Federal Circuit Affirms District Court’s Eligibility Analysis, Reyna Dissents

By IPWatchdog
July 16, 2020

“The asserted patents’ specifications made ‘clear that the claimed invention presented a technological solution to a technological problem’ by explaining that prior art network monitors were unable to identify disjointed connection flows to each other [and] the “focus of the claims [was] a specific improvement in computer technology….  Thus, the claims were not directed to an abstract idea.”

Federal Circuit Affirms District Court’s Eligibility Analysis, Reyna DissentsOn July 14, the United States Court of Appeals for the Federal Circuit, with Judge Lourie writing for the majority, affirmed-in-part and vacated-in-part a decision of the United States District Court for the Eastern District of Texas in Packet Intelligence, LLC v. NetScout Systems, Inc. The CAFC affirmed the district court’s judgments on the issues of infringement, invalidity, and willfulness, but reversed with respect to pre-suit damages. Judge Reyna wrote separately, dissenting on the issue of patent eligibility under Section 101.

District Court Proceedings

Packet Intelligence is the owner of U.S. Patent Nos. 6,665,725 (the ’725 patent), 6,839,751 (the ’751 patent), and 6,954,789 (the ’789 patent), which are directed to methods and apparatuses for monitoring packets exchanged over a computer network. In the district court, Packet Intelligence asserted claims 19 and 20 of the ’789 patent, claims 10 and 17 of the ’725 patent, and claims 1 and 5 of the ’751 patent against NetScout’s products, i.e. the “G10” and the “GeoBlade”.

A jury found that all asserted claims were willfully infringed, rejected NetScout’s invalidity defenses, and awarded pre-suit and post-suit damages to Packet Intelligence. Following the jury verdict, the district court rejected NetScout’s Section 101 invalidity defense and awarded enhanced damages in an amount of $2.8 million and further awarded an ongoing royalty for post-verdict infringement. NetScout appealed to the CAFC, challenging the district court’s judgment on the issues of infringement, invalidity under Section 101, invalidity under Section 102, pre-suit damages, and willfulness.

Infringement

The parties agreed that claim 19 of the ‘789 was representative of all the asserted claims, thus the CAFC focused its analysis on claim 19. NetScout’s argument that it did not infringe relied entirely on NetScout’s assertion that the memory limitation of claim 19 required “correlating connection flows into conversational flows.” NetScout asserted that its accused products did not infringe because its products “track connection flows but never joins them together” into conversational flows, as required by the claims. The CAFC agreed with Packet Intelligence that the asserted claims did not require joining connection flows into conversational flows. Noting that the term “conversational flows” is found in a limitation reciting “a memory for storing a database comprising none or more flow-entries for previously encountered conversational flows, each flow-entry identified by identifying information stored in the flow entry”, the CAFC explained that the limitation required storing flow entries, but did not require “correlating connection flow entries into conversational flows” as asserted by NetScout. Further, the CAFC noted that even if the claims did require correlating connection flows into conversational flows, the jury’s infringement verdict was supported by substantial evidence because an expert, Dr. Almeroth, testified that the accused products contain flow entries and information that can be used to correlate flow entries into conversational flows. Thus, the CAFC concluded that the jury’s verdict on infringement was supported by substantial evidence.

Patent Eligibility

NetScout argued that the asserted patent claims were directed to ineligible subject matter and, in particular, were directed to “the abstract idea of collecting, comparing, and classifying packet information.” Further, NetScout argued that the district court “erred by considering the specification’s teachings of how to identify packets belonging to the same conversational flow.” NetScout also asserted that the “claims lack an inventive concept because the recited components in the claim are standard, off-the-shelf components, used in every probe.”

The CAFC agreed with Packet Intelligence that the district court correctly held that the claims were not directed to an abstract idea. Citing SRI International, Inc. v. Cisco Systems, Inc., the CAFC explained that it has previously “relied on statements in the specification that the claimed invention purported to solve weaknesses in the prior art” where the “claims recited general steps for network monitoring with minimal detail present in the claim limitations themselves.” The CAFC noted that the asserted patents’ specifications made “clear that the claimed invention presented a technological solution to a technological problem” by explaining that prior art network monitors were unable to identify disjointed connection flows to each other. The CAFC also noted that the “focus of the claims [was] a specific improvement in computer technology: a more granular, nuanced, and useful classification of network traffic.”  Thus, the CAFC concluded that the claims were not directed to an abstract idea, in accordance with the Alice framework, and did not address step two.

Invalidity Under Section 102

NetScout argued before the district court that the asserted patents were invalid because RMON Working Group was not listed as inventors, when RMON Working Group “devised the ‘Track Sessions’ probe functionality that relates connection flows into conversational flows as claimed in the patents.” NetScout relied on testimony by its expert, Mr. Waldbusser, who opined that “the Track Sessions Probe … could correlate packets associated with an activity, even though those packets were exchanged via different connection flows with different port numbers.” Packet Intelligence responded that the jury’s rejection of NetScout’s § 102 challenge was supported by substantial evidence, noting that Mr. Waldbusser improperly focused on “conversational flows” rather than considering the limitations of claim 19. Further, Packet Intelligence relied on the testimony of Dr. Almeroth for an assertion that “Track Sessions counts all of the packets in a conversational flow as a single flow entry, as opposed to correlating several connection flows.” The district court rejected NetScout’s motion for judgment as a matter of law on the inventorship defense and supported its conclusion by “citing Dr. Almeroth’s testimony that Mr. Waldbusser failed to analyze the claim language as written and that the NetScout probe did not associate connection flows but, instead, replaced one flow with another.”  The CAFC agreed with the district court and concluded that the jury’s verdict was supported by substantial evidence.

Award of Pre-Suit Damages

Initially, the CAFC noted that the availability of pre-suit damages for the ‘789 patent, which included apparatus claims, depended on whether Packet Intelligence’s licensee, Exar, properly marked its MeterFlow product. The CAFC explained that, at the time the district court instructed the jury, the CAFC had not yet ruled on which party was to proving compliance with the marking statute, but shortly thereafter, in Arctic Cat Inc. v. Bombardier Recreational Prods. Inc., the CAFC “held that an alleged infringer ‘bears an initial burden of production to articulate the products it believes are unmarked ‘patented articles’ subject to [the marking requirement]’”. Noting that the district court’s jury instructions appeared to place the burden on NetScout, the CAFC reasoned that pursuant to Arctic Cat “NetScout bore the preliminary burden of identifying unmarked products that it believed practice the ’789 patent” and “Packet Intelligence then bore the burden of proving that MeterFlow did not practice at least one claim of the ’789 patent.”

Packet Intelligence produced evidence that all references to the MeterFlow product were removed from the asserted patents prior to filing the non-provisional applications and also submitted testimony from a named inventor, Mr. Dietz, stating that the MeterWorks product (rather than the MeterFlow product) did not embody the invention. The CAFC reasoned that the evidence was “insufficient to carry Packet Intelligence’s burden of proving that the MeterFlow product does not practice the ’789 patent” because 1. the fact that the inventors chose not to reference the MeterFlow product in its patent applications does not support the conclusion that MeterFlow does not practice the ‘789 patent, and 2.) Mr. Dietz testified about the wrong Exar product and, regardless, “his conclusory testimony failed to address what claim limitations were purportedly missing from the product and would have been insufficient to carry Packet Intelligence’s burden of proving that MeterFlow did not practice the ’789 patent.”  Thus, the CAFC concluded that Packet Intelligence failed to present substantial evidence to support a conclusion that the MeterFlow product did not practice the ’789 patent and, therefore, NetScout was entitled to judgment as a matter of law that it is not liable for pre-suit damages based on infringement of the ’789 patent.

Packet Intelligence argued on appeal that that the pre-suit damages award can alternatively be supported by evidence of direct infringement of the ‘725 and ’751 method patents. However, the CAFC disagreed the Packet Intelligence. Quoting Joy Techs., Inc. v. Flakt, Inc., the CAFC stated that “method claims are ‘not directly infringed by the mere sale of an apparatus capable of performing the claimed process.’” The CAFC noted that there was no evidence to support Packet Intelligence’s theory that “NetScout’s internal testing, customer support, and customer training was pre-suit activity infringing the method patents. Thus, the CAFC concluded that because “neither the record nor the law support[ed] Packet Intelligence’s recovery of pre-suit damages for any of the asserted patents, NetScout [was] entitled to judgment as a matter of law” on the issue of pre-suit damages.

Willfulness

NetScout also appealed the district court’s willfulness judgment, arguing that its executives did not know of Packet Intelligence’s patents or of the infringing activity until after the suit was filed. However, the CAFC agreed with Packet Intelligence that the jury’s willfulness verdict was supported by substantial evidence. The CAFC noted that NetScout’s corporate representative, Mr. Kenedi, admitted at trial “that he did not read the patents but still testified that he believed Mr. Dietz lied and stole the claimed inventions.” Further, the CACF noted that “NetScout’s CEO, Mr. Singhal, testified that he could not recall ever reviewing the asserted patents and confirmed that, even though NetScout was phasing out the accused products, he would sell one to a customer if the product was demanded.” Thus, the CAFC explained that the jury was permitted to give credit to the testimony and conclude that NetScout willfully infringed the asserted patents. In conclusion, the CAFC affirmed the district court’s judgments as to infringement, validity, and willfulness, but reversed the district court’s award of pre-suit damages and vacated any enhancement thereof.

Judge Reyna Concurs-in-Part, Dissents-in-Part

Judge Reyna wrote a separate opinion concurring with the majority on all issues except the patentability of the asserted claims under Section 101. In Reyna’s view “the claims [were] directed to the abstract idea of identifying data packets as belonging to ‘conversational flows’ rather than discrete ‘connection flows.’” Noting that the claims recite a “general method of sorting data packets according to any flow, not a specific means of sorting packets by conversational flow”, Reyna explained that “the claim does not recite how the individual packets are actually ‘identified’ as belonging to a conversational flow beyond the functional requirement that ‘identifying information’ is used.” Reyna further noted that, while the specification explains processes and components for identifying a conversational flow, they are not recited in the claims and, therefore, the claims do not provide “the specificity required to transform a claim from one claiming only a result to one claiming a way of achieving it.” Distinguishing SRI, Reyna noted that the claims in SRI specifically recited how the claimed monitors accomplished a step of “detecting… suspicious network activity”, while the claims of the asserted patents do not recite how the “desired result of ‘identif[ying]’ packets as belonging to a conversational flow is achieved.”

Reyna further explained that the district court determined that “[t]aken together, the claims and the specification do teach how to identify that certain packets belong to the same conversational flow.” However, Reyna stated “the relevant inquiry for § 101 purposes is not whether the patent as a whole teaches a concrete means for achieving an abstract result, but whether such a concrete means is claimed.” Although not addressed by the majority, Reyna asserted that the district court’s reasons for distinguishing the claimed monitors from prior art monitors were “nothing more than the abstract idea itself, and thus [could not] serve as inventive concepts supporting patentability at Alice Step 2.”  Thus, Reyna concluded that the district court’s analysis was clearly erroneous, and the case should be remanded for proper analysis.

 

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Discuss this

There are currently 13 Comments comments. Join the discussion.

  1. Pro Say July 16, 2020 9:33 pm

    When one elects to wear Alice-colored glasses, everything looks abstract.

  2. concerned July 17, 2020 7:12 am

    “The asserted patents’ specifications made ‘clear that the claimed invention presented a technological solution to a technological problem’ by explaining that prior art network monitors were unable to identify disjointed connection flows to each other [and] the “focus of the claims [was] a specific improvement in computer technology…. Thus, the claims were not directed to an abstract idea.”

    Memo to my examiner: We explained that the administrating agency’s computer networks could not both identify and correct the oversights. The examiner agreed that my claims solved this problem. Then his rejection continued with numerous unsubstantiated statements and an imaginary manual process that does not exists (before or after the advent of computers.)

    What is the real agenda: Classification 705 is dead on arrival regardless of facts?

  3. Peter Corcoran July 17, 2020 11:15 am

    Although I think the marking requirement statute and caselaw is ridiculously onerous for patent owners resulting in PI’s loss of presuit damages in this case, the CAFC FINALLY allows patent owners to refer to the specification for proving the patent eligibility of their claims and how the claims recite in improvement over the prior art.

  4. TFCFM July 17, 2020 11:45 am

    I think this is a really informative case, in that it is “close enough” to have gone either way, and (perhaps because it was so close) forced the court to spell out what made this computer-implemented technology eligible.

    As the court observed, “We have recognized that “software-based innovations can make ‘non-abstract improvements to computer technology’ and be deemed patent-eligible subject
    matter at step 1.

    In order to determine whether this was one of those eligible “non-abstract improvements,” the court analyzed whether the patentee claimed a specific technology, or merely claimed all (past, present, and/or future) solutions which might be operative to achieve a desired end. Unlike many computer-related patents which claim what looks, to my non-computer-expert eye, like “an [i.e., any] element which achieves desired end X,” this patent appears to recite (and the Court appears to have held that it recites) particular elements, rather than one or more ‘anything-that-works’ elements. The conclusion was thus that the claimed methods were not abstract.

    That conclusion seems to me like the right one, and seems to correctly separate “inventions” from mere attempts to claim what one hasn’t invented (but which would {at least probably} work if one had invented it) and from mere abstract (“anything-that-works”) ideas.

    Although I can’t say that the issue has become clear enough to me that I can specify a hard-and-fast “test” for distinguishing patent-eligible computer-related subject matter from ineligible subject matter, this case seems like a guidepost for spelling out that difference.

  5. Paul Johnson July 17, 2020 11:58 am

    Big surprise that a history major believed the claims were directed to the “abstract idea” of identifying data packets as belonging to conversational flows rather than discrete connection flows.

  6. Curious July 17, 2020 3:11 pm

    Unlike many computer-related patents which claim what looks, to my non-computer-expert eye, like “an [i.e., any] element which achieves desired end X,” this patent appears to recite (and the Court appears to have held that it recites) particular elements
    That’s the problem — unless you understand the technology, as a whole, being claimed, you really don’t know if what is being claimed is the “result” or a specific ways of implementing the result. Here is one clue, if somebody else has achieved the same “result” prior to the otherwise patentable invention, then the “result” is not being claimed. The problem that I see with the Federal Circuit is that they ignore the real result of what is being claimed and concoct a different “result” and assert that this alone is what is being claimed.

    For almost any limitation of a computer-implement process, I can break it down into additional steps. If so, is the initial limitation just claiming a “result”? No, it is merely broadly describing a particular operation (of the claimed invention as a whole). Naturally, there are many ways to perform most of the individually claimed operations, but that doesn’t mean that the claim, as a whole, is directed to a result.

  7. Jam July 17, 2020 3:38 pm

    This case serves to show that with the right judges (e.g., Lourie +1), your application may be subjectively identified as being directed to an inventive concept and patent eligible. Further, given different judges (e.g., Reyna), the exact same application may be subjectively identified as being directed to an abstract idea and patent ineligible. There is no underlying objective principle that allows laypersons to determine the result without the subjective opinion of a judge.

  8. Anon July 17, 2020 3:41 pm

    to my non-computer-expert eye

    Sniff much?

  9. Anon July 17, 2020 6:14 pm

    Jam – and therein the problem of the (improper) use of Common Law law writing of the Supreme Court that opened up the Void for Vagueness issue (continuously) being shown in CAFC opinions.

    And that is not even all of the Constitutionally unsound aspects of the scrivining by the Supreme Court.

  10. TFCFM July 20, 2020 10:32 am

    Curious @ #6: “For almost any limitation of a computer-implement process, I can break it down into additional steps. If so, is the initial limitation just claiming a “result”? No, it is merely broadly describing a particular operation (of the claimed invention as a whole). Naturally, there are many ways to perform most of the individually claimed operations, but that doesn’t mean that the claim, as a whole, is directed to a result.

    That’s true of all technologies, not just computer-related ones. One difference between an abstract claim and one that is eligible for patenting is whether one is seeking to claim the abstract notion of “everything that works (regardless of whether I’ve described it and regardless of whether I’ve even thought of it)” or a particular, concrete improvement that one has, in fact, devised and described in the specification.

    Were it otherwise, invention of the first compound even-remotely effective for treating medical condition X would permit its inventor to claim all later-discovered compounds for treating the same condition.

    Here, the inventors didn’t simply claim ‘any element(s) which perform function X,’ but instead disclosed particular elements and limited their claim to the disclosed elements.

  11. Curious July 20, 2020 2:25 pm

    One difference between an abstract claim and one that is eligible for patenting is whether one is seeking to claim the abstract notion of “everything that works (regardless of whether I’ve described it and regardless of whether I’ve even thought of it)” or a particular, concrete improvement that one has, in fact, devised and described in the specification.
    That’s nice but I rarely ever see those type of claims in the wild. What gets declared as being “abstract” these days is rarely claiming “everything that works.” However, unless you understand the technology, you wouldn’t know that.

    That being said, claims are always using language that can encompass terminology that captures elements not described in the specification (or even invented). Let’s say, for example, my invention includes a door connected to a frame with a hinge. Well, that “hinge” can include hinges that weren’t invented until after my invention. However, the fact that I use the term “hinge” doesn’t mean that the invention is abstract (i.e., directed to non-statutory subject matter) — it just means that I use broad language. Regardless, the problem you are addressing in one of enablement, which is a separate inquiry.

  12. Anon July 20, 2020 4:01 pm

    TFCFM,

    Are you familiar with the Ladders of Abstraction (and the notion that ONE single objective ‘particular and concrete’ picture claim is one of the worst things that a practitioner could provide?

    You seem to indicate a sense of one extreme or the other, and this may be due to a lack of experience across many types of innovation (and a preponderance of ‘activity’ in one particular area of innovation).

  13. TFCFM July 24, 2020 10:31 am

    Curious @#11: “the fact that I use the term “hinge” doesn’t mean that the invention is abstract (i.e., directed to non-statutory subject matter) — it just means that I use broad language.

    This is not abstract for two reasons (and “because anything goes,” you’ll note, is not one of them):

    1) “Hinge” has a definite meaning (roughly: axially-pivotal attachment between two items), regardless of the fact that an essentially infinite number of “hinge” variants are encompassed; and

    2) (presumably; you include only a fragment of a claim) The use of a “hinge” to connect your claimed door to the claimed frame is almost certainly not what is inventive about your claimed invention (good luck with obviousness rejections if it were). There is therefore no “harm” in permitting inclusion of an expansive term for a patentability-wise collateral aspect of your claimed invention — that is, the expansive language is not enabling you to claim more than you have genuinely invented (because a hinge is a hinge is a hinge).

    If recitation of a “hinge” were, indeed, a critical aspect of what you’d invented, then “hinge” might well be too abstract (if, for example, fewer than all possible hinges would be operable, or if a skilled artisan would not be able to immediately envision all operable hinges). In these instances, use of the generic term to encompass “everything that works,” even though you haven’t described everything that works might form the basis of a proper eligibility rejection.

    (Your example breaks down at this extent, because it is essentially impossible to envision an invention for which inventiveness is based on use of a generic “hinge” to connect a door and a frame, and yet is not obvious. If obviousness can be overcome because only some hinges will work, then surely your claim must be limited to those and a generic recitation of “pick any hinge that works” can be considered non-abstract only if your specification discloses which ones work and the claim is limited to those.)

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