Eyes on Alice: Federal Circuit Weighs Patent Eligibility of Patent Claims Concerning the Digital Processing and Archiving of Files in a Digital Asset Management System

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 February 8, 2018, the Federal Circuit affirmed that U.S. Patent No. 7,447,713 (‘713 patent) related to eliminating redundant storage of common text and graphical elements to improve system operating efficiency and to reduce storage costs was directed to patent ineligible subject matter under 35 U.S.C. § 101.

In Berkheimer v. HP Inc., the Federal Circuit affirmed-in-part and vacated-in-part the United States District Court for the Northern District of Illinois’ ruling granting defendant’s motion for summary judgment that claims 1-7 and 9 of the ‘713 patent were invalid as ineligible subject matter under 35 U.S.C. § 101 and that claims 10-19 were invalid for indefiniteness. No. 2017-1437, slip op. at 2 (Fed. Cir. Feb. 8, 2018). The ‘713 patent described a digital asset management system that parses files into multiple objects and tags the objects to create relationships between them and then analyzes and compares the objects, either manually or automatically, to archived objects to determine whether variations exist based on predetermined standards and rules. Id. at 2. This system helps eliminate redundant storage of common text and graphical elements. Id.

In ruling on the motion for summary judgment, the district court turned to the two-step Alice inquiry. Under step one, it found that claim 1 of the ‘713 was directed to the abstract idea of “using a generic computer to collect, organize, compare, and present data for reconciliation prior to archiving.” Id. at 9-10. Then, the district court found, under step two, that the claims “do not contain an inventive concept . . . because they describe steps that employ only ‘well-understood, routine and conventional’ computer functions and are claimed ‘at a relatively high level of generality.’” Id. at 13.

The Federal Circuit affirmed the district court’s conclusion that claims 1, -3 and 9 were ineligible under § 101. Id. at 17. However, the Federal Circuit vacated the district court’s decision that claims 4-7 were ineligible under § 101 and remanded the case back because there were fact questions regarding whether claims 4-7 relate to archiving documents in an inventive manner that improves the redundancy and efficiency aspects of the disclosed archival system. Id.

Reviewing the patent eligibility ruling, the Federal Circuit noted that while the ultimate decision was an issue of law reviewed de novo, the patent eligibility inquiry may contain underlying issue of fact. Id. at 6. In its review, the Federal Circuit found that plaintiff had never agreed to make claim 1 representative for purposes of analyzing patent eligibility and thus, it ruled that he had not waived the ability to make separate eligibility arguments for claims 4-7. Id. at 7-8.

Turning to step one of Alice, the Federal Court held: “that claims 1-3 and 9 are directed to the abstract idea of parsing and comparing data; claim 4 is directed to the abstract idea of parsing, comparing, and storing data; and claims 5-7 are directed to the abstract idea of parsing, comparing, storing and editing data. Id. at 10. The Court reasoned that the claims at issue were similar to past cases where claims were found to be directed to an abstract idea, citing to its decisions in In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607, 613 (Fed. Cir. 2016) and Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1347 (Fed. Cir. 2014). More specifically, the Court noted that the parsing and comparing of claims 1-3 and 9 were similar to the collecting and recognizing in Content Extraction and the classifying in an organized manner in TLI. Id. at 11. Moreover, claim 4 merely added the abstract concept of storing and claims 5-7 merely added the abstract concept of editing. Id.

Having found that all claims were directed to abstract ideas, the Federal Circuit turned to the second step in Alice. Id. In its analysis of step two, the Court explained that “[t]he question of whether a claim element or combination of elements is well-understood, routine, and conventional to a skilled artisan in a relevant field is a question of fact” and it must be proven by clear and convincing evidence. Id. at 12. In turn, “[w]hether a claim recites patent eligible subject matter is a question of law which may contain disputes over underlying facts.” Id. at 13. Plaintiff argued, at the district court and on appeal, that whether the claimed invention was well-understood, routine, and conventional was a fact question. Id. The Federal Circuit agreed that the issue was one of fact and that the district court had erred in concluding there were no underlying factual questions to the § 101 inquiry. Id. at 14.

Plaintiff argued that there was a factual dispute regarding whether the claimed combination improves computer functionality through the elimination of redundancy and the one-to-many editing feature that, if factually true, would provide inventive concepts. Id. The Federal Circuit recognized the specification discussed the state of the art at the time the patent was filed and the improvements by the ‘713 patent increased efficiency and computer functionality over the prior art systems. Id. Specifically, the specification described an inventive feature that stored parsed data in a purportedly unconventional manner to eliminate redundancy, reduce storage and permit one-to-many editing. Id. at 15. The Federal Circuit reasoned that the improvements provided for in the specification, to the extent captured in the claims, created a factual dispute about whether the invention described well-understood, routine and conventional activities. Id.

In reviewing the claims, the Federal Circuit found that claims 1-3 and 9, did not recite any of the purportedly unconventional activities disclosed in the specification and thus, they did not receive an inventive concept sufficient to transform the abstract idea into a patent eligible application. Id. However, claims 4-7 did contain limitations directed to the unconventional inventive concepts in the specification, such as storing data without redundancy, one-to-many editing and archiving that improves computer functionality. Id. at 16-17. Defendant argued, and the district court had agreed, that redundancy and efficiency were considerations in any archival system. Id. at 17. The Federal Circuit noted that such facts were in dispute with the specification and thus, there was a genuine issue of material fact whether claims 4-7 archive documents in an inventive manner that improves those aspects of the disclosed archival system. Id.

This Federal Circuit opinion emphasizes the role a factual dispute can play in a § 101 patent eligibility analysis. While patent eligibility can be resolved in motions to dismiss or at summary judgment, evidence challenging whether a claim element or claimed combination is well-understood, routine, or conventional to a skilled artisan in the relevant field can create an issue of fact that pushes the ruling to trial.

 

Other Notable Decisions – Week Ending February 9, 2018

Zuili v. Google, LLC, No. 2017-2161, 2017-2258, 2017-2267 (Fed. Cir. Feb. 9, 2018) (non-precedential):  In Zuili, the Federal Circuit affirmed the Board’s written decision finding that patents-in-suit were eligible for covered business method review pursuant to the Leahy-Smith America Invents Act and that the asserted claims were directed to patent-ineligible subject matter under 35 U.S.C. § 101. The three patents-in-suit taught a method and system that related to identifying invalid or illegitimate “impressions” and “clicks” for online “pay-per-click” and “pay-per-impression” advertisers. The Federal Circuit found no error in the Board’s determination that the patents-in-suit qualified for CBM review by meeting the financial product or service requirement because the claimed method detected fraudulent clicks for the financial activity of pay-per-click advertising. Furthermore, the Federal Circuit held that the asserted claims were directed to the abstract idea of collecting, transmitting, analyzing, and storing data to detect fraudulent and/or invalid clicks based on the time between two requests by the same device or client and that the asserted claims did not recite an inventive concept.

The Medicines Co. v. Hospira, Inc., No. 2014-1469, 2014-1504 (Fed. Cir. Feb. 6, 2018) (precedential): In The Medicines Co., the Federal Circuit affirmed the district court’s noninfringement finding but reversed the district court’s on-sale bar decision and remanded the case to the district court to determine whether the on-sale bar applies. The patent applications for the patents-in-suit were filed on July 27, 2008 and they covered an improved process for manufacturing a drug product of bivalirudin. On February 27, 2007, the patent owner had entered into a “distribution agreement” to make its bivalirudin product under the brand name Angiomax. The Federal Circuit affirmed the noninfringement finding because the patents-in-suit required “efficient mixing” and defendant did not perform “efficient mixing” in making is bivalirudin product. Turning to the on-sale bar issue, the Federal Circuit reversed the district court’s ruling that the “distribution agreement” was not a commercial offer for sale because it was clear the agreement was to sell and purchase the Angiomax product. The remaining issue for remand was whether the offer for sale covered the patented invention.

 

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