overcome a problem specifically arising in the realm of computer networks. Similarly, claimed processes using a combined order of specific rules” that improved on existing technological processes were deemed patent-eligible in McRO, Inc. v. Bandai Namco Games America Inc.. Claims that were directed to a specific improvement to the way computers operate, embodied in a self-referential table, were deemed eligible in Enfish, LLC v. Microsoft Corp. These software patent cases are described below in this blog.

The Federal Circuit pointed out that, for some computer-implemented methods, software may be essential to conduct the contemplated improvements, as indicated by Enfish. “Much of the advancement made in computer technology consists of improvements to software that, by their very nature, may not be defined by particular physical features but rather by logical structures and processes.”). Abstraction is avoided or overcome when a proposed new application or computer-implemented function is not simply the generalized use of a computer as a tool to conduct a known or obvious process, but instead is an improvement to the capability of the system as a whole.

The Federal Circuit reiterated the Court’s recognition that “at some level, all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” per Alice. This threshold level of eligibility is often usefully explored by way of the substantive statutory criteria of patentability, for an invention that is new, useful and unobvious is more readily distinguished from the generalized knowledge that characterizes ineligible subject matter. This analysis is facilitated by the Court’s guidance in Alice whereby the claims are viewed in accordance with “the general rule that patent claims ‘must be considered as a whole’.”

This decision should be considered when attempting to patent software that includes a graphical user interface.

Amdoc (Israel) Ltd. v. Openet Telecom, Inc., Federal Circuit Nov 2016 (Software Patents)

Amdoc sued Openet over four software patents directed to solving accounting and billing problems faced by network service providers. The district court held that the software patents were directed to patent-ineligible abstract ideas.

A split panel of the Federal Circuit reversed the district court.

The written descriptions of the software patents describe the same system, which allows network service providers to account for and bill for internet protocol (“IP”) network communications. The system includes network devices; information source modules (“ISMs”); gatherers; a central event manager (“CEM”); a central database; a user interface server; and terminals or clients. Network devices represent any devices that could be included on a network, including application servers, and also represent the source of information accessed by the ISMs. The ISMs act as an interface between the gatherers and the network devices and enable the gatherers to collect data from the network devices. The ISMs represent modular interfaces that send IP usage data in real time from network devices to gatherers. Gatherers can be hardware and software installed on the same network segment as a network device or on an application server itself to minimize the data traffic impact on a network; gatherers “gather the information from the ISMs.” Gatherers also normalize data from the various types of ISMs and serve as a distributed filtering and aggregation system. The CEM provides management and control of the ISMs and gatherers, and the CEM can perform several functions including performing data merges to remove redundant data. The central database is the optional central repository of the information collected by the system and is one example of a sink for the data generated by the system. The user interface server allows multiple clients or terminals to access the system, and its primary purpose is to provide remote and local platform independent control for the system.

Importantly, these components are arrayed in a distributed architecture that minimizes the impact on network and system resources. Through this distributed architecture, the system minimizes network impact by collecting and processing data close to its source.

The system includes distributed data gathering, filtering, and enhancements that enable load distribution. This allows data to reside close to the information sources, thereby reducing congestion in network bottlenecks, while still allowing data to be accessible from a central location. The software patents explain that this is an advantage over prior art systems that stored information in one location, which made it difficult to keep up with massive record flows from the network devices and which required huge databases.

The Federal Circuit noted that the two-step framework set out by the Supreme Court for distinguishing patents that claim so-called laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts, is now familiar law. See Alice, (following Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)). This framework is sometimes collectively referred to as Alice/Mayo. First, the court is to determine whether “the claims at issue are directed to one of those patent-ineligible concepts.” If so, the court is to next consider 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.”

The Federal Circuit noted that its cases generally follow the step one/step two Supreme Court format, reserving step two for the more comprehensive analysis in search of the ‘inventive concept.’ Recent cases, however, suggest that there is considerable overlap between step one and step two, and in some situations this analysis could be accomplished without going beyond step one. See Enfish, LLC, v. Microsoft Corp.

The Federal Circuit began with an examination of eligible and ineligible claims of a similar nature from past cases. They considered the claims in In re TLI Communications LLC Patent Litigation.

Under step one, the court found that the claims were directed to the abstract idea of “classifying and storing digital images in an organized manner.” Also under step one, the court found that the claims were not directed to a specific improvement in computer functionality, but instead were directed to the “use of conventional or generic technology in a nascent, but well-known environment.

The Federal Circuit stated that claim 1 of one of the software patents could be described as focusing on correlating two network accounting records to enhance the first record. Claim 1 could also be described in several other ways—such as focusing on a computer program that includes computer code for receiving initial information, for correlating that initial information with additional information, and for using that additional information to enhance the initial information.

The Federal Circuit explained that even if they were to agree that claim 1 is directed to an ineligible abstract idea under step one, the claim is eligible under step two because it contains a sufficient inventive concept. The Court relied on the distributed architecture. Claim 1 of one of the software patents requires “computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.” In a previous decision, the Federal Circuit construed “enhance” as being dependent upon the software invention’s distributed architecture. The court held that this distributed architecture was a critical advancement over the prior art. In other words, they were looking primarily at novelty and found novelty in a hardware arrangement.

I have long believed that the main issue that should be considered is novelty, not 101 issues. While this was a sensible decision, unfortunately, the Federal Circuit is divided. Some judges are quite hostile to all software. The Federal Circuit is continuing to struggle with interpreting the vague Alice v CLS Supreme Court decision. Until they can come up with brighter line rules, there cannot be any business certainty.

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