Rently Makes Section 101 Bid to High Court

By Eileen McDermott
October 6, 2020

“In the present case as well as many others, the Federal Circuit ‘has begun applying its own brand of Section 101 jurisprudence,’ consequently invalidating both preemptive and non-preemptive patents alike.”

Section 101, Supreme Court, EligibilityConsumer 2.0, Inc. d/b/a Rently has filed a petition with the U.S. Supreme Court asking it to review a U.S. Court of Appeals for the Federal Circuit decision holding its patent claims ineligible for patent protection under 35 U.S.C. § 101. The claims are directed to “the use of lockboxes able to recognize time-limited codes and coordination of those codes with software to facilitate secure automated entry.” Rently’s petition was filed just as the High Court kicked off its new term by denying certiorari yesterday in Chamberlain v. Techtronic, which also sought review of a Section 101 eligibility decision.

In April of this year, Rently, a small California-based property management technology company, filed a combined petition for panel rehearing and rehearing en banc asking the Federal Circuit to review its Rule 36 judgment affirming the United States District Court for the Eastern District of Virginia’s ruling that Rently’s patent claims were ineligible. That petition dubbed “Section 101 and its interpretation by the Courts over the last six years” as “the most turbulent and impactful legal development in patent law in modern history.”

In its Supreme Court petition, Rently further argues that, while Alice v. CLS Bank “provided a welcome clarification to the law of Section 101” and overall “has been effective in stemming the flood of patents directed to nothing more than age-old ideas applied on a computer,” the unfortunate way in which it has been misapplied by lower courts has led to the invalidation of patents on “real innovation”, hurting small inventors and startups the most.

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Automated Entry

The invention at issue in the Rently case is covered by U.S. Patent No. 9,875,590 (the ‘590 patent), which is titled Automated Entry and claims a method employing a combination of hardware and software for secure, automated entry of real property. The district court applied the two-step framework as set forth by the Supreme Court in Mayo Collaborative Services v. Prometheus Laboratories. Inc. 566 U.S. 66 (2012) and Alice Corp. Pty. v. CLS Bank Int’l. 134 S. Ct. 2347 (2014).  In assessing whether the asserted claims of the ‘590 patent describe a patent-ineligible concept in accordance with the first step of the framework, the district court found that the claims were directed to an abstract idea since the “claims use generic computing devices and techniques to provide automated entry to a property without human interaction.”

The court further held at step two that the claims included pre-existing and generic components “arranged in a conventional manner to execute the undoubtedly conventional functions of identity verification, time-sensitive code-generation, remote automated access, information collection and display, and the use of database tables.”

For its part, Rently argued that the court erroneously determined that the asserted claims of the ‘590 patent recited a generic lock box, rather than a “technology-enabled” lock box capable of recognizing “automated entry information.” The claim 7 limitation “upon the visitor providing the code information to the lock box or automated door lock within the specified period of time, the lock box or automated door lock opening to facilitate automated entry to the property” was sufficient to establish that the lock box was “technology-enabled,” Rently said.

Honing the Arguments

In an attempt to distinguish itself from the slew of recent Section 101 petitioners who have been summarily denied cert, Rently asserts in its SCOTUS petition that its plea is different:

Unlike other petitioners who have come before it, Petitioner here does not seek a complete overhaul or revocation of this Court’s decision in Alice. Rather, Petitioner believes this Court was on the right track with Alice, but that more guidance is required in order to reign in the lower courts’ misapplication of the rule so legitimate inventions are not mistakenly invalidated. This Court made clear in Alice that preemption is the “concern that drives [the] exclusionary principal,” and that patents that “pose no comparable risk of pre-emption . . . remain eligible” for patenting.

The petition presents two key questions:

1) Whether preemption is a threshold and defining consideration that the lower courts must consider in determining whether a claimed invention is directed to patent eligible subject matter under Section 101, and

2) Whether the courts below have erred in conflating the Step Two conventionality analysis of Alice with the factual prior art patentability analysis of Section 103, without the evidentiary opportunities and protections against hindsight bias afforded by Section 103 and in conflict with this Court’s precedent in Graham v. John Deere Co. of Kansas City, 383 U.S. 1 (1966).

Rently argues that the Federal Circuit’s refusal to address the issue of preemption has become an overarching problem. In the present case as well as many others, the Federal Circuit “has begun applying its own brand of Section 101 jurisprudence,” consequently invalidating both preemptive and non-preemptive patents alike. “Where there is no risk of broad preemption of an underlying idea, courts must follow this Court’s guidance and find the claims eligible for patent protection,” explains the petition. “The analysis can then proceed under Sections 102, 103, and 112, which is where Congress intended patentability to be assessed.”

Beginning with Ariosa Diagnostics, Inc. v. Sequenom, Inc. the Federal Circuit has increasingly dismissed the preemption analysis, says the petition. In that case, the Court noted that “questions on preemption are inherent in and resolved by the § 101 analysis.” This amounts to “circular logic” that has ignited the current chaos around 101. The petition traces the evolution of the Court’s erroneous approach to preemption, which conflicts with the U.S. Patent and Trademark Office’s (USPTO’s) approach since Alice. Unlike the Federal Circuit, the USPTO has updated its guidance appropriately, recognizing “that the focus on preemption underlies the entirety of the Section 101 analysis, and that patent claims which may appear to involve an abstract idea are nonetheless eligible when the practical application of those claims would not preempt the entire idea.”

Save Small Business

As to the second question, the petition contends that Step Two of the Alice analysis can only be resolved as a matter of law in clear-cut cases of patent ineligibility, such as in Bilski and Alice. “If…it becomes necessary for a court to delve deeper into the factual underpinnings of the prior art to determine how common a particular piece of technology or method was, or whether each individual element was known and to what degree, the patent should survive the eligibility test and instead be analyzed under the separate patentability requirements,” explains the petition. This issue was not addressed in either Bilski or Alice, the Federal Circuit has since improperly conflated Sections 101 and 103, and the CAFC’s practice of ignoring the preemption analysis and/or conflating eligibility and patentability particularly harms small businesses, adds the petition.

Citing research by Mark Lemley and Samantha Zyontz, and an IPWatchdog report on Judge Paul Michel’s remarks to Patent Masters attendees, the petition notes that “every time a legitimate invention is mistakenly invalidated under Section 101, it is more likely the Rentlys of the country that are harmed.”

The petition concludes: “When the patent system fails and legitimate rights are revoked, it fails the small businesses that need the system the most, to the benefit of large corporations.”

 

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The Author

Eileen McDermott

Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at several publications and industry organizations. She has acted as editorial consultant for the International Trademark Association (INTA), chiefly overseeing the editorial process for the Association’s twice-monthly newsletter, the INTA Bulletin. Eileen has also served as a freelance editor for the World Intellectual Property Organization (WIPO); as senior consulting editor for the Intellectual Property Owners Association (IPO) from 2015 to 2017; as Managing Editor and Editor-in-Chief at INTA from 2013 to 2016; and was Americas Editor for Managing Intellectual Property magazine from 2007 to 2013.

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 as of the time of publication and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 19 Comments comments. Join the discussion.

  1. Pro Say October 6, 2020 7:02 pm

    With garage door openers and car axles now sitting in the eligibility trashed heap, Rently doesn’t stand a chance.

    I wish it were different (and I hope against hope that I’m wrong), but it’s not.

    SCOTUS simply doesn’t give a d.a.m.n.

    They simply refuse to bring the innovation rabid dog CAFC to heal.

  2. concerned October 6, 2020 8:26 pm

    I have used this technology on a rental cabin and I thought it was a great idea. The patent process should encourage this kind of innovation that makes life better.

    “has been effective in stemming the flood of patents directed to nothing more than age-old ideas applied on a computer,”

    Newsflash: The USPTO is rejecting applications with processes that were never age old ideas that so happen to use a computer since the problem being solved is rooted in computer technology. If the current art used pencil and paper, the solution would still be useful, novel and non-obvious and a first ever concept in any field. Rejecting solutions to problems that are proven to have escaped experts and working professionals for decades.

    Best of luck, your invention made my vacation life easier.

  3. MaxDrei October 7, 2020 1:27 am

    Well, the chances of success for this Petition are not helped by the intervening dismissal of the Chamberlain one. But neither are they helped by writing errors that ought to shame any competent advocate and irritate any educated reader. In the short extract above, my eye was offended by at least two.

    I refer to the plea to “reign in” the lower courts and the praying in aid of the “exclusionary principal”. Who is that then?

    Good to see “hindsight bias” getting another smack though. I’m all in favour of that.

  4. Paul Cole October 7, 2020 4:35 am

    Unfortunately if you read the representative claim in this petition, you will be struck by the similarity to the representative claim in Alice. It is therefore not surprising that the petition was refused.

    What arguments could be put forward that the subject-matter of the representative claim falls as a matter of substance rather than mere outward presentation within the eligible “process” category of Section 101? What is newly and surprisingly transformed? Are the claimed steps more than ordinary people might routinely be expected to do, with the only novel feature that known computer technology is involved? What has been discovered that is new and plausibly falls within the domain of the “useful arts”?

  5. Anon2 October 7, 2020 7:47 am

    Could someone remind me again the section numbers (35 U.S.C. ###) for the Pre-emption Provisions of the Patent Act?

    I’d like a refresh on the wording of the operative law which rules in these matters, as written by elected representatives.

  6. Curious October 7, 2020 8:48 am

    With garage door openers and car axles now sitting in the eligibility trashed heap, Rently doesn’t stand a chance.
    Agreed. Oh, and if anybody thinks Barrett is going to help things, that is more based upon wishful thinking than evidence. Barrett may have never seen a patent case. Moreover, her mentor (Scalia) (im)famously referred to patents as “gobbledegook” during oral argument in KSR and didn’t sign onto the part of the opinion in Bilski that would have recognized at least some software patents are patent eligible.

    Some may also argue that Barrett, being a conservative, would naturally be inclined to support patent rights. To that I would respond that the Supreme Court, as a whole, has had 5 conservatives on the bench since the beginning of the Rehnquist Court (going back nearly 40 years).

    If Barrett becomes a savior for patent rights, it will be out of the blue.

  7. Anon October 7, 2020 10:06 am

    Given that all claims preempt — and that is what they are supposed to do, how then is the legal argument pertaining to claims failing to satisfy 35 USC 101 supposed to differentiate between “preemptive and non-preemptive patents,” and what does a “non-preemptive patent” even mean or have to do with claims of a patent under 35 USC 101?

  8. TFCFM October 7, 2020 12:15 pm

    Denial of this cert petition will, hopefully, be one MORE nail in the coffin of claiming-anything-and-everything-that-achieves-the-same-goal-as-what-I-(may-have)-invented.

  9. Jam October 7, 2020 1:11 pm

    As noted in comments to a previous article, it can be argued that while a brick may be patentable, putting a processor on the brick turns that brick into an abstract idea. Thus, the argument that “the lock box was ‘technology-enabled,’” may not prevail.

    Also, arguing that the lower court used the wrong style of reasoning (i.e., the lower court should have done a preemption analysis, but didn’t) may not be a strong approach.
    Specifically, simply identifying that the court could have used an alternative line of reasoning to allow the case does not refute whether or not the lower court was correct in denying the case with its chosen line of reasoning. Rather, arguing that the chosen line of reasoning is itself erroneous may yield the desired result. E.g., argue that applying the lower court’s reasoning to the facts of known patentable subject matter (e.g., Diehr, McRO, et al.) generates the wrong result and must, therefore, be erroneous.

  10. Curious October 7, 2020 3:57 pm

    Denial of this cert petition will, hopefully, be one MORE nail in the coffin of claiming-anything-and-everything-that-achieves-the-same-goal-as-what-I-(may-have)-invented.
    That kind of thing happens in the chemical/biotech arts … not so much in the other arts. Nice try.

  11. Mark Tornetta October 7, 2020 4:28 pm

    I am sick and tired of 101 stories where the inventor tells everyone how to do it in his/her patent and then the patent dies under the 101 hammer. I am preparing a document to send to the legislators so that all patents killed by 101 are revived. I feel I have good arguments. See

    https://drive.google.com/file/d/1637a59R5-MXZqZCbDjuU_ZqEmfREQsua/view?usp=sharing

    If anyone has anything to add, please email me your thoughts.

    The file is not done… but I’m getting there. mtornetta2@gmail.com

  12. concerned October 8, 2020 5:28 am

    It would be interesting to see a article of all the products, processes, etc. judges have ruled not patentable (not significantly more than the abstract idea) that the judges and their family members voluntarily use in their personal life.

    I suspect judges do not get out of their car to lift their garage door manually in the rain and snow. I suspect their grandkids use Bunch O Balloons. If these inventions are just old ideas with a computer or some other reason for rejection, why did the judges spend their own money to buy the apparently new and significantly more idea?

    Bar judges from every product, process, etc. ruled as nothing more than the previous abstract version and then ask them about life.

  13. TFCFM October 8, 2020 9:59 am

    TFCFM@#8: “…one MORE nail in the coffin of claiming-anything-and-everything-that-achieves-the-same-goal-as-what-I-(may-have)-invented

    Curious@#10: “That kind of thing happens in the chemical/biotech arts … not so much in the other arts.

    “Tuned” axles and “technology-enabled” lockboxes suggest otherwise.

  14. Anon October 9, 2020 7:52 am

    TFCFM,

    When the larger issue is that the scoreboard is broken, it is not persuasive to point to the score on that broken scoreboard.

  15. TFCFM October 9, 2020 9:37 am

    Similarly, when one team believes they’re ahead — despite what the scoreboard says — because they believe the rules of the game ought to be different than what the rules actually are, that team’s cries that “the scoreboard’s broken” are far from “persuasive.”

  16. Anon October 9, 2020 12:24 pm

    You presume the issue does not exist.

    It does — and has been recognized by members of all three branches of the government.

    That you want to then reply ‘not persuasive’ in face of such a fact, is itself not persuasive.

    Play ostrich somewhere else, thank you.

  17. Curious October 9, 2020 4:24 pm

    “Tuned” axles and “technology-enabled” lockboxes suggest otherwise.
    Too bad you don’t understand either of the claims/technology to understand that they don’t “claim[]-anything-and-everything-that-achieves-the-same-goal-as-what-I-(may-have)-invented.”

    There is century old prior art in the American Axle patent that involved the tuning of axles. If the patent claimed everything that achieved the goal of tuning axles, why isn’t that patent prior art? You don’t know because you don’t understand either the technology or what the claims cover.

    It is one thing to have a philosophical disagreement over what should constitute patentable subject matter … however, it is another thing altogether to misrepresent the facts in order to support your position.

  18. TFCFM October 12, 2020 9:46 am

    “You just don’t understand as well as *I* do,” is merely the running-away whine of folks who don’t have a counter-argument (as is Anon’s typical hand-waving about tangential issues.)

  19. Anon October 12, 2020 9:00 pm

    TFCFM,

    The only hand-waving is by you, given the fact that high-ranking members of all three branches of the government have stated the underlying issue that you want to pretend does not exist (or even worse, assert to be ‘tangential’).

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