ERICSSON V TCL, FEDERAL CIRCUIT 2020 (SOFTWARE PATENTS)

This case involves U.S. Patent No. 7,149,510 relating to securing mobile phones against improper access by apps.

Claim 1 recites:

1. A system for controlling access to a platform, the system comprising:

  • a platform having a software services component and an interface component, the interface component having at least one interface for providing access to the software services component for enabling application domain software to be installed, loaded, and run in the platform;
  • an access controller for controlling access to the software services component by a requesting application domain software via the at least one interface, the access controller comprising:
  • an interception module for receiving a request from the requesting application domain software to access the software services component;
  •  and a decision entity for determining if the request should be granted wherein the decision entity is a security access manager, the security access manager holding access and permission policies; and
  • wherein the requesting application domain software is granted access to the software services component via the at least one interface if the request is granted.

The Federal Circuit concluded that claim 1 is directed to the abstract idea of controlling access to, or limiting permission to, resources. Although written in technical jargon, a close analysis of the claims reveals that they require nothing more than this abstract idea. By the plain language of claim 1, the “security access manager” and the “decision entity” are the same thing.  According to the specification, this combined decision entity/security access manager can further be the same as the “interception module.” Because the security access manager/decision entity/interception module is the only claimed component of the “access controller,” all four components collapse into simply “an access controller for controlling access” by “receiving a request” and then “determining if the request should be granted.” That bare abstract idea, controlling access to resources by receiving a request and determining if the request for access should be granted, is at the core of claim 1.

Neither of the remaining limitations altered the Federal Circuit’s conclusion that claim 1 is directed to the abstract idea of controlling access to resources. The first limitation recites “a platform having a software services component and an interface component,” for the ultimate goal of “enabling application domain software to be installed, loaded, and run in the platform.” ‘510 patent claim 1. This recitation of functional computer components does not specify how the claim “control[s] access to a platform,” nor does it direct the claim to anything other than that abstract idea. It merely provides standard components that are put to use via the “access controller” limitation. Similarly, the “wherein” limitation simply recites the necessary outcome of the abstract idea, “grant[ing] access … if the request is granted.”

The Federal Circuit, referring to Enfish, stated that the step one inquiry looks to the claim’s “character as a whole” rather than evaluating each claim limitation in a vacuum.

Ericsson made two arguments as to why the asserted claims are not directed to an abstract idea at Alice step one. Neither is persuasive. First, it argued that the idea of controlling access to resources is not an abstract idea because it does not resemble one previously recognized by the Supreme Court.

This argument was dismissed by the Federal Circuit.  Controlling access to resources is exactly the sort of process that “can be performed in the human mind, or by a human using a pen and paper,” which the Federal Circuit has repeatedly found unpatentable.

Second, Ericsson contended that its claims are not directed to an abstract idea because they “solve the specific computer problem … of controlling app access in resource-constrained mobile phones.”

The Federal Circuit disagreed. As an initial matter, the district court was incorrect to conclude that the claims of the ‘510 patent are limited to mobile platform technology,” and Ericsson is wrong to repeat that point.

Moreover, according to the Federal Circuit, the claims here do not have the specificity required to transform a claim from one claiming only a result to one claiming a way of achieving it.

In summary, the Federal Circuit wants to see, in the claims, greater details of how a computer problem is solved.

 

UNILOC V LG ELECTRONICS, FEDERAL CIRCUIT 2020 (SOFTWARE PATENTS)

Uniloc sued LG Electronics in the United States District Court for the Northern District of California, alleging infringement of U.S. Patent No. 6,993,049. LG moved to dismiss Uniloc’s Complaint, arguing the claims of the ’049 patent are ineligible under 35 U.S.C. §101. The lower court granted LG’s motion, determining that the asserted claims are directed to an abstract idea and do not recite an inventive concept.

The ’049 patent is directed to a communication system comprising a primary station (e.g., a base station) and at least one secondary station (e.g., a computer mouse or keyboard). In conventional systems, such as Bluetooth networks, two devices that share a common communication channel form ad hoc networks known as “piconets.” Joining a piconet requires the completion of two sets of procedures, namely an “inquiry” procedure and a “page” procedure. The inquiry procedure allows a primary station to identify secondary stations and it allows secondary stations to issue a request to join the piconet.

The page procedure in turn allows a primary station to invite secondary stations to join the piconet.   Together, it can take several tens of seconds to complete the inquiry and page procedures so that a device joins a piconet and is able to transfer user input to the primary station. Once a piconet is formed, the primary station “polls” secondary stations to determine whether they have data to share over the communication channel. Because many secondary stations are battery-operated, secondary stations may enter a “park” mode and cease active communications with the primary station to conserve power.  A secondary station in parked mode remains synchronized with the primary station, but it must be polled before it can leave park mode and actively communicate with the primary station.

In conventional systems, primary stations alternate between sending inquiry messages to identify new secondary stations and polling secondary stations already connected to the piconet, including parked devices,to determine whether they have information to transmit. Therefore, under the conventional polling process, a secondary station could experience delays of tens of seconds both in initially joining a piconet and in transmitting data after entering park mode.

The specification explains that the invention improves conventional communication systems by including a data field for polling as part of the inquiry message, thereby allowing primary stations to send inquiry messages and conduct polling simultaneously.

Claim 2 of the ’049 patent, which is representative, recites:

A primary station for use in a communications system comprising at least one secondary station, wherein means are provided

  • for broadcasting a series of inquiry mes-sages, each in the form of a plurality of predetermined data fields arranged ac-cording to a first communications protocol, and
  • for adding to each inquiry message prior to transmission an additional data field for polling at least one secondary station.

The Federal Circuit held that the claims at issue are directed to a patent-eligible improvement to computer functionality, namely the reduction of latency experienced by parked secondary stations in communication systems.

The Federal Circuit stated that, like the claims in DDR Holdings v Hotels.com, the claimed invention changes the normal operation of the communication system itself to “overcome a problem specifically arising in the realm of computer networks.”

BOZEMAN FINANCIAL LLC V FEDERAL RESERVE BANK, FEDERAL CIRCUIT 2020 (SOFTWARE PATENTS)

Bozeman Financial LLC appealed from a decision of the U.S. Patent and Trademark Office’s Patent Trial and Appeal Board holding all of the claims of U.S. Patent Nos. 6,754,640 and 8,768,840 ineligible under 35 U.S.C. §101.

Claim 1 of the ’840 patent is representative:

1. A computer implemented method for detecting fraud in financial transactions during a payment clearing process, said method comprising:

  • receiving through one of a payer bank and a third party, a first record of an electronic financial transaction from at least one of the following group: a payer, a point-of-sale terminal, an online account and a portable electronic device;
  • storing in a database accessible by each party to said payment clearing process of said electronic financial transaction, said first record of said electronic financial transaction, said first record comprising more than one parameter;
  • receiving at said database at least a second record of said electronic financial transaction from one or more of a payee bank and any other party to said payment clearing process as said transaction moves along said payment clearing process, wherein said second record comprises at least one parameter which is the same as said more than one parameter of said first record;
  • each of said first and second records received at said database comprise at least two of the same said more than one parameters;
  • determining by a computer when there is a match between at least two of said parameters of said second record of said first financial transaction received at said database and the same parameters of said first record of said financial transaction stored in said database, and wherein any party to said payment clearing process is capable of verifying said parameters at each point along said financial transaction payment clearing process;sending a notification to said payee bank participant with authorization to process said electronic financial transaction when said parameters match;
  • and sending a notification to said payee bank participant to not process said electronic financial transaction when said parameters do not match.

The Board determined that the ’640 patent’s claims are directed to the abstract idea of “collecting, displaying, and analyzing information to reconcile check information against a ledger.” The Board determined that the ’840 patent claims are directed to the abstract idea of “collecting and analyzing information for financial transaction fraud or error detection.”  The Board found that the claims do not contain an inventive concept to render them eligible under §101.

The Federal Circuit applied the two-step framework set forth in Alice to determine patent-eligibility under §101.

Considering Alice Step 1, the Federal Circuit stated that verifying financial documents to reduce transactional fraud is a fundamental business practice that, without more, is not eligible for patent protection.

The Federal Circuit stated that their recent decision in Solutran, Inc. v. Elavon, Inc. held claims like the claims of the ’840 patent ineligible. 931 F.3d 1161 (Fed. Cir. 2019). In Solutran, the claims recited a method for electronic check processing.

Bozeman argued that the claimed method is a physical process that improves handling and processing of checks, not an abstract idea. It argued that because the process involves tangible steps, it cannot be an abstract idea, even if the claims additionally involve or include otherwise abstract concepts.

The Federal Circuit dismissed this argument.  As they explained in Solutran, “the physicality of the paper checks being processed and transported is not by itself enough to exempt the claims from being directed to an abstract idea.”

Considering Alice Step 2, the Federal Circuit stated that he technological components recited in claim 1 of the ’840 patent were conventional, off-the-shelf computer components.  Nothing in the claims, understood in light of the specification, appears to require anything more than off-the-shelf, conventional computer, storage, network, and display technology for collecting the data related to financial transactions, and displaying the data to the users.

The Federal Circuit did not consider that a programmed computer becomes a new machine.  They also did not find that the claims met the machine-or-transformation test.

One must wonder if the outcome could have been different if the Federal Reserve Banks were not involved.  The Federal Reserve Banks do not believe in patents covering financial methods.  On the other hand, there are plenty of issued patents covering Bitcoin and blockchain.

CUSTOMEDIA TECHNOLOGIES, LLC V DISH NETWORK, FEDERAL CIRCUIT 2020 (SOFTWARE PATENTS)

Customedia appealed a decision by the U.S. Patent and Trademark Office holding claims of U.S. Patent No. 8,719,090 and 9,053,494 ineligible under 35 U.S.C. § 101.

The patents both relate to a cable TV set-top box.  A cable distributor may provide customers with a cable set-top box with built-in storage sections that may be leased or sold to advertisers.

Claim 1 of U.S. Patent No. 8,719,090 is representative and recites:

1 A data delivery system for providing automatic delivery of multimedia data products from one or more multimedia data product providers, the system comprising:

  • a remote account transaction server for providing multimedia data products to an end user, at least one of the multimedia data products being specifically identified advertising data; and
  • a programmable local receiver unit for interfacing with the remote account transaction server to receive one or more of the multimedia data products and for processing and automatically recording the multimedia data products, said programmable lo-cal receiver unit including at least one individually controlled and reserved advertising data storage section adapted specifically for storing the specifically identified advertising data, said at least one advertising data storage section being monitored and controlled by said remote account transaction server and such that said specifically identified advertising data is delivered by said remote ac-count transaction server and stored in said at least one individually controlled and reserved advertising data storage section.

The Federal Circuit said that they must follow the  Supreme Court’s two-step framework for determining patent-eligibility under § 101 according to Alice Corp. Pty. Ltd. v. CLS Bank Int’l.

At Alice step one, the Federal Circuit must determine whether the claims are directed to an abstract idea.  in Alice, the Supreme Court made clear that the invocation of a computer does not necessarily transform an abstract idea into a patent-eligible invention. There, the Supreme Court held ineligible claims directed to a method of exchanging financial obligations using a computer system as a third-party intermediary. The Court explained that the claims were merely implemented “using some un-pecified, generic computer” and did not “purport to improve the functioning of the computer itself.

Customedia argued that its claims are patent-eligible because they provide for improvements to the functioning of computer systems.  The Federal Circuit disagreed.

By dedicating a section of the computer’s memory to advertising data, the claimed invention ensures memory is available for at least some advertising data. This does not, however, improve the functionality of the computer itself, according to the Federal Circuit.

Even if the court accepted Customedia’s assertions, the claimed invention merely improves the abstract concept of delivering targeted advertising using a computer only as a tool. This is not what the Supreme Court meant by improving the functioning of the computer itself, according to the Federal Circuit.

ChargePOINT, INC. v. SemaCONNECT, INC., FEDERAL CIRCUIT 2019 (SOFTWARE PATENTS)

This is a software patent decision in which the court ignored a substantial amount of hardware in the patent claim and found that the claim was directed to an abstract idea and therefore invalid.  In the Alice Supreme Court decision, the main issue was whether the patentee took a well known financial method and merely automated it on a computer.  In most post-Alice decisions, the computer was largely ignored in determining whether the claim was directed to an abstract idea and therefore unpatentable under 35 U.S.C. 101, unless there was an improvement in operation of the computer.

The ChargePOINT case relates to U.S. Patent No. 8,138,715; 8,432,131; 8,450,967; and 7,956,570 for charging stations for electric vehicles. The battery in an electric vehicle is recharged by connecting the vehicle to an electrical outlet.  At the time the patent application was filed, this process typically required hours and was often done overnight or while the electric vehicle was parked for a significant amount of time.

Businesses such as restaurants, apartments, and shopping centers have installed electric vehicle charging stations for the convenience of their customers. A shopping center may prefer to offer free vehicle charging to its customers to encourage customers to continue shopping.

Utility companies have different concerns in mind. Generally, the supply of electricity available from a power grid may vary, and in some cases the grid may lack sufficient electricity to meet demand. In addition to pulling electricity from a local electricity grid, electric vehicles may also supply electricity to the grid.

ChargePoint contends that its inventors created improved charging stations that address the various needs inherent in electric vehicle charging. This was accomplished by creating networked charging stations. According to ChargePoint, this network connectivity allows the stations to be managed from a central location, allows drivers to locate charging stations in advance, and allows all users to interact intelligently with the electricity grid.

Claim 1 of the ‘715 patent is representative and recites:

1. An apparatus, comprising:

  • a control device to turn electric supply on and off to enable and disable charge transfer for electric vehicles;
  • a transceiver to communicate requests for charge transfer with a remote server and receive communications from the remote server via a data control unit that is connected to the remote server through a wide area network; and
  • a  controller, coupled with the control device and the transceiver, to cause the control device to turn the electric supply on based on communication from the remote server.

The Federal Circuit noted that it is clear from the language of claim 1 that the claim involves an abstract idea—namely, the abstract idea of communicating requests to a remote server and receiving communications from that server, i.e., communication over a network. But at step one, “it is not enough to merely identify a patent-ineligible concept underlying the claim; we must determine whether that patent-ineligible concept is what the claim is `directed to‘, citing Thales Visionix.  In trying to discern what the claim is directed to, the Federal Circuit considered the problem being solved. The problem identified by the patentee, as stated in the specification, was the lack of a communication network that would allow drivers, businesses, and utility companies to interact efficiently with the charging stations.

The Federal Circuit stated that, looking at the problem identified in the patent, as well as the way the patent describes the invention, the specification suggests that the invention of the patent is nothing more than the abstract idea of communication over a network for interacting with a device, applied to the context of electric vehicle charging stations.  The Federal Circuit then agreed with SemaConnect that, based on the claim language, claim 1 would preempt the use of any networked charging stations.   The Federal Circuit stated that the inventors here had the good idea to add networking capabilities to existing charging stations to facilitate various business interactions. But that is where they stopped, and that is all they patented. The Federal Circuit therefore held that claim 1 is “directed to” an abstract idea.

I have a degree in electrical engineering and that sounds like a lot of hardware to me, in addition to just a computer or microprocessor.  35 U.S.C. 101 states that: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof may obtain a patent therefor, subject to the conditions and requirements of this title.

This sure sounds like a machine.  The judicial exception that prevents abstract ideas from being patented relates to the concern that we don’t want to have patents covering mental steps or laws of nature or natural phenomenon.   This claim covers none of these things.

The main sin of the patentee is that their claim was arguably too broad.  But if that was the case, the claim should also be obvious and that is where the court should have focused its analysis.  Since it was a “good idea,” maybe it wasn’t so obvious.

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.

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.

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.

Enfish v Microsoft, Federal Circuit 2016 (Software Patents)

Enfish sued Microsoft for infringement of U.S. Patent 6,151,604 and U.S. Patent 6,163,775 related to a logical model for a computer database. A logical model is a model of data for a computer database explaining how the various elements of information are related to one another. A logical model generally results in the creation of particular tables of data, but it does not describe how the bits and bytes of those tables are arranged in physical memory devices. Contrary to conventional logical models, the patented logical model includes all data entities in a single table, with column definitions provided by rows in that same table. The patents describe this as a “self-referential” property of the database.

This self-referential property can be best understood in contrast with the more standard “relational” model.  With the relational model, each entity (i.e., each type of thing) that is modeled is provided in a separate table. For instance, a relational model for a corporate file repository might include the following tables:
document table,
person table,
company table.

The document table might contain information about documents stored on the file repository, the person table might contain information about authors of the documents, and the company table might contain information about the companies that employ the persons.

In contrast to the relational model, the patented self referential model has two features that are not found in the relational model: first the self-referential model can store all entity types in a single table, and second the self-referential model can define the table’s columns by rows in that same table.

Claim 17 of the ’604 patent recites:
A data storage and retrieval system for a computer memory, comprising:
means for configuring said memory according to a logical table, said logical table including:
a plurality of logical rows, each said logical row including an object identification number (OID) to identify each said logical row, each said logical row corresponding to a record of information;
a plurality of logical columns intersecting said plurality of logical rows to define a plurality of logical cells, each said logical column including an OID to identify each said logical column; and
means for indexing data stored in said table.

The Federal Circuit reviewed de novo the district court’s determination that the claims at issue do not claim patent-eligible subject matter.

Section 101 of the patent act provides that a patent may be obtained for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101.  The Federal Circuit noted that they, as well as the Supreme Court, have long grappled with the exception that “[l]aws of nature, natural phenomena, and abstract ideas are not patentable.” Ass’n for Molecular Pathology v. Myriad Genetics, Inc., — U.S. —-, 133 S. Ct. 2107, 2116 (2013) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., — U.S. —-, 132 S. Ct. 1289, 1293 (2012)).

The Federal Circuit noted that Supreme Court precedent instructs them to “first determine whether the claims at issue are directed to a patent-ineligible concept.” Alice Corp. Pty Ltd. v. CLS Bank Int’l. If this threshold determination is met, we move to the second step of the inquiry and “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.” Id. (quoting Mayo, 132 S. Ct. at 1298, 1297).

The Supreme Court has not established a definitive rule to determine what constitutes an “abstract idea” sufficient to satisfy the first step of the Mayo/Alice inquiry.

Rather, both the Federal Circuit and the Supreme Court have found it sufficient to compare claims at issue to those claims already found to be directed to an abstract idea in previous cases.

Refreshingly, the Federal Circuit in Enfish stated that: “We do not read Alice to broadly hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two.  Indeed, some improvements in computer-related technology when appropriately claimed are undoubtedly not abstract, such as a chip architecture, an LED display, and the like. Nor do we think that claims directed to software, as opposed to hardware, are inherently abstract and therefore only properly analyzed at the second step of the Alice analysis. Software can make non-abstract improvements to computer technology just as hardware improvements can, and sometimes the improvements can be accomplished through either route. We thus see no reason to conclude that all claims directed to improvements in computer-related technology, including those directed to software, are abstract and necessarily analyzed at the second step of Alice, nor do we believe that Alice so directs. Therefore, we find it relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea, even at the first step of the Alice analysis.”

The Federal Circuit stated that, for that reason, the first step in the Alice inquiry in this case asks whether the focus of the claims is on the specific asserted improvement in computer capabilities (i.e., the self-referential table for a computer database) or, instead, on a process that qualifies as an “abstract idea” for which computers are invoked merely as a tool.

The Federal Circuit concluded that in this case, the plain focus of the claims is on an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity.  Therefore, it was not necessary to proceed to step two of the Mayo analysis.

Accordingly, the Federal Circuit found in this case, that the claims at issue in this appeal are not directed to an abstract idea within the meaning of Alice. Rather, they are directed to a specific improvement to the way computers operate, embodied in the self-referential table.

The district court had concluded that the claims were directed to the abstract idea of “storing, organizing, and retrieving memory in a logical table” or, more simply, “the concept of organizing information using tabular formats.”

However, describing the claims at such a high level of abstraction and untethered from the language of the claims all but ensures that the exceptions to § 101 swallow the rule. See Alice (noting that “we tread carefully in construing this exclusionary principle [of laws of nature, natural phenomena, and abstract ideas] lest it swallow all of patent law”); cf. Diamond v. Diehr (cautioning that overgeneralizing claims, “if carried to its extreme, make[s] all inventions unpatentable because all inventions can be reduced to underlying principles of nature which, once known, make their implementation obvious”).

Here, the claims are not simply directed to any form of storing tabular data, but instead are specifically directed to a self-referential table for a computer database. For claim 17, this is reflected in step three of the “means for configuring” algorithm described above.

Moreover, the Federal Circuit was not persuaded that the invention’s ability to run on a general-purpose computer dooms the claims. Unlike the claims at issue in Alice or, more recently in Versata Development Group v. SAP America, Inc., 793 F.3d 1306 (Fed. Cir. 2015),  the claims here are directed to an improvement in the functioning of a computer. In contrast, the claims at issue in Alice and Versata can readily be understood as simply adding conventional computer components to well-known business practices.

The Federal Circuit also noted that the fact that an improvement is not defined by reference to “physical” components does not doom the claims.  To hold otherwise risks resurrecting a bright-line machine-or-transformation test, cf. Bilski v. Kappos (“The machine-or-transformation test is not the sole test for deciding whether an invention is a patent-eligible ‘process.’”), or creating a categorical ban on software patents, cf. id. at 603.  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.   The Federal Circuit did not see in Bilski or Alice, or our cases, an exclusion to patenting this large field of technological progress.

The Federal Circuit went on to say that, in other words, they were not faced with a situation where general-purpose computer components are added post-hoc to a fundamental economic practice or mathematical equation. Rather, the claims are directed to a specific implementation of a solution to a problem in the software arts. Accordingly, the Federal Circuit found the claims at issue were not directed to an abstract idea.

Because the claims were not directed to an abstract idea under step one of the Alice/Mayo analysis, the Federal Circuit did not need to proceed to step two of that analysis.

The Federal Circuit concluded that the claims were patent-eligible under 35 USC 101.