“We note that [the USPTO] guidance ‘is not, itself, the law of patent eligibility, does not carry the force of law, and is not binding on our patent eligibility analysis.’… And to the extent the guidance ‘contradicts or does not fully accord with our caselaw, it is our caselaw, and the Supreme Court precedent it is based upon, that must control.’” – CAFC opinion
Earlier today, in cxLoyalty, Inc. v. Maritz Holdings, Inc., the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed-in-part, reversed-in-part and dismissed-in-part a decision of the U.S. Patent and Trademark Office’s (USPTO’s) Patent Trial and Appeal Board (PTAB) in which the CAFC doubled down on its past contention that the USPTO’s Subject Matter Eligibility Guidance is not binding on the court’s analysis. The panel included Chief Judge Prost and Judges Lourie and Hughes. The opinion was authored by Prost.
cxLoyalty petitioned for covered business method review (CBM) of claims 1–15 of Maritz Holdings, Inc.’s U.S. Patent No. 7,134,087 and the PTAB instituted, finding those claims patent ineligible. However, the Board found Maritz’s proposed substitute claims 16-23 patent eligible. cxLoyalty appealed and Maritz cross-appealed to the Federal Circuit.
The CAFC initially dismissed Maritz’s cross-appeal that cxLoyalty had failed to satisfy its burden of establishing that the patent was eligible for CBM review, citing SIPCO, LLC v. Emerson Elec. Co., 980 F.3d 865, 867 (Fed. Cir.2020), which was decided after the close of briefing but before oral arguments in the case. In SIPCO, the court explained that “[t]he Supreme Court’s decision in Thryv [v. Click to Call]. . . makes clear that the threshold determination” that a “patent qualifies for CBM review is a decision that is non-appealable under 35 U.S.C.” [hyperlink added by IPWatchdog]
The CAFC then turned to the eligibility arguments. Maritz’s ‘087 patent eliminates the need for human intervention in redeeming customer loyalty awards. Claim 1 provides:
- A computerized system for use by a participant of a program which awards points to the participant, wherein the awarded points are maintained in a point account for the participant, said system for permitting the participant to transact a purchase using the awarded points with a vendor system which transacts purchases in currency, said system comprising a processor including instructions for defining:
an application programming interface (API) for interfacing with the vendor system;
a program account hidden from the participant connected to the program for use in currency transactions;
a graphical user interface (GUI) for providing an interface between the participant and the API and for communicating with the program;
wherein said GUI includes instructions for receiving participant-related information from the participant and providing the received participant-related information to the API;
wherein said GUI includes instructions for receiving information regarding the program account hidden from the participant and for providing the received program account information to the API;
wherein said API is adapted to receive the participant-related information and the program account information from the GUI and adapted to provide the received participant-related information and the received program account information to the vendor system;
wherein said API is adapted to receive vendor-related information from the vendor system and adapted to provide the received vendor-related in-formation to the GUI; and
wherein said GUI includes [i]nstructions for receiving vendor-related information from the API and for providing the received vendor-related information to the participant;
such that from the perspective of the participant, the participant uses the GUI to conduct a purchase transaction with the vendor system based in whole or in part on the points in the participant’s point account; and
such that from the perspective of the vendor system, the vendor system conducts the purchase transaction with the participant as a currency transaction based on the program’s program account hidden from the participant whereby the participant is not aware that the purchase transaction with the vendor system is being transacted using program account.
The proposed substitute claim 16 “adds in relevant part that the GUI includes instructions for converting the vendor-related information from the format of the vendor system into a format of the GUI and proposed substitute claim 22 “adds in relevant part that the GUI communicates with multiple APIs having corresponding vendor systems, allowing participants to use the GUI to make points-based purchases directly from multiple third-party vendor systems.”
CAFC: Our Case Law Controls
At the start of its discussion on the merits of the case, the court included the following footnote:
Throughout its Final Written Decision, the Board repeatedly referred to the United States Patent and Trademark Office’s 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019). We note that this guidance “is not, itself, the law of patent eligibility, does not carry the force of law, and is not binding on our patent eligibility analysis.” In re Rudy, 956 F.3d 1379, 1382 (Fed. Cir. 2020). And to the extent the guidance “contradicts or does not fully accord with our caselaw, it is our caselaw, and the Supreme Court precedent it is based upon, that must control.” Id. at 1383.
While the PTAB agreed with Maritz’s argument that the added limitation of substitute claim 16 that explains the GUI “is able to convert vendor-related information into information formatted for the GUI, which GUI-formatted information may then be provided to the claimed participants” makes the claim eligible, the court disagreed:
Maritz argues that the added limitation constitutes a technological solution to a technological problem. How-ever, Maritz does not contend that the claimed invention improves the use of computers as a tool by reciting a new way for computers to conduct format conversion. Nor do the claims provide any guidance as to how this purported function is achieved. Thus, claim 16 does not claim a patent-eligible technological solution to a technological problem.
Maritz also cited expert testimony that it said bolstered its argument that substitute claim 16 cites “unconventional subject matter”. But the CAFC said that “[a]lthough this expert testimony invokes the words ‘well-understood, routine, or conventional,’ the type of unconventionality described by Maritz’s expert does not spare the claims…. At most, the testimony describes the claimed subject matter as not conventional only in the sense that the subject matter as a whole was novel….But, as explained previously, our cases are clear that a patent claim is not eligible under § 101 merely because it recites novel subject matter.”
The court addressed Maritz’s attempt to analogize its substitute claims to CardioNet, LLC v. InfoBionic, Inc., in which the claims at issue were found to be eligible, distinguishing the two cases on the basis that, while the claims in CardioNet did not “merely computerize pre-existing techniques for diagnosing atrial fibrillation and atrial flutter,” in the present case “the record demonstrates that the claims are directed to the application of longstanding commercial practices using well-understood, routine, and conventional activities.”
The court also distinguished the claims from those at issue in DDR Holdings, LLC v. Hotels.com, L.P., explaining that “[t]he claims in DDR Holdings did not relate to a longstanding commercial practice but rather to a business challenge particular to the internet, and the claims did not merely employ conventional techniques to apply an abstract idea but rather involved the use of a computer network operating outside its normal and expected manner.”
Ultimately, the court affirmed the PTAB’s finding that claims 1-15 were patent ineligible, reversed the finding that the proposed substitute claims were eligible and dismissed the CBM eligibility challenge.
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