Federal Circuit: An unconventional solution to a technological problem is patent eligible

cafc-federal-circuit-windowsAmdocs (Isr.) Ltd. v. Openet Telecom, Inc.,  (Fed. Cir. Nov. 1, 2016)(Before Newman, Plager, and Reyna, J.)(Opinion for the court, Plager, J.)(Dissenting opinion, Reyna, J.)

A divided panel reversed the lower court’s judgment of invalidity under §101 and remanded.

The four patents at issue derive from the same parent, which describes a system allowing network service providers to account for and bill internet protocol (“IP”) communications. The components are arranged to lower the burden on the system’s resources by processing data in different locations than had been done historically. This distributed architecture is an improvement because it does not require huge single-location databases that can struggle to process vast amounts of information.

The Court began its analysis by discussing the doctrine of §101. The Court laid out the two-step Alice framework: first, determining whether the claims are directed to a law of nature, natural phenomena, or abstract idea, and second, looking for an inventive concept that transforms the claims into patent-eligible subject matter. The Court noted how post-Alice decisions have struggled to delineate between the first and second step, but considered a precise delineation to be less important than determining what an ‘abstract idea’ encompasses by comparing the case at hand to “earlier cases in which a similar or parallel descriptive nature can be seen—what prior cases were about, and which way they were decided.”  The Court must take this approach since there is no “single, succinct, usable definition or test” for what an abstract idea is. To this point, the Court remarked in a footnote: “[§101] law is evolving into greater certitude based on experience, not on generalizations.”

Thus, the Court began its analysis by looking at claims of a similar nature. First, the Court looked at three cases directed to ineligible subject matter: Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343 (Fed. Cir. 2014); and, In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607 (Fed. Cir. 2016). In each of these cases the Court found the claims ineligible because they were either directed to mathematical algorithms manipulating existing information to generate additional information, or merely applied a computer or component in a “well-understood, routine, [and] conventional” way.

The Court contrasted those “ineligible” cases with two cases where the claims were found to be directed to eligible subject matter: DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014); and, BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016). In both cases step two of the Alice framework led the Federal Circuit to find that, although the claims were directed to abstract ideas, the claim limitations – taken together and as an ordered combination – were sufficient to add an inventive step. This inventive step was not conventional or generic computing, and made the claims patent eligible under §101.

The court then moved to the patents at issue, examining them in light of their common specification. For the ’065 patent the court found that, even if it agreed that the representative claim was an ineligible abstract idea, it contained a sufficient inventive concept under step two. Its reasoning was that the claim was more like the DDR Holdings and BASCOM cases, and less like the Digitech, Content Extraction, and In re TLI cases. That is, the Court found that the claim solved a technology-based problem with conventional, generic components that were combined in an unconventional matter, which – like DDR Holdings and BASCOM – added an inventive step. The claim did so by providing a distributed architecture and components within that distributed architecture that worked together in an unconventional way. This inventive step was laid out in the specification and incorporated into the claim by the limitation “enhance” as construed in a previous proceeding. These limitations were sufficiently narrow to avoid preemption concerns.

The ’510, ‘984, and ‘797 patents were each held eligible for similar reasons. Again, the court found that even if the claims were directed to an abstract idea, they would be eligible under step two of the Alice framework. The Court again relied on the unique and unconventional distributed architecture found in the specification and construed into the claim in the previous proceeding. This architecture allowed for load distribution – a technological and unconventional solution to a technological problem.  While the ‘984 claims contained generic components and functions, the overall ordered combination of the limitations were unconventional and solved the technological problem.

In dissent, Judge Reyna would have found that the ’065 and ’797 patents were not eligible under §101, while agreeing with the majority that the ’510 and ‘984 patents were eligible under different reasoning. Judge Reyna found the ’510 and ‘984 patents had incorporated limitations into their claims citing structure from the specification, while the ’065 and ’797 patents failed to do so. This difference is important because citing structure in the claims satisfied Judge Reyna’s ‘abstract idea test’:   “a desired goal (i.e., a ‘result of effect’), absent structural or procedural means for achieving that goal, is an abstract idea.” Judge Reyna further disagreed with the majority that the ’065 and ’797 patents added an inventive step because he believed the claims were not sufficiently limited to a specific means.

Judge Reyna also argued that the majority’s §101 analysis was flawed. Specifically, he criticized the majority’s failure to undergo step one of the Alice framework. He also criticized use of the specification to import the limitation that made the claims patentable; contending that §101 analysis is directed to the claims, not the specification. Therefore, because the ’065 and ’797 patents had not sufficiently incorporated the distributed network into their claims directly, and because they had not added an inventive step, they were not eligible.

The Courts should evaluate the claims at issue in light of Federal Circuit precedent under Alice, to elucidate the “abstract idea,” and should look for the claims to embody an unconventional solution to a technical problem. The Federal Circuit indicated that Judge Reyna’s ‘abstract idea test’ (requiring structure or procedure to achieve the goal of abstract claims) is one helpful way of evaluating subject matter eligibility under step two of Alice.

[Troutman-Ad]

[Troutman-About]

The Author

Robert Schaffer

Robert Schaffer is an intellectual property partner at Troutman Sanders. Bob applies more than 30 years of experience to IP counseling and litigation. His work includes patent procurement, strategic planning and transactional advice, due diligence investigations, district court patent cases, and Federal Circuit appeals. He regularly handles complex and high-profile domestic and international patent portfolios, intellectual property agreements and licensing, IP evaluations for collaborations, mergers, and acquisitions. In disputed court cases Bob’s work includes representing and counseling client in ANDA litigations, complex patent infringement cases and appeals, and multidistrict and international cases. In disputed Patent Office matters his work includes representing and counseling clients in interferences, reexaminations, reissues, post-grant proceedings, and in European Oppositions. For more information and to contact Bob please visit his profile page at the Troutman Sanders website.

Robert Schaffer

Joseph Robinson has over 20 years of experience in all aspects of intellectual property law. He focuses his practice in the pharmaceutical, life sciences, biotechnology, and medical device fields. His practice encompasses litigation, including Hatch-Waxman litigation; licensing; counseling; due diligence; and patent and trademark prosecution. He has served as litigation counsel in a variety of patent and trademark disputes in many different jurisdictions, and has also served as appellate counsel before the Court of Appeals for the Federal Circuit. Joe also focuses on complex inter partes matters before the U.S Patent and Trademark Office, inventorship disputes, reexaminations and reissues. His experience includes numerous interferences, a particular advantage in new U.S. Patent and Trademark Office post-grant proceedings. He also counsels on patent–related U.S. Food and Drug Administration issues, including citizen petitions, Orange Book listing, and trademark issues. For more information and to contact Joe please visit his profile page at the Troutman Sanders website.

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 4 Comments comments.

  1. Anon2 November 11, 2016 8:04 am

    I might be wrong but doesn’t it 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?

  2. Anon November 14, 2016 7:14 am

    When does the unconventional become the conventional?

  3. Mohammed December 14, 2016 4:31 pm

    I still have a confusion about USPTO approach for assessing claim eligibility under article 101. Your article refers to the expression ” a solution to a technical problem” which quite similar to EPO approach for computer implemented inventions.
    In my opinion, USPTO guidelines don’t refer to the expression ” technical solution” for examining claim’s eligibility. The Alice test doesn’t refer too to the word technical. The machine or transformation test doesn’t refer to ”technical features ”. Is there a disagreement between USPTO and the courts regarding this issue ??!!!

  4. Gene Quinn December 14, 2016 4:48 pm

    Mohammed-

    You are quite correct to note that there is no “technical solution” requirement in U.S. law. If you look through the recent patent eligibility decisions of the Federal Circuit, however, it seems that the Federal Circuit is adopting a technical solution standard that is reminiscent of the EPO approach. So you won’t find it in Alice or in the MPEP. But I think it is starting to shine through the cases as they develop, which is what many of us thought was likely to happen.

    Take a look at these two articles:

    http://www.ipwatchdog.com/2016/11/17/patent-software-post-alice/id=74750/

    http://www.ipwatchdog.com/2016/11/20/guide-software-patent-eligibility-federal-circuit/id=74760/

    -Gene