Estoppel in CBMR is Both Reviewable and Determined on a Claim by Claim Basis

In Credit Acceptance Corp. v. Westlake Services, [2016-2001](June 9, 2017), the Federal Circuit affirmed the PTAB decision that Westlake was not estopped to bring a CBMR challenge to U.S. Patent No. 6,950,807, and that the challenged claims of this patent were invalid under  35 U.S.C. § 101.

On the estoppel issue Westlake petitioned for CBMR review of all of the claims fo the ‘807, but the Board instituted only as to some of the claims,.  Westlake filed a second CBMR, and Credit Acceptance argued that Westlake was estopped to petition for a second review.  However, since the first CBMR had not yet resulted in a Final Written Decision, the Board found the estoppel argument premature.  After the Final Written Decision in the first CBMR, Credit Acceptance renewed its effort to terminate the second proceeding on estoppel grounds, but the Board decided that estoppel is applied on a claim by claim business, and thus the first proceeding did not impact the second proceeding.

At the outset, the Federal Circuit rejected Westlake’s and the USPTO’s position that the decision on estoppel was akin to a institution decision that is not reviewable.  After finding the estoppel provision was reviewable, the Federal Circuit went on to agree with the Board, that estoppel is determined in on a claim by claim basis.

As to the merits of the CBMR, The Federal Circuit noted that Board determined that the claims are directed to the abstract idea of “processing an application for financing a purchase,” and agreed.  The Federal Circuit said that each of the claims is directed to the abstract idea of processing an application for financing a purchase. The Court saw no meaningful distinction between this type of financial industry practice and “the concept of intermediated settlement” held to be abstract in Alice, or the “basic concept of hedging” held to be abstract in Bilski.

AIPLA Proposes New 101 to Save the Patent System

The AIPLA has proposed a new Section 101:

35 U.S.C. § 101—Inventions Patentable

(a) Eligible Subject Matter.—Whoever invents or discovers any useful process, machine, manufacture, composition of matter, or any useful improvement thereof, shall be entitled to a patent therefor, subject only to the conditions and requirements set forth in this title.

(b) Sole Exceptions to Subject Matter Eligibility.—A claimed invention is ineligible under subsection (a) only if the claimed invention as a whole exists in nature independent of and prior to any human activity, or can be performed solely in the human mind.

(c) Sole Eligibility Standard.—The eligibility of a claimed invention under subsections (a) and (b) shall be determined without regard to the requirements or conditions of sections 102, 103, and 112 of this title, the manner in which the claimed invention was made or discovered, or whether the claimed invention includes an inventive concept.

This proposed version of 101 would eliminate the “abstract idea” exception created by the Supreme Court, and which the courts have been unwilling (and unable) to properly define, and which has denied protection to inventors or novel and useful computer related inventions.

It is about time that the patent bar solved the patentability problem it created.  Hopefully this proposal or something similar will end the  tyranny that is the Alice v. CLS.

Posted in 101

A Claim to an Abstract Idea does not Automatically Become Eligible Merely by Adding a Mathematical Formula

In Recognicorp, LLC v. Nintendo Co., Ltd., [2016-1499](April 28, 2017), the Federal Circuit affirmed the district court’s grant of judgment on the pleadings that U.S. Patent No. 8,005,303 on a method and apparatus
for building a composite facial image using constituent parts was directed to the abstract idea of encoding and decoding image data.

At Alice step one, the district court concluded that the asserted claims are “directed to the abstract idea of encoding and decoding composite facial images using a mathematical formula.”  At Alice step two, the district court found that the ’303 patent contains no inventive concept, stating that “the entirety of the ’303 Patent consists of the encoding algorithm itself or purely conventional or obvious pre-solution activity and post-solution activity insufficient to transform the unpatentable abstract idea into a patent-eligible application.”

The Federal Circuit agreed that claim 1 is directed to the abstract idea of
encoding and decoding image data, noting that it claims a method
whereby a user displays images on a first display, assigns image codes to the images through an interface using a mathematical formula, and then reproduces the image based on the codes.  The Federal Circuit rejected the argument that, like the claims in Enfish, the claim was being parsed at too high a level of abtractions.  The Federal Circuit found Digitech Image Technologies more analogous.

At step two of the Alice inquiry, the Federal Circuit found that nothing
“transforms” the abstract idea of encoding and decoding into patent-eligible subject matter.  The Federal Circuit said that claims that are directed to a nonabstract idea are not rendered abstract simply because they use a mathematical formula, but that the converse is also true: A claim directed to an abstract idea does not automatically become eligible merely by adding a mathematical formula.

The Federal Circuit concluded that the claims of the ’303 patent are directed to encoding and decoding image data, an abstract idea, adding that the claims provide no inventive concept to render them eligible under
§ 101.

Posted in 101

Among Other Things, the Federal Circuit Affirms Viability of Assignor Estoppel

In Mentor Graphics Corporation v. EVE-USA, Inc., [2015-1470, 2015-1554, 2015-1556] (March 16, 2016), the Federal Circuit:

  • affirmed the jury verdict of infringement of U.S. Patent Nos. 6,240,376, the denial of JMOL, and the award of $36,000,000 in damages, and that that assignor estoppel bars Synopsys from challenging the validity of the patent.
  • reversed summary judgment that U.S. Patent No.
    6,132,109 is indefinite.
  • affirmed summary judgment that U.S. Patent No. 7,069,526 lacks patent-eligible subject matter.
  • vacated the motion in limine precluding Mentor from
    presenting evidence of willful infringement.
  • reversed summary judgment that U.S. Patent No. 6,947,882 lacks
    written description.
  • reverse summary judgment that Mentor’s infringement allegations
    regarding U.S. Patent Nos. 6,009,531 and 5,649,176 are barred by
    claim preclusion.

Regarding Assignor Estoppel, the Federal Circuit rejected Synopsys argument that the Supreme Court abolished the doctrinal underpinnings of assignor estoppel in Lear, Inc. v. Adkins.

Regarding the Damage Award, the Federal Circuit noted that the facts of this case are remarkably simple for a patent damages appeal and Synopsys does not dispute any of them.

The jury found, and Synopsys does not dispute on appeal, that Mentor
satisfied all of the Panduit factors with regard to the sales to Intel for which the jury awarded lost profits:
(1) there was a demand by Intel for the patented product; (2) there were no non-infringing alternative emulator systems acceptable to Intel; (3) Mentor had the manufacturing and marketing capability to satisfy Intel’s demand; and, (4) Mentor established the amount of profit it would
have made if Synopsys had not infringed.  Synopsys argued that the lost profits shuold be apportioned to cover only the patentee’s inventive contribution.  The Federal Circuit agreed with Synopsys that apportionment is an important component of damages law generally, and we believe it is necessary in both reasonable royalty and lost
profits analysis.  However, the Federal Circuit said that Panduit’s requirement that patentees prove demand for the product as a whole and the absence of non-infringing alternatives ties lost profit damages to specific claim limitations and ensures that damages are commensurate with the value of the patented features.

Regarding indefiniteness, the Federal Circuit said that “a method for displaying the results of synthesized circuit analysis visually near the
HDL source specification that generated the circuit” was not indefinite.The Federal Circuit held that the term “near” informs a person of ordinary skill in the art about the scope of the invention with
reasonable certainty, noting that a skilled artisan would understand “near” requires the HDL code and its corresponding circuit analysis to be displayed in a manner that physically associates the two.

Regarding patentable subject matter, the Federal Circuit held that claims containing “machine-readable medium” renders the claimed
subject matter invalid under 35 U.S.C. § 101.  The specification defined machine-readable medium as including carrier waves, found to be unpatentable in In re Nuijten, 500 F.3d 1346 (Fed. Cir. 2007).

With respect to willful infringement, the Federal Circuit found the district court erred in barring evidence of willful infringement.  Specificaly, the Federal Circuit rejected a rigid rule that post-filing willful infringement cannot be presented unless the party moves for a preliminary injunction.

With respect to written description, the Federal Circuit found that there was adequate written description.  The Federal Circuit found that the very language of claim 1 which the court held was not supported by the specification was present in the originally-filed claims. Original claims are part of the original specification and in many cases will satisfy the written description requirement.

Finally, with respect to claim preclusion, the Federal Circuit said that claim preclusion does not bar later infringement allegations with respect to accused products that were not in existence at the time of the previous actions for the simple reason that claim preclusion requires that in order for a particular claim to be barred, it is necessary that the claim either was asserted, or could have been asserted, in the prior action.

 

Oh Diehr Me, Another Case With Patent Eligible Subject Matter

In Thales Visionix, Inc., v. U.S., [2015-5150](March 8, 2017), the Federal Circuit reversed the Court of Claims determination that the claims of U.S. Patent No. 6,474,159 were directed to patent ineligible subject matter.

The Federal Circuit observed that the Supreme court “has not established a definitive rule to determine what constitutes an ‘abstract idea.'”  Because all inventions at some level embody, use. reflect rest upon or apply laws of nature, natural phenomenon, or abstract ideas, the Federal Circuit said it was important to articulate what the claims are directed to with sufficient specificity to ensure that the step one inquiry is meaningful.  The Federal Circuit looked to Rapid Litigation Management, Enfish, and Diamond v. Diehr, and concluded that for purposes of evaluating patent eligibility, the claims in the ‘159 patent were nearly indistinguishable from the claims at issue in Diehr, explaining that just as the claims in Diehr reduced the likelihood that the rubber molding process would result in over curing or under curing, the claims at issue result in a system that reduces errors in an inertial system that tracks an object on a moving platform.

The Federal Circuit also (and less aptly) analogized to Rapid Litigation, stating that just as claims directed to a new and useful technique for defining a database that runs on general-purpose computer computer equipment are patent eligible, so too are claims directed to a new an useful technique for using sensors to more efficiently track an object on a moving platform.  Editorial comment: the similarity of these two cases is hard to see.

In a line that is sure to be quoted by applicants (and patent owners), the Federal Circuit said:

That a mathematical equation is required to complete the claimed method and system does not doom the claims to abstraction.

The Federal Circuit explained that far from claiming the equations themselves, the claims seek to protect only the application of physics to the unconventional configuration of sensors as disclosed, and concluded that the claims pass Step 1 of the Alice test.

Posted in 101

It Was Over Before the Fat Lady Sang; Collateral Estoppel Applies to Partial Summary Judgment under §101

In Intellectual Ventures I LLC v. Capital One Financial Corp., [2016-1077] (March 7, 2017), the Federal Circuit affirmed judgment that all claims of U.S. Patent Nos. 7,984,081 and 6,546,002 ineligible under 35 U.S.C. § 101, and barring Intellectual Ventures from pursuing claims based on U.S. Patent No. 6,715,084.  The district court granted Summary Judgment of invalidity of the ‘081 and ‘002 patents, and on the strength of a partial summary judgment order of ineligibility under § 101 for the ’084 patent in a separate proceeding in New York, granted summary judgment as the ‘084 patent under a collateral estoppel theory.

The Federal Circuit observed that the Fourth Circuit has established five requirements for collateral estoppel: (1) the issue in the prior proceeding be identical, (2) actually determined, (3) necessary, (4) final, and (5) that the affected party was afforded a full and fair opportunity to litigate the issue. However the parties only dispute the finality requirement, for which the Fourth Circuit requires a “final and valid” judgment, Intellectual Ventrues arguing that the district court erred because it based its collateral estoppel findings on a partial summary judgment order, rather than a final judgment.  The Federal Circuit concluded that under Fourth Circuit law, collateral estoppel attaches in light of the partial summary judgment order, because
this particular issue has reached such a stage that the
district court would see no really good reason for permitting
it to be litigated again.

 

The Federal Circuit agreed that the claims of the ‘081 and ‘002 patents failed step 1 of the Alice/Mayo test.

Don’t Take Your Eye Off the Ball or Your Patent Assignment Will End Up in the Dirt

In Intellectual Ventures I LLC v. Erie Indemnity Company, [2016-1128, 2016-1132] (March 7, 2017), the Federal Circuit affirmed in part, vacated in part, and remanded in part the district court’s decision finding all claims of U.S. Patent Nos. 6,510,434, 6,519,581 and 6,546,002 ineligible under 35 U.S.C. § 101, and the infringement claim of the ’581 patent for lack of standing.

Lack of Standing

The rights of the parent application of the ‘581 patent, together with “all continuations” (including the ‘581 patent application, which was pending at the time, were assigned to ALLAdvantage.com.  AllAdvantage.com then assigned various patent (including the parent of the ‘581 patent) to Alset.  Although this agreement expressly identified the various patents and pending applications subject to assignment—including
the ’581 parent and several of its pending foreign patent application counterparts—it did not explicitly list the ’581 patent’s then-pending application.  The assignment generally provided:

The Federal Circuit concluded that the Alset Agreement did not include an assignment of rights to the ’581 patent and affirmed the district court’s Rule 12(b)(1) dismissal.  The Federal Circuit rejected the argument that the language implicitly included the ‘581 patent application.  Applying California contract law, the Federal Circuit agreed with the district court’s conclusion that there is no ambiguity within the Alset Agreement that could render it reasonably susceptible to an interpretation that the ‘581 patent application was transferred.  The fact that Alset recorded the assignment at the PTO, represented in a terminal disclaimer that it owned all the rights to the ’581 patent, and filed updated power of attorneys and paid the ’581 patent’s issuance fee.  The Federal Circuit said that although this evidence may lead one to reasonably conclude that Alset believed it owned the ’581 patent application at some later point in time, it would be error to rewrite the parties’ agreement to include that which was plainly not included.  The fact that other pending applications were expressly listed also did not help plaintiff’s cause.

Because the Federal Circuit agreed that plaintiff lacked standing to sue under the ‘581 patent, it vacated the finding that the ‘581 patent was invalid under §101.

Don’t Take Your Eye Off the Ball

Conveying a pending patent application should be routine.  And perhaps because it was so routine is the reason that things went wrong.  If you want to assign a pending application, it is a probably a good idea to specifically identify that application.  If you want to include all continuations, divisionals, and continuations in part, than it is a good idea idea to say “including all continuations, divisionals, and continuations in part” rather than “together with the goodwill of the business symbolized by said patents and applications and registrations thereof.”

Invalidity Under §101

As to the ‘434 patent, which contained twenty-eight claims relating to methods and apparatuses that use an index to locate desired information in a computer database:  Under step one of the Mayo/Alice test the Federal Circuit agreed with the district court that the invention is drawn to the abstract idea of “creating an index and using that index to search for and retrieve data.  The Federal Circuit noted that it had previously held patents ineligible for reciting similar abstract concepts that merely collect, classify, or otherwise filter data.  Under step two of the Mayo/Alice test the Federal Circuit agreed with the district court that they lack an “inventive concept” that transforms the abstract idea of creating an index and using that index to search for and retrieve data into a patent-eligible application of that abstract idea.  The fact that the claimed invention employed an index of XML tags was not significant in view of the patent’s admission that such tags are known.  Moreover limiting an abstract idea to a particular field does not make the idea any less abstract.  The Federal Circuit concluded that the claimed computer functionality can only be described as generic or conventional.

As to the ‘002 patent, which contained 49 claims relating to systems and methods for accessing a user’s remotely stored data and files:

Under step one of the Mayo/Alice test the Federal Circuit agreed with the district court that the claims are drawn to the idea of “remotely accessing user specific information.  Under step two of the Mayo/Alice test, the Federal Circuit concluded that the claims recite no “inventive concept” to transform the abstract idea of remotely accessing user-specific information into a patent eligible application of that abstract idea. Rather, the Federal Circuit said that the claims merely recite generic, computer implementations
of the abstract idea itself.

The Difficulty in Implementing an Idea Does Not Mean the Idea is Not Abstract

In Apple, Inc., v. Ameranth, Inc., [2015-1703, 2015-1704] (November 29, 2016), the Federal Circuit affirmed in part and reversed in part the PTAB’s subject matter eligibility determination of claims of U.S. Patent Nos. 6,384,850, 6,871,325, and 6,982,733 in three separate CBM proceedings. The patent specifications disclose a first menu that has categories and items, and software that can generate a second menu from that first menu by allowing categories and items to be selected. The patents describe a preferred embodiment of the invention for use in the restaurant industry.

The Patent Trial and Appeal Board (“Board”) construed the claims, found that each patent met the statutory definition of “covered business method patent,” and instituted CBM reviews. In its final decisions, the Board found certain claims in each of the patents unpatentable under 35 U.S.C. § 101.

On appeal the patent owner did not contest that the claims were directed to a “financial product or service,” but it did argue that the patents fall within the exception for technological inventions. 37 C.F.R. § 42.301(b) provides:

In determining whether a patent is for a technological invention solely for purposes of the Transitional Program for Covered Business Methods (section 42.301(a)), the following will be considered on a case-by-case basis: whether the claimed subject matter as a whole recites a technological feature that is novel and unobvious over the prior art; and solves a technical problem using a technical solution.

The Federal Circuit observed that this regulation offers little towards understanding the meaning of the term “technological invention,” but noted that determining whether these patents are a technological invention does not require this court to determine “the full sweep of the term.” The Federal Circuit affirmed the Board’s determinations that the patents were not for technological inventions.

In the first step of the Alice test, the Board determined that the claims in all three patents are directed to the abstract idea of “generating a second menu from a first menu and sending the second menu to another location.” The patent owner complained that the characterization of the abstract idea changed from the institution decision to the final written decision. The Federal Circuit noted that an abstract idea can generally be described at different levels of abstraction, but concluded that the Board’s slight revision of its abstract idea analysis does not impact the patentability analysis. The Federal Circuit affirmed the Board’s conclusion that the claims in these patents are directed to an abstract idea.

In the second step of the Alice test, the Board found that the recited central processing unit, data storage device, and operating system components were “typical” hardware elements. The Board rejected the various elements identified by the patent owner as insignificant post-solution activity, and the Federal Circuit agreed. The Federal Circuit pointed out that the specifications describe the hardware elements of the invention as “typical” and the software programming needed as “commonly known.” Lastly the Federal Circuit rejected the patent owner’s argument that the required programming was difficult, and this difficulty indicated that the claims were not directed to an abstract idea. The difficulty of the programming details for this functionality is immaterial because these details are not recited in the actual claims. The degree of difficulty in implementing an abstract idea in this circumstance does not itself render an abstract idea patentable.

The Federal Circuit went on to reverse the confirmation of patentability of several of the claims.

Posted in 101

The Search for an Abstract Idea Test Continues to Elude; Federal Circuit Goes Old School with Common Law Analysis of Precedent

In Amdocs (Israel) Limited v, Openet Telecom, Inc., [2015-1180] the Federal Circuit reversed and remanded the district court’s judgment on the pleadings that U.S. Patent Nos. 7,631,065, 7,412,510, 6,947,984, and 6,836,797 were not directed to patent eligible subject matter under 35 USC 101.

The patents in suit concerned, inter alia, parts of a system designed to solve an accounting and billing problem faced by network service providers.  The Federal Circuit outlined the Alice/May two step framework, and noted that its cases generally follow the step one/step two Supreme Court format, reserving step two for the more comprehensive analysis in search of the inventive concept. The Federal Circuit went on to observe that recent cases suggest that there is considerable overlap between step one and step two, and in some situations this analysis could be accomplished
without going beyond step one.

The Federal Circuit said that the analysis presumably would be based on a generally-accepted and understood definition of, or test for, what an ‘abstract idea’ encompasses.  The Federal Circuit  conceded that:

a search for a single test or definition 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 Federal Circuit noted that in absence of a defintion, the decisional mechanism
courts now apply is to examine earlier cases in which a similar or parallel descriptive nature can be seen—what prior cases were about, and which way they were decided, which the Court identified as the classic approach of common law.

After reviewing some of its precedent, the Federal Circuit found the claims in the ’065 Patent were 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 Federal Circuit concluded the the claim entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows
which previously required massive databases).

With respect to the ‘510, ‘984, and ‘797 Patents, the Federal Circuit said these claims were eligible for patenting for reasons similar to those that undergirded the eligibility of the ’065 patent claims.  With respect to the ’984 Patent.

 

Posted in 101

Claims for a New Abstract Idea are Still Claims to an Abstract Idea, Invalid under §101

In Synopsis, Inc. v. Mentor Graphics Corporation, [2015-1599] (October 17, 2016), the Federal Circuit affirmed summary judgment that claims of U.S. Patent Nos. 5,530,841; 5,680,318; and 5,748,488 were invalid under 35 U.S.C. §101.  The Federal Circuit rejected the argument that the claims were directed to eligible subject matter because they relate to complex algorithms used in computer- based synthesis of logic circuits, instead finding that the are directed to the abstract idea of translating a functional
description of a logic circuit into a hardware component description of the logic circuit.

The Federal Circuit said that the idea of reviewing a description of certain functions and turning it into a representation of the logic component that performs those functions can be—and, indeed, was—performed mentally or by pencil and paper by one of ordinary skill in the art.  Furthermore the Federal Circuit said that the claims did not call for the involvement of a computer, and thus they cannot be characterized as an improvement in a computer as a tool.

At Step I of the Alice test, the Federal Circuit said that it continues to treat analyzing
information by steps people go through in their minds, or by mathematical algorithms, without more, as essentially mental processes within the abstract-idea category.  The justification for this is that computational methods which can be performed entirely in the human mind are the types of methods that embody the “basic tools of scientific and technological work” that are free to all men and reserved exclusively to none.

Synopsis argued that the complexity of the claims indicated that the method could not be performed mentally, but the Federal Circuit said that claims covered methods that could be performed mentally.  While Synopsys may be correct that the inventions were intended to be used in conjunction with computer-based design tools, the claims were not confined to that conception, and the §101 inquiry must focus on the language of the claims themselves.

At Step II of the Alice test, the Federal Circuit rejected the argument that the novelty of the claims saved them from being abstract, noting that a claim for a new abstract idea is
still an abstract idea, and concluded that the search for a § 101 inventive concept is distinct from demonstrating § 102 novelty.   Although conceding that the contours of what constitutes an inventive concept are far from precise, the Federal Circuit said that the claims contain no technical solution. To the extent the claims add anything to the abstract idea (of translating a functional description of a logic circuit into a hardware component description of the logic circuit), it is the use of assignment
conditions as an intermediate step in the translation process.  But, because the claims are for a mental process, assignment conditions, which merely aid in mental translation as opposed to computer efficacy, are not an inventive concept that takes the claims
beyond their abstract idea.

 

Posted in 101