On the heels of CLS Bank Int’l v. Alice Corp. Pty presently before the Supreme Court, the Federal Circuit and district courts in 2014 have continued to issue decisions analyzing computer-implemented inventions under 35 U.S.C. § 101. These courts have generally sought to answer similar questions: whether the claim is an abstract idea; whether this abstract idea preempts all other uses or can be performed in the human mind (or on a pen and paper); and whether the claim contains other limitations to narrow it sufficiently, such as being tied to a specific machine or transforming the data into a different thing.
In CyberFone Sys., LLC v. CNN Interactive Group, Inc., 2012-1673, 1674, 2014 U.S. App. LEXIS 3599 (Fed. Cir. Feb. 26, 2014), the Federal Circuit (in a nonprecedential opinion) affirmed the finding of invalidity under 35 U.S.C. § 101. The patent there was generally related to obtaining transaction information from a telephone which is “exploded” into different data transactions that are sent to different destinations based on the transaction data information.
The court first found claim 1 was an abstract idea of “categorical data storage, i.e., the idea of collecting information in classified form, then separating and transmitting that information according to its classification.” Furthermore, even if the claimed subject matter could not be performed by a human unaided by devices, the court further noted that “the category of patent-ineligible abstract ideas is not limited to methods that can be performed in the human mind.”
The court then analyzed whether any “additional substantive limitations . . . narrow, confine, or otherwise tie down the claim so that . . . it does not cover the full abstract idea itself,” such as if the method is “tied to a particular machine . . . or transforms a particular article into a different state or thing.” (internal quotations and citations omitted) The court found neither. The claimed telephone was “not a specific machine” and “add[ed] nothing of significance to the claimed abstract idea.” And the “exploding” step made no “meaningful transformation” because it only made “the originally-gathered information accessible to different destinations without changing the content or its classification.”
Likewise, the Federal Circuit reached the same result in SmartGene, Inc. v. Advanced Biological Lab., No. 2013-1186, 2014 U.S. App. LEXIS 1357 (Fed. Cir. Jan. 24, 2014) (another nonprecedential opinion) on a patent directed to “guiding the selection of a treatment regiment for a patient with a known disease.” There, the court’s reasoning in holding the patent invalid was because “every step is a familiar part of the conscious process that doctors can and do perform in their heads.”
District courts, however, have rendered different decisions. In Clear With Computers v. Dick’s Sporting Goods, 12-00674-LED, Dkt. No. 116 (E.D. Tex., Jan. 21, 2014) granted defendants’ motion on the pleadings that the asserted claims were invalid under section 101. The patent-at-issue was “directed to a system which facilitates sales from an inventory of the selling entity.” The court found claim 1 was an “abstract idea of inventory-based selling” and could be performed “by a human, mentally or with pencil and paper.” The abstract idea was not limited or otherwise tied down because claim 1 allegedly lacked the alleged logic rules (or “solvers”); required a “general purpose computer”; and only performed “mere manipulation or reorganization of data . . . [which did] not satisfy the transformative prong.” The dependent claims were cast away as “token post-solution activity” because they were allegedly conventional steps. This case is akin to a prior Eastern District of Texas case we previously analyzed.
A different conclusion, though, was recently found in TQP Dev., LLC v. Intuit Inc., 12-180, 2014 U.S. Dist. LEXIS 20077 (E.D. Tex. Feb. 19, 2014). In that case, the patent was directed at encrypting and decrypting data, which in general includes, inputting a seed value to generate pseudo-random key values that are produced based on predetermined characteristic (i.e., number of blocks) of the data being transmitted. The defendants argued that the patented technology (i) can be performed by a human using pen and paper, (ii) is not tied to a particular machine or apparatus, (iii) only transforms data from one form into another, not one article into another article, and (iv) would preclude all practical applications of the algorithm.
Denying the first argument, the court found that the claim was limited in use because: it employs functionally identical pseudo-random number generators to create key values and triggers key value changes based on a specific predetermined characteristic (the number of blocks). Because of these limitations, the court held that “the preemptive effect of the claim is very much diminished” and “is a far cry from something that could be fairly characterized as a basic tool of scientific and technological work.” (internal quotations and citation omitted) The court, however, determined that whether “a pseudo-random number generator can be devised that relies on an algorithm that can be performed mentally, or readily with pencil and paper,” was an issue of fact. Finally, the court distinguished prior Federal Circuit cases that held patents invalid where “a computer was used to perform steps that are commonly performed without a computer” because the claim involves “a way of making computer communication itself more effective by making that communication more secure.” Despite there being no “physical transformation of matter . . . a specific system for modifying data . . . has equally concrete and valuable effects in the field of electronic communications.”
Gibbons will continue to monitor Section 101 cases and the Supreme Court’s anticipated CLS Bank Int’l decision.