Eyes on Alice: Federal Circuit Affirms Decision to Strike Claims of Four Patents Related to Streaming Data Over the Internet as Unpatentable Subject Matter

The Federal Circuit issued another precedential decision adding to its line of cases delineating between patent-eligible and patent-ineligible improvements in computer-related technology. On November 1, 2017, the Federal Circuit issued a decision concluding that four patents related to a system for streaming audio/visual data over a communications system like the internet are directed to patent ineligible subject matter under 35 U.S.C. § 101.

In Two-Way Media Ltd. v. Comcast Cable Communications, LLC, the Federal Circuit affirmed the United States District Court for the District of Delaware’s ruling granting defendants’ motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) based on patents being ineligible under § 101. Nos. 2016-2531, 2016-2532, slip op. at 7, 9 (Fed. Cir. Nov. 1, 2017). The patents-in-suit were entitled “Multicasting Method and Apparatus” and described a system to provide a way to transmit one packet of information to multiple recipients. Id. at 3. More specifically, “[t]he patents describe the invention as an improved scalable architecture for delivering real-time information.” Id.

In ruling on the motion for judgment on the pleadings, the district court first addressed claims construction and adopted the patentee Two-Way Media’s proposed constructions. Id. at 7. Next, the district court addressed Two-Way Media’s evidentiary arguments requesting that the district court take judicial notice of expert report excerpts, expert trial testimony, inventor trial testimony and a press release all part of prior proceedings before other tribunals purportedly related to the evaluation of the novelty and nonobviousness of the claimed inventions. Id. at 7-8. The district court denied Two-Way Media’s request explaining that evidence related to novelty and nonobviousness was irrelevant to the patent-eligible subject matter inquiry under § 101. Id.

Finally, the district court turned to the two-step Alice inquiry. Under step one, it found that two patents-in-suit (the “‘187 and ‘005 patents”) were “directed to the abstract idea of (1) sending information, (2) directing the sent information, (3) monitoring receipt of the sent information, and (4) accumulating records about receipt of the sent information.” Id. at 8. The other two patents-in-suit (the “‘622 and ‘686 patents”) were found to be directed to the abstract ideas of “monitoring the delivery of real-time information to a user or users” and “measuring the delivery of real-time information for commercial purposes.” Id. at 9. Then, the district court found, under step two, that none of the patents-in-suit recited a saving inventive concept because, even in light of Two-Way Media’s claim construction, the claims did not recite computer architecture or recite computer components that required anything more than the ordinary functionality of those components. Id. at 8-9.

The Federal Circuit affirmed the district court’s opinion concluding that the four patents-in-suit were patent ineligible under § 101. Id. at 10. The Federal Circuit found that while the representative claim from the ‘187 and ‘005 patents  required “the functional results of ‘converting,’ ‘routing,’ ‘controlling,’ ‘monitoring,’ and ‘accumulating records,’ [it did] not sufficiently describe how to achieve these results in a non-abstract way.” Id. at 11. In other words, even though the ‘187 and ‘005 patents claimed the manipulation of data, they did not do so in a non-abstract way. Id. Additionally, Two-Way Media’s claim constructions recited only conventional computer components and not some particular scalable network architecture. Id. Thus, as the Federal Circuit explained, “[a]t best, the constructions propose the use of generic computer components to carry out the recited abstract idea, but that is not sufficient.” Id. at 12.

The Federal Circuit found that under step one the ‘622 and ‘686 patents suffered the same ineligibility infirmity as the other two patents. Id. at 15.  The Federal Circuit agreed with the district court that the representative claims of the ‘622 and ‘686 patents, which were “directed to monitoring the delivery of real-time information to user(s) or measuring such delivery for commercial purposes,” were similar to other concepts found to be abstract and it cited to previous opinions in BASCOM, Electric Power Group, and Ultramercial, Inc. to support its reasoning.

In its application of the second Alice step, the Federal Circuit noted that for the patents-in-suit to be saved “an invented concept must be evident in the claims.” Id. at 12 (emphasis added). The district court had found that while the specification of the ‘187 patent, which applied to the ‘005 patent as well, described a system architecture as a technological innovation, the relevant claims were missing an inventive concept. Id. at 13. Two-Way Media argued that the district court had been wrong because the relevant claim solved “various technical problems, including excessive loads on a source server, network congestion, unwelcome variations in delivery times, scalability of networks, and lack of precise recordkeeping.” Id. The Federal Circuit again agreed with the district court and concluded that “[n]othing in the claims or their constructions, including the use of ‘intermediate computers,’ requires anything other than conventional computer and network components operating according to their ordinary functions.” Id. at 13-14.

With regard to the ‘622 and ‘686 patents, the Federal Circuit found that there was no inventive concept in the claims. Id. at 16. It again agreed with the district court that “nothing in [the] claims require[d] anything other than conventional computer and network components operating according to their ordinary functions.” Id. at 17.

Additionally, the Federal Circuit upheld the district court’s decision to exclude evidence offered by Two-Way Media related to the “purported technological innovations of its invention.” Id. at 15. The Federal Circuit agreed that the evidence was properly excluded because while it was relevant to a novelty and obviousness analysis it was not relevant to “whether the claims were directed to eligible subject matter” because “[e]ligibility and novelty are separate inquires.” Id.

This Federal Circuit opinion emphasizes the fact that although an invention may be novel and even solve “various technical problems,” it may nonetheless fail to claim eligible subject matter under § 101 if it merely recites generic computer components used to carry out the novel but still abstract idea.

 

Other Notable Decisions – Week Ending November 3, 2017

Bayer Pharma Ag v. Watson Laboratories, Inc., No. 2016-2169 (Fed. Cir. Nov. 1, 2017) (precedential):  In Bayer, the Federal Circuit reversed the district court’s finding that the defendant Watson Laboratories had failed to prove that two claims in the patent-in-suit were obvious concluding that the district court clearly erred in finding a skilled artisan would not have been motivated to use the claim elements. The Federal Circuit noted that “[t]he clear error in the district court fact finding that there was no motivation to formulate ED drugs in ODTs, is that it concluded that the record did not contain any indication that ED drugs would be good candidates for ODT formulations” because that view of the record was “simply not accurate.” The Federal Circuit proceeded to go through the various prior art references in the record that made the district court’s finding clearly erroneous explaining that a district court cannot, through a credibility determination, ignore the wealth of evidence in the record.

Mastermine Software, Inc. v. Microsoft Corporation, No. 2016-2465 (Fed. Cir. Oct. 30, 2017) (precedential): In Mastermine Software, the Federal Circuit affirmed the district court’s claim construction but reversed the district court’s indefiniteness determination and remanded for further proceedings because the claims, properly construed, did not improperly claim both an apparatus and method of using the apparatus. The Federal Circuit disagreed with the district court’s finding that the claims were invalid for indefiniteness for introducing method elements into system claims. Instead, the Federal Circuit found that the claims were simply apparatus claims with proper functional language.

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