Federal Circuit holds software claims to be patent-eligible because they recite a technological solution to a technological problem

By John M. Rogitz
November 2, 2016

Federal CircuitAmdocs (Israel), Ltd. v. Openet Telecom, Inc., Appeal No. 2015-1180, is a precedential case from the U.S. Court of Appeals for the Federal Circuit that reverses a judgment on the pleadings that certain asserted claims directed to gathering network information were patent-ineligible. In so doing, Step One of Alice/Mayo is not clarified at all, because the majority accepted “for argument’s sake” the district court’s view of the disqualifying abstract ideas, and in each instance then explained why the claims seen in their entirety are not disqualified under Step two.

The Federal Circuit panel consisted of Judges Newman, Plager, and Reyna. Judge Plager delivered the opinion for the panel, and Judge Reyna dissented.

Judge Plager, as is his wont, first got to the heart of the matter with clarity: “a search for a single test or definition [of abstract] in the decided cases concerning §101 from this court, and indeed from the Supreme Court, reveals that at present there is no such single, succinct, usable definition or test. The problem with articulating a single, universal definition of ‘abstract idea’ is that it is difficult to fashion a workable definition to be applied to as-yet-unknown cases with as-yet-unknown inventions.” However, Judge Plager gets it somewhat wrong in declaring that this state of affairs “is not for want of trying”, citing the effectively obsolete machine-or-transformation test (obsolete in that if it is used to justify patent-eligibility, it is invariably defeated as being but one non-exclusive test), when in fact the Supreme Court itself has never bothered to try to define its own term and the Federal Circuit has given up after being shot down on the M-O-T test.

The opinion next accurately notes that “the decisional mechanism courts now apply is to examine earlier cases in which a similar or parallel descriptive nature can be seen”. Judge Plager refers to this as “the classic common law methodology for creating law when a single governing definitional context is not available”. This is mildly puzzling, because the common law derived from generally accepted principles that were readily definable, with the precise application of them being established through individual cases.

In any case, before commencing the merits of his opinion, Judge Plager helpfully summarizes the dissent, and I like Judge Plager believe it is important to acknowledge dissents in abstract idea jurisprudence given the jarring effect the law of abstract idea has had on patent protection and the likelihood that it will evolve in ways not entirely predictable, including in directions offered by various dissents.

The dissent first takes the majority to task for comparing the asserted claims to some, but not all, abstract idea cases. Judge Plager defends this approach as applying prior precedents to the current case based on comparable facts and noting that discussing in an opinion only the most relevant prior opinions, rather than every prior opinion in an actively-litigated field, is a necessary discipline if opinions are to be read, rather than just written.

The majority opinion further notes that the dissent offers a different paradigm for identifying an abstract idea: “it is apparent that a desired goal (i.e., a ‘result or effect’), absent structural or procedural means for achieving that goal, is an abstract idea.” Judge Plager likens this approach as seeming “similar, but differ[ing] in significant respects”, to means-plus-function claiming. Though §112 ¶ 6 “permits the ‘means’ to be found in the patentee’s ‘specification,’ meaning the written description and the claims of the patent, the dissent would save the patent’s eligibility under §101 only if the claim at issue itself explicitly states the necessary ‘means.’ In the dissent’s step two, we must find ‘a particular means for accomplishing an underlying goal’ through careful ‘limitation-by-limitation analysis’ of the claim. We commend the dissent for seeking a creative way of incorporating aspects of well-known doctrine in the search for what is an ‘abstract idea,’ but that is not now the law, either in statute or in court decision. At best, as this court has previously stated, the dissent’s analysis may be ‘one helpful way of double checking the application of the Supreme Court’s framework to particular claims—specifically, when determining whether the claims meet the requirement of an inventive concept in application.’”

Judge Plager then turns to the meat of his opinion, summarizing selected abstract idea cases as follows, beginning with cases that found patent-ineligibility and concluding with cases that preserved patent validity.

In Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1350 (Fed. Cir. 2014) one of the representative claims described a process of organizing information through mathematical correlations with merely generic gathering and processing activities. While the court did not parse the analysis into discrete step one and step two stages, it found that this claim recited an “ineligible abstract process of gathering and combining data that does not require input from a physical device” and that “the two data sets and the resulting device profile are ineligible subject matter.” The court observed that “[w]ithout additional limitations, a process that employs mathematical algorithms to manipulate existing information to generate additional information is not patent eligible.”

Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1345 (Fed. Cir. 2014) characterized all of the claims at issue as being directed to the abstract idea of “1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory.”

In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607, 610 (Fed. Cir. 2016), the claims were found to be directed to the abstract idea of “classifying and storing digital images in an organized manner.”

Turning to cases preserving patent rights, in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) the “claimed solution [was] necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” Analyzing the claims under step two, the court noted when the claim limitations were taken together as an ordered combination, they recited an invention that was not merely “the routine or conventional use of the Internet.”

In Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1352 (Fed. Cir. 2016) the claims were held to be abstract under step one but saved under step two, similar to DDR (which did not take sides on step one): the court in Bascom found that the ordered combination of limitations provided the requisite inventive concept. The claimed and described inventive concept was the “installation of a filtering tool at a specific location, remote from the end-users, with customizable filtering features specific to each end user.” This permitted the filtering tool to have “both the benefits of a filter on a local computer and the benefits of a filter on the [Internet Service Provider] server” which was not conventional or generic, and the claims did not preempt all ways of filtering content on the Internet – instead, the patent claimed and explained how a particular arrangement of elements was “a technical improvement over prior art ways of filtering such content.”

Turning to the facts of this case, Amdocs focused on a representative claim that reads:

A computer program product embodied on a computer readable storage medium for processing network accounting information comprising:

computer code for receiving from a first source a first network accounting record;

computer code for correlating the first network accounting record with accounting information available from a second source; and

computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.

The key to patent-eligibility here was “enhance”. In a prior appeal to the Federal Circuit, “enhance” was defined to mean “apply a number of field enhancements in a distributed fashion.” The Federal Circuit noted that in turn, “distributed” means that the network usage records are processed close to their sources before being transmitted to a centralized manager, specifically approving of the district court’s “reading the ‘in a distributed fashion’ requirement and the ‘close to the source’ of network information requirement into the term ‘enhance.’”

Because of this, the Federal Circuit concluded that the above claim is “much closer to those in BASCOM and DDR Holdings than those in Digitech, Content Extraction, and In re TLI Commc’ns. Indeed, even if we 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 claim under appeal entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows which previously required massive databases). The solution requires arguably generic components, including network devices and ‘gatherers’ which ‘gather’ information. However, the claim’s enhancing limitation necessarily requires that these generic components operate in an unconventional manner to achieve an improvement in computer functionality” (because the Federal Circuit had augmented the meaning of “enhance” in an earlier case as mentioned above). “This is similar to the design in BASCOM which permitted the invention to have a filtering tool with the benefits of a filter on a local computer and the benefits of a filter on an ISP server. The benefits in BASCOM were possible because of customizable filtering features at specific locations remote from the user. Similarly, the benefits of [present claim 1] are possible because of the distributed, remote enhancement that produced an unconventional result – reduced data flows and the possibility of smaller databases. This arrangement is not so broadly described to cause preemption concerns. Instead, it is narrowly circumscribed to the particular system outlined. As in BASCOM, this is a technical improvement over prior art technologies and served to improve the performance of the system itself.”

Thus, they key to eligibility in this case, as in Bascom, was an “unconventional” manner of operation to solve a technical problem that the specification had discussed. Whether the technical problem is required to appear in the specification the opinion does not say.

Three related patents were also discussed in the opinion, and found to be patent-eligible under the reasoning above. In no case did the Federal Circuit definitively hold on step one, accepting for argument’s sake the district court’s definition of the abstract idea in play. Instead, the district court was reversed exclusively on step two analysis.

Based on the Amdocs opinion, here are a few takeaways for practitioners:

  1. Increasingly it appears that Federal Circuit judges understandably seek to avoid holding on step one, involving, as it does, effectively adding to the list of what is and is not an abstract idea, which is the only “definition” going. This is judicially risky business, which is why even the Supreme Court confined Alice step one analysis to nothing more, in effect, than that it was “similar enough” to the claim in Bilski for government work.
  2. To win on step two, it appears to be helpful to have a technological problem in mind and it is desirable, potentially necessary, to identify that problem in the specification.
  3. To win on step two, it is further necessary that the claim recite a combination that is “unconventional”, which might mean “novel” and moreover might further require nonobviousness, although this opinion does not say. And here the patentee easily could have lost, because it did not explicitly claim the novelty with precision. Instead, it attempted the generalization of “enhance” which by itself, unadorned, probably would have resulted in patent-ineligibility. Only because the district court and Federal Circuit previously read into the claim some unclaimed limitations did “enhance” possess enough “unconventionality” to survive. So a good tactic to employ based on this would be to write one broad claim akin to “enhance” but to back it up with a more detailed, specific recital in another claim that amplifies on the generality, just so you don’t have to hope later on that a court will do it for you.

 

The Author

John M. Rogitz

John M. Rogitz is of counsel to Rogitz & Associates and is a registered patent attorney. His patent background includes preparation and prosecution of a large number of patent applications for Fortune 500 high-tech institutions in a wide range of technologies. John has also been active on behalf of his clients in the acquisition of patent portfolios. John writes frequently for various publications on developments in patent law. He also regularly appears as a guest lecturer on intellectual property at DeVry University. Previously, John was engaged in civil litigation at the Watkins Firm, a San Diego-based law firm. Prior to that, John worked as a web developer for Loyola Marymount University. John received his J.D. in 2009 from California Western School of Law.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 8 Comments comments. Join the discussion.

  1. step back November 2, 2016 10:08 am

    It seems there is a battle between opposed panels and it is decided by who gets to a precedential issue first.

  2. Anon November 2, 2016 10:38 am

    Any machine component that allows a machine to do something different is an “enhancement” – even if that “doing different” is not a linear advance in technology.

    As those who have studied innovation can readily tell you, often times the first items of radical and breakthrough disruptive inovation are often considered to be worse than the standard items that they will replace.

    There is an amplify that is very helpful to grasp this mindset: paving a parking lot versus paving a network of streets.

  3. Anon November 2, 2016 10:57 am

    Beg my pardon, but above, please replace the word amplify with the word analogy.

  4. step back November 2, 2016 12:58 pm

    Anon,

    The claim term, “enhance” in the Amdocs case was given special construction due to prior court proceedings. What the author is saying is that in general we should not rely on getting special claim construction. 😉

    Think of the Amdocs decision as a Halloween treat for those of us who follow 101 jurisprudence.

    https://patentu.blogspot.com/2016/10/from-salem-to-sequenom-following-whacko.html

  5. Night Writer November 3, 2016 9:02 am

    I have to deal with 101 in 3600 art units. This 101 stuff is just ridiculous. There is absolutely no sense to it at all.

    1) You know, technical books expressly say that functional language is used to represent known solutions because there are so many that they cannot be represented in a different way.

    2) Something that is enabled cannot be abstract. It may be broad, but the scope of the claim should be the scope of enablement.

    3) The only thing that isn’t 100 percent solved is if you claim something broadly with several solutions, and then another non-obvious solution is presented whether they deserve a patent too, or whether it invalidates your patent. LazardTech dealt with this issue.

    The whole thing is just absurd.

  6. step back November 4, 2016 2:26 am

    Night Writer @5,

    I feel your pain.
    (I too have to deal with Tech center 3600.)

    The examiners there are not saying your claim recites abstract subject matter.

    Instead what they are saying is that you are a crafty deceptive scrivener who is using recitation of non-abstract subject matter to cover up what your client truly invented.

    In order for them to unmask what your client truly invented, they pull out their hand-dandy direction finding compass and use it to detect the abstract idea that your claims are truly “directed to”.

    Invariably they find one.

    Then to prove what nice guys they are, they pretend to vigilantly “search” for a “something more” that might save your claims from the witchcraft drowning pool.

    Alas, hard as they search they can’t seem to find that something more. You of course have no right to question their good faith and sincerity.
    After all, when has the government ever tried to deceive you (you who is presumed to be guilty as a crafty deceptive scrivener of obtuse satanic verses within your claim language)?

    http://patentu.blogspot.com/2016/10/from-salem-to-sequenom-following-whacko.html

  7. Anon2 November 4, 2016 8:02 am

    It would seem, that the issues of procedure and prior history of a case could have a profound affect on the outcome of a legal test, in other words the exact same case could be decided completely differently under the 101 test based on which court hears it and when:

    If a 101 decision happens to be attempted before full claim construction, the term “enhance” leads to one conclusion for step 2 – ineligibility.

    If a 101 decision happens to be invoked after a full claim construction, the term “enhance” with its narrow construction, leads to a different conclusion for the step 2 analysis – eligibility

    Is this arbitrariness an untenable situation? (honestly I might be missing something here)

    Follow up: Should the court require that step 2 be done only after a proper claims construction, or equivalently that step 2 include Markman hearing if not as of yet conducted?

  8. Independent Inventor November 6, 2016 4:47 pm

    John, Gene (or anyone) — the CAFC is now showing Amdocs as a “revised” opinion on the CAFC website.

    Anyone find what the revision(s) is/are? Anything substantive?

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