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Netflix, Inc. v. Rovi Corporation (NDCA 2015): Five TV guide patents dropped by abstract idea ineligibility

Wednesday, July 29th, 2015

How did we go from the claims in Alice being considered abstract, claims that clearly involved a well-known financial concept (e.g, intermediated settlement) merely implemented on a computer, to admittedly novel (and likely non-obvious) concepts inexorably tied to computing systems being considered abstract?

District courts and the CAFC seem to be quickly expanding the reach of the abstract idea to invalidate software implemented inventions. In Netflix v. Rovi (Netflix, Inc. v. Rovi Corporation, Case No. 11-cv-6591, NDCA 2015), the court uses the Alice/Mayo abstract idea test to invalidate as non-patentable subject matter claims directed to an admittedly unknown concept rooted in computer technology, just because the claims could be articulated as being directed to an abstract idea. This court, and many others, seem to have missed the part of Alice where the Supreme Court cautions that all claims at some level involve an abstract idea.

In this case, Rovi attempts to defend validity of five patents related to video-on-demand and tv/movie listing interfaces. Many of the five patents were understandably doomed due to very broad claims to very broad concepts. However, the decision finding claims of U.S. 7,103,906 (the ‘906 patent) invalid under 101 highlight the troubling direction district courts (and the CAFC) seem to be continuing to head with Mayo/Alice 101 analysis.

The ‘906 patent is directed to on-demand media bookmarking of streaming content coupled with delivery of the content is different formats to different devices.

Representative Claim for the ‘906 patent:

  1. A method for providing configurable access to media in a media-on-demand system comprising the steps of:

delivering the media to a first client device through a first communications link, wherein the media is configured in a format compatible with identified device properties of said first client device and said first client device is associated with a first user;

recording a bookmark specifying a position in the media; and

delivering the media to a second client device through a second communications link, said delivery to said second client device beginning at said position specified by said recorded bookmark, wherein the media is configured in a format compatible with identified device properties of said second client device and said second client device also is associated with said first user.

The claims of the ‘906 patent seem to do a reasonable job (especially given the timeframe from which this patent originates) in reciting and incorporating multiple computing devices. The claim is admittedly fairly broad, but with a priority date of Sep. 2000 it was likely a fairly early patent in the area of streaming media. Additionally, the functionality covered by the claim is relatively specific (delivering content in two different formats, while maintaining a bookmark position between two different streams) and likely not trivial to implement. Despite all that, this court is very quick to dismiss it as nothing more than an abstract idea..

In dismissing these claims the court simply generates an abstract idea to fit the claims, and dismisses the computer implementation as being nothing more than generic. The court actually states that the client/server system is “a generic client/server system,” a client/server system that the court describes as “creating a ‘bookmark’ to allow users to start watching a program on one device then resume the program at the same point on a different type of device.”

In one of the more troubling passages, the court states that “[g]iven Alice’s rejection of a ‘general purpose computer’ as sufficient to establish patentability, a patentee must show that the machine itself is a particular machine, and not just that a generic machine is being used for a particular purpose.”

It is unclear how one could ever overcome this type of reasoning. Regardless of how detailed recitation of an algorithm is, following this court’s formula any computer implemented invention can just be dismissed as an abstract idea implemented on “a generic machine being used for [the] particular purpose” of implementing the abstract idea. Assuming for a moment that the ‘906 patent involves concepts that were truly novel and non-obvious, then doesn’t it follow that no generic computer at the time of the invention performed the recited subject matter? Further, even if a generic computer was “capable” of performing the claimed subject matter, none had been configured to do so.

The subject matter at issue here did not involve an old and well known method or concept that was simply implemented on a computing system. Rather these claims involved new methods of using computing technology to provide streaming media content to different devices.

Rovi attempted to argue both sides of the Machine or Transformation test. While the court summarily dismissed the machine side using the generic client/server system argument, the transformation side got a bit more traction. However, in the end the court failed to fully appreciate the transformation of the streamed content into two different formats and dismissed this angle as well. It is a bit unclear to me why Rovi didn’t attempt to argue an analogy to DDR Holdings, as it would seem that they would have had an argument that their recited media server changed what would normally occur when attempt to stream previously viewed content to a new device (e.g., start over at the beginning).

Netflix v. Rovi appears to represent the next step by the courts in widening the breadth of subject matter likely to fall victim to mis-application of the Mayo/Alice abstract idea test.

This posting written by Greg Stark, Principal, Schwegman, Lundberg & Woessner, P.A.

Intellectual Ventures I LLC v. Capitol One Bank (USA) (Fed. Cir.): Mental steps doctrine making a strong comeback, courtesy of Alice.

Wednesday, July 8th, 2015

In Intellectual Ventures I LLC v. Capitol One Bank (USA), Case No. 2014-1506 (Fed. Cir. July 6, 2015), the Federal Circuit affirmed the Eastern District of Virginia’s holding that the claims of two patents were invalid under Section 101. It is perhaps worth noting that the district court’s decision was made before the Supreme Court’s Alice decision issued, so while the Federal Circuit’s reasoning applies the two-part Mayo test, as dictated by Alice, this is a case in which pre-Alice and post-Alice reasoning arrived at the same result, not a case in which the new standard invalidated a previously-valid patent.

With respect to U.S. Patent No. 8,083,137 (“the ’137 patent”), the courts found claim 5 to be representative:

  1. A method comprising:

storing, in a database, a profile keyed to a user identity and containing one or more user-selected categories to track transactions associated with said user identity, wherein individual user-selected categories include a user pre-set limit; and

 

causing communication, over a communication medium and to a receiving device, of transaction summary data in the database for at least one of the one or more user-selected categories, said transaction summary data containing said at least one user-selected category’s user pre-set limit.

 

Similarly, for U.S. Patent No. 7,603,382 (“the ’382 patent”), the courts found claim 1 to be representative:

  1. A system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user, comprising:

 

an interactive interface configured to provide dynamic web site navigation data to the user, the interactive interface comprising:

 

a display depicting portions of the web site visited by the user as a function of the web site navigation data; and

a display depicting portions of the web site visited by the user as a function of the user’s personal characteristics.

 

The district court found both of the above claims to be “drawn to a mental process – i.e., an abstract idea” without “‘add[ing] enough’ by way of the disclosed applications of these abstract ideas.” The district court was not persuaded by the patentee’s argument that limitations such as “a display” provided concrete implementation details. Instead, the lower court held that “an improvement in the workings of the computer or the transmissibility of data or some other transformation of data into something qualitatively beyond the informational content of the data entered, even though the data might be organized and manipulated to disclosed useful correlations” is needed to “authorize[] the protections of a patent.” That is, the claims at issue store, retrieve, and display data, but don’t actually do anything with the data. In this respect, at least, the claims are unlike those in Diehr, for an improved process resulting from the use of a particular algorithm, and more like those warned against in Diehr, involving “insignificant postsolution activity.”

At the Federal Circuit, the two-part Mayo/Alice test was applied to each of the representative claims. For the claims of the ’137 patent, the Appeals Court found that the claims are directed to the “abstract idea” of “tracking financial transactions to determine whether they exceed a pre-set spending limit (i.e., budgeting).” The Federal Circuit did not cite any references to support the mapping of the claim language to the identified abstract idea, and relied on the patentee’s admission that “budgeting ‘… is an abstract idea’” to consider step 1 of the two-part test to be met.

Once it was determined that the claims were directed to an abstract idea, the only remaining issue was whether “the claims contain” an “inventive concept.” The court found that all recited elements are “generic computer elements,” and thus the claims simply recite “apply[ing] the abstract idea … using some unspecified, generic computer.” Furthermore, “the budgeting calculations at issue here are unpatentable because they ‘could still be made using a pencil and paper’ with a simple notification device.”

With respect to the claims of the ’382 patent, the Appeals Court found the claims to be related to “customizing information based on (1) information known about the user and (2) navigation data.” The court used the example of newspaper inserts based on a recipients address to show that customizing information based on information known about the user is “a fundamental … practice long prevalent in our system …” and thus an abstract idea. Similarly, the court noted that television advertisements have long been shown based on the time of day in which the advertisement is viewed. Since the patentee agreed that “navigation data” encompassed the time of day at which the user viewed the information, the court found the second feature to also be an abstract idea in the form of a fundamental economic practice. The court did not perform an analysis to determine if the combination itself were a fundamental economic practice long prevalent in our system of commerce.

The patentee argued that the claims of the ’382 patent included an “inventive concept that would support patent eligibility” because the claims are directed to a “‘real time’ customiz[ation]” of a “web page based on … information … about the particular viewer,” but the court held that the claims did not recite those features. Accordingly, the claims were found to be directed to an abstract idea “restricted to the Internet, on a generic computer,” which was insufficient to confer patentability.

In holding that the claims were patent-ineligible, the Federal Circuit addressed the patentee’s argument that the claims at issue were similar to the patent-eligible claims in DDR Holdings:

The patent at issue in DDR provided an Internet-based solution to solve a problem unique to the Internet that (1) did not foreclose other ways of solving the problem, and (2) recited a specific series of steps that resulted in a departure from the routine and conventional sequence of events after the click of a hyperlink advertisement. … The patent claims here do not address problems unique to the Internet, so DDR has no applicability.

Thus, the Federal Circuit leaves the door open for Internet-based solutions to modern problems, even while keeping the door firmly shut against computer implementations of fundamental economic practices long prevalent in our system of commerce.

Thanks to Domenico Ippolito, Schwegman, Lundberg & Woessner, P.A., for this posting.

OIP TECHNOLOGIES, INC., v. AMAZON.COM, INC., (Fed. Cir. 2012-1696)

Friday, June 12th, 2015

The Federal Circuit has found the claims of yet another business/financial-oriented patent patent ineligible.  In this case, OIP Technologies sued Amazon.Com, Inc., for infringing US Patent Number 7,970,713, which claims computer-implemented methods for “pricing a product for sale.”   Amazon filed a motion to dismiss OIP’s complaint, arguing that the ’713 patent is drawn to patent-ineligible subject matter. The district court granted Amazon’s motion, finding that the asserted claims merely use a general-purpose computer to implement the abstract idea of “price optimization” and is therefore ineligible for patent protection under 35 U.S.C. § 101. The district court reasoned that without the “insignificant computer-based limitations,” the claims merely “describe what any business owner or economist does in calculating a demand curve for a given product.”  The Federal Circuit agreed.

According to the Federal Circuit opinion, claim 1 (reproduced below) has the following relevant limitations: (1) testing a plurality of prices; (2) gathering statistics generated about how customers reacted to the offers testing the prices; (3) using that data to estimate outcomes (i.e. mapping the demand curve over time for a given product); and (4) automatically selecting and offering a new price based on the estimated outcome. The Federal Circuit further noted that the dependent claims add various computer elements such as including webpages as advertisements in the second set of messages and generating statistics.

1. A method of pricing a product for sale, the method comprising:

testing each price of a plurality of prices by sending a first set of electronic messages over a network to devices;

wherein said electronic messages include offers of said product;

wherein said offers are to be presented to potential customers of said product to allow said potential customers to purchase said product for the prices included in said offers;

wherein the devices are programmed to communicate offer terms, including the prices contained in the messages received by the devices;

wherein the devices are programmed to receive offers for the product based on the offer terms;

wherein the devices are not configured to fulfill orders by providing the product;

wherein each price of said plurality of prices is used in the offer associated with at least one electronic message in said first set of electronic messages;

gathering, within a machine-readable medium, statistics generated during said testing about how the potential customers responded to the offers, wherein the statistics include number of sales of the product made at each of the plurality of prices;

using a computerized system to read said statistics from said machine-readable medium and to automatically determine, based on said statistics, an estimated outcome of using each of the plurality of prices for the product;

selecting a price at which to sell said product based on the estimated outcome determined by said computerized system; and

sending a second set of electronic messages over the network, wherein the second set of electronic messages include offers, to be presented to potential customers, of said product at said selected price.

The Federal Circuit found that “[b]eyond the abstract idea of offer-based price optimization, the claims merely recite “well-understood, routine conventional activit[ies],” either by requiring conventional
computer activities or routine data-gathering steps, and that, “[c]onsidered individually or taken together as an ordered combination, the claim elements fail “to ‘transform’ the claimed abstract idea into a patent- eligible application.”
The court pointed out, for example, that “sending a first set of electronic messages over a network to devices,” the devices being “programmed to communicate,” storing test results in a “machine-readable medium,” and “using a computerized system . . . to automatically determine” an estimated outcome and setting a price, were all ‘well-understood, routine, conventional activit[ies]’ previously known to the industry.”

Moreover, the court found that “the claims are exceptionally broad and the computer implementation limitations do little to limit their scope.” “At best, the claims describe the automation of the fundamental economic concept of offer-based price optimization through the use of generic-computer functions. Both the prosecution history and the specification emphasize that the key distinguishing feature of the claims is the ability to automate or otherwise make more efficient traditional price-optimization methods. For example, the specification states that a core advantage of the invention is reducing the “extremely high testing costs” of “[b]rute force live price testing.”
Finally, the court noted that “[j]ust as Diehr could not save the claims in Alice, which were directed to “implement[ing] the abstract idea of intermediated settlement on a generic computer”, Alice, 134 S. Ct. at 2358–59, it cannot save OIP’s claims directed to implementing the abstract idea of price optimization on a generic computer.

ALLVOICE DEVELOPMENTS US, LLC v. MICROSOFT CORP. — Federal Circuit finds some speech recognition claims not patentable

Monday, June 1st, 2015

In a refreshing break from Alice/Mayo abstract idea based 35 U.S.C. § 101 rejections, the Federal Circuit released a decision invalidating certain claims of U.S. Patent No. 5,799,273 as not being directed to one of the four statutory categories of inventions (see Allvoice Developments US, LLC, v. Microsoft Corp., CAFC 2014-1258, decided May 22, 2015). The matter was on appeal, by Allvoice, from a district court decision invalidating claims 60-68 as non-statutory subject matter. The decision also affirms a non-infringement decision by the district court, while interesting that portion of the decision is not the focus of this post.

The claims of the ‘273 Patent at issue were directed towards a speech-recognition “interface,” see claim 60 reproduced below. Both the CAFC and the district court interpreted, probably correctly, the claimed interface as software without any tangible form (e.g., not interpreted as instructions on a computer-readable medium or as part of a tangible system).

60. A universal speech-recognition interface that enables operative coupling of a speech-recognition engine to at least any one of a plurality of different computer-related applications, the universal speech-recognition interface comprising:
input means for receiving speech-recognition data including recognised words;
output means for outputting the recognised words into at least any one of the plurality of different computer-related applications to allow processing of the recognised words as input text; and
audio playback means for playing audio data associated with the recognised words.   ’273 Patent, col. 29 ll. 22–34.

Allvoice essentially reinforces the Court’s interpretation by asserting that the claimed speech-recognition interfaces are described in the specification as “interface applications,” and thus the claims are limited to software. Allvoice attempts to clarify their position by further asserting that the claims should be interpreted as reciting “software instructions,” and further asserting that the instructions must necessarily be in a machine readable, physical state, in order to exist. It is interesting to consider whether the decision in this case might have been different if Allvoice had been able to argue an interpretation of the “means” elements as including hardware components of a system. Unfortunately, such an interpretation was either not supported by the specification, or not pursued for other reasons by the litigation team.

The Court dismisses Allvoice’s assertions regarding the implied physical form, stating “this Court has recognized, instructions, data, or information alone, absent a tangible medium, is not a manufacture.” (Citing Digitech Image Techs., 758 F.3d at 1349–50 (rejecting a patentee’s attempt to argue that the disputed claims were subject matter eligible because the claim language did not describe “any tangible embodiment of this information (i.e., in physical memory or other medium) or claim any tangible part of the digital processing system”).) Earlier in the decision, the Court had already determined that the claims were clearly not directed to a process. Thus, because the claims were not directed to a tangible article and were not process claims, the district court’s invalidity holding was upheld.

The good news from this case is that the Court provides a fairly clear roadmap for claiming software-based inventions – software must be claimed as a process (method) or as instructions on a machine-readable medium (tangible manufacture), at least outside of a system claim. While this case does not seem to cover any “new” ground per se, it does clearly reinforce that claims directed to pure software, such as the recited speech-recognition interfaces, and not fashioned as a process or machine-readable medium are not likely to find favor in the courts.

My thanks to Greg Stark of Schwegman, Lundberg & Woessner, P.A., for this post.

Eidos Display, LLC v. AU Optronics Corp: Claim definite enough for those of skill in the art, even if not the Eastern District of Texas

Wednesday, March 11th, 2015

This guest post is from Domenico Ippolito:

The Eastern District of Texas has long been known as a patentee-friendly venue for litigation, but in Eidos Display, LLC v. AU Optronics Corp., Case No. 2014-1254 (Fed. Cir. March 10, 2015), the Federal Circuit turned the tables by finding claim language to be definite, reversing the District Court’s finding of indefiniteness.

The patent at issue, U.S. Patent No. 5,879,958, is directed toward manufacturing processes for electro-optical devices (e.g., LCDs).  One of the steps of asserted claim 1 recites “patterning the passivation film to form … a contact hole for source wiring and gate wiring connection terminals.”  The problem faced by the patentee was that the source wiring and gate wiring connections are separate, and the patent discloses separate contact holes for the two terminals.  Accordingly, the District Court found the claim to be indefinite because, read in light of the specification, “the Court is unable to arrive at a construction that would allow a person of ordinary skill in the art to determine what is claimed” by the “contact hole,” applying 35 U.S.C. § 112, ¶ 2.

The Federal Circuit, on review of the same record, instead found that one of ordinary skill in the art, would interpret “a contact hole for source wiring and gate wiring connection terminals” to mean two separate contact holes.  The accused infringer argued that this interpretation essentially rewrote the claim, but the Federal Circuit disagreed, holding that “[D]etermining how a person of ordinary skill in the art would understand the limitation … is different from rewriting the limitation.”  Accordingly, the Federal Circuit reversed the lower court’s finding of indefiniteness.

In making this determination, the Federal Circuit relied on several points:

  • The parties agreed that the state of the art for manufacturing LCD panels was to form contact holes for source wiring terminals that are separate from contact holes for gate wiring connection terminals, and that the specification does not teach otherwise.
  • The patent does not teach how to create a working LCD panel that uses a novel shared contact hole.  Accordingly, if the claims were directed to such a contact hole, the claims would fail the written description requirement.
  • The parties agreed that, as recited in another claim, “ ‘a contact hole for source wiring and gate wiring connection terminals’ requires separate contact holes for each connection terminal.”

The take-away from this decision for prosecutors is, of course, to be careful when drafting claims.  Reciting “a contact hole for source wiring and a contact hole for gate wiring” would have avoided the finding of indefiniteness by the District Court and subsequent appeal costs.  For litigators, the Federal Circuit’s decision provides support for arguments that claims should be interpreted in a way that supports validity, even when that interpretation does not precisely track the literal language of the claim.

 

Financial Product Search System Found Patent Ineligible Under Section 101 by Delaware Court

Thursday, February 12th, 2015

In this recent § 101 decision, The Money Suite Company v. 21st Century Insurance and Financial Services, Inc., et al., C.A. No. 13-984-GMS (D. Del. Jan. 27, 2015), the plaintiff The Money Suite Company (“Money Suite”) initiated patent infringement lawsuits against a host of defendants, namely Century Insurance and Financial Services, Inc., 21st Century Insurance Group, and Farmers Group, Inc., Farmers Group, Inc., Lending Tree LLC, Citigroup Inc. and MetLife, Inc. Money Suite alleged that the Defendants each infringed U.S. Patent No. 6,684,189 (“the ‘189 Patent”)·  Defendants filed a Motion to Dismiss arguing that the ‘189 Patent claims patent-ineligible subject matter and is invalid under 35 U.S.C. § 101. For the reasons discussed below, the court granted the Defendants’ motion.

This case is, in my estimation, a reasonable application of the Supreme Court’s Alice decision.  While the invention was clearly claimed in a physical, computer-implemented form, the core “innovation” was essentially a non-technical concept that any business major could devise — providing consumers an easy way to get pricing for multiple financial products with a single search.  If there was a technical innovation associated with the implementation of this “abstract idea”, the plaintiff failed to convince the court of it.  Instead, the court essentially found that only routine and conventional technical skills were employed to implement this abstract idea, and therefore the “significantly more” innovation needed to save the patent from patent ineligibility was absent.

 

The ‘189 Patent describes a computerized method for generating price quotes for financial products. Claim 1-   the only independent claim of the ‘189 Patent’s 887 claims  – summarizes the invention:

1.  A computer-implemented method using front-end network gateways and search criteria entered at a remote computer terminal to conduct a search of multiple financial products for efficient quoting at a remote location, the method including the steps of:

providing at least one data input screen with signals communicated from a digital computer to the remote terminal connected by a communications system, the at least one data input screen at the terminal soliciting entry of financial product selection criteria;

receiving the selection criteria from the terminal over the communications system at the digital computer; and

using the front-end network gateways, data accessible by the digital computer representing the multiple financial products, and the selection criteria entered at the terminal to provide a quote at the terminal for a financial product identified from the multiple financial products.

 

The additional dependent claims specify limitations such as defining the type of financial product at issue, identifying the specific search criteria, and adding hyperlink capability and password protection.

 

The court applied the two-step framework outlined in Alice to the ‘189 Patent. In doing so, the court found that the ‘189 Patent-and all of its 887 claims were invalid under  § 101, as they claim  the  abstract   concept  of  assigning  prices  to  financial  products   and  services  without meaningfully narrowing the scope of coverage.  The court agreed with the Defendants that the core invention embodied by the ‘189 Patent is a “fundamental economic [or] conventional business practice” and therefore an abstract idea. “There is no dispute that the claims describe a process used to generate price quotes for various types of financial products, based on a given set of criteria.” According to the court, although Money Suite attempted to frame it otherwise, this concept is abstract. The court stated that stripped of its limitations and technical jargon, claim 1 recites a “method . . . to conduct a search of multiple financial products for efficient quoting.”  The court found this concept was not dissimilar from those discussed by recent § 101 court cases. See, e.g., Alice, 134 S. Ct. at 2356 (invalidating computer-implemented claims covering intermediated settlement); Bilski v. Kappas, 561 U.S. 593, 609-11 (2010)  (invalidating computer-implemented claims covering “the basic  concept  of hedging, or protecting against risk”).

 

Although the ‘189 Patent reads on an abstract idea, the court noted that the second step of the Alice test specifies that it will not be found to cover patent­ ineligible subject matter if there is evidence of an inventive concept or contribution: “an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.”  The court in this case found clear and convincing evidence showed that the ‘189 Patent fails to claim an inventive contribution sufficient to satisfy § 101.  While there were many dependent claims adding elements such as the type of financial product at issue, the specific search criteria, hyperlink capabilities, and password protection, Money Suite did not contend that it “invented” any of these limitations, and the court found that none of these features qualify as a contribution sufficient to transform the abstract idea into a patent-eligible invention. Thus, while the ‘189 Patent may recite slightly more than “wholly generic computer implementation” language, the difference is merely one of degree and not one of kind, and this conventional activity must be factored out.

 

It was also observed by the court that leaving open the possibility of practicing the idea of price quoting financial products manually does not save the ‘189 Patent. This was the very concern underlying the court’s rationale in Alice: monopolizing computerized implementations while allowing the public to practice the idea “by hand” does not comport with § 101, citing Alice, 134 S. Ct. at 2358-59 (“The fact that a computer necessarily exists in the physical, rather than purely conceptual, realm is beside the point. There is no dispute that a computer is a tangible system . . . , or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But if that were the end of the § 101 inquiry, an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept.”).

Money Suite also argued that the recent DDR Holdings, 773 F.3d  1245, case out of the Court of Appeals for the Federal Circuit supported its position that the ‘189 Patent claims patent-eligible subject matter, but the court noted that in DDR Holdings the claims do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution in DDR is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.

For the foregoing reasons, ‘189 Patent was deemed invalid under 35 U.S.C. § 101 because it claims an abstract idea.

 

 

 

 

California District Court Refuses to Invalidate Gaming Patent as Encompassing an Abstract Idea

Thursday, January 8th, 2015

In another hopeful sign that “the exception won’t swallow the rule”, the Central District of California has refused to apply Alice to invalidate a software patent — U.S. Patent No. 8,393,969 — for player tracking in a gaming establishment.  In  this case, Ameranth_ Inc. v. Genesis Gaming Solutions_ Inc , case number 8:11-cv-00189, the defendants filed a motion for Summary Judgment of Patent Invalidity of the ’969 Patent.  Defendants asked the Court to rule that the asserted claims of the ‘969 Patent fail 35 U.S.C.§ 101 because they are directed to the abstract idea of a customer loyalty program directed to poker players, without adding significantly more to that abstract idea.

System claim 27 of U.S. Patent No. 8,393,969 is set forth below:

27. A computer system for monitoring a physical casino poker game comprising:

a. a system database;

b. software enabled to set up and maintain poker game types and tables associated with said poker game types, wherein said software is configured to provide real time table availability status in the system database;

c. software enabled to facilitate the receipt of a poker player check-in input including player identification information and the player’s poker game type preference and identifying the particular player from the player check-in input utilizing a player database which includes information regarding previously registered players;

d. software enabled to determine table availability in real time for said particular player’s poker game type preference;

e. software enabled to add said particular player to a wait list for said poker game type preference if no matching table is currently available;

f. software enabled to display indicia identifying said particular player on a public wait list display,said public display including the display of information comprising at least two different poker game types and waiting players for each game type and wherein said display is suitable for viewing by a multiplicity of players or prospective players throughout the poker room;

g. software enabled to select said particular waiting player for an available table matching said waiting player’s selected game type when it is available and then assigning said player to that available table;

h. software enabled to receive check-out input regarding said particular player containing player identification information; wherein said software is configured to identify the particular player from the player check-out input information, to remove the player from the game and from the table, to update the table availability to reflect that a seat for the particular poker game type at said table is currently available;

i. software enabled to calculate the total elapsed time between receiving the check-in input and the check-out input of the particular player, wherein said software is configured to store the calculated playing time of said particular player in at least one of the system database or the player database;

j. wherein all of the said software is enabled to operate as a synchronized system.

In finding that the defendants had failed to meet the first step of the two part Alice test, the court said:

“Defendants argue that the Opposition does not dispute that poker has been played in gambling houses, riverboats,speakeasies and casinos in the United States for the past three hundred years,’ and that [t]he abstract concept of’ monitoring a physical casino poker game’ thus predates the abstract concept of a ’customer loyalty program’ for casinos.  … First, it is unclear what role Defendants believe the relative age of these abstract concepts plays in the § 101 analysis.  Second, Defendant ignores that the claims do not purport to cover the game of poker itself: they require nothing about cards, bets, or the mechanics of play. While it might be undisputed that people have hosted and watched poker games for as long as they have been played, that does not establish that the type of monitoring and player management required by the claims is an idea of similarly hoary provenance. Therefore, Defendants have not established even the first step of the Alice/Mayo test is satisfied for the system claims.”

In rejecting that a corresponding method claim improperly encompassed an abstract idea, the court noted that “one could implement many different player reward systems” that do not infringe the claims, and that therefore “the Defendants have not shown how these claims implicate the basic underlying concern that these patents tie up too much future use of the abstract idea of a player reward system.”

Defendants also attacked the claims on the basis that the Ameranth system was simply a software program that automates previously performed manual task[s] associated with operating a poker room.  The court noted that “mere generic computer implementation fails to transform an abstract idea into a patent-eligible invention: transformation requires an inventive concept . . . sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”

On the other hand, the court notes that “automation of manual tasks is not necessarily abstract”, and for this proposition, it cites to U.S. Patent No. 72 (1794) to Eli Whitney for a cotton gin, as “one familiar example of a solidly tangible automating machine.”  The court then insightfully observes that “[o]f course, one could posit a way of drafting even a claim to a cotton gin in a way that renders it abstract: a machine comprising metal and wood configured to remove cotton seeds from cotton fiber”, and draws a parallel to the Defendants argument:   “[r]ead most charitably, Defendants are arguing something like that—that the prior art shows that all of the steps in the claimed method were performed together previously, and the ’969 Patent merely says do that, on a computer, neatly fitting the Alice mold. But Defendants rely on multiple combinations of references to make that argument, and as couched by Defendants, those combinations seem more like an obviousness argument under 35 U.S.C. § 103 than a patent eligibility analysis under 35 U.S.C. § 101.”

While the application of the Alice test by any particular court is still highly unpredictable, it is encouraging for software innovators that an increasing number of software patents are being found 101 compliant under Alice, and that indeed, there is good reason to believe that once all is said and done, the “exception will not swallow the rule” after all.

 

 

 

 

 

Cooler Heads Prevail in New Interim Guidance on Patent Subject Matter Eligibility

Friday, December 19th, 2014

The 2014 Interim Guidance on Patent Subject Matter Eligibility (“Interim Guidance”) was printed in the Federal Register Tuesday [1] (December 16) and “supplements” the Preliminary Examination Instructions in view of the Supreme Court decision in Alice Corp. of June 25, 2014 (“Preliminary Instructions”).[2] The Interim Guidance includes a flowchart that presents the two-part test for Section 101 eligibility in graphical form:

With respect to Step 2A, the Interim Guidance still includes the four categories of abstract ideas identified in the Preliminary Instructions: “fundamental economic practices, certain methods of organizing human activities, an idea ‘of itself,’ and mathematical relationships/formulas.”  However, while the Preliminary Instructions suggested that Part 1 of the two-part test is met by any claim that includes an element that falls into one of these categories, the Interim Guidance provides 17 distinct examples from various cases, allowing for a finer-grained analysis.  Similarly, while the Preliminary Instructions recited five examples relating to Part 2 of the two-part test, the Interim Guidance provides ten.

For six of the 17 abstract idea examples, the Interim Guidance walks through the two-part analysis to show how the decision regarding Section 101 eligibility was reached (or how the decision was consistent with the two-part analysis, for decisions rendered prior to Mayo or Alice).[3] Additionally, fifteen Federal Circuit and Supreme Court case summaries are provided.  The case summaries should help to provide context for practitioners and Examiners, but are unlikely to provide clear direction in any particular application.  Accordingly, future battles over Section 101 rejections may look more like litigation than prosecution, with the applicant arguing that Case X provides the appropriate precedent for analysis of his claims and the Examiner arguing that Case X is distinguishable and Case Y is the relevant case.

In addition to discussing the two-step process, the Interim Guidelines also include a streamlined eligibility analysis for a claim that “when viewed as a whole, clearly does not seek to tie up any judicial exception such that others cannot practice it.”  Four examples are provided of such claims:

  • a robotic arm assembly having a control system that operates using certain mathematical relationships
  • an artificial hip prosthesis coated with a naturally occurring mineral
  • a cellphone with an electrical contact made of gold
  • a plastic chair with wood trim

Unfortunately, the Interim Guidelines do not go into any greater detail as to why these examples “clearly” do not implicate the judicial exceptions.  For example, if the naturally occurring mineral and its properties are natural phenomena, and the artificial hip prosthesis is otherwise known in the art, then why isn’t the hip prosthesis claim merely a field of use limitation for the mineral?  In that case, the hip prosthesis, no matter how complex in its own right, would merely be well-understood and routine, and could not be significantly more than the use of the natural phenomenon.

The Interim Guidelines specify that “if there is doubt … the full analysis should be conducted.”  Accordingly, once an examiner has decided to perform the full analysis, an applicant will have little recourse to argue that the streamlined eligibility analysis should have been used.  Thus, as with the Preliminary Guidelines, examiners retain broad discretion in deciding what the abstract idea is, whether preemption concerns apply, and whether the claim involves significantly more than the abstract idea.

For reference, the examples included in the Interim Guidance for Part 1 and Part 2 of the test are provided below.  The 17 example laws of nature, natural phenomena, and abstract ideas are:

  • isolated DNA – Myriad
  • a correlation that is the consequence of how a compound is metabolized – Mayo
  • electromagnetism to transmit signals – Morse
  • the chemical principle underlying the union between fatty elements and water – Tilghman
  • mitigating settlement risk – Alice
  • hedging – Bilski
  • creating a contractual relationship – buySAFE
  • using an advertisement as currency – Ultramercial
  • processing information through a clearinghouse – Dealertrack
  • comparing new and stored information and using rules to identify options – SmartGene
  • using categories to organize, store, and transmit information – Cyberfone
  • organizing information through mathematical correlations – Digitech
  • managing a game of bingo – Planet Bingo
  • the Arrhenius equation for calculating the cure time of rubber – Diehr
  • a formula for updating alarm limits – Flook
  • a formula relating to standing wave phenomena – Mackay Radio
  • a procedure for converting one form of numerical representation to another – Benson

The six positive examples of what qualifies as “significantly more” than the abstract idea are:

  • improvements to another technology or technical field – Diehr
  • improvements to the functioning of the computer itself – Alice
  • applying the judicial exception with, or by use of, a particular machine – Bilski
  • effecting a transformation or reduction of a particular article to a different state or thing – Diehr, Benson, Tilghman
  • other meaningful limitations beyond generally linking the use of the judicial exception to a particular technological environment – Alice

The four negative examples of what is not “significantly more” are:

  • adding the words “apply it” (or the equivalent) with the judicial exception, or mere instructions to implement an abstract idea on a computer – Alice
  • simply appending well-understood, routine and conventional activities previously known to the industry, specified at a high level of generality, to the judicial exception, e.g., a claim to an abstract idea requiring no more than a generic computer to perform generic computer functions that are well-understood, routine and conventional activities previously known to the industry – Alice, Mayo
  • adding insignificant extrasolution activity to the judicial exception, e.g., mere data gathering in conjunction with a law of nature or abstract idea – Mayo, Flook
  • generally linking the use of the judicial exception to a particular technological environment or field of use – Mayo, Bilski, Flook

My thanks to Domenico Ippolito for this post.


[1] 79 Fed. Reg. 74618-33 (Dec. 16, 2014).

[2] The Interim Guidance also “supersedes” the March 4, 2014 Procedure For Subject Matter Eligibility Analysis Of Claims Reciting Or Involving Laws of Nature / Natural Principles, Natural Phenomena, And / Or Natural Products.  However, that Procedure did not address software inventions, and so is not addressed here.

[3] Four additional cases are also addressed, for a total of 21 case summaries in the Interim Guidance.

 

Federal Circuit finally meets a software patent it can love: DDR Holdings, LLC v. Hotels.com, et al.

Thursday, December 11th, 2014

 

Software patent owners that have been underwater holding their breath since the Supreme Court’s Alice Corp. v. CLS Bank decision can finally come up for air.   In DDR Holdings, LLC v. Hotels.com, et al.  (13-1505.Opinion.12-3-2014.1),  the Federal Circuit finally found a software patent it could love in spite of the Alice decision.   The DDR Holdings patent involved methods of serving web pages offering commercial opportunities by an “outsource provider.”  The claimed invention provided for more than one unrelated web stores to offer a single product while allowing an “outsource provider” to provide a standard web page format for the product.  In particular, the invention allowed product merchandisers to control the “look and feel” of their products even when offered for sale on unrelated merchant sites.

Representative claim 13 of the ’572 patent recites:

13.  An e-commerce outsourcing system comprising:

a) a data store including a look and feel description

associated with a host web page having a

link correlated with a commerce object; and

b) a computer processor coupled to the data store

and in communication through the Internet

with the host web page and programmed, upon

receiving an indication that the link has been

activated by a visitor computer in Internet

communication with the host web page, to serve

a composite web page to the visitor computer

wit[h] a look and feel based on the look and feel

description in the data store and with content

based on the commerce object associated wit[h]

the link.

 

The Federal Circuit noted that the claims did “not merely recite the performance of some business practice known from the pre- Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” Id. (emphasis added).   The Federal Circuit reasoned the Alice did not preclude protection because there were no abstract ideas implemented by the invention, and furthermore that the claims recited a combination of specific, what could be termed “technical” steps.

The claims recently held 101 ineligible in Ultramercial, finding that unlike the claims in Ultramercial, the claims at issue do “not merely the routine or conventional use of the Internet.”  Id. at 22-23.

There are a couple things worth noting about the DDR invention, and this decision:

  1. The point of novelty of this invention is a technical architecture and operation that, while perhaps fulfilling a non-technical business objective of providing the same look and feel across multiple different web sites, is not an abstract “business idea” like an advertising or accounting scheme.
  2. The invention recites a fairly complex (and novel) technical arrangement, in which:
    1. A “data store” contains “look and feel” information;
    2. A “processor” is “programmed” and interacts with the data store to serve a composite web page through the Internet to a “visitor computer” using the look and feel information and “content” based on a “commerce object.”

As I have alluded to in earlier posts, after all is said and done, we now have a “technical” test for software inventions – if the advance over the art is technical in nature, it is likely inside Section 101.  If the advance over the art is non-technical it will not be statutory even if it is wrapped inside a technical shell.  Instead of using the word “abstract idea” in the Alice test, at least as far as software is concerned, just substitute “non-technical idea”, and you will get the same result.  The trick is, however, that the vessel implementing the idea doesn’t count in making this determination.  Here is an example of what I mean.  Let’s say the claimed “invention” is a computer programmed to play a novel musical score, or a robot programmed to dance a novel dance move.

In either example, let’s assume for the sake of argument the music and score are novel and non-obvious.  Would we expect these “inventions” to be patentable?  I would say history tells us no, as I am not aware of any patents issued on inventions where the point of novelty is a musical idea.  So, in this case, even though the computer “vessel” is most definitely a machine, what is new is actually a work of authorship that we would all agree is not patentable.  In this way we can see that merely reciting a computer in a claim does not mean that “machine” should, as a matter of policy, be automatically statutory.  Accordingly, if we accept that not all computers programmed to behave in a novel manner are 101 statutory, and that not all novel ideas are patentable just because they are machine-implemented (for example neither music nor choreography), we can open ourselves to the possibility that certain other types of innovation, like non-technical ideas, even though computer implemented, are not necessarily patent eligible.  For example, the Federal Circuit appears to have viewed the invention as a whole in Ultramercial v. Hulu (November 2014), as a non-technical, content monetization concept as opposed to a technical innovation inside the perimeter of the useful arts.  Of course, it is possible for innovation to encompass both non-technical and technical ideas simultaneously, some would argue that Ultramercial was such a case, tipping it inside 101.

Another point of confusion in Alice and its progeny is the mixing of obviousness requirements into Section 101.  I would submit that the Court did not really conflate these two requirements.  What the Court was really doing can be understood with reference to my example given above.  Let’s assume again that the the “invention as a whole” is a musical score, and that this score is claimed as a computer programmed to “play” the score using a straight forward technical approach with nothing new about it.  Here, the hypothetical tells us that the way the computer is programmed is not novel in and of itself, only the music is novel.  But normally this is not a given, requiring an inquiry into whether there is a technical contribution of some kind.  It is not so much an inquiry as to the obviousness of the technical contribution as it is whether or not the asserted innovation lies in the technical domain as opposed to a non-technical domain.  If the technical component appears to be a routine implementation of the non-technical component of the innovation, then the conclusion is that the invention as a whole contains no patent eligible subject matter.  Clearly this can get confusing to sort out, and particularly where the applicant or patentee would prefer to conflate any non-technical innovation with the technical implementation.

In essence, what the Court did in Alice was say that once the abstract idea was stripped out, the technical component remaining was routine engineering bereft of any inventive content.  Unfortunately, the patentee may beg to differ on that point in most cases.

 

Card Verification v. Citigroup: Software Patent Survives 12(b)(6) Abstract Idea Attack

Wednesday, October 8th, 2014

This decision provides a bit of hope for software patents at least in getting through a 12(b)(6) motion, it will be interesting to keep track of this case as it progresses.  There is nothing particularly remarkable about the claims (in fact it seems like much less abstract claims have gone down in other cases).   Card Verification v. Citigroup ilnd-1-13-cv-06339-50-Claims up held at 12(b)(6)

It is very interesting that this Court choose to give the patent owner a very favorable construction around the “tokens” as there is nothing in the claim that would require these to be interpreted as being “four-digit pseudorandom strings of numbers and characters.”

Summary of Court’s Analysis:

Claims are directed to the abstract idea of “verifying a transaction.”

(Commentary: fairly board and reasonable identification of an abstract idea that the claims do embody.)

The Court continues by analogizing the present claims to the credit card verification claims in CyberSource, and states that the claims involve a fundamental economic practice long prevalent in our system of commerce.

The Court then moves to the 2nd Step of the Mayo/Alice analysis – is there something more sufficient to transform the unpatentable abstract idea?

The Court expressly finds “a review of the diagrams demonstrates incorporation of a computer, nonsecure network, and pseudorandom tag generating software. A plausible interpretation of the patent is that computing devices, software, keyboards, and credit card readers would be required to use the invention.”

(Commentary: This seems like a very favorable read for the patent owner, probably due to the nature of the motion at issue (12(b)(6) motion on the pleadings))

The Court essentially predicates their decision on an interpretation of the claims that includes “a limitation requiring pseudorandom tag generating software that could not be done with pen and paper.”

(Commentary: This “limitation” is not literally recited in the independent claims.  Without this favorable interpretation the reminder of the Court’s analysis falls apart.)

Here is to hoping this analysis is were things are heading–it would not to severely limit the claims at issue to literally recite the limitation read into the claims by the court.  Accordingly, this decision provides some ground to stand on for software patents.

My thanks to Greg Stark of Schwegman, Lundberg & Woessner, PA, for this post.