alice in wonderland...alice in wonderland court decisions for 35 u.s.c. 101 patentability after the...

Alice In Wonderland

Court Decisions for 35 U.S.C. § 101 Patentability

After the Supreme Court’s Alice Decision

A Practitioner’s Guide

Edited By:

Jonathan (Yoni) J. Torchman, Esq.

Hui-Shan Sandra King, Pharm. D., Esq.

Patrick G. Wamsley, M.E., Esq.

INTRODUCTION

After the United States Supreme Court decision in Alice Corporations Pty. Ltd. v. CLS Bank International, decided on June 19, 2014 corporations and patent practitioners all over the world have been left in a weary state. Unsure of what the courts will now uphold as patentable under 35 U.S.C. § 101 practitioners have been struggling to make recommendations to clients. This guide includes a compilation of court cases both Appellate and District. This guide is intended as a reference to help make precise decisions on patentability.

See the bookmarks on the left for fast viewing of different cases as well as patents.

Appellate Decisions Included is first a summary of the Federal court decisions made in the past several years. Claim language and interpretation of the Supreme Court’s now two prong model is attached. The text of the full Federal decisions is presented as a reference and condensed guide.

District Court Decisions Following the text of the Federal decisions is a summary of several district court decisions including an image of the patents as reference.

This is intended as a reference for practitioners to use to assess the Alice implications to their relevant technologies and arts. This is a reference which is necessary for all practitioners and CEO’s under Alice.

www.krameramado.com Intellectual Property Law

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TABLE OF CONTENTS

Federal Decisions

University of Utah v. Ambry Genetics

Buysafe v. Google

DDR Holdings v. Hotels.com

Digitech Image v. Electronics For Imaging

I/P Engine v. AOL

Planet Bingo v. VKGS

Ultramercial v. Hulu

District Court Decisions

Enfish, LLC v. Microsoft Corporation

Every Penny Counts, Inc. v. Wells Fargo Bank, N.A.

Genetic Technologies Ltd. v. Bristol-Myers Squibb Company

Eclipse Ip LLC v. Mckinley Equipment Corporation

Dietgoal Innovations Llc v. Bravo Media LLC (Division Of Nbc Universal Media, LLC)

Genetic Technologies Limited v. Laboratory Corporation Of America Holdings

Amdocs (Israel) Limited v. Openet Telecom, Inc. Et Al.

Cmg Financial Services, Inc. v. Pacific Trust Bank, F.S.B.


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Intellectual Ventures I LLC v. Manufacturers And Traders Trust

Company Joao Bock Transaction Systems, LLC, v. Jack Henry &

Associates, Inc. Walker Digital, LLC. v. Google, Inc. Ameranth, Inc. v. Genesis Gaming Solutions, Inc. Card Verification Solutions, LLC. v. Citigroup Inc Cal. Inst. Of Tech. v. Hughes Communs., Inc.


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APPELLATE DECISIONS

The CAFC which decides federal patent appeals for the United States, has so far invalidated nearly all 35 U.S.C. § 101 patents on appeal. The court in DDR Holdings was one of the only cases so far involving Alice which determined the patent to be significantly more.


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Cases Claimed Invention Eligible(Page Number) Abstract

Idea?Abstract Idea Additional Features Considered Siginificantly

More?under Alice?

Digitech Image Techs. LLC v. Electronics for

Imaging Inc.

"A method of generating a device profil that describes properties of a device in a digital image reproduction system for capturing transforming or rendering an image" (1347)

Y It describes a process of organizing information through mathematical correlations and is not tied to a specific structure or machine.(1350)

Not considered. Not considered.

N

I/P Engine8/15/14

Y Which filters information for relevance to a user’squery using combined content and collaborative data, see U.S. Patent No. 6,314,420 col.28 ll.1-15; U.S. Patent No. 6,775,664 col.27 ll.27-37, does not pass muster under section 101.(6 - 2nd opinion)

The asserted claims do not meet subject matter eligibility requirements because they do not “improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.”Alice, 134 S. Ct. at 2359. To the contrary, the use of search engines was well-established and the clear advantages of combining content-based and collaborative filtering were widely recognized at the time of the claimed invention. See ante at 8-9. (6 - 2nd opinion)

N N

Planet Bingo 8/26/14

The claims at issue recite computer-aided methods and systems for managing the game of bingo. Generally, the claims recite storing a player's preferred sets of bingo numbers; retrieving one such set upon demand, and playing that set; while simultaneously tracking the player's sets, tracking

Y The claims here recite methods and systems for “managing a game of Bingo.” ... This is similar to the kind of “organizing human activity” at issue in

The '646 and '045 patents do not claim the “accounting program,” “ticket program,” and “verification program” that Planet Bingo identifies in its briefs. Instead, the claims recite a program that is used for the generic functions of

N N

CAFC Court Cases Involving Alice

Prong One Prong Two

A search engine system comprising: a systemfor scanning a network to make a demand search for informons relevant to a query from an individual user; a content-based filter system for receiving the informons from the scanning system and for filtering the informons on the basis of applicable content profile data for relevance to the query;and a feedback system for receiving collaborative feedback data from system users relative to informons considered by such users; the filter system combining pertaining feedback data from the feedback system with the content profile data in filtering each informon for relevance to the query.

A search system comprising: a scanning system for searching for information relevant to a query associated with a first user in a plurality of users; a feedback system for receiving information found to be relevant to the query by other users;and a content-based filter system for combining the information from the feedback system with the information from the scanning system and for filtering the combined information for relevance to at least one of the query and the first user. (4)

simultaneously tracking the player s sets, tracking player payments, and verifying winning numbers.(1)

human activity at issue in Alice… these claims are directed to the abstract idea of “solv[ing a] tampering problem and also minimiz[ing] other security risks” during bingo ticket purchases. This is similar to the abstract ideas of “risk hedging” during “consumer transactions,” (2)

that is used for the generic functions of storing, retrieving, and verifying a chosen set of bingo numbers against a winning set of bingo numbers. And, as was the case in Alice, “the function performed by the computer at each step of the process is ‘[p]urely conventional.’(2)

BuySAFE, Inc. 9/3/14

Receiving, by at least one computer applicationprogram running on a computer of a safe transaction service provider, a request from afirst party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online commercial transaction;processing, by at least one computer application program running on the safe transaction service provider computer, the request by underwriting the first party in order to provide the transaction performance guaranty service to the first party,...(1352)

Y The claims are squarely about creating a contractual relationship-- a 'transaction performance guaranty' -- that is beyond question of ancient lineage.(1355)

"Computer receives a request for a guarantee and transmits an offer of guarantee in return."(1355)

N N


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More?under Alice?

Ultramercial 11/14/14 2014

Claim 1 includes eleven steps for displaying an advertisement in exchange for access to copyrighted media. Without purporting to construe the claims, as the district court did not, the steps include: 1) receiving copyrighted media from a content provider; 2) selecting an after consulting an activity log to determine whether the ad has been played lass than a certain number of times; 3) offering the media for sale on the internet; 4) restricting public access to the media; 5) offering the media to the consumer in exchange for watching the selected ad; 6) receiving a request to view the ad from the consumer; 7) facilitating diplay of the ad; 8) allowing the consumer access to the media; 9) allowing the consumer access to the media if the ad is interactive; 10) updating the activity log; and 11) receiving payment from the sponsor of the ad(5)

Y The process of receiving copyrighted media, selecting an ad, offering the media in exchange for watching the selected ad, displaying the ad, allowing the consumer access to the media, and receiving payment from the sponsor of the ad all describe an abstract idea, devoid of a concrete or tangible application.(5)

The claims simply instruct the practitioner to implement the abstract idea with routine, conventional activity. None of these eleven individaul steps, viewed "both individually and 'as an ordered combination,' transmform the nature of the claim into paten-eligible subject matter. the majority of those steps comprise the abstract concept of offering media content in exchange for vewing an advertisement.Adding routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Intentet does not transform an...

N N

DDR Holdings 12/5/14 2014

Y As an initial matter, it is true that the claims here are similar to the claims in the cases discussed above in the sense that the claims involve both a computer and the Internet. But these claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer

Y YAn e-commerce outsourcing system comprising:a) a data store including a look and feel description associated with a host web page having a link correlated with a commerce object; andb) a computer processor coupled to the data store and in communication through the Internet with the host web page and programmed, upon receiving an indication that the link has been activated by a visitor computer in Internet communication with the host web page, to serve a composite web page to the visitor computer wit[h] a look and feel based on the look and feel description in the data store and with content based on the commerce object associated wit[h] the link.(3)

A system useful in an outsource provider serving web pages offering commercial opportunities, the system comprising:(a) a computer store containing data, for each of a plurality of first web pages, defining a plurality of

The ’399 patent’s claims are different enough in substance from those in Ultramercial because they do not broadly and generically claim “use of the Internet” to perform an abstract business practice (with insignificant added ivity). Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink. Instead of the computer network operating in its normal, expected manner by sending the website visitor to the third-party website that appears to be connected with the clicked advertisement, the claimed system generates and directs the visitor to the abovedescribed hybrid

Prong TwoProng One


pnetworks.(20)

BRCA1- & BRCA212/17/14 2014

Y Allowing a patent on the comparison step could impede a great swath of research relating to the BRCA genes, and it is antithetical to the patent laws to allow these basic building blocks of scientific research to be monopolized.

N NA method for screening germline of a human subject for an alteration of a BRCA1 gene which comprises comparing germline sequence of a BRCA1 gene or BRCA1 RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample with germline sequences of wild-type BRCA1 gene, wild-type BRCA1 RNA or wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject[,]

A method for screening germline of a human subject for an alteration of a BRCA1 gene which com prises comparing germline sequence of a BRCA1 gene or BRCA1 RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample with germline sequences of wild-type BRCA1 gene, wild-type BRCA1 RNA or wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject[,](10)

There must be a further inventive concept to take the claim into the realm of patent-eligibility. Id. at 2355. The second paragraph of claim 7 describes the way in which the sequences are compared: they are compared by 1) hybridizing a BRCA gene probe and 2) detecting the presence of a hybridization product. Similarly, claim 8 requires 1) amplification of the BRCA1 gene and 2) sequencing of the amplified nucleic acids.

The non-patent-ineligible elements of claims 7 and 8 do not add “enough” to make the claims as a whole patent- eligible. The district court found, and Myriad does not challenge, that the elements of the second paragraphs of claims 7 and 8 “set forth well-understood, routine and conventional activity engaged in by scientists at the time of Myriad’s patent applications.”(16)

p y p g g p yvisually perceptible elements, which visually perceptible elements correspond to the plurality of first web pages;(5)

yweb page that presents product information from the third-party and visual “look and feel” elements from the host website. When the limitations of the ’399 patent’s asserted claims are taken together as an ordered combination, the claims recite an invention that is not merely the routine or conventional use of the Internet.


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More?under Alice?

Content Extraction and Transmission LLC v. Wells Fargo

Bank12/23/14 2014

A method of processing information from a diversity of types of hard copy documents, said method comprising the steps of:(a) receiving output representing a diversityof types of hard copy documents from an automated digitizing unit and storing information from said diversity of types of hard copy documents into a memory, said information not fixed from one document to the next, said receiving step not preceded by scanning, via said automated digitizing unit, of a separate document (4)

Y The claims of the asserted patents are drawn to the abstract idea of 1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory. The concept of data collection, recognition, and storage is undisputedly well-known. Indeed, humans have always performed these functions.(7)

CET’s claims merely recite the use of this existing scanning and processing technology to recognize and store data from specific data fields such as amounts, addresses, and dates.See id. There is no “inventive concept” in CET’s use of a generic scanner and computer to perform well-understood, routine, and conventional activities commonly used in industry. See Alice, 134 S. Ct. at 2359. At most, CET’s claims attempt to limit the abstract idea of recognizing and storing information from hard copy documents using a scanner and a computer to a particular technological environment. Such a limitation has been held insufficient to save a claim in this context.(9)

N N


Prong One Prong Two


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United States Court of Appeals for the Federal Circuit

______________________

IN RE BRCA1- AND BRCA2-BASED HEREDITARY CANCER TEST PATENT LITIGATION

- - - - - - - - - - - - - - - - - - - - - - -

UNIVERSITY OF UTAH RESEARCH FOUNDATION, THE TRUSTEES OF THE UNIVERSITY OF PENNSYLVANIA, HSC

RESEARCH AND DEVELOPMENT LIMITED PARTNERSHIP, ENDORECHERCHE, INC., AND

MYRIAD GENETICS, INC., Plaintiffs-Appellants,

v.

AMBRY GENETICS CORPORATION, Defendant-Appellee.

______________________

2014-1361, -1366 ______________________

Appeals from the United States District Court for the

District of Utah in Nos. 2:13-cv-00640-RJS and 2:14-md-02510-RJS, Judge Robert J. Shelby.

______________________

Decided: December 17, 2014 ______________________


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UNIVERSITY OF UTAH RESEARCH v. AMBRY GENETICS CORPORATION

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JONATHAN E. SINGER, Fish & Richardson P.C., of Min-neapolis, Minnesota, argued for plaintiffs-appellants. With him on the brief were DEANNA J. REICHEL; and GEOFF D. BIEGLER, of San Diego, California. Of counsel on the brief were DAVID G. MANGUM, MICHAEL R. MCCARTHY, KRISTINE E. JOHNSON, and C. KEVIN SPEIRS, Parsons Behle & Latimer, of Salt Lake City, Utah.

WILLIAM G. GAEDE, McDermott Will & Emery LLP, of

Menlo Park, California, argued for defendant-appellee. With him on the brief were ERIC W. HAGEN and JAMES W. HILL; M. MILLER BAKER and DANIEL K. GREENE, of Wash-ington, DC, and JOHN C. LOW, of Houston, Texas.

SANDRA S. PARK, American Civil Liberties Union

Foundation of New York, New York for amici curiae. With her on the brief was LENORA M. LAPIDUS. Of counsel on the brief was BARBARA JONES, AARP Foundation Litigation of Pasadena, California.

______________________

Before PROST, Chief Judge, CLEVENGER and DYK, Circuit Judges.

DYK, Circuit Judge.

Plaintiffs are the University of Utah Research Foun-dation, The Trustees of the University of Pennsylvania, HSC Research and Development Limited Partnership, Endorecherche, Inc., and Myriad Genetics, Inc. (collective-ly “Myriad”). Myriad owns U.S. Patent No. 5,753,441 (“the ’441 patent”), U.S. Patent No. 5,747,282 (“the ’282 patent”), and U.S. Patent No. 5,837,492 (“the ’492 pa-tent”), which cover compositions of matter and methods relating to the BRCA1 and BRCA2 genes. Defendant is Ambry Genetics Corporation (“Ambry”), a company that


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sells medical kits designed to test for the presence of gene mutations linked to breast and ovarian cancer.

Myriad sought to, inter alia, enjoin alleged infringe-ment of six claims of three patents: claims 7 and 8 of the ’441 patent, claims 16 and 17 of the ’282 patent, and claims 29 and 30 of the ’492 patent. Myriad appeals from a decision of the District Court for the District of Utah denying Myriad’s motion for preliminary injunction. Because we hold that these claims are directed to ineligi-ble subject matter under 35 U.S.C. § 101, we affirm and remand.

BACKGROUND The Supreme Court has addressed some of the pa-

tents at issue here in its June 13, 2013, opinion in Associ-ation for Molecular Pathology v. Myriad, 133 S. Ct. 2107 (2013) (“Myriad”), as has our court in Association for Molecular Pathology v. United States Patent and Trade-mark Office, 653 F.3d 1329 (Fed. Cir. 2011), vacated, 132 S. Ct. 1794 (2012), and Association for Molecular Patholo-gy v. Myriad, 689 F.3d 1303 (Fed. Cir. 2012), aff’d in part, rev’d in part, 133 S. Ct. 2107 (2013). This case involves claims of those patents not previously considered by the Supreme Court or by this court. A brief summary of the relevant factual background follows.

In the 1990s, Myriad and its partners discovered the precise locations and sequences of the BRCA1 and BRCA2 genes, mutations of which are linked to hereditary breast and ovarian cancers. By discovering the particular loca-tions and sequences of the genes, Myriad was able to determine the typical sequences of the genes most often found in humans (i.e., the “wild-type” sequence for each), as well as mutations, which depart from the two wild-type sequences. Some mutations are harmless, but other mutations are correlated with an increased likelihood of


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developing particular cancers. By testing for the presence of these mutations, doctors can determine whether the patient is particularly prone to developing breast or ovarian cancer. Myriad’s efforts to commercialize its discovery through the sale of medical test kits have been successful; to date, Myriad has earned roughly $2 billion in revenue from the sale of the tests.

The Supreme Court, in its Myriad decision, held that claims of the ’282 patent directed to isolated DNA were drawn to patent-ineligible subject matter because the isolated DNA strands, which are naturally occurring and separated from the rest of the human genome, were natural phenomena. See Myriad, 133 S. Ct. at 2117–19. Thereafter, generic competitors, including Ambry, entered the market for medical kits designed to test for suscepti-bility to particular kinds of cancer.

On July 9, 2013, Myriad sued Ambry in the United States District Court for the District of Utah and, on that same day, requested a preliminary injunction. Myriad’s amended complaint alleges infringement of sixty-six claims across fifteen different patents. The preliminary injunction motion asserted, inter alia, the six claims listed above.1

On March 10, 2014, the district court denied Myriad’s motion for preliminary injunction. In a detailed, 106-page opinion, the court found that Myriad was unlikely to

1 Myriad originally sought to enjoin infringement of four additional claims: claims 2 and 4 of U.S. Patent No. 5,654,155 (“the ’155 patent”), claim 5 of U.S. Patent No. 6,951,721 (“the ’721 patent”), and claim 4 of U.S. Patent No. 6,033,857 (“the ’857 patent”). Myriad no longer pursues those claims as grounds for the preliminary injunction.


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succeed on the merits because the claims were likely drawn to ineligible subject matter, although it found that Myriad would likely suffer irreparable harm from the denial of the injunction and the public interest was in equipoise. The court found that the balance of hardships slightly favored Ambry.

The four composition of matter claims now on appeal are directed to primers, which are “short, synthetic, single-stranded DNA molecule[s] that bind[] specifically to . . . intended target nucleotide sequence[s].” J.A. 13. The court held these were likely patent ineligible because they claim so-called products of nature—that is, they claim the same nucleotide sequence as naturally occur-ring DNA.

The two method claims now on appeal involve com-parisons between the wild-type BRCA sequences with the patient’s BRCA sequences. The court reasoned that these method claims were likely ineligible because “the only ‘inventive concepts’ in the[] [m]ethod [c]laims are the patent ineligible naturally occurring BRCA1 and BRCA2 sequences themselves.” J.A. 93. As found by the district court, “the other steps set forth in the method claims are conventional activities that were well-understood and uniformly employed by those working with DNA at the time Myriad applied for its patents . . . .” J.A. 94.

We have jurisdiction pursuant to 28 U.S.C. §§ 1292 and 1295. We review the district court’s denial of a motion for preliminary injunction for abuse of discretion, but we review legal issues relating to that denial de novo. Titan Tire Corp. v. Case New Holland, Inc., 566 F.3d 1372, 1375 (Fed. Cir. 2009); Globetrotter Software, Inc. v. Elan Computer Grp., Inc., 236 F.3d 1363, 1367 (Fed. Cir. 2001). The ultimate question of patent eligibility under


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§ 101 is an issue of law, reviewed de novo. Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012).

DISCUSSION I

We consider separately the asserted composition of matter claims and the asserted method claims. We ad-dress first the composition of matter claims (the “primer” claims). Claim 16 of the ’282 patent is representative. It is directed to:

A pair of single-stranded DNA primers for deter-mination of a nucleotide sequence of a BRCA1 gene by a polymerase chain reaction, the sequence of said primers being derived from human chro-mosome 17q, wherein the use of said primers in a polymerase chain reaction results in the synthesis of DNA having all or part of the sequence of the BRCA1 gene.

’282 patent col. 155 ll. 23–29. Claim 17 of the ’282 patent and claims 29 and 30 of the ’492 patent are similar to claim 16 of the ’282 patent.

Our analysis of the primer claims under § 101 is guid-ed by the Supreme Court’s Myriad decision. In its 2013 Myriad decision, the Supreme Court reviewed claims 1, 2, 5, 6, and 7 of the ’282 patent, claim 1 of U.S. Patent No. 5,693,473, and claims 1, 6, and 7 of the ’492 patent. Myriad, 133 S. Ct. at 2113 n.2. Six of the nine claims covered isolated DNA molecules, which are DNA strands that have been separated from the rest of the human genome. The remaining claims, claims 2 and 7 of the ’282 patent and claim 7 of the ’492 patent, covered isolated cDNA molecules, which are synthetically created DNA molecules consisting only of exons—DNA nucleotides that


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code for amino acids. Myriad, 133 S. Ct. at 2111; Myriad, 689 F.3d at 1329 n.12.

The Court held ineligible the isolated DNA claims, explaining: “Myriad did not create or alter any of the genetic information encoded in the BRCA1 and BRCA2 genes. The location and order of the nucleotides existed in nature before Myriad found them.” Myriad, 133 S. Ct. at 2116. Rather, “Myriad’s principal contribution was uncovering the precise location and genetic sequence of the BRCA[ genes].” Id. Even if Myriad made a “[g]roundbreaking, innovative, or even brilliant discov-ery,” id. at 2117, that is not enough. With respect to the isolated DNA, “Myriad did not create anything. To be sure, it found an important and useful gene, but separat-ing that gene from its surrounding genetic material is not an act of invention.” Id. The Court held that “[g]enes and the information they encode are not patent eligible under § 101 simply because they have been isolated from the surrounding genetic material.” Id. at 2120.

The cDNA claims, however, were held to be patent el-igible under § 101. cDNA is an exon-only sequence, with no introns, that does not occur in nature, “except insofar as very short series of DNA may have no intervening introns to remove when creating cDNA.” Id. at 2119. To the extent that the exon-only sequence does not exist in nature, the lab technician “unquestionably creates some-thing new when cDNA is made.” Id.

The primers before us are not distinguishable from the isolated DNA found patent-ineligible in Myriad and are not similar to the cDNA found to be patent-eligible. Primers necessarily contain the identical sequence of the BRCA sequence directly opposite to the strand to which they are designed to bind. They are structurally identical to the ends of DNA strands found in nature.


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Contrary to Myriad’s argument, it makes no differ-ence that the identified gene sequences are synthetically replicated. As the Supreme Court made clear, neither naturally occurring compositions of matter, nor syntheti-cally created compositions that are structurally identical to the naturally occurring compositions, are patent eligi-ble. Id. at 2117. After all, as the district court in the earlier Myriad case and our opinion in Myriad made clear, isolated DNA is routinely synthetically created. See Ass’n for Molecular Pathology v. U.S. Patent and Trade-mark Office, 702 F. Supp. 2d 181, 217 (S.D.N.Y. 2010) (construing “isolated DNA” to “include both DNA originat-ing from the cell as well as DNA synthesized through chemical or heterologous biological means”); Myriad, 689 F.3d at 1313 (explaining that “[i]solated DNA has been cleaved . . . or synthesized to consist of just a fraction of a naturally occurring DNA molecule” and that “isolated DNA results from human intervention to cleave or syn-thesize a discrete portion of a native chromosomal DNA”).

Myriad argues that primers are in fact not naturally occurring because single-stranded DNA cannot be found in the human body. But, as the Supreme Court made clear, “separating [DNA] from its surrounding genetic material is not an act of invention.” Myriad, 133 S. Ct. at 2117. The Supreme Court held ineligible claims directed to segments as short as 15 nucleotides, the same length as the primer claims at issue here, suggesting that even short strands identical to those found in nature are not patent eligible. Compare ’492 patent col. 170 ll. 32–38, with ’282 patent col. 153 ll. 66–67. This situation is similar to In re Roslin Institute (Edinburgh), 750 F.3d 1333, 1337 (Fed. Cir. 2014). There, we held unpatentable a genetic copy of a naturally occurring organism—Dolly, a cloned sheep—because she “is an exact genetic replica of another sheep and does not possess ‘markedly different


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characteristics from any farm animals found in nature.’” Id. (quoting Diamond v. Chakrabarty, 447 U.S. 303, 310 (1980)) (punctuation omitted). Myriad also argues that the sequences, when extract-ed as primers, have a fundamentally different function than when they are part of the DNA strand. When part of the naturally occurring genetic sequence, DNA “stores the biological information used in the development and func-tioning of all known living organisms,” but when isolated as a primer, the DNA fragment “prime[s], i.e., . . . serve[s] as a starting material for a DNA polymerization pro-cess.” Appellants’ Br. 50–51. In fact, the naturally occur-ring genetic sequences at issue here do not perform a significantly new function. Rather, the naturally occur-ring material is used to form the first step in a chain reaction—a function that is performed because the primer maintains the exact same nucleotide sequence as the relevant portion of the naturally occurring sequence. One of the primary functions of DNA’s structure in nature is that complementary nucleotide sequences bind to each other. It is this same function that is exploited here—the primer binds to its complementary nucleotide se-quence. Thus, just as in nature, primers utilize the innate ability of DNA to bind to itself.

We do not read the Supreme Court’s opinion in Myri-ad as conferring patent eligibility on composition of matter claims directed to naturally occurring DNA strands under such circumstances. A DNA structure with a function similar to that found in nature can only be patent eligible as a composition of matter if it has a unique structure, different from anything found in na-ture. Myriad, 133 S. Ct. at 2116–17 (citing Chakrabarty, 447 U.S. at 309–10). Primers do not have such a different structure and are patent ineligible.


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II We next address the two asserted method claims,

claims 7 and 8 of the ’441 patent. While we addressed some of the method claims of the ’441 patent in our Myri-ad decision, the Supreme Court did not address any method claims. See 133 S. Ct. at 2119.

Claim 7, revised to include the language of claim 1, from which it depends, provides:

A method for screening germline of a human sub-ject for an alteration of a BRCA1 gene which com-prises comparing germline sequence of a BRCA1 gene or BRCA1 RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample with germline se-quences of wild-type BRCA1 gene, wild-type BRCA1 RNA or wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject[,] wherein a germline nucleic acid sequence is com-pared by hybridizing a BRCA1 gene probe which specifically hybridizes to a BRCA1 allele to ge-nomic DNA isolated from said sample and detect-ing the presence of a hybridization product wherein a presence of said product indicates the presence of said allele in the subject.

’441 patent col. 155 ll. 16–25, 57–63. Claim 8, revised to include the language of claim 1,

from which it depends, provides: A method for screening germline of a human sub-ject for an alteration of a BRCA1 gene which com-


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prises comparing germline sequence of a BRCA1 gene or BRCA1 RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample with germline se-quences of wild-type BRCA1 gene, wild-type BRCA1 RNA or wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject[,] wherein a germline nucleic acid sequence is com-pared by amplifying all or part of a BRCA1 gene from said sample using a set of primers to produce amplified nucleic acids and sequencing the ampli-fied nucleic acids.

Id. col. 155 ll. 16–25, 64–67. Ambry argues that the method claims are ineligible

under “a straightforward application” of the Supreme Court decision in Mayo Collaborative Services v. Prome-theus Laboratories, Inc., 132 S. Ct. 1289 (2012). Appel-lee’s Br. 44.

In Mayo, the patentee had discovered the relationship between the level of a particular metabolite in a patient’s blood and whether a patient could and should safely be administered additional medication. Specifically, 6–TG metabolite in concentrations in excess of about 400 picomoles per 8x108 red blood cells risked toxicity, where-as concentrations of less than about 230 picomoles per 8x108 red blood cells risked ineffectiveness. Mayo, 132 S. Ct. at 1295. The asserted claims taught that doctors should test the metabolite levels of the patient and, if the patient’s metabolite concentration was less than the 230 picomoles floor, the doctor should increase the dosage; if the concentration was greater than the 400 picomoles cap,


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the doctor should decrease the dosage.2 The court reiter-ated that a bare recitation of the natural law was patent ineligible, id. at 1296–97, and then went on to consider “whether the claims do significantly more than simply describe these natural relations. To put the matter more precisely, do the patent claims add enough to their state-ments of the correlations to allow the processes they describe to qualify as patent-eligible processes that apply natural laws?” Id. at 1297 (emphases in original).

The Court found that the additional elements amounted to little more than a broad command to “apply

2 The patent claimed: A method of optimizing therapeutic efficacy for treatment of an immune-mediated gastrointesti-nal disorder, comprising: (a) administering a drug providing 6–thioguanine to a subject having said immune-mediated gastro-intestinal disorder; and (b) determining the level of 6–thioguanine in said subject having said immune-mediated gastroin-testinal disorder, wherein the level of 6–thioguanine less than about 230 pmol per 8x108 red blood cells indicates a need to increase the amount of said drug subse-quently administered to said subject and wherein the level of 6–thioguanine greater than about 400 pmol per 8x108 red blood cells indicates a need to decrease the amount of said drug subse-quently administered to said subject.

U.S. Patent No. 6,355,623 col. 20 ll. 10–20.


19


13

the law [of nature].” Id. Focusing on the “determining” step, the Court explained that “methods for determining metabolite levels were well known in the art” and that “scientists routinely measured metabolites as part of their investigations into the relationships between metabolite levels and efficacy and toxicity of [the drug].” Id. at 1297–98. Because the additional steps did little more than instruct the practitioners to apply the natural law in routine and conventional ways, the claim was patent ineligible. Id. at 1298.

Ambry argues that Mayo is directly on point because the method claims here, as there, simply identify a law of nature (the precise sequence of the BRCA genes, and comparisons of the wild-type BRCA sequences with cer-tain mutations of those gene sequences found in the test subject) and apply conventional techniques. We need not decide if Mayo is directly on point here because the meth-od claims before us suffer from a separate infirmity: they recite abstract ideas.

Laws of nature are not the only implicit exception to patentable subject matter identified by 35 U.S.C. § 101. Natural phenomena and abstract ideas are also not patentable. See Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014).

Recently in Alice the Supreme Court reiterated its two-step test to determine patent eligibility for any claims that allegedly encompass abstract ideas. First, “we determine whether the claims at issue are directed to [a] patent-ineligible concept[]. If so, we then ask, ‘what else is there in the claims before us?’” Id. at 2355 (quoting Mayo, 132 S. Ct. at 1296–97) (citations and punctuation omitted). That is, we next ask whether the remaining elements, either in isolation or combination with the other non-patent-ineligible elements, are sufficient to “‘trans-


20


14

form the nature of the claim’ into a patent-eligible appli-cation.” Id. at 2355 (quoting Mayo, 132 S. Ct. at 1297). Put another way, there must be a further “inventive concept” to take the claim into the realm of patent-eligibility. Id. at 2355.

Here, we treat separately the first paragraphs of claims 7 and 8, which describe the comparison of wild-type genetic sequences with the subject’s genetic sequence and correspond to the first step of Alice, and the second paragraphs, which describe the techniques to be used in making the comparisons and correspond to the second step of Alice.

We have already addressed the first paragraphs—the comparison step—in our own 2012 Myriad decision. Claims 7 and 8 at issue here depend from claim 1. Claim 1, which is the first paragraph of claims 7 and 8, is the comparison step.3 In our 2012 decision, we held that claim 1 was patent ineligible because it claimed an ab-

3 Claim 1 reads as follows: A method for screening germline of a human sub-ject for an alteration of a BRCA1 gene which com-prises comparing germline sequence of a BRCA1 gene or BRCA1 RNA from a tissue sample from said subject or a sequence of BRCA1 cDNA made from mRNA from said sample with germline se-quences of wild-type BRCA1 gene, wild-type BRCA1 RNA or wild-type BRCA1 cDNA, wherein a difference in the sequence of the BRCA1 gene, BRCA1 RNA or BRCA1 cDNA of the subject from wild-type indicates an alteration in the BRCA1 gene in said subject.

’441 patent, col. 155 ll. 15–25.


21


15

stract mental process of ‘comparing’ and ‘analyzing’ two gene sequences. Myriad, 689 F.3d at 1334. We found:

[The] claim thus recites nothing more than the abstract mental steps necessary to compare two different nucleotide sequences: one looks at the first position in a first sequence; determines the nucleotide sequence at that first position; looks at the first position in a second sequence; determines the nucleotide sequence at that first position; de-termines if the nucleotide at the first position in the first sequence and the first position in the sec-ond sequence are the same or different, wherein the latter indicates an alteration; and repeats the process for the next position.

Id. Here, under our earlier decision, the comparisons de-

scribed in the first paragraphs of claims 7 and 8 are directed to the patent-ineligible abstract idea of compar-ing BRCA sequences and determining the existence of alterations. The methods, directed to identification of alterations of the gene, require merely comparing the patient’s gene with the wild-type and identifying any differences that arise. ’441 patent col. 155 ll. 16–25. The number of covered comparisons is unlimited. The covered comparisons are not restricted by the purpose of the comparison or the alteration being detected. Because of its breadth, the comparison step covers detection of yet-undiscovered alterations, as well as comparisons for purposes other than detection of cancer. Even with respect to cancer, the comparisons are not limited to the detection of risk of breast or ovarian cancer. Similar concerns to the ones the Supreme Court expressed in Myriad with respect to isolated DNA exist here: allowing a patent on the comparison step could impede a great


22


16

swath of research relating to the BRCA genes, and it is antithetical to the patent laws to allow these basic build-ing blocks of scientific research to be monopolized. See Myriad, 133 S. Ct. at 2116; see also Gottschalk v. Benson, 409 U.S. 63, 64 (1972) (holding that a claim on an algo-rithm for converting binary-coded decimal numbers into pure binary numbers was not patent eligible because “[t]he claims were not limited to any particular art or technology, to any particular apparatus or machinery, or to any particular end use”).4 The first paragraphs in claims 7 and 8 are therefore unpatentable abstract ideas, as we held in Myriad. Having determined that the comparison steps of claims 7 and 8 are abstract ideas, we move to the second step of Alice and ask whether the particular mechanism for the comparisons added by claims 7 or 8 renders the claims patent-eligible. For this step, Alice dictates that we ask whether the remaining elements, either in isola-tion or combination with the other non-patent-ineligible elements, are sufficient to “‘transform the nature of the claim’ into a patent-eligible application.” Alice, 134 S. Ct. at 2355 (quoting Mayo, 132 S. Ct. at 1297). There must be a further inventive concept to take the claim into the realm of patent-eligibility. Id. at 2355. The second para-graph of claim 7 describes the way in which the sequences are compared: they are compared by 1) hybridizing a BRCA gene probe and 2) detecting the presence of a hybridization product. Similarly, claim 8 requires 1)

4 The preemptive nature of the claims is not amelio-rated even if we accept Myriad’s argument that other methods of comparison exist. If the combination of cer-tain routine steps were patent eligible, so too would different combinations of other routine steps.


23


17

amplification of the BRCA1 gene and 2) sequencing of the amplified nucleic acids.

The non-patent-ineligible elements of claims 7 and 8 do not add “enough” to make the claims as a whole pa-tent-eligible. The district court found, and Myriad does not challenge, that the elements of the second paragraphs of claims 7 and 8 “set forth well-understood, routine and conventional activity engaged in by scientists at the time of Myriad’s patent applications.” J.A. 93 (internal capital-ization removed). Moreover, “[a]ny scientist engaged in obtaining the sequence of a gene in a patient sample would rely on these techniques.” J.A. 95. Myriad does not challenge the district court’s finding that “the claims contain no otherwise new process for designing or using probes, primers, or arrays beyond the use of BRCA1 and BRCA2 sequences in those processes.” Appellants’ Rep. Br. 5 (quoting J.A. 93–94) (alterations omitted). The second paragraphs of claims 7 and 8 do nothing more than spell out what practitioners already knew—how to compare gene sequences using routine, ordinary tech-niques. Nothing is added by identifying the techniques to be used in making the comparison because those compari-son techniques were the well-understood, routine, and conventional techniques that a scientist would have thought of when instructed to compare two gene sequenc-es. Myriad argues that these claims should be patent eligible because they are similar to claim 21 of the ’441 patent, which Judge Bryson suggested was patent eligible in his separate opinion in our 2012 Myriad decision. Myriad, 689 F.3d at 1349. There, Judge Bryson indicated that, “[a]s the first party with knowledge of the sequenc-es, Myriad was in an excellent position to claim applica-tions of that knowledge. Many of its unchallenged claims are limited to such applications.” Myriad, 689 F.3d at


24


18

1349 (Bryson, J., concurring in part and dissenting in part) (citing claims found in the ’441 patent, the ’492 patent, and the ’282 patent). The Supreme Court ap-proved of Judge Bryson’s general suggestion, directly quoting him for the propositions that “[a]s the first party with knowledge of the BRCA1 and BRCA2 sequences, Myriad was in an excellent position to claim applications of that knowledge,” and that “[m]any of its unchallenged claims are limited to such applications.” Myriad, 133 S. Ct. at 2120. But, nowhere in the opinion did the Court express approval of the individual claims identified by Judge Bryson, much less of claim 21 in particular. In-deed, no method claim was even before the Supreme Court. Id. at 2119. Even if claim 21 of the ’441 patent were patent eligi-ble—a question about which we express no view—claim 21 is qualitatively different from the method claims at issue here. Claim 21 claims a method of detecting altera-tions in which the alterations being detected are expressly identified in the specification by tables 11 and 12.5 These

5 Claim 21 (revised to include the language of claim 20, from which it depends) provides:

A method for detecting a germline alteration in a BRCA1 gene, said alteration selected from the group consisting of the alterations set forth in Ta-bles 11 and 12 which comprises analyzing a se-quence of the BRCA1 gene or BRCA1 RNA from a human sample or analyzing the sequence of BRCA1 CDNA made from mRNA from said sam-ple[,] wherein a germline alteration is detected by hy-bridizing a BRCA1 gene probe which specifically hybridizes to an allele of one of said alterations to


25


19

tables expressly identify ten predisposing mutations of the BRCA1 gene sequence discovered by the patentees. ’441 patent col. 157 ll. 11–17, col. 56 ll. 50–59, col. 60 ll. 7–18. Thus, the detection in claim 21 is limited to the particular mutations the inventors discovered: detecting ten specific mutations from the wild-type, identified as “[p]redisposing [m]utations,” for the specific purpose of identifying increased susceptibility to specific cancers. ’441 patent col. 60 ll. 8–19. Claims 7 and 8 are signifi-cantly broader and more abstract, as they claim all com-parisons between the patient’s BRCA genes and the wild-type BRCA genes. ’441 patent col. 155 ll. 16–63. The first paragraphs of claims 7 and 8, as we held in our 2012 Myriad opinion, claim abstract comparisons. We hold today that the second paragraphs recite only routine and conventional steps. The claims, therefore, are directed to patent-ineligible subject matter.

CONCLUSION The claims on appeal are directed to ineligible subject

matter in violation of 35 U.S.C. § 101. Therefore, the district court properly denied Myriad’s motion for prelim-inary injunction. We remand to the district court for an entry of an order consistent with this opinion.

AFFIRMED AND REMANDED COSTS

Costs to appellee.

RNA isolated from said human sample and detect-ing the presence of a hybridization product, wherein the presence of said product indicates the presence of said allele in the sample.

’441 patent col. 157 ll. 11–24.


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______________________

BUYSAFE, INC., Plaintiff-Appellant,

v.

GOOGLE, INC., Defendant-Appellee.

______________________

2013-1575 ______________________

Appeal from the United States District Court for the

District of Delaware in No. 11-CV-1282, Judge Leonard P. Stark.

______________________

Decided: September 3, 2014 ______________________

STEPHEN M. HANKINS, Schiff Hardin LLP, of San

Francisco, California, argued for plaintiff-appellant. With him on the brief was ALISON L. MADDEFORD. Of counsel on the brief were BRIAN D. SIFF and JAMES E. HANFT, of New York, New York, and DONALD E. STOUT, Antonelli, Terry, Stout & Kraus, LLP, of Arlington, Virginia.

ANDREW J. PINCUS, Mayer Brown, LLP, of Washing-

ton, DC, argued for defendant-appellee. With him on the brief were BRIAN A. ROSENTHAL, ANN MARIE DUFFY, and PAUL W. HUGHES. Of counsel on the brief were A. JOHN P.


27

BUYSAFE, INC. v. GOOGLE, INC. 2

MANCINI and ALLISON LEVINE STILLMAN, of New York, New York.

______________________

Before TARANTO and HUGHES, Circuit Judges.* TARANTO, Circuit Judge. This case involves claims directed to creating familiar commercial arrangements by use of computers and net-works. The district court held the asserted claims invalid because they cover subject matter ineligible for patenting under 35 U.S.C. § 101. buySAFE, Inc. v. Google, Inc., 964 F. Supp. 2d 331 (D. Del. 2013). Under the approach to section 101 affirmed by the Supreme Court in the recent decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), the district court’s holding is correct.

BACKGROUND U.S. Patent No. 7,644,019, owned by buySAFE, Inc.,

claims methods and machine-readable media encoded to perform steps for guaranteeing a party’s performance of its online transaction. In 2011, buySAFE sued Google, Inc., in the District of Delaware, alleging that Google infringes claims 1, 14, 39, and 44 of the ’019 patent. Google moved for judgment on the pleadings, arguing that the asserted claims are invalid under 35 U.S.C. § 101.

Claim 1 is an independent method claim, with claim 14 dependent on it. Claim 39 is an independent claim to a computer-readable medium encoded with instructions to carry out the Claim 1 method, with claim 44 a dependent claim bearing the same relation to claim 39 as claim 14 does to claim 1. The parties agreed that the analysis of

* Randall R. Rader, who retired from the position of Circuit Judge on June 30, 2014, was a member of the panel but did not participate in this decision.


28


claims 1 and 14 would control the analysis of claims 39 and 44, so we discuss only the method claims here.

Claim 1 recites a method in which (1) a computer op-erated by the provider of a safe transaction service re-ceives a request for a performance guarantee for an “online commercial transaction”; (2) the computer pro-cesses the request by underwriting the requesting party in order to provide the transaction guarantee service; and (3) the computer offers, via a “computer network,” a transaction guaranty that binds to the transaction upon the closing of the transaction. Specifically:

1. A method, comprising: receiving, by at least one computer application program running on a computer of a safe transac-tion service provider, a request from a first party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online com-mercial transaction; processing, by at least one computer application program running on the safe transaction service provider computer, the request by underwriting the first party in order to provide the transaction performance guaranty service to the first party, wherein the computer of the safe transaction service provider offers, via a computer network, the transaction performance guaranty service that binds a transaction performance guaranty to the online commercial transaction involving the first party to guarantee the performance of the first party following closing of the online commercial transaction.

Claim 14 narrows the claim 1 method to a guaranty “in one form of: a surety bond; a specialized bank guaranty; a


29


specialized insurance policy; and a safe transaction guar-anty.” The district court granted Google’s motion for judg-ment on the pleadings, holding that the asserted claims fall outside section 101. The court concluded that the patent “describes a well-known, and widely-understood concept—a third party guarantee of a sales transaction—and then applied that concept using conventional comput-er technology and the Internet.” buySAFE, 964 F. Supp. 2d at 335–36. It makes no difference, the court added, that the guarantee of the underlying transaction attaches only when that transaction closes. Id. at 336. Moreover, the claimed computer “is used only for processing—a basic function of any general purpose computer.” Id. Finally, the court explained, the claims “do not require specific programming” and are not “tied to any particular ma-chine.” Id. In these circumstances, the court ruled, the claims are outside section 101. We have jurisdiction over buySAFE’s appeal under 28 U.S.C. § 1295(a)(1). We review the grant of judgment on the pleadings de novo. See Allergan, Inc. v. Athena Cos-metics, Inc., 640 F.3d 1377, 1380 (Fed. Cir. 2011); M.R. v. Ridley School Dist., 744 F.3d 112, 117 (3d Cir. 2014).

DISCUSSION The Supreme Court has “interpreted § 101 and its

predecessors . . . for more than 150 years” to “‘contain[] an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.’” Alice, 134 S. Ct. at 2354, quoting Association for Molecu-lar Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013) (further internal quotation marks and brack-ets omitted). Under that interpretation, laws of nature, natural phenomena, and abstract ideas, no matter how “[g]roundbreaking, innovative, or even brilliant,” Myriad, 133 S. Ct. at 2117, are outside what the statute means by “new and useful process, machine, manufacture, or com-


30


position of matter,” 35 U.S.C. § 101. See Alice, 134 S. Ct. at 2357; Myriad, 133 S. Ct. at 2116, 2117.

In identifying the three types of excluded matter, the Court has explained that the underlying “concern” is “‘that patent law not inhibit further discovery by improp-erly tying up the future use’ of these building blocks of human ingenuity.” Alice, 134 S. Ct. at 2354, quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1301 (2012). The Court has invoked the concern to justify and inform understanding of, but not to identify section 101 exclusions beyond, the three recog-nized categories.

In defining the excluded categories, the Court has ruled that the exclusion applies if a claim involves a natural law or phenomenon or abstract idea, even if the particular natural law or phenomenon or abstract idea at issue is narrow. Mayo, 132 S. Ct. at 1303. The Court in Mayo rejected the contention that the very narrow scope of the natural law at issue was a reason to find patent eligibility, explaining the point with reference to both natural laws and one kind of abstract idea, namely, mathematical concepts.

[O]ur cases have not distinguished among differ-ent laws of nature according to whether or not the principles they embody are sufficiently narrow. See, e.g., [Parker v.] Flook, 437 U.S. 584 [(1978)] (holding narrow mathematical formula unpatent-able). And this is understandable. Courts and judges are not institutionally well suited to mak-ing the kinds of judgments needed to distinguish among different laws of nature. And so the cases have endorsed a bright-line prohibition against patenting laws of nature, mathematical formulas and the like, which serves as a somewhat more easily administered proxy for the underlying ‘building-block’ concern.


31


Mayo, 132 S. Ct. at 1303. Based on the three implicit exclusions, the Court has

created a framework for identifying claims that fall out-side section 101. Alice, 134 S. Ct. at 2355; Mayo, 132 S. Ct. at 1296–97. A claim that directly reads on matter in the three identified categories is outside section 101. Mayo, 132 S. Ct. at 1293. But the provision also excludes the subject matter of certain claims that by their terms read on a human-made physical thing (“machine, manu-facture, or composition of matter”) or a human-controlled series of physical acts (“process”) rather than laws of nature, natural phenomena, and abstract ideas. Such a claim falls outside section 101 if (a) it is “directed to” matter in one of the three excluded categories and (b) “the additional elements” do not supply an “inventive concept” in the physical realm of things and acts—a “new and useful application” of the ineligible matter in the physical realm—that ensures that the patent is on something “significantly more than” the ineligible matter itself. Alice, 134 S. Ct. at 2355, 2357 (internal quotation marks omitted); see Mayo, 132 S. Ct. at 1294, 1299, 1300. This two-stage inquiry requires examination of claim elements “both individually and ‘as an ordered combination.’” Alice, 134 S. Ct. at 2355.

Several decisions of the Court have involved the “ab-stract idea” category, which is at issue here. Two aspects of those decisions are important for present purposes: what type of matter the Court has held to come within the category of “abstract idea”; and what invocations of a computer in a claim that involves such an abstract idea are insufficient to pass the test of an inventive concept in the application of such an idea.

As to the first question: The relevant Supreme Court cases are those which find an abstract idea in certain arrangements involving contractual relations, which are intangible entities. Bilski v. Kappos, 561 U.S. 593 (2010),


32


involved a method of entering into contracts to hedge risk in commodity prices, and Alice involved methods and systems for “exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk,” Alice, 134 S. Ct. at 2356. More narrow-ly, the Court in both cases relied on the fact that the contractual relations at issue constituted “a fundamental economic practice long prevalent in our system of com-merce.” Bilski, 561 U.S. at 611; see Alice, 134 S. Ct. at 2356, 2357.

In simultaneously rejecting a general business-method exception to patent eligibility and finding the hedging claims invalid, moreover, Bilski makes clear that the recognition that the formation or manipulation of economic relations may involve an abstract idea does not amount to creation of a business-method exception. The required section 101 inquiry has a second step beyond identification of an abstract idea. If enough extra is included in a claim, it passes muster under section 101 even if it amounts to a “business method.”

As to the second question: The Court in Alice made clear that a claim directed to an abstract idea does not move into section 101 eligibility territory by “merely requir[ing] generic computer implementation.” Alice, 134 S. Ct. at 2357.1 In so holding, the Court in Alice relied on

1 The Court in Alice noted that in Diamond v. Diehr, 450 U.S. 175 (1981), the patent applicants added more than a computer to a mathematical equation in claiming an arguably “inventive application” in the tech-nology of curing synthetic rubber. 134 S. Ct. at 2358 (internal quotation marks omitted). Diehr explains that the claimed contribution to the art was the step of “con-stantly measuring the actual temperature inside the mold” for the synthetic rubber products. 450 U.S. at 178, 179 n.5.


33


Mayo for the proposition that “ ‘[s]imply appending con-ventional steps, specified at a high level of generality,’ was not ‘enough’ to supply an ‘ “inventive concept.” ’ ” Id. (quoting Mayo, 132 S. Ct. at 1300, 1297, 1294). Neither “attempting to limit the use of [the idea] to a particular technological environment” nor a “wholly generic comput-er implementation” is sufficient. Id. at 2358 (internal quotation marks omitted). The Court found nothing sufficient in Alice Corp.’s claims.

The Court explained that the method claims in Alice invoke “the use of a computer to create electronic records, track multiple transactions, and issue simultaneous instructions,” id. at 2359; “electronic recordkeeping,” id.; and “the use of a computer to obtain data, adjust account balances, and issue automated instructions,” id. They “do not, for example, purport to improve the functioning of the computer itself. See [CLS Bank Int’l v. Alice Corp. Pty. Ltd., 717 F.3d 1269, 1286 (Fed. Cir. 2013) (Lourie, J., concurring)] (‘There is no specific or limiting recitation of . . . improved computer technology . . .’); Brief for United States as Amicus Curiae 28–30.” Alice, 134 S. Ct. at 2359. They do not “effect an improvement in any other technol-ogy or technical field,” and they merely invoke “some unspecified, generic computer.” Id. at 2359–60. The system claims in Alice are “no different,” the Court added, explaining that they invoke a “‘data processing system’ with a ‘communications controller’ and ‘data storage unit,’” which are “purely functional and generic” compo-nents for “performing the basic calculation, storage, and transmission functions required by the method claims.” Id. at 2360. Finally, the Court viewed the claims to a computer-readable medium for the methods as indistin-guishable for section 101 purposes. Id.

Given the new Supreme Court authority in this deli-cate area, and the simplicity of the present case under that authority, there is no need to parse our own prece-dents here. The claims in this case do not push or even


34


test the boundaries of the Supreme Court precedents under section 101. The claims are squarely about creat-ing a contractual relationship—a “transaction perfor-mance guaranty”—that is beyond question of ancient lineage. See Willis D. Morgan, The History and Econom-ics of Suretyship, 12 Cornell L.Q. 153 (1927). The de-pendent claims’ narrowing to particular types of such relationships, themselves familiar, does not change the analysis. This kind of narrowing of such long-familiar commercial transactions does not make the idea non-abstract for section 101 purposes. See Mayo, 132 S. Ct. at 1301. The claims thus are directed to an abstract idea.

The claims’ invocation of computers adds no inventive concept. The computer functionality is generic—indeed, quite limited: a computer receives a request for a guaran-tee and transmits an offer of guarantee in return. There is no further detail. That a computer receives and sends the information over a network—with no further specifi-cation—is not even arguably inventive. The computers in Alice were receiving and sending information over net-works connecting the intermediary to the other institu-tions involved, and the Court found the claimed role of the computers insufficient. See also CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011) (use of Internet to verify credit-card transaction does not add enough to abstract idea of verifying the transaction). And it likewise cannot be enough that the transactions being guaranteed are themselves online transactions. At best, that narrowing is an “attempt[] to limit the use” of the abstract guarantee idea “to a particu-lar technological environment,” which has long been held insufficient to save a claim in this context. See Alice, 134 S. Ct. at 2358; Mayo, 132 S. Ct. at 1294; Bilski, 561 U.S. at 610–11; Diehr, 450 U.S. at 191.

In short, with the approach to this kind of section 101 issue clarified by Alice, it is a straightforward matter to conclude that the claims in this case are invalid.


35


CONCLUSION For the foregoing reasons, we affirm the judgment of

the district court. AFFIRMED


36


______________________

CONTENT EXTRACTION AND TRANSMISSION LLC,

Plaintiff-Appellant,

v.

WELLS FARGO BANK, NATIONAL ASSOCIATION, Defendant-Appellee,

AND

THE PNC FINANCIAL SERVICES GROUP, INC. AND

PNC BANK, N.A., Defendants-Appellees.

- - - - - - - - - - - - - - - - - - - - - - - - -

DIEBOLD, INCORPORATED,

Plaintiff-Counterdefendant-Cross Appellant,

v.

CONTENT EXTRACTION AND TRANSMISSION LLC,

Defendant-Counterplaintiff-Appellant,

AND

MITCHELL MEDINA, CATHERINE ELIAS, AND JEAN-MARC ZIMMERMAN,

Defendants,


37

CONTENT EXTRACTION v. WELLS FARGO BANK 2

AND

JOHN DOE COMPANIES 1-100, JOHN DOE COMPANIES 1-99, TD BANK GROUP, AND TD

BANK, N.A. Third-Party Defendants. ______________________

2013-1588, -1589, 2014-1112, -1687

______________________

Appeals from the United States District Court for the District of New Jersey in Nos. 12-CV-2501, 12-CV-6960, and 12-CV-7640, Judge Michael A. Shipp.

______________________


ANATOLY S. WEISER, Zimmerman & Weiser LLP, of

Westfield, New Jersey, argued for plaintiff-appellant Content Extraction and Transmission LLC. With him on the brief was JEAN-MARC ZIMMERMAN.

FREDERICK L. WHITMER, Kilpatrick, Townsend &

Stockton LLP, of New York, New York, argued for de-fendant-appellee Wells Fargo Bank, National Association. Of counsel on the brief for defendant-appellees The PNC Financial Services Group, Inc., et al. was NOAM J. KRITZER, Bakos & Kritzer of Florham Park, New Jersey.

ROY H. WEPNER, Lerner, David, Littenberg, Krumholz

& Mentlik, LLP, of Westfield, New Jersey, argued for plaintiff-counterdefendant-cross appellant Diebold, Incor-porated. With him on the brief were ARNOLD I. RADY and BRIAN D. HILL.

______________________


38


Before DYK, TARANTO, and CHEN, Circuit Judges.

CHEN, Circuit Judge.

Content Extraction and Transmission LLC and its principals (collectively, CET) appeal from the grant of a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure (FRCP), in which the United States District Court for the District of New Jersey held that the claims of CET’s asserted patents are invalid as patent-ineligible under 35 U.S.C. § 101. Cross-appellant Diebold, Inc. (Diebold) appeals from the district court’s dismissal of its tortious interference and Racketeer Influ-enced and Corrupt Organizations Act (RICO) claims against CET in a related action. We affirm the district court’s dismissal of both CET’s and Diebold’s claims.

BACKGROUND

CET owns U.S. Patent Nos. 5,258,855 (’855 patent), 5,369,508 (’508 patent), 5,625,465 (’465 patent), and 5,768,416 (’416 patent) (collectively, the asserted patents). The ’508, ’465, and ’416 patents are continuations of the ’855 patent, and share substantially the same specifica-tion. The four patents contain a total of 242 claims. The claims generally recite a method of 1) extracting data from hard copy documents using an automated digitizing unit such as a scanner, 2) recognizing specific information from the extracted data, and 3) storing that information in a memory. This method can be performed by software on an automated teller machine (ATM) that recognizes information written on a scanned check, such as the check’s amount, and populates certain data fields with that information in a computer’s memory.

Claim 1 of the ’855 patent recites:


39


A method of processing information from a diver-sity of types of hard copy documents, said method comprising the steps of:

(a) receiving output representing a diver-sity of types of hard copy documents from an automated digitizing unit and storing information from said diversity of types of hard copy documents into a memory, said information not fixed from one document to the next, said receiving step not preced-ed by scanning, via said automated digit-izing unit, of a separate document containing format requirements;

(b) recognizing portions of said hard copy documents corresponding to a first data field; and

(c) storing information from said portions of said hard copy documents correspond-ing to said first data field into memory lo-cations for said first data field.

’855 patent, 16:19–34.

In April and November 2012 respectively, CET filed infringement actions against appellees Wells Fargo Bank, N.A. (Wells Fargo) and The PNC Financial Services Group, Inc. and PNC Bank, N.A. (collectively, PNC), alleging that they were using ATMs with check deposit software that infringed its patents. In December 2012, Diebold, the manufacturer of Wells Fargo’s and PNC’s ATMs, filed an action against CET seeking 1) a declarato-ry judgment that its ATMs did not infringe CET’s assert-ed patents and that CET’s patents were invalid, and 2) injunctive and monetary relief for tortious interference and violations of the RICO Act arising from CET’s act of


40


filing allegedly baseless infringement suits against Wells Fargo, PNC, and other Diebold customers. CET counter-claimed against Diebold by asserting direct and indirect infringement of its patents. The district court eventually consolidated the three inter-related actions between CET and Wells Fargo, PNC, and Diebold for pretrial purposes.

Relevant here, PNC subsequently moved to dismiss CET’s complaint in its entirety pursuant to FRCP 12(b)(6), on the ground that each claim of the asserted patents was invalid as patent-ineligible under 35 U.S.C. § 101. PNC focused its arguments on two claims: claim 1 of the ’855 patent and claim 1 of the ’416 patent. PNC contended that these two claims were representative, and that none of the other claims included anything more than minor changes in format or phrasing. In its opposi-tion to PNC’s motion, CET did not challenge PNC’s char-acterization of claim 1 of the ’855 patent or claim 1 of the ’416 patent as representative, instead focusing its argu-ments on defending those two claims.

The district court agreed that all CET’s asserted claims were invalid as patent-ineligible under § 101, granted PNC’s motion, and dismissed CET’s complaints against both PNC and Wells Fargo. Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, No. 12-6960, 2013 WL 3964909, at *5, *14 (D.N.J. July 31, 2013) (CET). In light of this holding, the district court also dismissed Diebold’s request for a declaratory judg-ment of invalidity and noninfringement as moot. Lastly, the district court dismissed Diebold’s RICO and tortious interference claims against CET, concluding that CET’s act of filing lawsuits against Diebold’s customers—such as Wells Fargo and PNC—was protected under the Noerr-Pennington doctrine, as established in E. R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127 (1961), and United Mine Workers of Am. v. Pennington, 381 U.S. 657 (1965). CET appealed and Diebold cross-


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appealed the district court’s order dismissing the parties’ complaints. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

STANDARD OF REVIEW

We review a district court’s dismissal for failure to state a claim under the law of the regional circuit. In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1331 (Fed. Cir. 2012). The Third Circuit reviews challenges to a dismissal for failure to state a claim under FRCP 12(b)(6) de novo. Sands v. McCormick, 502 F.3d 263, 267 (3d Cir. 2007). We review the district court’s determination of patent eligibility under § 101 de novo. Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012).

DISCUSSION

An invention is patent-eligible if it claims a “new and useful process, machine, manufacture, or composition of matter.” 35 U.S.C. § 101. The Supreme Court, however, has long interpreted § 101 and its statutory predecessors to contain an implicit exception: “laws of nature, natural phenomena, and abstract ideas” are not patentable. Alice Corp. Pty Ltd. v. CLS Bank Int’l, 573 U.S. __, 134 S. Ct. 2347, 2354 (2014). We focus here on whether the claims of the asserted patents fall within the excluded category of abstract ideas.

The Supreme Court’s two-step framework, described in Mayo and Alice, guides our analysis. Id. at 2355 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. __, 132 S. Ct. 1289, 1296–97 (2012)). We first deter-mine whether a claim is “directed to” a patent-ineligible abstract idea. If so, we then consider the elements of the claim—both individually and as an ordered combination—to assess whether the additional elements transform the


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nature of the claim into a patent-eligible application of the abstract idea. Id. This is the search for an “inventive concept”—something sufficient to ensure that the claim amounts to “significantly more” than the abstract idea itself. Id.

The Supreme Court has not “delimit[ed] the precise contours of the ‘abstract ideas’ category.” Id. at 2357. We know, however, that although there is no categorical business-method exception, Bilski v. Kappos, 561 U.S. 593, 606, 608 (2010), claims directed to the mere for-mation and manipulation of economic relations may involve an abstract idea. See Alice, 134 S. Ct. at 2356–57. We have also applied the Supreme Court’s guidance to identify claims directed to the performance of certain financial transactions as involving abstract ideas. See buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014) (creating a transaction performance guaranty for a commercial transaction on computer networks such as the Internet); Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1338 (Fed. Cir. 2013) (generating rule-based tasks for processing an insurance claim); Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1278 (Fed. Cir. 2012) (managing a stable value protected life insur-ance policy); Dealertrack, 674 F.3d at 1333 (processing loan information through a clearinghouse).

Applying Mayo/Alice step one, we agree with the dis-trict court that the claims of the asserted patents are drawn to the abstract idea of 1) collecting data, 2) recog-nizing certain data within the collected data set, and 3) storing that recognized data in a memory. The concept of data collection, recognition, and storage is undisputedly well-known. Indeed, humans have always performed these functions. And banks have, for some time, reviewed checks, recognized relevant data such as the amount,


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account number, and identity of account holder, and stored that information in their records.

CET attempts to distinguish its claims from those found to be abstract in Alice and other cases by showing that its claims require not only a computer but also an additional machine—a scanner.1 Appellant’s Br. 31–32. CET argues that its claims are not drawn to an abstract idea because human minds are unable to process and recognize the stream of bits output by a scanner. Id. at 29. However, the claims in Alice also required a computer that processed streams of bits, but nonetheless were found to be abstract. See 134 S. Ct. at 2358. Similar to how the computer-implemented claims in Alice were directed to “the concept of intermediated settlement,” id. at 2356, and the claims in Dealertrack were directed to the concept of “processing information through a clearing-house,” 674 F.3d at 1333, CET’s claims are drawn to the basic concept of data recognition and storage.

For the second step of our analysis, we determine whether the limitations present in the claims represent a patent-eligible application of the abstract idea. Alice, 134 S. Ct. at 2357. For the role of a computer in a computer-implemented invention to be deemed meaningful in the context of this analysis, it must involve more than per-formance of “well-understood, routine, [and] conventional activities previously known to the industry.” Id. at 2359 (quoting Mayo, 132 S. Ct. at 1294 (internal quotation

1 We note that some of CET’s claims do not explicit-ly require the use of either a computer or scanner, and refer instead to a generic “application unit” and “auto-mated digitizing unit.” See, e.g., ’855 patent, 18:52–19:3. We assume for purposes of PNC’s motion to dismiss, however, that these claims require the presence of both a computer and a scanner.


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marks and brackets omitted)). Further, “the mere recita-tion of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.” Id. at 2358.

Applying Mayo/Alice step two, we agree with the dis-trict court that the asserted patents contain no limita-tions—either individually or as an ordered combination—that transform the claims into a patent-eligible applica-tion. CET conceded at oral argument that the use of a scanner or other digitizing device to extract data from a document was well-known at the time of filing, as was the ability of computers to translate the shapes on a physical page into typeface characters. Oral Arg. at 3:35–3:55; 16:12–16:17, available at http://oralarguments. cafc.uscourts.gov/default.aspx?fl=2013-1588.mp3. CET’s claims merely recite the use of this existing scanning and processing technology to recognize and store data from specific data fields such as amounts, addresses, and dates. See id. There is no “inventive concept” in CET’s use of a generic scanner and computer to perform well-understood, routine, and conventional activities commonly used in industry. See Alice, 134 S. Ct. at 2359. At most, CET’s claims attempt to limit the abstract idea of recognizing and storing information from hard copy documents using a scanner and a computer to a particular technological environment. Such a limitation has been held insufficient to save a claim in this context. See Alice, 134 S. Ct. at 2358; Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715–16 (Fed Cir. 2014); buySAFE, 765 F.3d at 1355.

CET next argues that the failure of PNC or the dis-trict court to individually address every one of its claims is inconsistent with the statutory presumption of validity that requires proving the invalidity of each claim by clear and convincing evidence. See Dana Corp. v. Am. Axle & Mfg., Inc., 279 F.3d 1372, 1376 (Fed. Cir. 2002). The district court, however, correctly determined that address-


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ing each claim of the asserted patents was unnecessary. After conducting its own analysis, the district court determined that PNC is correct that claim 1 of the ’855 patent and claim 1 of the ’416 patent are representative, because all the claims are “substantially similar and linked to the same abstract idea.” CET, 2013 WL 3964909, at *5 (citing Bilski, 561 U.S. at 612). Moreover, CET never asserted in its opposition to PNC’s motion that the district court should have differentiated any claim from those identified as representative by PNC. Nor did CET identify any other claims as purportedly containing an inventive concept. If CET disagreed with PNC’s or the district court’s assessment, CET could have identified claims in its opposition brief that it believed would not be fairly represented by claims 1 of the ’855 and ’416 patents for purposes of PNC’s § 101 challenge. Regardless, we have reviewed all the claims of CET’s asserted patents, and agree with the district court that, for the purposes of PNC’s § 101 challenge, 1) the claims of the asserted patents are substantially similar in that they recite little more than the same abstract idea, and 2) claim 1 of the ’855 patent and claim 1 of the ’416 patent are representa-tive.

CET argues on appeal that certain dependent claims recite additional steps, such as extracting and detecting specific data fields, repeating some steps, and storing data as images or text, rendering those claims patent-eligible. Appellant’s Br. 40–41. For instance, CET notes that dependent claim 44 of the ’416 patent additionally re-quires: “defining a set of symbols which designate fields of information required by an application program; and detecting the presence of a particular one of said defined set of symbols on a hard copy document and extracting a field of information required by an application program based on said detecting.” Id. This limitation merely describes generic optical character recognition technology, which CET conceded was a routine function of scanning


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technology at the time the claims were filed. Oral Arg. at 3:35–3:55, 16:12–16:17, available at http://oralarguments. cafc.uscourts.gov/default.aspx?fl=2013-1588.mp3. Indeed, all of the additional limitations in the claims cited in CET’s appeal brief recite well-known, routine, and con-ventional functions of scanners and computers. Thus, while these claims may have a narrower scope than the representative claims, no claim contains an “inventive concept” that transforms the corresponding claim into a patent-eligible application of the otherwise ineligible abstract idea.

Finally, CET contends that the district court erred by declaring its claims patent-ineligible under § 101 at the pleading stage without first construing the claims or allowing the parties to conduct fact discovery and submit opinions from experts supporting their claim construction positions. Although the determination of patent eligibil-ity requires a full understanding of the basic character of the claimed subject matter, claim construction is not an inviolable prerequisite to a validity determination under § 101. See Ultramercial, 772 F.3d at 714–15; Bancorp, 687 F.3d at 1273–74. The district court construed the terms identified by CET “in the manner most favorable to [CET],” necessarily assuming that all of CET’s claims required a machine, even though several claims do not expressly recite any hardware structures. See supra note 1; CET, 2013 WL 3964909, at *12. Nonetheless, the district court determined the claims of the asserted pa-tents were patent-ineligible. Likewise, we conclude that even when construed in a manner most favorable to CET, none of CET’s claims amount to “significantly more” than the abstract idea of extracting and storing data from hard copy documents using generic scanning and processing technology. The district court’s resolution of PNC’s mo-tion to dismiss at the pleading stage was therefore proper.


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DIEBOLD’S CROSS-APPEAL

We turn next to Diebold’s appeal from the district court’s dismissal of its tortious interference and RICO violation claims against CET. Diebold’s claims all arise from the following predicate act: the filing of allegedly frivolous infringement suits by CET against Wells Fargo, PNC, and other Diebold customers in an attempt to obtain nuisance settlements from them. The district court, however, concluded that the Noerr-Pennington doctrine immunized CET from both Diebold’s tortious interference and RICO violation claims.2

Under Noerr-Pennington, a person’s act of petitioning the government is presumptively shielded from liability by the First Amendment against certain types of claims. See BE & K Const. Co. v. N.L.R.B., 536 U.S. 516, 525 (2002) (quoting Cal. Motor Transp. Co. v. Trucking Un-limited, 404 U.S. 508, 511, (1972)); Sosa v. DIRECTV, Inc., 437 F.3d 923, 930, 931 (9th Cir. 2006) (applying Noerr-Pennington to bar a RICO violation claim); Pers. Dep’t, Inc. v. Prof’l Staff Leasing Corp., 297 F. App’x 773, 779 (10th Cir. 2008) (holding that Noerr-Pennington can provide immunity from liability arising from a tortious

2 We note that other circuits have held that the act of filing a lawsuit, even one which is frivolous, does not by itself constitute an act of “extortion” under the Hobbs Act, 18 U.S.C. § 1951(b)(2), and therefore cannot constitute a predicate act under RICO. See, e.g., Deck v. Engineered Laminates, 349 F.3d 1253, 1258 (10th Cir. 2003); Raney v. Allstate Ins. Co., 370 F.3d 1086, 1088 (11th Cir. 2004). Treating meritless litigation as a form of extortion pun-ishable under RICO would substantially chill even valid court petitioning, as it could subject almost any unsuc-cessful lawsuit or set of lawsuits to a colorable claim of a RICO violation. Deck, 349 F.3d at 1258.


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interference claim). To overcome this presumptive im-munity, a plaintiff must establish that the defendant’s instigation of litigation was merely a “sham.” Prof’l Real Estate Investors, Inc. v. Columbia Pictures Indus., Inc., 508 U.S. 49, 60 (1993) (PRE). This two-part test requires the plaintiff to show not only that the litigation was objectively baseless, but also that the defendant subjec-tively intended to harm the plaintiff through the abuse of a governmental process itself, as opposed to harms flow-ing from the outcome of that process. See id.

The district court found that Diebold established the first, but not the second prong of the PRE sham litigation test. In an oral ruling, the district court held that Diebold successfully alleged objective baselessness based on the district court’s own analysis of CET’s patent claims as ineligible under § 101, and “[Diebold’s] allegations that [CET]’s litigation conduct was solely designed to engender settlement” with Diebold’s customers. J.A. 687–89. However, the district court also determined that Diebold had not shown CET subjectively intended to harm Diebold through its instigation of litigation, as required under prong two of the PRE test. Id. Although we agree with the district court’s ultimate conclusion regarding CET’s immunity, we find instead that Diebold’s allegation fails the first prong of the PRE test, and thus the district court’s analysis under the second prong was unnecessary.

Under the first prong, a “sham” lawsuit must be ob-jectively baseless “in the sense that no reasonable litigant could realistically expect success on the merits.” No-belpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1071 (Fed. Cir. 1998) (quoting PRE, 508 U.S. at 50). Given the focus on the act of filing the complaint as the actionable event, CET’s infringement suits, though un-successful, were not objectively baseless. This is because the state of the law of § 101 was deeply uncertain at the time CET filed its complaints against Wells Fargo and


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PNC in 2012. Compare Ultramercial, Inc. v. Hulu, LLC, 657 F.3d 1323, 1327–28 (Fed. Cir. 2011) (subsequently vacated), with Dealertrack, 674 F.3d at 1333–35. See also CLS Bank Int’l v. Alice Corp. Pty Ltd., 717 F.3d 1269, 1273 (Fed. Cir. 2013) (en banc), cert. granted, 134 S. Ct. 734 (2013), and aff’d, 571 U.S. __, 134 S. Ct. 2347 (2014). Under these circumstances, we cannot conclude that as a matter of law, no reasonable litigant in 2012 could have expected success on at least one of CET’s claims.

The Supreme Court has held that “even unsuccessful but reasonably based suits advance some First Amend-ment interests,” and therefore should receive protection under the First Amendment. BE & K, 536 U.S. at 532. Although we conclude the claims of CET’s asserted pa-tents are invalid under § 101, we decline to find CET’s infringement suits against Wells Fargo and PNC to be objectively baseless at the time they were filed. There-fore, since the act of filing its suits was shielded from liability by the Noerr-Pennington doctrine, the district court correctly dismissed Diebold’s tortious interference and RICO violation claims against CET.

CONCLUSION

We affirm the district court’s grant of PNC’s motion to dismiss under FRCP 12(b)(6) on the ground that the claims of CET’s asserted patents are invalid as patent-ineligible under § 101. Because CET’s infringement suits against Wells Fargo and PNC were not objectively base-less, we also affirm the district court’s dismissal of Diebold’s tortious interference and RICO violation claims. Finally, because the claims of CET’s asserted patents are invalid under § 101, we need not reach the district court’s dismissal of Diebold’s request for a declaratory judgment of noninfringement and invalidity.

AFFIRMED


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COSTS

No costs.


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______________________

DDR HOLDINGS, LLC, Plaintiff-Appellee,

v.

HOTELS.COM, L.P., CENDANT TRAVEL DISTRIBUTION SERVICES GROUP, INC., EXPEDIA, INC., TRAVELOCITY.COM, L.P.,

SITE59.COM, LLC, INTERNATIONAL CRUISE & EXCURSION GALLERY, INC.,

OURVACATIONSTORE, INC., INTERNETWORK PUBLISHING CORPORATION, AND ORBITZ

WORLDWIDE, LLC, Defendants,

AND

NATIONAL LEISURE GROUP, INC. AND

WORLD TRAVEL HOLDINGS, INC., Defendants-Appellants,

AND

DIGITAL RIVER, INC.,

Defendant. ______________________

2013-1505

______________________


52

DDR HOLDINGS, LLC v. HOTELS.COM, L.P. 2

Appeal from the United States District Court for the Eastern District of Texas in No. 06-CV-0042, Judge J. Rodney Gilstrap.

______________________


LOUIS J. HOFFMAN, Hoffman Patent Firm, of Scotts-

dale, Arizona, argued for plaintiff-appellee. On the brief was IAN B. CROSBY, Susman Godfrey LLP, of Seattle, Washington.

NORMAN H. ZIVIN, Cooper & Dunham LLP, of New

York, New York, argued for defendants-appellants, Na-tional Leisure Group, Inc., et al. With him on the brief was TONIA A. SAYOUR.

______________________

Before WALLACH, MAYER, and CHEN, Circuit Judges. Opinion for the court filed by Circuit Judge CHEN.

Dissenting opinion filed by Circuit Judge MAYER. CHEN, Circuit Judge.

Defendants-Appellants National Leisure Group, Inc. and World Travel Holdings, Inc. (collectively, NLG) ap-peal from a final judgment of the United States District Court for the Eastern District of Texas entered in favor of Plaintiff-Appellee DDR Holdings, LLC (DDR). Following trial, a jury found that NLG infringes the asserted claims of U.S. Patent Nos. 6,993,572 (the ’572 patent) and 7,818,399 (the ’399 patent). The jury also found the asserted claims of the ’572 and ’399 patents are not inva-lid. The district court denied NLG’s renewed motion for judgment as a matter of law (JMOL) on, inter alia, nonin-fringement and invalidity of the asserted patents. The district court subsequently entered a final judgment


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consistent with the jury’s findings on infringement, validi-ty, and damages, and awarded DDR pre- and post-judgment interest and costs. We affirm the district court’s denial of NLG’s motions for JMOL of noninfringe-ment and invalidity of the ’399 patent. Because we con-clude that the ’572 patent is anticipated as a matter of law, we reverse the district court’s denial of JMOL on the validity of the ’572 patent, and remand to the district court for further proceedings consistent with our decision.

I. BACKGROUND DDR is the assignee of the ’572 and ’399 patents. The

’572 and ’399 patents are both continuations of U.S. Patent No. 6,629,135 (the ’135 patent), which has a priori-ty date of September 17, 1998. Each of these patents is directed to systems and methods of generating a compo-site web page that combines certain visual elements of a “host” website with content of a third-party merchant. For example, the generated composite web page may combine the logo, background color, and fonts of the host website with product information from the merchant. ’135 patent, 12:46–50.

The common specification of the patents-in-suit ex-plains that prior art systems allowed third-party mer-chants to “lure the [host website’s] visitor traffic away” from the host website because visitors would be taken to the third-party merchant’s website when they clicked on the merchant’s advertisement on the host site. Id. at 2:26–30. The patents-in-suit disclose a system that provides a solution to this problem (for the host) by creat-ing a new web page that permits a website visitor, in a sense, to be in two places at the same time. On activation of a hyperlink on a host website—such as an advertise-ment for a third-party merchant—instead of taking the visitor to the merchant’s website, the system generates and directs the visitor to a composite web page that displays product information from the third-party mer-


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chant, but retains the host website’s “look and feel.” Id. at 3:9–21. Thus, the host website can display a third-party merchant’s products, but retain its visitor traffic by displaying this product information from within a gener-ated web page that “gives the viewer of the page the impression that she is viewing pages served by the host” website. Id. at 2:56–63, 3:20–22.

Representative claim 13 of the ’572 patent recites: 13. An e-commerce outsourcing system compris-

ing: a) a data store including a look and feel descrip-

tion associated with a host web page having a link correlated with a commerce object; and

b) a computer processor coupled to the data store and in communication through the Internet with the host web page and programmed, upon receiving an indication that the link has been activated by a visitor computer in Internet communication with the host web page, to serve a composite web page to the visitor computer wit[h] a look and feel based on the look and feel description in the data store and with content based on the commerce object associated wit[h] the link.

System claim 13 requires that the recited system pro-vide the host website with a “link” that “correlate[s]” the host website with a “commerce object.” The “commerce object” is the product or product catalog of the merchant. ’135 patent, 3:7–13. After recognizing that a website visitor has activated the link, the system retrieves data from a “data store” that describes the “look and feel” of the host web page, which can include visual elements such as logos, colors, fonts, and page frames. Id. at 12:46–50. The claimed system then constructs a composite web page comprising a “look and feel” based on the look and


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feel description in the data store along with content based on product information from the associated merchant’s product catalog.

The ’399 patent is directed to a similar system with a greater emphasis on a “scalable [computer] architecture” to serve “dynamically constructed [web] pages” associated with multiple host website and merchant pairs. ’135 patent, 3:32–36. Representative claim 19 of the ’399 patent recites:

19. A system useful in an outsource provider serv-ing web pages offering commercial opportuni-ties, the system comprising:

(a) a computer store containing data, for each of a plurality of first web pages, defining a plurality of visually perceptible elements, which visually perceptible elements correspond to the plurality of first web pages; (i) wherein each of the first web pages belongs

to one of a plurality of web page owners; (ii) wherein each of the first web pages displays

at least one active link associated with a commerce object associated with a buying opportunity of a selected one of a plurality of merchants; and

(iii) wherein the selected merchant, the out-source provider, and the owner of the first web page displaying the associated link are each third parties with respect to one other;

(b) a computer server at the outsource provider, which computer server is coupled to the com-puter store and programmed to: (i) receive from the web browser of a computer

user a signal indicating activation of one of


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the links displayed by one of the first web pages;

(ii) automatically identify as the source page the one of the first web pages on which the link has been activated;

(iii) in response to identification of the source page, automatically retrieve the stored data corresponding to the source page; and

(iv) using the data retrieved, automatically generate and transmit to the web browser a second web page that displays: (A) infor-mation associated with the commerce object associated with the link that has been acti-vated, and (B) the plurality of visually per-ceptible elements visually corresponding to the source page.

Similar to claim 13 of the ’572 patent, system claim 19 of the ’399 patent requires that a “data store” hold “visu-ally perceptible elements” (or “‘look and feel’ elements”) that “visually . . . correspond” to a host web page. The host web page must include a link associated with a “buying opportunity” with a merchant. Once a visitor activates this link, the claimed system generates and transmits to the website visitor’s web browser a composite web page that includes product information of the mer-chant and the “look and feel” of the host website (i.e., “the plurality of visually perceptible elements visually corre-sponding to the [host web] page”).

Claim 19 further requires that the data store must store “look and feel” descriptions for multiple hosts and that each link must be associated with a particular mer-chant’s product catalog. Claim 19 also requires that the merchant, system operator, and host website be “third parties with respect to one another.” When a website visitor activates a link associated with a merchant’s


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product catalog, the claimed system identifies the host web page and then transmits a composite web page using the proper “look and feel” elements of the host website in the data store and the product information from the associated merchant.

The ’572 patent issued on January 31, 2006. On the same day, DDR filed suit against NLG, Digital River, Inc. (Digital River), and nine other defendants, asserting infringement of various claims of the ’135 and ’572 pa-tents. NLG is a travel agency that sells cruises in part-nership with travel-oriented websites and major cruise lines through the Internet. DDR’s suit accused NLG of infringing the ’135 and ’572 patents by providing a system for cruise-oriented (host) websites that allows visitors to book cruises on major cruise lines (merchants). Joint Appendix (J.A.) 261. In particular, when a visitor on one of these cruise-oriented (host) websites clicks on an adver-tisement for a cruise, NLG’s system generates and directs the visitor to a composite web page that incorporates “look and feel” elements from the host website and product information from the cruise line (merchant).

DDR’s suit was stayed during the pendency of an ex parte reexamination of the ’135 and ’572 patents request-ed by DDR that was based on prior art identified by the defendants. Shortly after the U.S. Patent and Trademark Office confirmed the validity of the ’135 and ’572 patents and the stay was lifted, the ’399 patent issued on October 19, 2010. DDR subsequently amended its complaint to assert infringement of this patent by several of the de-fendants, including NLG.

During Markman proceedings, the parties stipulated to a construction of several terms, including “look and feel,” which appears in each of the asserted claims of the ’572 patent, and “visually perceptible elements,” which appears in each of the asserted claims of the ’399 patent. J.A. 542. For “look and feel,” the parties agreed to a


58


construction of: “A set of elements related to visual ap-pearance and user interface conveying an overall appear-ance identifying a website; such elements include logos, colors, page layout, navigation systems, frames, ‘mouse-over’ effects, or others elements consistent through some or all of the website.” Id. For “visually perceptible ele-ments,” the parties agreed to a construction of: “look and feel elements that can be seen.” Id. The defendants, however, expressly reserved their rights to argue that both the “look and feel” and “visually perceptible ele-ments” terms are indefinite, but offered the stipulated constructions “in the alternative.” Id.

Between June 2012 and January 2013, DDR settled with all defendants except for NLG and Digital River. The case eventually proceeded to a jury trial in October 2012. At trial, DDR accused NLG and Digital River of direct and willful infringement of claims 13, 17, and 20 of the ’572 patent, and accused NLG—but not Digital Riv-er—of direct and willful infringement of claims 1, 3, and 19 of the ’399 patent. DDR also accused NLG and Digital River of inducing infringement of claim 17 of the ’572 patent.

The jury found that NLG and Digital River directly infringed the asserted claims of the ’572 patent and that NLG directly infringed the asserted claims of the ’399 patent, but that NLG and Digital River’s infringement was not willful. The jury found that NLG and Digital River did not induce infringement of claim 17 of the ’572 patent. The jury also found that the asserted claims were not invalid. The jury determined DDR was entitled to $750,000 in damages from both NLG and Digital River for infringing DDR’s patents.

At the conclusion of trial, NLG and Digital River re-newed motions for JMOL pursuant to Rule 50(b) of the Federal Rules of Civil Procedure (FRCP) on several grounds. NLG contended the asserted claims of the ’572


59


and ’399 patents are invalid under 35 U.S.C. § 101 be-cause the claims are directed to patent-ineligible subject matter and invalid under 35 U.S.C. § 112 ¶ 21 because the terms “look and feel” and “visually perceptible elements” are indefinite. NLG also contended that neither the jury’s finding of infringement nor its award of damages was supported by substantial evidence. NLG also alleged the district court made several unfair and prejudicial eviden-tiary rulings.

Digital River contended that the asserted claims of the ’572 patent are invalid as either anticipated under 35 U.S.C. § 102, obvious under 35 U.S.C. § 103, or indefinite under 35 U.S.C. § 112 ¶ 2. Digital River also contended that the jury’s finding of infringement was not supported by substantial evidence. Digital River moved for a new trial pursuant to FRCP 59.

The district court denied NLG and Digital River’s mo-tions for JMOL and Digital River’s FRCP 59 motion for a new trial. Over the defendants’ objections, the district court awarded DDR an additional $284,404 in prejudg-ment interest pursuant to 35 U.S.C. § 284. The district court entered a final judgment in favor of DDR, and NLG and Digital River timely appealed. NLG and Digital River’s appeals were consolidated and fully briefed. Prior to oral argument, DDR and Digital River settled, and we granted Digital River’s motion to terminate its appeal. D.I. 65, 68. NLG’s appeal continued. We have jurisdic-tion pursuant to 28 U.S.C. § 1295(a)(1).

1 Paragraph 2 of 35 U.S.C. § 112 was replaced with newly designated § 112(b) when § 4(c) of the America Invents Act (AIA), Pub. L. No. 112-29, took effect on September 16, 2012. Because the applications resulting in the patents at issue in this case were filed before that date, we will refer to the pre-AIA version of § 112.


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II. DISCUSSION Since the denial of a motion for JMOL is not patent

law-specific, regional circuit law applies. The Fifth Cir-cuit reviews the denial of a JMOL motion de novo. See, e.g., Harris Corp. v. Ericsson Inc., 417 F.3d 1241, 1248 (Fed. Cir. 2005). In the Fifth Circuit, JMOL is appropri-ate if “the facts and inferences point so strongly and overwhelmingly in favor of one party that the court con-cludes that reasonable jurors could not arrive at a contra-ry verdict.” Id. The Court “must presume that the jury resolved all factual disputes in the [prevailing party’s] favor.” Transocean Offshore Deepwater Drilling, Inc. v. Maersk Drilling USA, Inc., 699 F.3d 1340, 1347 (Fed. Cir. 2012) (applying Fifth Circuit law to the review of a dis-trict court’s grant of JMOL).

A. Anticipation We turn first to the district court’s denial of Digital

River’s motion for JMOL of invalidity of the ’572 patent based on 35 U.S.C. § 102(a). A patent claim is anticipated if a single prior art reference expressly or inherently discloses every limitation of the claim. See, e.g., Orion IP, LLC v. Hyundai Motor Am., 605 F.3d 967, 975 (Fed. Cir. 2010). Anticipation challenges under § 102 must focus only on the limitations actually recited in the claims. See Constant v. Adv. Micro-Devices, Inc., 848 F.2d 1560, 1570–71 (Fed. Cir. 1988) (finding “limitations [] not found anywhere in the claims” to be irrelevant to an anticipa-tion challenge). Whether a reference discloses a limita-tion is a question of fact, and a jury’s findings on questions of fact are reviewed for substantial evidence. See, e.g., Dawn Equip. Co. v. Ky. Farms Inc., 140 F.3d 1009, 1014 (Fed. Cir. 1998). Invalidity by anticipation must be proven by clear and convincing evidence. See Microsoft Corp. v. i4i L.P., 131 S. Ct. 2238, 2242 (2011).

On appeal, the parties only dispute whether Digital River’s prior art Secure Sales System (SSS) satisfies the


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“look and feel” limitation; DDR does not dispute that the SSS satisfies every other limitation of the ’572 patent’s asserted claims. NLG, which adopted Digital River’s anticipation challenge to the ’572 patent,2 argues that no evidence supports the jury’s finding that the SSS does not disclose the “look and feel” limitation, since it showed the jury multiple examples of composite web pages generated by the SSS with a “look and feel” based on a set of “look and feel” elements from the corresponding host website.

DDR contends that, as the district court determined, “it is up to the trier of fact to determine whether the combination of elements making up the overall appear-

2 Even though Digital River terminated its appeal prior to oral argument, it did not do so until after the parties had fully completed their briefing. In its own briefs, although only in footnotes, NLG incorporated by reference Digital River’s arguments on anticipation. Appellant’s Br. 43 n.23; Appellant’s Reply Br. 9 n.5. In a consolidated case such as here, Rule 28(i) of the Federal Rules of Appellate Procedure (FRAP) permits “any party [to] adopt by reference a part of another’s brief.” See, e.g., Pozen Inc. v. Par Pharm. Inc., 696 F.3d 1151, 1159 n.3 (Fed. Cir. 2012); Aventis Pharma Deutschland GmbH v. Lupin, Ltd., 499 F.3d 1293, 1294 n.1 (Fed. Cir. 2007). Compare Microsoft Corp. v. DataTern, Inc., 755 F.3d 899, 910 (Fed. Cir. 2014) (co-parties in non-consolidated ap-peals cannot use incorporation pursuant to FRAP 28(i) to exceed word count limits prescribed by FRAP 32(a)(7)). DDR implicitly concedes that NLG has adequately adopt-ed Digital River’s anticipation defense as to the ’572 patent, acknowledging that “[NLG] did not adopt Digital River’s anticipation defense or seek to extend it to prove anticipation of the ’399 patent, which has claims contain-ing extra elements not found in the asserted claims of the ’572 patent.” Appellee’s Br. 44 n.10 (emphasis added).


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ance of a website has a similar ‘look and feel’ as compared to another website.” DDR Holdings, LLC v. Hotels.com, L.P., 954 F. Supp. 2d 509, 517 (E.D. Tex. 2013). DDR contends that the jury reviewed substantial evidence that Digital River’s SSS did not replicate the host website’s “look and feel” in terms of “overall appearance” and that the web pages generated by the SSS did not show “corre-spondence of overall appearance.” In particular, DDR argues that the SSS did not satisfy this limitation since it did not replicate a sufficient number of “look and feel” elements from the host web page. Appellee’s Br. 45–46.

We find that the record allows only one reasonable finding: clear and convincing evidence establishes that Digital River’s prior art SSS anticipates the asserted claims of the ’572 patent. The record lacks substantial evidence to support the jury’s finding that the asserted claims of the ’572 patent are not anticipated. Therefore, the district court erred by denying the defendants’ motion for JMOL of invalidity of the ’572 patent under 35 U.S.C. § 102(a).

Digital River’s prior art SSS was operational and sold to its first customer by August 12, 1996. J.A. 6618–23. By August 1997, more than a year before the filing date of the provisional application for the ’135 patent, Digital River’s SSS had attracted its 500th customer. J.A. 6257. Digital River advertised its SSS as a system for generat-ing web pages that allowed website visitors to “purchase and download the digital products of their choice,” but still “retain[ed] the look and feel of [the host’s] site.” J.A. 6202 (emphasis added). The SSS was activated when visitors on a host’s website clicked a “web site ‘buy’ but-ton” hyperlink. J.A. 6320. Digital River’s advertisements explained that “[w]hen [website visitor] customers want to purchase, they push the ‘buy’ button and are transferred immediately and transparently to the Digital River Cen-tral Commerce Server.” J.A. 6202. This component of the SSS then generated and served composite web pages to


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website visitors that incorporated “look and feel” elements of the host website and product information associated with the host website’s “web store” in a manner that “replicate[d] the look and feel of the [host’s] Web site.” J.A. 6320 (emphasis added). These “look and feel” ele-ments and this product information content were stored by Digital River in a data warehouse and retrieved for incorporation into the generated composite web page based on a correlation with the “buy” button hyperlink on the host website. See id. In this way, Digital River’s SSS would allow “transaction[s to] take[] place in the selling environment [the host website had] created, surrounded by the look and feel of [the host website’s] identity. . . . There [would be] no sensation [for a website visitor] of being suddenly hustled off to another location.” J.A. 6123 (emphasis added).

During trial, a Digital River witness testified at length on how the SSS generated composite web pages with “look and feel” elements from host websites, and operated the SSS for the jury. Digital River also showed the jury several composite web pages generated by the SSS for host websites before the earliest priority date of the ’572 patent, including a composite web page that incorporated several elements identified in DDR’s patents or by DDR’s expert at trial as “look and feel elements”: the host website’s logo, background color, and prominent circular icons. J.A. 8856–57 (composite web page), 7502 (host website); see also J.A. 8858–61 (composite web page incorporating host website logo, colors, fonts), 6122 (ex-ample web page from host website).

The parties’ stipulated construction of “look and feel” requires the generated composite web page to include a set of elements from the host website, each of these ele-ments being a “look and feel element” described in the specification that “convey[s] an overall appearance identi-fying a website.” J.A. 542. Consistent with the specifica-tion, the stipulated construction defines these “look and


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feel elements” that “convey an overall appearance identi-fying a website” to “include logos, colors, page layout, navigation systems, frames, ‘mouse-over’ effects, or other elements that are consistent through some or all of a Host’s website.” Id.; see also ’572 patent, 14:11–14. Digital River’s SSS clearly satisfies this limitation. For example, Digital River showed the jury a host website that included a stylized logo, a particular background color, and prominent circular icons. J.A. 7502. The SSS generated a prior art composite web page that incorpo-rated each of these “look and feel” elements. J.A. 8856–57; see also J.A. 6172 (host website) and 6171 (SSS-generated prior art composite web page incorporating logo, navigational menu, and color “look and feel” ele-ments). And as explained above, the SSS was consistent-ly promoted and advertised as creating a composite web page that retained the “look and feel” of the host website. E.g., J.A. 6123, 6202, 6320.

Both the district court and DDR introduced a limita-tion found neither in the ’572 patent’s claims nor the parties’ stipulated construction. In particular, the district court introduced a requirement that the generated com-posite web page have an “overall match” in appearance with the host website, beyond what is expressly recited by the claims. DDR Holdings, 954 F. Supp. 2d at 517; see also Appellee’s Br. 47. There is nothing, however, in the parties’ stipulated construction of “look and feel,” the claim language, or the specification that requires the generated composite web page to match the host website or to incorporate a specific number, proportion, or selec-tion of the identified “look and feel” elements on a host website.

In order to satisfy this limitation, it is sufficient that “look and feel” elements identifying the host website are transferred to and displayed on the generated composite webpage. For example, independent claim 13 of the ’572 patent merely requires that the generated composite web


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page have a “look and feel based on the look and feel description in the data store and content based on the commerce object associated wit[h] the link.” Independent claim 17 requires only that the generated composite web page have a “look and feel corresponding to the stored look and feel description” of the host website. There is no claim language requiring an “overall match” or a specific number of “look and feel” elements.

Further, the common specification explains that “[t]he look and feel is captured by selecting an example page [from] the host, retrieving the sample page from the host, identifying the look and feel elements from the sample page, and saving the identified look and feel elements.” ’572 patent, 14:7–10. Nothing in the common specifica-tion suggests that satisfaction of the “look and feel” limi-tation requires more than mechanically identifying “look and feel elements” from a web page on the host website, storing these elements in a data store, and using these stored “look and feel elements” to create the “look and feel” of the generated composite web page.

The jury’s determination that the SSS does not antic-ipate claims 13, 17, and 20 of the ’572 patent is not sup-ported by substantial evidence. Therefore, the district court erred by denying the defendants’ motion for JMOL of invalidity of the ’572 patent under 35 U.S.C. § 102(a).3

B. Patent-eligible subject matter NLG also contends that the district court erred by

denying its motion for JMOL that the asserted claims of

3 Neither Digital River nor NLG ever argued that the ’399 patent is invalid as anticipated by or obvious over prior art. We decline to speculate whether Digital River’s prior art SSS, either alone or in combination with other prior art, invalidates the ’399 patent under 35 U.S.C. §§ 102 or 103.


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the ’572 and ’399 patents are invalid under 35 U.S.C. § 101. Since the ’572 patent is invalid as anticipated under 35 U.S.C. § 102(a), we focus on NLG’s § 101 chal-lenge to claims 1, 3, and 19 of the ’399 patent. We con-clude, as did the district court, that the asserted claims of the ’399 patent clear the § 101 hurdle.

We review the district court’s determination of patent eligibility under 35 U.S.C. § 101 de novo. Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012). In Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1294 (2012), the Supreme Court set forth an analytical framework under § 101 to distinguish patents that claim patent-ineligible laws of nature, natural phe-nomena, and abstract ideas—or add too little to such underlying ineligible subject matter—from those that claim patent-eligible applications of those concepts. First, given the nature of the invention in this case, we deter-mine whether the claims at issue are directed to a patent-ineligible abstract idea. Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2355 (2014). If so, we then consider the elements of each claim—both individually and as an ordered combination—to determine whether the addition-al elements transform the nature of the claim into a patent-eligible application of that abstract idea. Id. This second step is the search for an “inventive concept,” or some element or combination of elements sufficient to ensure that the claim in practice amounts to “significantly more” than a patent on an ineligible concept. Id.

Distinguishing between claims that recite a patent-eligible invention and claims that add too little to a pa-tent-ineligible abstract concept can be difficult, as the line separating the two is not always clear. At one time, a computer-implemented invention was considered patent-eligible so long as it produced a “useful, concrete and tangible result.” State St. Bank & Trust Co. v. Signature Fin. Grp., Inc., 149 F.3d 1368, 1373 (Fed. Cir. 1998) (finding a machine that transformed data by a series of


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mathematical calculations to a final share price to be patent-eligible); see also In re Alappat, 33 F.3d 1526, 1544 (Fed. Cir. 1994) (en banc). This understanding rested, in large part, on the view that such inventions crossed the eligibility threshold by virtue of being in the technological realm, the historical arena for patented inventions. See, e.g., In re Bilski, 545 F.3d 943, 952, 954–56 (Fed. Cir. 2008) (en banc) (concluding that a patent-eligible process must either be “tied to a particular machine or apparatus” or transformed into a different state or thing, i.e., the “machine-or-transformation test”).

While the Supreme Court in Bilski v. Kappos noted that the machine-or-transformation test is a “useful and important clue” for determining patent eligibility, 130 S. Ct. 3218, 3227 (2010), it is clear today that not all ma-chine implementations are created equal. For example, in Mayo, the Supreme Court emphasized that satisfying the machine-or-transformation test, by itself, is not sufficient to render a claim patent-eligible, as not all transfor-mations or machine implementations infuse an otherwise ineligible claim with an “inventive concept.” See 132 S. Ct. at 1301 (“[S]imply implementing a mathematical principle on a physical machine, namely a computer, [i]s not a patentable application of that principle.”) (describ-ing Gottschalk v. Benson, 409 U.S. 63, 64 (1972)). And after Alice, there can remain no doubt: recitation of gener-ic computer limitations does not make an otherwise ineligible claim patent-eligible. 134 S. Ct. at 2358. The bare fact that a computer exists in the physical rather than purely conceptual realm “is beside the point.” Id.

Although the Supreme Court did not “delimit the pre-cise contours of the ‘abstract ideas’ category” in resolving Alice, 134 S. Ct. at 2356–57, over the course of several cases the Court has provided some important principles. We know that mathematical algorithms, including those executed on a generic computer, are abstract ideas. See Benson, 409 U.S. at 64. We know that some fundamental


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economic and conventional business practices are also abstract ideas. See Bilski, 130 S. Ct. at 3231 (finding the “fundamental economic practice” of hedging to be patent ineligible); Alice, 134 S. Ct. at 2356 (same for intermedi-ated settlement).

In some instances, patent-ineligible abstract ideas are plainly identifiable and divisible from the generic com-puter limitations recited by the remainder of the claim. For example, the Supreme Court in Alice determined that the claims at issue “simply instruct[ed] the practitioner to implement the abstract idea of intermediated settlement on a generic computer.” 134 S. Ct. at 2359. In Ultramer-cial, Inc. v. Hulu, LLC, ___ F.3d ___, 2014 WL 5904902, at *5 (Fed. Cir. Nov. 14, 2014), the claims merely recited the abstract idea of using advertising as a currency as applied to the particular technological environment of the Inter-net. In buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014), the claims recited no more than using a computer to send and receive information over a network in order to implement the abstract idea of creating a “transaction performance guaranty.” In Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1344–45 (Fed. Cir. 2013), the claims merely recited “gen-eralized software components arranged to implement an abstract concept [of generating insurance-policy-related tasks based on rules to be completed upon the occurrence of an event] on a computer.” And in Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1278 (Fed. Cir. 2012), the claims recited no more than the use of a computer “employed only for its most basic function, the performance of repetitive calculations,” to implement the abstract idea of managing a stable-value protected life insurance policy. Under Supreme Court precedent, the above claims were recited too broadly and generically to be considered sufficiently specific and meaningful applications of their underlying abstract ideas. Although many of the claims recited various com-


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puter hardware elements, these claims in substance were directed to nothing more than the performance of an abstract business practice on the Internet or using a conventional computer. Such claims are not patent-eligible.

Against this background, we turn to the ’399 patent’s asserted claims. We begin our § 101 analysis at Mayo/Alice step one: determining whether the computer-implemented claims at issue here are “directed to” a patent-ineligible abstract idea.4 Here, we note that the ’399 patent’s asserted claims do not recite a mathematical algorithm. Nor do they recite a fundamental economic or longstanding commercial practice. Although the claims address a business challenge (retaining website visitors), it is a challenge particular to the Internet.

Indeed, identifying the precise nature of the abstract idea is not as straightforward as in Alice or some of our other recent abstract idea cases. NLG’s own varying formulations of the underlying abstract idea illustrate this difficulty. NLG characterizes the allegedly abstract idea in numerous ways, including “making two web pages look the same,” “syndicated commerce on the computer using the Internet,” and “making two e-commerce web pages look alike by using licensed trademarks, logos, color schemes and layouts.” See, e.g., Appellant’s Br. 18–20. The dissent characterizes DDR’s patents as describing the entrepreneurial goal “that an online merchant’s sales can be increased if two web pages have the same ‘look and feel.’” Dissenting Op. 2. But as discussed below, under

4 The parties do not dispute that the asserted sys-tem and method claims of the ’399 patent, for the purpos-es of § 101, are no different in substance. See Appellee Br. 63; Appellant Br. 24. Thus, the form of the asserted claims (system or method) does not affect our analysis of their patent eligibility. See Alice, 134 S. Ct. at 2360.


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any of these characterizations of the abstract idea, the ’399 patent’s claims satisfy Mayo/Alice step two.

As an initial matter, it is true that the claims here are similar to the claims in the cases discussed above in the sense that the claims involve both a computer and the Internet. But these claims stand apart because they do not merely recite the performance of some business prac-tice known from the pre-Internet world along with the requirement to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer tech-nology in order to overcome a problem specifically arising in the realm of computer networks.

In particular, the ’399 patent’s claims address the problem of retaining website visitors that, if adhering to the routine, conventional functioning of Internet hyper-link protocol, would be instantly transported away from a host’s website after “clicking” on an advertisement and activating a hyperlink. For example, asserted claim 19 recites a system that, among other things, 1) stores “visu-ally perceptible elements” corresponding to numerous host websites in a database, with each of the host web-sites displaying at least one link associated with a product or service of a third-party merchant, 2) on activation of this link by a website visitor, automatically identifies the host, and 3) instructs an Internet web server of an “out-source provider” to construct and serve to the visitor a new, hybrid web page that merges content associated with the products of the third-party merchant with the stored “visually perceptible elements” from the identified host website. See supra 5.

In more plain language, upon the click of an adver-tisement for a third-party product displayed on a host’s website, the visitor is no longer transported to the third party’s website. Instead, the patent claims call for an “outsource provider” having a web server which directs the visitor to an automatically-generated hybrid web page


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that combines visual “look and feel” elements from the host website and product information from the third-party merchant’s website related to the clicked advertisement.5 In this way, rather than instantly losing visitors to the third-party’s website, the host website can instead send its visitors to a web page on the outsource provider’s server that 1) incorporates “look and feel” elements from the host website, and 2) provides visitors with the oppor-tunity to purchase products from the third-party mer-chant without actually entering that merchant’s website.

The dissent suggests that the “store within a store” concept, such as a warehouse store that contains a kiosk for selling a third-party partner’s cruise vacation packag-es, is the pre-Internet analog of the ’399 patent’s asserted claims. Dissenting Op. 4. While that concept may have been well-known by the relevant timeframe, that practice did not have to account for the ephemeral nature of an Internet “location” or the near-instantaneous transport between these locations made possible by standard Inter-net communication protocols, which introduces a problem that does not arise in the “brick and mortar” context. In particular, once a customer enters a physical warehouse store, that customer may encounter a kiosk selling third-

5 On a fundamental level, the creation of new com-positions and products based on combining elements from different sources has long been a basis for patentable inventions. See, e.g., Parks v. Booth, 102 U.S. 96, 102 (1880) (“Modern inventions very often consist merely of a new combination of old elements or devices, where noth-ing is or can be claimed except the new combination.”); KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418–19 (2007) (“[I]nventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discov-eries almost of necessity will be combinations of what, in some sense, is already known.”).


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party cruise vacation packages. There is, however, no possibility that by walking up to this kiosk, the customer will be suddenly and completely transported outside the warehouse store and relocated to a separate physical venue associated with the third-party—the analog of what ordinarily occurs in “cyberspace” after the simple click of a hyperlink—where that customer could purchase a cruise package without any indication that they were previously browsing the aisles of the warehouse store, and without any need to “return” to the aisles of the store after com-pleting the purchase. It is this challenge of retaining control over the attention of the customer in the context of the Internet that the ’399 patent’s claims address.

We caution, however, that not all claims purporting to address Internet-centric challenges are eligible for patent. For example, in our recently-decided Ultramercial opin-ion, the patentee argued that its claims were “directed to a specific method of advertising and content distribution that was previously unknown and never employed on the Internet before.” 2014 WL 5904902, at *3. But this alone could not render its claims patent-eligible. In particular, we found the claims to merely recite the abstract idea of “offering media content in exchange for viewing an adver-tisement,” along with “routine additional steps such as updating an activity log, requiring a request from the consumer to view the ad, restrictions on public access, and use of the Internet.” Id. at *5.

The ’399 patent’s claims are different enough in sub-stance from those in Ultramercial because they do not broadly and generically claim “use of the Internet” to perform an abstract business practice (with insignificant added activity). Unlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result—a result that overrides the routine and conventional se-quence of events ordinarily triggered by the click of a hyperlink. Instead of the computer network operating in


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its normal, expected manner by sending the website visitor to the third-party website that appears to be connected with the clicked advertisement, the claimed system generates and directs the visitor to the above-described hybrid web page that presents product infor-mation from the third-party and visual “look and feel” elements from the host website. When the limitations of the ’399 patent’s asserted claims are taken together as an ordered combination, the claims recite an invention that is not merely the routine or conventional use of the Inter-net.

It is also clear that the claims at issue do not attempt to preempt every application of the idea of increasing sales by making two web pages look the same, or of any other variant suggested by NLG. Rather, they recite a specific way to automate the creation of a composite web page by an “outsource provider” that incorporates ele-ments from multiple sources in order to solve a problem faced by websites on the Internet. As a result, the ’399 patent’s claims include “additional features” that ensure the claims are “more than a drafting effort designed to monopolize the [abstract idea].” Alice, 134 S. Ct. at 2357. In short, the claimed solution amounts to an inventive concept for resolving this particular Internet-centric problem, rendering the claims patent-eligible.

In sum, the ’399 patent’s claims are unlike the claims in Alice, Ultramercial, buySAFE, Accenture, and Bancorp that were found to be “directed to” little more than an abstract concept. To be sure, the ’399 patent’s claims do not recite an invention as technologically complex as an improved, particularized method of digital data compres-sion. But nor do they recite a commonplace business method aimed at processing business information, apply-ing a known business process to the particular technologi-cal environment of the Internet, or creating or altering contractual relations using generic computer functions and conventional network operations, such as the claims


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in Alice, Ultramercial, buySAFE, Accenture, and Bancorp. The claimed system, though used by businesses, is patent-eligible under § 101.6 The district court did not err in denying NLG’s motion for JMOL of invalidity under 35 U.S.C. § 101 as to these claims.

C. Indefiniteness In its motion for JMOL of invalidity, NLG also sought

to invalidate the asserted claims of the ’572 and ’399 patents on the ground that the terms “look and feel” and “visually perceptible elements” render the claims indefi-nite because they are impermissibly subjective and fail to notify the public of the bounds of the claimed invention.7 On appeal, NLG contends that the district court erred by denying its motion. We disagree.

Since the ’572 patent’s asserted claims are invalid un-der 35 U.S.C. § 102(a), we need not decide NLG’s indefi-niteness challenge to the patent based on the term “look and feel.” We thus focus our analysis on the term “visual-ly perceptible elements” in the ’399 patent’s asserted claims. The parties stipulated to a construction of the

6 Of course, patent-eligible does not mean patenta-ble under, e.g., 35 U.S.C. §§ 102 and 103. As discussed in footnote 3 supra, the patentability of the ’399 patent’s asserted claims is not before us.

7 Though NLG contended that the term “look and feel” is indefinite before the district court, on appeal NLG shifts its focus to “look and feel description.” “Look and feel” and “look and feel description,” while related, are recited as separate terms within the asserted claims. E.g., ’572 patent, claim 13 (“. . . a look and feel based on the look and feel description in the data store . . .”). NLG provides no explanation or justification for its shift in focus. As does DDR in its briefing, we focus our analysis on the term “look and feel.”


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term as “‘look and feel’ elements that can be seen.” J.A. 542. NLG argues that the term “is effectively the same as ‘look and feel description,’” and therefore lacks definite-ness for the same reasons. Appellant’s Br. 30 n.12.

Indefiniteness is a question of law we review de novo. Wellman, Inc. v. Eastman Chem. Co., 642 F.3d 1355, 1365–66 (Fed. Cir. 2011). The definiteness requirement is set forth in 35 U.S.C. § 112 ¶ 2, which states that “[t]he specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his inven-tion.” The definiteness requirement focuses on whether “a patent’s claims, viewed in light of the specification and prosecution history, inform those skilled in the art about the scope of the invention with reasonable certainty.” Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120, 2129 (2014). The inquiry “trains on the understanding of a skilled artisan at the time of the patent application.” Id. at 2130.

When a claim term “depend[s] solely on the unre-strained, subjective opinion of a particular individual purportedly practicing the invention,” without sufficient guidance in the specification to provide objective direction to one of skill in the art, the term is indefinite. Datamize, LLC v. Plumtree Software, Inc., 417 F.3d 1342, 1350 (Fed. Cir. 2005) (finding “aesthetically pleasing” to be indefinite because the specification lacked any objective definition of the term). For some facially subjective terms, the defi-niteness requirement is not satisfied by merely offering examples that satisfy the term within the specification. See Interval Licensing LLC v. AOL, Inc., 764 F.3d 1364, 1371–73 (Fed. Cir. 2014) (finding a single example of the term “unobtrusive manner” in the specification did not outline the claims to a skilled artisan with reasonable certainty). For other terms like, for example, terms of degree, specific and unequivocal examples may be suffi-cient to provide a skilled artisan with clear notice of what


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is claimed. See Enzo Biochem, Inc. v. Applera Corp., 599 F.3d 1325, 1334–35 (Fed. Cir. 2010) (finding the phrase “not interfering substantially” to be definite where intrin-sic evidence provided multiple examples that would allow a skilled artisan to determine whether a particular chem-ical bond linkage group would “interfer[e] substantially” with hybridization).

Here, though NLG attempts to characterize “look and feel” as purely subjective, the evidence demonstrates that “look and feel” had an established, sufficiently objective meaning in the art, and that the ’399 patent used the term consistent with that meaning. The specification explains that “the look and feel is captured by selecting an example page [from] the host, retrieving the sample page from the host, identifying the look and feel elements from the sample page and saving the identified look and feel elements.” ’399 patent, 13:5–9. “Look and feel elements” are described as “includ[ing] logos, colors, page layout, navigation systems, frames, ‘mouse-over’ effects, or other elements that are consistent through some or all of a Host’s website.” Id. at 13:9–12. DDR’s expert on in-fringement testified that a skilled artisan would interpret these “other elements” as elements such as headers, footers, fonts, and images. J.A. 3584.

These examples are consistent with the established meaning of the term “look and feel” in the art, as demon-strated by Digital River’s own evidence at trial. For example, as discussed in Section II. A., Digital River advertised its prior art SSS as generating composite web pages that displayed third-party merchandise but also replicated the “‘look and feel’ of the [host website’s] identi-ty.” J.A. 6123. Digital River also explained that the composite web pages generated by its SSS “retain[ed] the look and feel of the [host’s web]site.” J.A. 6202. At trial, Digital River conceded that it understood the meaning of “look and feel.” J.A. 4146–47 (“Q. And Digital River understood what it meant when it said: we’ll match your


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look and feel, right? A. Yes, sir.”). Digital River also admitted that its customers understood the meaning of “look and feel.” J.A. 4199 (“Q. . . . [S]omebody who is reading Digital River’s [advertising] document should understand what Digital River means when it says matching look and feel, right? . . . A. Yes, sir.”).

In sum, “look and feel” is not a facially subjective term like “unobtrusive manner” in Interval or “aesthetically pleasing” in Datamize. Rather, as demonstrated by Digital River’s own advertisements for its prior art SSS and its admissions at trial, the term had an established meaning in the art by the relevant timeframe. The exam-ples of “look and feel” elements disclosed in the specifica-tion are consistent with the term’s established meaning. In short, the term “visually perceptible elements,” or “‘look and feel’ elements that can be seen,” viewed in light of the specification and prosecution history, informed those skilled in the art about the scope of the ’399 patent’s claims with reasonable certainty. The district court did not err by denying NLG’s motion for JMOL of invalidity of the ’399 patent under 35 U.S.C. § 112 ¶ 2.

D. Infringement NLG also contends that the district court erred by

denying its motion for JMOL of noninfringement as to both the ’572 and ’399 patents. Since the ’572 patent is invalid under 35 U.S.C. § 102(a), we address only NLG’s noninfringement appeal of the ’399 patent. We find, as did the district court, that the jury was presented with substantial evidence on which to base its finding that NLG infringes the asserted claims of the ’399 patent.

NLG argues that the jury’s finding that NLG’s ac-cused websites satisfy the “visually perceptible elements” limitation of the asserted claims is unsupported. NLG further argues that DDR failed to introduce evidence that NLG’s accused system automatically identifies or recog-nizes the source web page as required by claims 1 and 19


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of the ’399 patent. NLG also argues that DDR only showed the jury screenshot images of the accused web-sites running NLG’s e-commerce system on a single day, and thus did not provide evidence of NLG’s alleged in-fringement throughout the entire damages period.

The record tells a different tale. For the “visually per-ceptible elements” limitation, the jury viewed screenshot images from nine NLG-partner host websites and their corresponding accused NLG-operated composite web pages. DDR’s expert on infringement also presented the jury with lists of the “look and feel elements” from each host website allegedly incorporated in a corresponding NLG-generated composite web page and opined that the accused composite web pages satisfied the limitation. The jury was free to use this proffered evidence and testimony to form its own conclusions as to whether NLG’s accused composite web pages satisfied the “visually perceptible elements” limitation of the asserted claims.

As for the other contested limitations of the ’399 pa-tent’s asserted claims, DDR’s expert on infringement testified that on activation of a link on an NLG-partner host website corresponding to an NLG-generated compo-site web page, a keyword identifier is sent to NLG’s e-commerce web server (e.g., “OBWEB” for Orbitz’s host website), and a processor therein determines the location and identity of the host website (e.g., Orbitz). The jury was free to credit this testimony as evidence that NLG’s accused e-commerce system “automatically . . . recog-niz[es]” or “automatically identif[ies]” the source page “on which the link has been activated.”

NLG’s argument that DDR provided the jury with screenshot images of NLG’s accused composite web pag-es—and thus evidence of infringement—for only one day appears to be more relevant to damages than to infringe-ment. Regardless, NLG’s contention is without merit. DDR’s expert testified that he had examined NLG’s


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accused system throughout the entire period of alleged infringement, including any changes in its software source code, deposition testimony on its operation, and, via the Internet Archive, prior versions of accused compo-site web pages. Based on his review, DDR’s expert testi-fied that nothing about NLG’s accused system “had changed in any substantial way” during this period. J.A. 3751–52. Substantial evidence supports the jury’s finding that NLG’s accused system infringes the ’399 patent, and thus the district court did not err in denying NLG’s mo-tion for JMOL of noninfringement.

E. Damages DDR sought $6.04 million in damages for NLG’s in-

fringement of the ’572 and ’399 patents; NLG countered with $375,000. The parties agreed on a verdict form that instructed the jury to award a single sum to compensate DDR for NLG’s infringement of the asserted claims found to be infringed and not invalid. J.A. 3080. The jury awarded DDR $750,000 in damages for NLG’s infringe-ment, without specifying how this award was apportioned between the ’572 and the ’399 patents.

Because we find the ’572 patent invalid as anticipat-ed, we vacate the damages award. This could warrant a new trial on damages. See Verizon Servs. Corp. v. Vonage Holdings Corp., 503 F.3d 1295, 1310 (Fed. Cir. 2007). NLG did not, however, move for a new trial under FRCP 59 and may not have preserved its recourse to this option. DDR Holdings, 954 F. Supp. 2d at 522 (“Interestingly however, NLG does not move for a new trial pursuant to Rule 59.”). We remand to the district court to determine the effect—if any—of our invalidation of the ’572 patent on the jury’s damages award.8

8 We note that NLG’s contention that the jury’s damages award was “grossly excessive” because its ac-


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F. Prejudgment Interest The district court also awarded DDR prejudgment in-

terest. NLG contends that DDR should not be entitled to any prejudgment interest because it is a non-practicing entity and at a minimum, DDR should not be entitled to any prejudgment interest during a four-year stay in litigation since the stay was the result of DDR’s request for ex parte reexamination of the ’135 and ’572 patents.

We review the district court’s award of prejudgment interest for an abuse of discretion. See Telcordia Techs., Inc. v. Cisco Sys., Inc., 612 F.3d 1365, 1377 (Fed. Cir. 2010); see also Gen. Motors Corp. v. Devex Corp., 461 U.S. 648, 657 (1983) (“[A] decision to award prejudgment interest will only be set aside if it constitutes an abuse of discretion.”). Under 35 U.S.C. § 284, after a finding of infringement, the court “shall award . . . damages . . . together with interest and costs.” (emphases added). Prejudgment interest should ordinarily be awarded absent some justification for withholding such an award. Gen. Motors, 461 U.S. at 657; see also Energy Transp. Grp., Inc. v. William Demant Holding A/S, 697 F.3d 1342, 1358 (Fed. Cir. 2012) (“The award of pre-judgment interest is the rule, not the exception.”) (quotation and citation omitted).

NLG cites no case law suggesting that prevailing non-practicing entities are not entitled to prejudgment inter-est. We decline to create such a statutory exception. See Energy Transp., 697 F.3d at 1358 (“The district court did

cused websites infringed for only one day is based on a flawed premise and is without merit. As the district court explained, NLG cannot attempt to “reverse engineer the jury’s math . . . and use its substituted, and purely specu-lative, analysis to call the award excessive.” DDR Hold-ings, 954 F. Supp. 2d at 530.


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not abuse its discretion in this case by following the standard rule of awarding pre-judgment interest.”). However, since the ’572 patent is invalid, the district court must recalculate its award of prejudgment interest so that it is tied solely to NLG’s infringement of the ’399 patent, which issued in 2010, more than four years after issuance of the ’572 patent. Nickson Indus., Inc. v. Rol Mfg. Co., 847 F.2d 795, 800 (Fed. Cir. 1988) (“Generally, prejudgment interest should be awarded from the date of infringement to the date of judgment.”). Since the ’399 patent did not issue until after the stay was lifted in 2010, we need not determine whether DDR is entitled to pre-judgment interest during the pendency of the contested stay.

We have considered the parties’ remaining arguments and find them unpersuasive.

III. CONCLUSION In large part, we affirm the district court. The assert-

ed claims of the ’572 patent, however, are anticipated by Digital River’s prior art Secure Sales System under 35 U.S.C. § 102(a), and no substantial evidence supports the jury’s contrary finding. As such, the district court erred in denying defendants’ motion for JMOL of invalidity as to the ’572 patent. We vacate the award of damages and prejudgment interest to DDR based on NLG’s infringe-ment of the ’572 and ’399 patents and remand to the district court in order to determine the damages and prejudgment interest attributable solely to NLG’s in-fringement of the ’399 patent.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED

COSTS No costs.


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______________________

DDR HOLDINGS, LLC, Plaintiff-Appellee,

v.

HOTELS.COM, L.P., CENDANT TRAVEL DISTRIBUTION SERVICES GROUP, INC., EXPEDIA, INC., TRAVELOCITY.COM, L.P.,

SITE59.COM, LLC, INTERNATIONAL CRUISE & EXCURSION GALLERY, INC.,

OURVACATIONSTORE, INC., INTERNETWORK PUBLISHING CORPORATION, AND ORBITZ

WORLDWIDE, LLC, Defendants,

AND

NATIONAL LEISURE GROUP, INC. AND

WORLD TRAVEL HOLDINGS, INC., Defendants-Appellants,

AND

DIGITAL RIVER, INC.,

Defendant. ______________________

2013-1505

______________________


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MAYER, Circuit Judge, dissenting. I respectfully dissent. The claims asserted by DDR

Holdings, LLC (“DDR”) fall outside 35 U.S.C. § 101 be-cause they simply describe an abstract concept—that an online merchant’s sales can be increased if two web pages have the same “look and feel”—and apply that concept using a generic computer.

I. The common specification of DDR’s patents notes that

an online merchant will often lose customers when those customers click on an advertisement from a third-party vendor that has been displayed on the original merchant’s web page. See U.S. Patent No. 6,993,572 (the “’572 pa-tent”) col.2 ll.30–33. The specification explains, however, that the original merchant could potentially avoid “the loss of hard-won visitor traffic,” id. col.2 ll.64–65, if he were able to dupe customers into believing that they were still on the merchant’s web page even when they were actually viewing goods from a third-party vendor, id. col.2 ll.26–65. Notably, though, DDR’s patents are very vague as to how this duping is to occur, indicating only that the web page of the original merchant and that of the third-party vendor should be made to look alike using “visually perceptible elements.” See U.S. Patent No. 7,818,399 (the “’399 patent”) col.28 ll.31–32 (requiring the use of a “plu-rality of visually perceptible elements visually corre-sponding to the [original merchant’s web] page”). DDR’s patents fail to meet the demands of section 101 because they describe a goal—confusing consumers by making two web pages look alike—but disclose no new technology, or “inventive concept,” Mayo Collaborative Servs. v. Prome-theus Labs., Inc., 132 S. Ct. 1289, 1294 (2012), for achiev-ing that goal. See O’Reilly v. Morse, 56 U.S. (15 How.) 62, 120 (1854) (rejecting a claim which covered “an effect produced by the use of electro-magnetism distinct from the process or machinery necessary to produce it”); In re


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Brooks, 90 F.2d 106, 107–08 (CCPA 1937) (“It is for the discovery or invention of some practicable method or means of producing a beneficial result or effect, that a patent is granted, and not for the result or effect itself.” (emphasis added) (citations and internal quotation marks omitted)).

DDR’s patents are long on obfuscation but short on substance. Indeed, much of what they disclose is so rudimentary that it borders on the comical. For example, the patents explain that two web pages are likely to look alike if they are the same color, have the same page layout, and display the same logos. See ’572 patent col.14 ll.5–18. The recited computer limitations, moreover, are merely generic. The claims describe use of a “data store,” a “web page having a link,” and a “computer processor,” id. col.29 ll.1–13, all conventional elements long-used in e-commerce. Because DDR’s claims, like those at issue in Alice Corporation v. CLS Bank International, “simply instruct the practitioner to implement [an] abstract idea . . . on a generic computer,” they do not meet section 101. 134 S. Ct. 2347, 2359 (2014); see id. at 2360 (reject-ing claims requiring a “data processing system’” with a “communications controller” and a “data storage unit” as “purely functional and generic” (citations and internal quotation marks omitted)); Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1344 (Fed. Cir. 2013) (rejecting claims requiring “a combination of computer components including an insurance transac-tion database, a task library database, a client compo-nent, and a server component, which include[d] an event processor, a task engine, and a task assistant”).

II. The court concludes that the asserted claims of

DDR’s ’399 patent fall within section 101 because “they do not merely recite the performance of some business prac-tice known from the pre-Internet world along with the


85


requirement to perform it on the Internet.” Ante at 20. This is incorrect. DDR’s claims do, in fact, simply take a well-known and widely-applied business practice and apply it using a generic computer and the Internet. The idea of having a “store within a store” was in widespread use well before the dawn of e-commerce. For example, National Leisure Group, Inc. (“NLG”), one of the defend-ants here, previously “sold vacations at . . . BJ’s Whole-sale Clubs through point of purchase displays in the 45 BJ’s Clubs along the Eastern Seaboard.” Br. of Defend-ants-Appellants National Leisure Group, Inc. and World Travel Holdings, Inc. at 4. DDR’s patents are directed to the same concept. Just as visitors to BJ’s Wholesale Clubs could purchase travel products from NLG without leaving the BJ’s warehouse, the claimed system permits a person to purchase goods from a third-party vendor, but still have the visual “impression that she is viewing pages served by the [original host merchant].” ’399 patent col.3 ll.23–24; see ante at 3 (explaining that DDR’s claimed system “permits a website visitor, in a sense, to be in two places at the same time”). Indeed, any doubt as to wheth-er the claimed system is merely an Internet iteration of an established business practice is laid to rest by the fact that one of the named inventors acknowledged that the innovative aspect of his claimed invention was “[t]aking something that worked in the real world and doing it on the Internet.” J.A. 03208.

Alice articulated a technological arts test for patent eligibility. 134 S. Ct. at 2359 (explaining that the claimed method fell outside section 101 because it did not “im-prove the functioning of the computer itself” or “effect an improvement in any other technology or technical field”). Here, the court correctly recognizes Alice’s technological arts standard, but applies it in a deficient manner. Ac-cording to the court, DDR’s claims fall within section 101 because the “solution” they offer “is necessarily rooted in computer technology in order to overcome a problem


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specifically arising in the realm of computer networks.” Ante at 20 (emphasis added). The solution offered by DDR’s claims, however, is not rooted in any new computer technology. Its patents address the problem of preventing online merchants from losing “hard-won visitor traf-fic,” ’572 patent col.2 ll.64–65, and the solution they offer is an entrepreneurial, rather than a technological, one. DDR has admitted that it did not invent any of the gener-ic computer elements disclosed in its claims. J.A. 3311–16. There is no dispute, moreover, that at the time of the claimed invention the use of hyperlinks to divert consum-ers to particular web pages was a well-understood and widely-used technique. See ’399 patent col.1 ll.29–52. While DDR’s patents describe the potential advantages of making two web pages look alike, they do not disclose any non-conventional technology for capturing the “look and feel” of a host website or for giving two web pages a simi-lar appearance. See Alice, 134 S. Ct. at 2360 (“[W]hat petitioner characterizes as specific hardware . . . is purely functional and generic.”); Accenture, 728 F.3d at 1345 (rejecting claims that contained no “detailed software implementation guidelines”). DDR’s patents fall outside section 101 because they simply “tak[e] existing infor-mation”—the visual appearance of a host merchant’s website—and use conventional technology to “organiz[e] this information into a new form.” Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir. 2014); see Mayo, 132 S. Ct. at 1298 (emphasizing that reciting “well-understood, routine, [or] conventional activity” does not impart patent eligibility).

In concluding that DDR’s claims meet the demands of section 101, the court focuses on the fact that “they recite a specific way to automate the creation of a composite web page . . . .” Ante at 23 (emphasis added). The Supreme Court, however, has emphatically rejected the idea that claims become patent eligible simply because they dis-close a specific solution to a particular problem. See


87


Bilski v. Kappos, 561 U.S. 593, 599–601 (2010) (conclud-ing that claims fell outside section 101 notwithstanding the fact that they disclosed a very specific method of hedging against price increases); Parker v. Flook, 437 U.S. 584, 593 (1978) (rejecting the argument “that if a process application implements a principle in some specific fash-ion, it automatically falls within the patentable subject matter of § 101”). Indeed, although the claims at issue in Alice described a very specific method for conducting intermediated settlement, the Court nonetheless unani-mously concluded that they fell outside section 101. 134 S. Ct. at 2358–60.

Nor is the fact that the claims address an “Inter-netcentric problem,” ante at 23, sufficient to render them patent eligible. The Supreme Court has repeatedly made clear that “limiting the use of an abstract idea to a partic-ular technological environment” is insufficient to confer patent eligibility. Alice, 134 S. Ct. at 2360 (citations and internal quotation marks omitted); see also Mayo, 132 S. Ct. at 1294; Bilski, 561 U.S. at 610. Accordingly, the fact that DDR’s system operates “in the context of the Inter-net,” ante at 22, does not bring it within patentable sub-ject matter.

The potential scope of DDR’s patents is staggering, arguably covering vast swaths of Internet commerce. DDR has already brought infringement actions against ten defendants, including Digital River, Inc., Expedia, Inc., Travelocity.com, L.P., and Orbitz Worldwide, LLC. See J.A. 255–63; ante at 7. DDR’s claims are patent ineligible because their broad and sweeping reach is vastly disproportionate to their minimal technological disclosure. See Mayo, 132 S. Ct. at 1303 (In assessing patent eligibility, “the underlying functional concern . . . is a relative one: how much future innovation is foreclosed relative to the contribution of the inventor.”).


88


Alice made clear that claims untethered to any ad-vance in science or technology do not pass muster under section 101. 134 S. Ct. at 2359. Viewed as a whole, DDR’s claims contain no more than an abstract idea for increasing sales implemented via “some unspecified, generic computer,” id. at 2360. The inventive concept, if any, embedded in DDR’s claims is an idea for “retaining control over the attention of the customer,” ante at 22. Because this purported inventive concept is an entrepre-neurial rather than a technological one, DDR’s claims are not patentable.


89


______________________

DIGITECH IMAGE TECHNOLOGIES, LLC, Plaintiff-Appellant,

v.

ELECTRONICS FOR IMAGING, INC., SAKAR INTERNATIONAL, INC. (doing business as

Vivitar), GENERAL IMAGING COMPANY, OVERSTOCK.COM, INC., NEWEGG, INC.,

NEWEGG.COM, INC., XEROX CORPORATION, TOSHIBA CORPORATION, TOSHIBA AMERICA

BUSINESS SOLUTIONS, INC., TOSHIBA AMERICA INFORMATION SYSTEMS, INC., AND TOSHIBA

AMERICA, INC., Defendants-Appellees,

AND

BUY.COM, INC.,

Defendant-Appellee,

AND

B AND H FOTO AND ELECTRONICS CORP., Defendant-Appellee,

AND

LEAF IMAGING, LTD.

(doing business as Mamiyaleaf), AND MAMIYA AMERICA CORPORATION,

Defendants-Appellees,


90

AND

LEICA CAMERA AG AND LEICA CAMERA, INC.,


AND

FUJIFILM CORPORATION, SIGMA CORPORATION, SIGMA CORPORATION OF

AMERICA, MICRO ELECTRONICS, INC. (doing business as Micro Center), PENTAX RICOH

IMAGING CO., LTD., PENTAX RICOH IMAGING AMERICAS CORPORATION, RICOH COMPANY,

LTD., RICOH AMERICAS CORPORATION, AND KONICA MINOLTA BUSINESS SOLUTIONS

USA, INC., Defendants-Appellees,

AND

ASUS COMPUTER INTERNATIONAL,

AND ASUSTEK COMPUTER, INC., Defendants-Appellees,

AND

CDW LLC,

Defendant-Appellee,

AND

VICTOR HASSELBLAD AB AND HASSELBLAD USA, INC.,


AND


91

MAMIYA DIGITAL IMAGING CO., LTD., Defendant.

______________________

2013-1600, -1601, -1602, -1603, -1604, -1605, -1606, -1607, -1608, -1609, -1610, -1611, -1612, -1613, -1614, -1615,

-1616, -1617, -1618 ______________________

Appeals from the United States District Court for the

Central District of California in Nos. 12-CV-1324, 12-CV-1668, 12-CV-1671, 12-CV-1673, 12-CV-1675, 12-CV-1677, 12-CV-1679, 12-CV-1680, 12-CV-1681, 12-CV-1686, 12-CV-1687, 12-CV-1688, 12-CV-1689, 12-CV-1693, 12-CV-1694, 12-CV-1695, 12-CV-1696, 12-CV-2122 and 12-CV-2127, Judge Otis D. Wright, II.

______________________

Decided: July 11, 2014 ______________________

JOHN J. EDMONDS, Collins, Edmonds, Pogorzelski,

Schlather & Tower, PLLC, of Houston, Texas, argued for plaintiff-appellant. With him on the brief were STEPHEN F. SCHLATHER and SHEA PALAVAN.

MARK A. LEMLEY, Durie Tangri LLP, of San Francisco,

California, argued for all defendants-appellees. With him on the brief were ANTHONY S. GABRIELSON and TIFFANY D. GEHRKE, Marshall, Gerstein & Borun LLP, of Chicago, Illinois, for CDW LLC; GREGORY S. TAMKIN and CASE COLLARD, Dorsey & Whitney LLP, of Denver, Colorado, for Buy.com, Inc.; PAUL T. MEIKLEJOHN and MUDIT KAKAR, Dorsey & Whitney, LLP, of Seattle, Washington, for Toshiba Corporation, et al.; WILLIAM C. ROOKLIDGE, FRANK P. COTE, and MARK L. BLAKE, Jones Day, of Irvine, California, for Electronics for Imaging, Inc.; EZRA SUTTON, Ezra Sutton & Associates, P.A., of Woodbridge, New


92

Jersey, for Sakar International, Inc.; AARON STIEFEL, Kaye Scholer, LLP, of New York, New York, for B and H Foto and Electronics Corp.; MICHAEL H. JACOBS, Crowell & Moring LLP, of Washington, DC, for Leica Camera AG, et al.; STEVEN J. ROUTH, STEN JENSEN, and JOHN R. INGE, Orrick, Herrington & Sutcliffe LLP, of Washington, DC, and CHRISTOPHER P. BRODERICK and WILLIAM H. WRIGHT, of Los Angeles, California, for FUJIFILM Corporation, et al.; J. RICK TACHÉ, Greenberg Traurig, LLP, of Irvine, California, for Leaf Imaging, Ltd., et al.; JOSHUA M. MASUR and ZHUANJIA GU, Turner Boyd LLP, of Mountain View, California, for Asus Computer International, et al.; and MARK C. JOHNSON, KYLE B. FLEMING, and NICHOLAS J. GINGO, Renner, Otto, Boisselle & Sklar, LLP, of Cleve-land, Ohio, for Victor Hasselblad AB, et al. Of counsel were JASON P. GRIER, Baker & Hostetler, of Atlanta, Georgia, KATRINA M. QUICKER and MICHAEL J. RIESEN, Ballard Spahe, LLP, of Atlanta, Georgia, for Xerox Corpo-ration; KENT E. BALDAUFER and CECILIA ROSE DICKSON, The Webb Law Firm, of Pittsburgh, Pennsylvania, for Newegg, Inc., et al.; and DAVID EVAN CASE, Orrick, Her-rington & Sutcliffe LLP, of Minato-ku, Tokyo, Japan, for Fujifilm Corporation.

______________________

Before MOORE, REYNA, and HUGHES, Circuit Judges. REYNA, Circuit Judge.

In this appeal, we address the subject matter eligibil-ity of claims in U.S. Patent No. 6,128,415 (“the ’415 patent”) directed to a device profile and a method for creating a device profile within a digital image processing system. The district court concluded that the asserted claims were invalid under 35 U.S.C. § 101. For the rea-sons set forth below, we affirm.


93

BACKGROUND Digitech Image Technologies (“Digitech”) is the as-

signee of the ’415 patent, which is directed to the genera-tion and use of an “improved device profile” that describes spatial and color properties of a device within a digital image processing system. In general, digital image pro-cessing involves electronically capturing an image of a scene with a “source device,” such as a digital camera, altering the image in a desired fashion, and transferring the altered image to an “output device,” such as a color printer.

According to the patent, all imaging devices impose some level of distortion on an image’s color and spatial properties. This distortion occurs because different devices (i.e., digital cameras, monitors, TVs, printers, etc.) allow for slightly different ranges of colors and spatial information to be displayed or reproduced. Prior art methods attempted to correct these distortions using certain device dependent solutions and device independ-ent paradigms. Device dependent solutions work to calibrate and modify the color and spatial properties of the devices themselves. For example, some devices may be designed with certain upstream or downstream devices in mind to ensure optimal transfer of image data to those devices. Device independent solutions, on the other hand, work to translate an image’s pixel data from a device dependent format into an independent color space, which can then be translated to any number of output devices at a reduced level of distortion.

Device independent solutions discussed in the patent were limited to color information and require creating “device profiles” that describe the color properties of both the source and output devices, thereby enabling a more accurate translation of the image’s pixel data into the independent color space and across the source and output devices. The ’415 patent expands this device independent


94

paradigm to capture both spatial properties and color properties of an imaging device. The ’415 patent thus discloses an “improved device profile” that “includes both chromatic characteristic information and spatial charac-teristic information.” ’415 patent, col. 2, ll. 16-18.

Digitech filed infringement suits against 32 defend-ants in the U.S. District Court for the Central District of California, asserting claims 1-6, 9, and 26-31 of the ’415 patent directed to a “device profile,” and claims 10-15 of the ’415 patent directed to methods for generating a “device profile.” On July 3, 2013, several defendants filed summary judgment motions seeking to invalidate the asserted claims of the ’415 patent under 35 U.S.C. § 101. On July 31, 2013, the district court granted the defend-ants’ motions and found that all of the asserted claims were subject matter ineligible. The district court found that the “device profile” claims are directed to a collection of numerical data that lacks a physical component or physical manifestation. The district court thus concluded that a “device profile” is nothing more than information and does not fall within one of the categories of eligible subject matter under section 101. The district court further concluded that the asserted method claims for generating a device profile encompass the abstract idea of organizing data through mathematical correlations. The district court thus concluded that the asserted method claims were also ineligible under section 101.

On appeal, Digitech asks us to reverse the district court’s findings for two reasons. First, Digitech asserts that the district court erred in finding that the device profile claims are directed to a collection of data that lacks tangible or physical properties. Second, Digitech argues that the district court erred in finding that the asserted method claims encompass an abstract idea and are not tied to a specific machine or apparatus. We have jurisdic-tion pursuant to 28 U.S.C. § 1295(a)(1).


95

DISCUSSION We review the grant of summary judgment under the

law of the regional circuit. Charles Mach. Works, Inc. v. Vermeer Mfg. Co., 723 F.3d 1376, 1378 (Fed. Cir. 2013). The Ninth Circuit reviews the grant or denial of summary judgment de novo. Leever v. Carson City, 360 F.3d 1014, 1017 (9th Cir. 2009). We also review de novo the question of whether a claim is valid under section 101. In re Nuijten, 500 F.3d 1346, 1352 (Fed. Cir. 2007).

I. DEVICE PROFILE CLAIMS Digitech argues on appeal that the “device profile”

claimed in the ’415 patent is eligible subject matter under section 101 because it is a tangible object that is an “inte-gral part of the design and calibration of a processor device within a digital image processing system.” Appel-lant Br. 20 (emphasis omitted). We disagree. Pursuant to section 101, an inventor may obtain a patent for “any new and useful process, machine, manu-facture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. For all categories except process claims, the eligible subject matter must exist in some physical or tangible form. To qualify as a machine under section 101, the claimed invention must be a “concrete thing, consisting of parts, or of certain devices and combination of devices.” Burr v. Duryee, 68 U.S. 531, 570 (1863). To qualify as a manufacture, the invention must be a tangible article that is given a new form, quali-ty, property, or combination through man-made or artifi-cial means. Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980). Likewise, a composition of matter requires the combination of two or more substances and includes all composite articles. Id.

Here, the device profile described in the ’415 patent is not a tangible or physical thing and thus does not fall within any of the categories of eligible subject matter.


96

Independent claims 1 and 26 describe a device profile as a collection of information; specifically, a description of a device dependent transformation of spatial and color information:

1. A device profile for describing properties of a device in a digital image reproduction system to capture, transform or render an image, said device profile comprising:

first data for describing a device de-pendent transformation of color infor-mation content of the image to a device independent color space; and second data for describing a device de-pendent transformation of spatial in-formation content of the image in said device independent color space.

*** 26. A device profile for describing properties of a de-

vice in a digital image reproduction system to capture, transform or render an image, said de-vice profile comprising data for describing a de-vice dependent transformation of spatial information content of the image to a device in-dependent color space, wherein through use of spatial stimuli and device response for said de-vice, said data is represented by spatial charac-teristic functions.

’415 patent, col. 5, ll. 33-41 (emphasis added); ’415 patent, col. 7, ll. 8-15 (emphasis added).1 As noted in the above

1 The remaining claims 2-6 and 9 are dependent on independent claim 1, and claims 27-31 are dependent on independent claim 26.


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claims, the device profile is comprised of two sets of data that describe a device dependent transformation—one set of data for color information and the other set of data for spatial information. The asserted claims are not directed to any tangible embodiment of this information (i.e., in physical memory or other medium) or claim any tangible part of the digital processing system. The claims are instead directed to information in its non-tangible form. Hence, the device profile claimed in the ’415 patent does not fall within any of the categories of eligible subject matter under section 101.

Digitech argues that a device profile is subject matter eligible because it is “hardware or software within a digital image processing system” and exists as a tag file appended to a digital image. Appellant Br. 26. Digitech’s position is not supported by the claim language, which does not describe the device profile as a tag or any other embodiment of hardware or software. The claims’ only description of the device profile is that it comprises “first data for describing” color information and “second data for describing” spatial information. The claims encompass all embodiments of the information contained in the device profile, regardless of the process through which this information is obtained or the physical medium in which it is stored. Data in its ethereal, non-physical form is simply information that does not fall under any of the categories of eligible subject matter under section 101.

In Nuijten, we affirmed the U.S. Patent and Trade-mark Office’s rejection of the applicant’s attempt to claim a “signal” embedded with supplemental data. This claim reads:

A signal with embedded supplemental data, the signal being encoded in accordance with a given encoding process and selected samples of the sig-nal representing the supplemental data, and at least one of the samples preceding the selected


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samples is different from the sample correspond-ing to the given encoding process.

Nuijten, 500 F.3d at 1351. Although we acknowledged that a signal had physical properties with “tangible causes and effects,” we nevertheless concluded that “such transitory embodiments are not directed to statutory subject matter.” Id. at 1353, 1357. We thus held that the physical embodiment of the supplemental data—the claimed “signal”—was not patent eligible.

The claims at issue here are even broader than the claim in Nuijten. While the claim in Nuijten requires supplemental data in the form of a transitory embodi-ment, the device profile claims of the ’415 patent do not require any physical embodiment, much less a non-transitory one. The device profile, as claimed, is a collec-tion of intangible color and spatial information. We therefore hold that the device profile claims of the ’415 patent do not encompass eligible subject matter as re-quired by section 101 and are therefore not patent eligi-ble.

II. METHOD CLAIMS Digitech next argues that the asserted method claims

of the ’415 patent are patent eligible because they de-scribe a process for generating a device profile that is specifically tied to a digital image processing system and is integral to the transformation of a digital image. Again, we do not agree.

There is no dispute that the asserted method claims describe a process. Claims that fall within one of the four subject matter categories may nevertheless be ineligible if they encompass laws of nature, physical phenomena, or abstract ideas. Chakrabarty, 447 U.S. at 309. The Su-preme Court recently reaffirmed that fundamental con-cepts, by themselves, are ineligible abstract ideas. Alice Corp. v. CLS Bank Int’l, 573 U.S. ___, No. 13-298, slip op.


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at 10 (June 19, 2014). In determining whether a process claim recites an abstract idea, we must examine the claim as a whole, keeping in mind that an invention is not ineligible just because it relies upon a law of nature or mathematical algorithm. As noted by the Supreme Court, “an application of a law of nature or mathematical formu-la to a known structure or process may well be deserving of patent protection.” Diamond v. Diehr, 450 U.S. 175, 187 (1981). A claim may be eligible if it includes addi-tional inventive features such that the claim scope does not solely capture the abstract idea. Alice Corp., 573 U.S. ___, slip op. at 6. But a claim reciting an abstract idea does not become eligible “merely by adding the words ‘apply it.’” Bancorp Servs., LLC v. Sun Life Assurance Co. of Can. (U.S.), 687 F.3d 1266, 1276 (Fed. Cir. 2012).

The method in the ’415 patent claims an abstract idea because it describes a process of organizing information through mathematical correlations and is not tied to a specific structure or machine. Claim 10 describes the process for generating the device profile:

10. A method of generating a device profile that describes properties of a device in a digital im-age reproduction system for capturing, trans-forming or rendering an image, said method comprising:

generating first data for describing a device dependent transformation of col-or information content of the image to a device independent color space through use of measured chromatic stimuli and device response characteristic func-tions; generating second data for describing a device dependent transformation of spatial information content of the image in said device independent color space


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through use of spatial stimuli and de-vice response characteristic functions; and combining said first and second data in-to the device profile.

’415 patent, col. 6, ll. 1-16.2 The above claim recites a process of taking two data sets and combining them into a single data set, the device profile. The two data sets are generated by taking existing information—i.e., measured chromatic stimuli, spatial stimuli, and device response characteristic functions—and organizing this information into a new form. The above claim thus recites an ineligi-ble abstract process of gathering and combining data that does not require input from a physical device. As dis-cussed above, the two data sets and the resulting device profile are ineligible subject matter. Without additional limitations, a process that employs mathematical algo-rithms to manipulate existing information to generate additional information is not patent eligible. “If a claim is directed essentially to a method of calculating, using a mathematical formula, even if the solution is for a specific purpose, the claimed method is nonstatutory.” Parker v. Flook, 437 U.S. 584, 595 (1978) (internal quotations omitted). Contrary to Digitech’s argument, nothing in the claim language expressly ties the method to an image processor. The claim generically recites a process of combining two data sets into a device profile; it does not claim the pro-cessor’s use of that profile in the capturing, transforming, or rendering of a digital image. The only mention of a “digital image reproduction system” lies in the claim’s

2 The remaining claims 11-15 are dependent on in-dependent claim 10.


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preamble, and we have routinely held that a preamble does not limit claim scope if it “merely states the purpose or intended use of an invention.” Bicon, Inc. v. Strau-mann Co., 441 F.3d 945, 952 (Fed. Cir. 2006). The meth-od claimed in the ’415 patent is thus “so abstract and sweeping” as to cover any and all uses of a device profile. See Gottschalk v. Benson, 409 U.S. 63, 68 (1972). We therefore need not decide whether tying the method to an image processor would lead us to conclude that the claims are directed to patent eligible subject matter in accord-ance with the Supreme Court’s Mayo test. Alice Corp., 573 U.S. ___, slip op. at 11. Accordingly, we hold that the process described in the asserted claims is directed to an abstract idea and is not patent eligible under section 101.

CONCLUSION For the reasons set forth above, we affirm the decision of the district court.

AFFIRMED


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NOTE: This disposition is nonprecedential.


______________________

I/P ENGINE, INC., Plaintiff-Cross Appellant,

v.

AOL INC., GOOGLE INC., IAC SEARCH & MEDIA, INC., GANNETT COMPANY, INC., AND

TARGET CORPORATION, Defendants-Appellants. ______________________

2013-1307, -1313

______________________

Appeals from the United States District Court for the Eastern District of Virginia in No. 11-CV-0512, Judge Raymond Alvin Jackson.

______________________

Decided: August 15, 2014 ______________________

DAVID A. PERLSON, Quinn Emanuel Urquhart & Sulli-

van LLP, of San Francisco, California, argued for defend-ants-appellants. With him on the brief were EMILY C. O’BRIEN, ANTONIO R. SISTOS, MARGARET P. KAMMERUD, and JOSHUA L. SOHN; and DAVE NELSON, of Chicago, Illinois. Of counsel were DAVID L. BILSKER and KEVIN ALEXANDER SMITH, of San Francisco, California, and ROBERT B. WILSON, of New York, New York. Of counsel


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I/P ENGINE, INC. v. AOL INC. 2

on the brief for Google Inc. were DARYL L. JOSEFFER, King & Spalding LLP, of Washington, DC, and ADAM M. CONRAD, of Charlotte, North Carolina.

JOSEPH R. RE, Knobbe, Martens, Olson & Bear, LLP,

of Irvine, California, argued for plaintiff-cross appellant. With him on the brief was STEPHEN W. LARSON. Of Coun-sel on the brief were JEFFREY K. SHERWOOD, FRANK C. CIMINO, JR., KENNETH W. BROTHERS, DAWN RUDENKO ALBERT, CHARLES J. MONTERIO, JR., and JONATHAN L. FALKLER, Dickstein Shapiro LLP, of Washington, DC.

EDWARD R. REINES and JILL J. SCHMIDT, Weil, Gotshal

& Manges LLP, of Redwood Shores, California, for amici curiae Newegg Inc., et al.

______________________

Before WALLACH, MAYER, and CHEN, Circuit Judges. Opinion for the court filed PER CURIAM. Concurring Opinion filed by Circuit Judge MAYER. Dissenting

Opinion filed by Circuit Judge CHEN. PER CURIAM.

I/P Engine, Inc. (“I/P Engine”) brought an action against AOL Inc., Google Inc. (“Google”), IAC Search & Media, Inc., Gannett Company, Inc., and Target Corpora-tion (collectively, the “Google Defendants”) alleging in-fringement of U.S. Patent Nos. 6,314,420 (the “’420 patent”) and 6,775,664 (the “’664 patent”). A jury re-turned a verdict finding that all asserted claims were infringed and not anticipated. J.A. 4163-73. The district court then determined that the asserted claims were not obvious and entered judgment in I/P Engine’s favor. See I/P Engine, Inc. v. AOL Inc., No. 11-CV-0512, 2012 U.S. Dist. LEXIS 166555 (E.D. VA Nov. 20, 2012) (“Non-Obviousness Order”). Because the asserted claims of the


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’420 and ’664 patents are invalid for obviousness, we reverse.

BACKGROUND The ’420 and ’664 patents both claim priority to the

same parent patent, U.S. Patent No. 5,867,799. They relate to a method for filtering Internet search results that utilizes both content-based and collaborative filter-ing. See ’420 patent col.1 ll.10-16, col.2 ll.20-26; ’664 patent col.23 ll.29-44.1 Content-based filtering is a tech-nique for determining relevance by extracting features such as text from an information item. ’420 patent col.4 ll.22-26; see also J.A. 487. By contrast, collaborative filtering assesses relevance based on feedback from other users—it looks to what items “other users with similar interests or needs found to be relevant.” ’420 patent col.4 ll.28-29; see also J.A. 487. The asserted patents describe a system “wherein a search engine operates with collabora-tive and content-based filtering to provide better search responses to user queries.” ’420 patent col.1 ll.14-16. Specifically, the asserted claims describe a filter system that combines content and collaborative data in filtering each “informon”—or information item—for relevance to a user’s query.2 Asserted claim 10 of the ’420 patent re-cites:

1 The specifications of the ’420 and ’664 patents are substantively identical, but employ slightly dissimilar line numbering. Unless otherwise noted, citations to the specification refer to the line numbering used in the ’420 patent.

2 The parties stipulated that the term “informon” referred to an “information entity of potential or actual interest to the [individual/first] user.” I/P Engine, Inc. v. AOL Inc., 874 F. Supp. 2d 510, 517 (E.D. Va. 2012) (inter-nal quotation marks omitted) (“Claim Construction Or-


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A search engine system comprising: a system for scanning a network to make a demand search for informons relevant to a query from an individ-ual user; a content-based filter system for receiv-ing the informons from the scanning system and for filtering the informons on the basis of applica-ble content profile data for relevance to the query; and a feedback system for receiving collaborative feedback data from system users relative to in-formons considered by such users; the filter sys-tem combining pertaining feedback data from the feedback system with the content profile data in filtering each informon for relevance to the query.

Id. col.28 ll.1-15; see also id. col.29 ll.32-44. Asserted claim 1 of the ’664 patent provides:

A search system comprising: a scanning sys-tem for searching for information relevant to a query associated with a first user in a plurality of users; a feedback system for receiving information found to be relevant to the query by other users; and a content-based filter system for combining the information from the feedback system with the information from the scanning system and for filtering the combined information for relevance to at least one of the query and the first user.

’664 patent col.27 ll.27-37. Claim 26 of the ’664 patent is similar to claim 1, but

cast as a method claim: A method for obtaining information relevant

to a first user comprising: searching for infor-

der”). The asserted patents explain that an “informon” can be all or part of a text, video, or audio file. ’420 patent col.3 ll.30-35.


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mation relevant to a query associated with a first user in a plurality of users; receiving information found to be relevant to the query by other users; combining the information found to be relevant to the query by other users with the searched infor-mation; and content-based filtering the combined information for relevance to at least one of the query and the first user.

Id. col.28 ll.56-65. On September 15, 2011, IP/Engine3 filed a complaint

in the United States District Court for the Eastern Dis-trict of Virginia alleging that Google’s AdWords, AdSense for Search, and AdSense for Mobile Search systems, which display advertisements on web pages, infringed claims 10, 14, 15, 25, 27, and 28 of the ’420 patent and claims 1, 5, 6, 21, 22, 26, 28, and 38 of the ’664 patent. See Claim Construction Order, 874 F. Supp. 2d at 514-15. On December 5, 2011, the Google Defendants filed coun-terclaims, seeking declaratory judgments of non-infringement and invalidity of both the ’420 and ’664 patents. Id. at 514.

Following a Markman hearing, the district court con-strued disputed claim terms. The court concluded that: (1) the term “collaborative feedback data” refers to “data from system users regarding what informons such users found to be relevant”; (2) the term “scanning a network” means “looking for or examining items in a network”; and (3) the term “demand search” refers to “a single search engine query performed upon a user request.” Id. at 525 (internal quotation marks omitted).

During a twelve-day trial, the Google Defendants pointed to numerous prior art references to support their

3 In 2012, I/P Engine became a subsidiary of Vrin-go, Inc. J.A. 2046-47.


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contention that the claims of the ’420 and ’664 patents were invalid as anticipated and obvious. In particular, they argued that U.S. Patent No. 6,006,222 (“Culliss”) anticipated the asserted claims, and that those claims were obvious in view of: (1) U.S. Patent No. 6,202,058 (“Rose”); (2) Yezdezard Z. Lashkari, Feature Guided Automated Collaborative Filtering (July 25, 1995) (M.S. thesis, Massachusetts Institute of Technology) (“WebHound”); and (3) Marko Balabanovic & Yoav Sho-ham, Content-Based, Collaborative Recommendation, 40 Comms. of the ACM 66 (1997) (“Fab”).

The jury returned a verdict on November 6, 2012, finding that the Google Defendants had infringed all asserted claims and awarding damages of $30,496,155.4 J.A. 4173. The jury also found that the asserted claims were not anticipated, and answered a special verdict form on factual issues pertaining to the obviousness inquiry. J.A. 4169-72. Specifically, the jury found that “Rose, [WebHound] and Fab[] were profile systems that did not disclose a tightly integrated search system, and could not filter information relevant to the query.” J.A. 4170, 4171-72.

On November 20, 2012, the district court ruled that the Google Defendants had “failed to prove, by clear and convincing evidence, that the ’420 Patent or the ’664 Patent [was] obvious.” Non-Obviousness Order, 2012 U.S. Dist. LEXIS 166555, at *9. The district court further determined that the equitable doctrine of laches barred I/P Engine from recovering damages for any infringement occurring prior to September 15, 2011, the date of its complaint. I/P Engine, Inc. v. AOL Inc., 915 F. Supp. 2d 736, 746-49 (E.D. Va. 2012). The court explained that I/P Engine “had constructive notice that the Google Adwords

4 The jury also awarded I/P Engine a running royal-ty of 3.5%. J.A. 4173.


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system potentially infringed its patents as of July 2005 and [yet] failed to undertake any reasonable investigation to further determine if infringement was occurring.” Id. at 744. The court stated, moreover, that “[a]lthough Congress is best left to consider the merits of non-practicing patent entities in our patent system, the dilato-ry nature of [I/P Engine’s] suit is precisely why the doc-trine of laches has been applied to patent law.” Id. at 748.

On December 18, 2012, the Google Defendants filed motions for a new trial and for judgment as a matter of law on non-infringement, invalidity, and damages. J.A. 4252-381. I/P Engine also filed post-trial motions, argu-ing that the district court erred in applying the doctrine of laches to preclude recovery of damages for infringement in the period prior to September 15, 2011. J.A. 4433, 4550-56. All of these motions were denied by the district court. J.A. 59-67.

The Google Defendants then filed a timely appeal with this court. They argue that: (1) the infringement determination should be set aside because the accused systems do not meet claim limitations which require “combining” content data with feedback data and filtering “the combined information”; (2) the accused systems do not meet the limitation contained in claim 10 of the ’420 patent requiring a “demand search”; (3) I/P Engine im-properly relied on marketing documents, rather than source code, in attempting to establish infringement and misled the jury by insinuating that Google had “copied” the system claimed in I/P Engine’s patents; (4) the district court erred as a matter of law in finding the asserted claims non-obvious; (5) the asserted claims are invalid as anticipated because Culliss discloses filtering Internet articles based on scores that combine both content and collaborative feedback data; and (6) I/P Engine failed to introduce any credible evidence of damages in the period following the filing of its complaint. I/P Engine filed a cross-appeal in which it argues that the district court


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erred in applying the doctrine of laches to bar recovery for infringement occurring prior to September 15, 2011. I/P Engine further contends that even if laches does apply, it is entitled to damages of more than $100 million for infringement occurring after the date it filed its com-plaint. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION I. Standard of Review

“Whether the subject matter of a patent is obvious is a question of law and is reviewed de novo.” Procter & Gamble Co. v. Teva Pharms. USA, Inc., 566 F.3d 989, 993 (Fed. Cir. 2009); see PharmaStem Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342, 1359 (Fed. Cir. 2007). The factual findings underlying an obviousness determination include: (1) the scope and content of the prior art; (2) the differences between the claimed invention and the prior art; (3) the level of ordinary skill in the art; and (4) any objective indicia of non-obviousness. See Graham v. John Deere Co., 383 U.S. 1, 17-18 (1966). II. The Obviousness Determination

The Google Defendants argue that I/P Engine’s claimed invention is obvious as a matter of law because it simply combines content-based and collaborative filtering, two information filtering methods that were well-known in the art. They assert, moreover, that the prior art contained explicit statements describing the advantages of combining these two filtering techniques, and that it would have been obvious to include a user’s query in the filtering process. See Br. of Defendants-Appellants at 35-38.

We agree and hold that no reasonable jury could con-clude otherwise. The asserted claims describe a system that combines content and collaborative data in filtering each “informon”—or information item—for relevance to an individual user’s search query. ’420 patent col.28 ll.1-15;


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’664 patent col.27 ll.27-37. As the asserted patents them-selves acknowledge, however, search engines, content-based filtering, and collaborative filtering were all well-known in the art at the time of the claimed invention. See ’420 patent col.1 ll.20-45. The record is replete, moreover, with prior art references recognizing that content-based and collaborative filtering are complimentary techniques that can be effectively combined. The WebHound refer-ence explains that “content-based and automated collabo-rative filtering are complementary techniques, and the combination of [automated collaborative filtering] with some easily extractable features of documents is a power-ful information filtering technique for complex infor-mation spaces.” J.A. 5427. The Fab reference likewise notes that “[o]nline readers are in need of tools to help them cope with the mass of content available on the World-Wide Web,” and explains that “[b]y combining both collaborative and content-based filtering systems,” many of the weaknesses in each approach can be eliminated. J.A. 5511. Similarly, the Rose patent, which was filed in 1994 by engineers at Apple Computer, Inc., states that “[t]he prediction of relevance [to a user’s interests] is carried out by combining data pertaining to the content of each item of information with other data regarding corre-lations of interests between users.” J.A. 5414. These references, individually and collectively, teach the clear advantages of combining content-based and collaborative filtering.5

5 I/P Engine points to recent United States Patent and Trademark Office (“PTO”) reexamination proceedings which concluded that Rose and WebHound do not antici-pate the asserted claims of the ’420 patent. J.A. 7899-902. Here, however, the question is not whether Rose and WebHound anticipate the asserted claims, but instead whether the prior art, viewed as a whole, renders the


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On appeal, I/P Engine does not dispute that the prior art disclosed hybrid content-based and collaborative filtering. It contends, however, that it would not have been obvious to a person of ordinary skill in the art to filter items for relevance to a user’s query using combined content and collaborative data. In I/P Engine’s view, the prior art simply took the results of content-based filtering and “threw them over a proverbial wall to a separate profile-based [filtering] system,” but did not also throw the search query “over the wall” for use in the filtering process. Br. of Plaintiff-Cross Appellant at 6-7; see also id. at 40-43; J.A. 3689-90, 3728-31.

The fundamental flaw in I/P Engine’s argument is that using an individual user’s search query for filtering was a technique widely applied in the prior art. Indeed, the shared specification of the ’420 and ’664 patents acknowledges that “conventional search engines” filtered search results using the original search query. See ’420 patent col.2 ll.15-18 (explaining that “conventional search engines initiate a search in response to an individual user’s query and use content-based filtering to compare the query to accessed network informons” (emphasis added)). Given that its own patents acknowledge that using the original search query for filtering was a “con-ventional” technique, I/P Engine cannot now evade inva-lidity by arguing that integrating the query into the

asserted claims obvious. See Cohesive Techs., Inc. v. Waters Corp., 543 F.3d 1351, 1364 (Fed. Cir. 2008) (“Ob-viousness can be proven by combining existing prior art references, while anticipation requires all elements of a claim to be disclosed within a single reference.”); Medi-chem, S.A. v. Rolabo, S.L., 437 F.3d 1157, 1166 (Fed. Cir. 2006) (explaining that in an obviousness analysis “the prior art must be considered as a whole for what it teach-es”).


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filtering process was a non-obvious departure from the prior art. See PharmaStem, 491 F.3d at 1362 (“Admis-sions in the specification regarding the prior art are binding on the patentee for purposes of a later inquiry into obviousness.”); see also Constant v. Advanced Micro-Devices, Inc., 848 F.2d 1560, 1570 (Fed. Cir. 1988) (“A statement in a patent that something is in the prior art is binding on the applicant and patentee for determinations of anticipation and obviousness.”).

While I/P Engine acknowledges that the prior art dis-closed “conventional ‘content-based filtering’ in response to a query,” it contends that the prior art did “not show or suggest using content and collaborative data together in filtering items for relevance to a query.” Br. of Plaintiff-Cross Appellant at 43. This argument “tak[es] an overly cramped view of what the prior art teaches.” Allergan, Inc. v. Apotex Inc., 754 F.3d 952, 963 (Fed. Cir. 2014). The Culliss patent renders the asserted claims obvious because it plainly discloses using combined content and collaborative data when analyzing information for rele-vance to a user’s search query. In the Culliss system, Internet articles are assigned a “key term score” for significant words or phrases. J.A. 5521. Culliss teaches content-based analysis because the key term score can initially be based on the number of times a particular term appears in an article.6 J.A. 5526. Culliss also

6 Dr. Jaime Carbonell, I/P Engine’s expert, asserted that Culliss does not disclose content-based filtering as required by the asserted claims because Culliss’ repeated feedback-based adjustments to a key term score will dilute or “swamp” the content portion of the score over time. J.A. 3714, 3787. Notably, however, while the asserted claims require content-based filtering, they do not mandate that content-based analysis play a dominant role in the filtering process. See ’420 patent col.28 ll.1-15;


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describes collaborative feedback analysis because the key term score will be increased when search engine users who query particular key terms select an article from the search results list. J.A. 5521. Significantly, moreover, Culliss presents articles to users based upon their key term scores for the terms that were used in a user’s search query. J.A. 5521 (“As users enter search queries and select articles, the scores are altered. The scores are then used in subsequent searches to organize the articles that match a search query.” (emphasis added)). Culliss, therefore, squarely discloses using combined content and collaborative data in analyzing items for relevance to a query.

I/P Engine contends that Culliss does not anticipate because it “describes a system for ranking items, not filtering them, as required by the asserted claims.” Br. of Plaintiff-Cross Appellant at 54. As Dr. Lyle Ungar, the Google Defendants’ expert, explained at trial, however, “the standard way of filtering is to rank things and pick all items above a threshold.” J.A. 3366. Notably, moreo-ver, Culliss discloses an embodiment in which articles

’664 patent col.27 ll.27-37. Thus, the fact that in the Culliss system content data may play less and less of a role as more user feedback is obtained does not mean that Culliss does not disclose content-based filtering. To the contrary, Culliss explains that while feedback can raise an article’s key term score (when the article is clicked on by other users), it can also lower that score (when the article is not clicked on by other users). J.A. 5527 (“[I]f the user does not select the matched article, the key term score for that matched article under that key term can be assigned a negative score.”). Thus, the positive and negative feedback adjustments could potentially nearly “cancel each other out,” and content data could play a very significant role in setting an article’s overall score.


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that are given an “X-rated” score for adult content are filtered out and not displayed to persons who enter “G-rated” queries. J.A. 5525. At trial, Carbonell asserted that Culliss was not enabled because it did not provide for a “workable” filtering system. J.A. 3717. In support, he argued that a certain number of G-rated searchers might have to view an article before it would be labeled as X-rated and screened from subsequent G-rated searches. J.A. 3718-19. There is no credible evidence, however, that Culliss would not ultimately succeed in filtering X-rated articles from being viewed by G-rated searchers. See Cephalon, Inc. v. Watson Pharms., Inc., 707 F.3d 1330, 1337 (Fed. Cir. 2013) (emphasizing that a patent is pre-sumptively enabled and that “the challenger bears the burden, throughout the litigation, of proving lack of enablement by clear and convincing evidence”). Even more importantly, while “a prior art reference cannot anticipate a claimed invention if the allegedly anticipa-tory disclosures cited as prior art are not enabled,” In re Antor Media Corp., 689 F.3d 1282, 1289 (Fed. Cir. 2012) (citations and internal quotation marks omitted), a non-enabling reference can potentially qualify as prior art for the purpose of determining obviousness, Symbol Techs. Inc. v. Opticon, Inc., 935 F.2d 1569, 1578 (Fed. Cir. 1991); see Geo. M. Martin Co. v. Alliance Mach. Sys. Int’l LLC, 618 F.3d 1294, 1302 (Fed. Cir. 2010) (“Under an obvious-ness analysis, a reference need not work to qualify as prior art; it qualifies as prior art, regardless, for whatever is disclosed therein.” (citations and internal quotation marks omitted)); Beckman Instruments, Inc. v. LKB Produkter AB, 892 F.2d 1547, 1551 (Fed. Cir. 1989) (“Even if a reference discloses an inoperative device, it is prior art for all that it teaches.”). Thus, even assuming arguendo that the Culliss filtering system was not fully functional, this does not mean that it does not qualify as prior art for purposes of the obviousness analysis.


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Significantly, moreover, the obviousness inquiry “not only permits, but requires, consideration of common knowledge and common sense.” DyStar Textilfarben GmbH & Co. v. C.H. Patrick Co., 464 F.3d 1356, 1367 (Fed. Cir. 2006); see KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 421 (2007) (eschewing “[r]igid preventative rules that deny factfinders recourse to common sense”); Perfect Web Techs., Inc. v. InfoUSA, Inc., 587 F.3d 1324, 1329 (Fed. Cir. 2009) (explaining that the obviousness analysis “may include recourse to logic, judgment, and common sense available to the person of ordinary skill that do not neces-sarily require explication in any reference or expert opinion”); Leapfrog Enters., Inc. v. Fisher-Price, Inc., 485 F.3d 1157, 1161 (Fed. Cir. 2007) (emphasizing that “the common sense of those skilled in the art” can be sufficient to “demonstrate[] why some combinations would have been obvious where others would not”). Very basic logic dictates that a user’s search query can provide highly pertinent information in evaluating the overall relevance of search results. See, e.g., 420 patent col.1 ll.21-23 (ex-plaining that a “query” is “a request for information relevant to . . . a field of interest”); id. col.4 ll.5-6 (“The ‘relevance’ of a particular informon broadly describes how well it satisfies the user’s information need.”). As Ungar explained, the query would be just “sitting there” with the results of a search, and it would have been obvious to one skilled in the art “to keep around the query and use that also for filtering.” J.A. 3173.7 “A person of ordinary skill is . . . a person of ordinary creativity, not an automaton,” KSR, 550 U.S. at 421, and the obviousness inquiry must take account of the “routine steps” that a person of ordi-

7 The parties stipulated that, for purposes of both the ’420 and ’664 patents, a person of ordinary skill in the art was “an individual with a bachelor’s degree in com-puter science with at least [two] years of experience.” J.A. 39.


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nary skill in the art would employ, Ball Aerosol & Spe-cialty Container, Inc. v. Ltd. Brands, Inc., 555 F.3d 984, 993 (Fed. Cir. 2009); see Soverain Software LLC v. Newegg Inc., 705 F.3d 1333, 1344, amended on reh’g, 728 F.3d 1332 (Fed. Cir. 2013) (concluding that claims di-rected to an online shopping system were invalid as obvious given that the patentee “did not invent the Inter-net, or hypertext, or the URL” and using hypertext to communicate transaction information was no more than “a routine incorporation of Internet technology into existing processes”). Because the query was readily available and closely correlated to the overall relevance of search results—and the prior art unequivocally disclosed hybrid content-based/collaborative filtering—retaining the query for use in filtering combined content and collab-orative data was “entirely predictable and grounded in common sense.” Ball Aerosol, 555 F.3d at 993; see W. Union Co. v. MoneyGram Payment Sys., Inc., 626 F.3d 1361, 1372 (Fed. Cir. 2010) (concluding that the asserted dependent claims, which “add[ed] only trivial improve-ments that would have been a matter of common sense to one of ordinary skill in the art,” were obvious as a matter of law); Perfect Web, 587 F.3d at 1331 (concluding that a claimed method for sending e-mails was obvious because “simple logic suggests that sending messages to new addresses is more likely to produce successful deliveries than re-sending messages to addresses that have already failed”); Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318, 1326-27 (Fed. Cir. 2008) (concluding that claims which added a web browser to a prior art electronic sys-tem were obvious as a matter of law). While our conclu-sion that the asserted claims are invalid as obvious is grounded on the determination that the prior art, most notably Culliss, disclosed use of the search query when filtering combined content-based and collaborative data, the common sense of a skilled artisan would likewise have suggested retaining the query for use in the filtering process.


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III. The Jury’s Findings I/P Engine points to the fact that the jury found that

there were differences between the prior art and the claimed invention, see J.A. 4170-72, and argues that on appeal “the only question is whether substantial evidence supports the jury’s findings.” Br. of Plaintiff-Cross Appel-lant at 40. There are a number of reasons why we do not find this reasoning persuasive. First, not all of the jury’s findings support non-obviousness. To the contrary, the jury found that the invention claimed in the ’664 patent had been “independent[ly] invent[ed] . . . by others before or at about the same time as the named inventor thought of it.” J.A. 4172. As we have previously made clear, near-simultaneous development of a claimed invention by others can, under certain circumstances, demonstrate obviousness. See Geo. M. Martin, 618 F.3d at 1305 (“In-dependently made, simultaneous inventions, made within a comparatively short space of time, are persuasive evi-dence that the claimed apparatus was the product only of ordinary mechanical or engineering skill.” (citations and internal quotation marks omitted)). Thus, as the Google Defendants correctly note, the jury’s findings are a “mixed bag” on the obviousness question. Br. of Defendants-Appellants at 40.

Second, some of the jury’s findings appear internally inconsistent. In making their arguments on obviousness, neither I/P Engine nor the Google Defendants drew any distinction between the ’420 patent and the ’664 patent. Indeed, counsel for I/P Engine referred to the asserted patents simply as the “Lang and Kosak invention” when discussing differences between the prior art and the asserted claims. J.A. 3730. The jury found, however, that the invention claimed in the ’664 patent had been inde-pendently invented by others, whereas the invention claimed in the ’420 patent had not. J.A. 4171-72. Like-wise, while the jury found that there had been unsuccess-ful attempts by others to develop the invention claimed in


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the ’420 patent, it determined that there were no such attempts with respect to the invention disclosed in the ’664 patent. J.A. 4170, 4172.

Finally, and most importantly, while the jury made underlying determinations as to the differences between the asserted claims and the prior art, it did not address the ultimate legal conclusion as to obviousness. Thus, while the jury found that the prior art did not disclose all of the elements of the asserted claims, J.A. 4170-71, it never determined whether it would have been obvious to one skilled in the art to bridge any differences between the prior art and the claimed invention. See Bos. Scien-tific Scimed, Inc. v. Cordis Corp., 554 F.3d 982, 990 (Fed. Cir. 2009) (“When we consider that, even in light of a jury’s findings of fact, the references demonstrate an invention to have been obvious, we may reverse its obvi-ousness determination.”); see also Soverain, 705 F.3d at 1337 (emphasizing that “the question of obviousness as a matter of law receives de novo determination on appeal”); Jeffries v. Harleston, 52 F.3d 9, 14 (2d Cir. 1995) (conclud-ing that “hopelessly irreconcilable” jury findings did not require a retrial because “elementary principles” of law compelled one result). IV. Objective Indicia of Non-Obviousness

“This court has consistently pronounced that all evi-dence pertaining to the objective indicia of nonobvious-ness must be considered before reaching an obviousness conclusion.” Plantronics, Inc. v. Aliph, Inc., 724 F.3d 1343, 1355 (Fed. Cir. 2013). Here, however, I/P Engine introduced scant evidence on secondary considerations. See Allergan, Inc. v. Sandoz Inc., 726 F.3d 1286, 1293 (Fed. Cir. 2013) (concluding that secondary considerations did “not weigh heavily in the obviousness analysis”). Indeed, the district court did not even cite to the jury’s findings on secondary considerations when it concluded that the asserted claims were not invalid for obviousness.


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See Non-Obviousness Order, 2012 U.S. Dist. LEXIS 166555, at *7-9.

We find no merit in I/P Engine’s argument that the commercial success of Google’s accused advertising sys-tems provides objective evidence of non-obviousness. “Evidence of commercial success, or other secondary considerations, is only significant if there is a nexus between the claimed invention and the commercial suc-cess.” Ormco Corp. v. Align Tech., Inc., 463 F.3d 1299, 1311-12 (Fed. Cir. 2006). At trial, however, I/P Engine never established a nexus between the success of Google’s accused systems and the patented invention.8 Indeed, I/P Engine’s damages expert agreed that the accused technol-ogy encompassed numerous features not covered by the asserted patents, and acknowledged that he had not evaluated the issue of whether the patented technology drove consumer demand for Google’s advertising platform. J.A. 2772-73.

Under certain circumstances, the “copying” of an in-vention by a competitor may constitute evidence that an invention is not obvious. See Iron Grip Barbell Co., Inc. v. USA Sports, Inc., 392 F.3d 1317, 1325 (Fed. Cir. 2004); Vandenberg v. Dairy Equip. Co., 740 F.2d 1560, 1567 (Fed. Cir. 1984). Contrary to I/P Engine’s assertions, however, the fact that one of Google’s patents cited to the ’420 patent does not establish that Google copied the invention disclosed in that patent. Nor is the fact that Google did not provide evidence at trial as to how it developed its accused advertising system sufficient to

8 Nor did I/P Engine present evidence that any owner of the asserted patents had ever used the claimed system commercially. See Soverain, 705 F.3d at 1346 (finding no commercial success where the claimed elec-tronic commerce system “was abandoned by its developers and almost all of its original users”).


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establish that it copied the claimed invention. See Wyers v. Master Lock Co., 616 F.3d 1231, 1246 (Fed. Cir. 2010) (“Our case law holds that copying requires evidence of efforts to replicate a specific product, which may be demonstrated through internal company documents, direct evidence such as disassembling a patented proto-type, photographing its features, and using the photo-graph as a blueprint to build a replica, or access to the patented product combined with substantial similarity to the patented product.”).

The jury found “[a]cceptance by others of the claimed invention as shown by praise from others in the field or from the licensing of the claimed invention.” J.A. 4171-72. Carbonell acknowledged, however, that although he had been in the “search industry” for thirty years he was unaware of any “praise” that I/P Engine’s purported invention had received. J.A. 3788. Likewise, although the jury found “unexpected and superior results from the claimed invention,” J.A. 4171-72, there was no evidence, other than conclusory testimony from Carbonell, see J.A. 3691-92, 3740, that the results of the patented system were unexpected. See SkinMedica, Inc. v. Histogen Inc., 727 F.3d 1187, 1210 (Fed. Cir. 2013) (emphasizing that expert opinions that “are conclusory and incomplete” have little evidentiary value). Accordingly, secondary consid-erations cannot overcome the strong prima facie case of obviousness.9 See Leapfrog, 485 F.3d at 1162.

CONCLUSION Accordingly, the judgment of the United States Dis-

trict Court for the Eastern District of Virginia is reversed. REVERSED

9 Because we conclude that the asserted claims are obvious as a matter of law, we need not reach issues related to infringement and damages.


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______________________


v.

AOL INC., GOOGLE INC., IAC SEARCH & MEDIA, INC., GANNETT COMPANY, INC., AND TARGET

CORPORATION, Defendants-Appellants. ______________________

2013-1307, -1313

______________________


______________________ MAYER, Circuit Judge, concurring.

The Supreme Court in Alice Corporation v. CLS Bank International, 573 U.S. __, 134 S. Ct. 2347, 2359 (2014), for all intents and purposes, recited a “technological arts” test for patent eligibility. Because the claims asserted by I/P Engine, Inc. (“I/P Engine”) disclose no new technology, but instead simply recite the use of a generic computer to implement a well-known and widely-practiced technique for organizing information, they fall outside the ambit of 35 U.S.C. § 101. And if this determination had been made in the first instance as directed by the Supreme Court,


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unnecessary litigation, and nearly two weeks of trial and imposition on citizen jurors, could have been avoided.

I. “[T]he patent system represents a carefully craft-

ed bargain that encourages both the creation and the public disclosure of new and useful advances in technology, in return for an exclusive monopoly for a limited period of time.” Pfaff v. Wells Elecs., Inc., 525 U.S. 55, 63 (1998). A patentee does not uphold his end of this bargain if he seeks broad monopoly rights over a funda-mental concept or basic idea without a concomitant con-tribution to the existing body of scientific and technological knowledge. Alice thus made clear that abstract ideas untethered to any significant advance in science and technology are ineligible for patent protection, concluding that a computer-implemented system for mitigating settlement risk fell outside section 101 because it did not “improve the functioning of the computer itself” or “effect an improvement in any other technology or technical field.” 134 S. Ct. at 2359; see also id. at 2358 (explaining that the claims in Diamond v. Diehr, 450 U.S. 175, 177-79 (1981) (“Diehr”), were patent eligible because they disclosed an “improve[ment]” to a “technological process”).

Application of the technological arts test1 for patent eligibility requires consideration of whether the claimed “inventive concept,” Mayo Collaborative Servs. v. Prome-

1 One of our predecessor courts likewise applied a technological arts test for patent eligibility. It recognized that patentable processes must “be in the technological arts so as to be in consonance with the Constitutional purpose to promote the progress of ‘useful arts.’” In re Musgrave, 431 F.2d 882, 893 (CCPA 1970) (quoting U.S. Const. art. I, § 8, cl. 8).


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theus Labs., Inc., 132 S. Ct. 1289, 1294 (2012), is an application of scientific principles or natural laws. See In re Bilski, 545 F.3d 943, 1010 (Fed. Cir. 2008) (en banc) (Mayer, J., dissenting), aff’d on other grounds sub nom. Bilski v. Kappos, 561 U.S. 593 (2010) (“[A] process is non-technological where its inventive concept is the applica-tion of principles drawn not from the natural sciences but from disciplines such as business, law, sociology, or psy-chology.”). Importantly, claims do not meet the demands of section 101 simply because they recite the use of com-puters or other technology. Instead, the inventive concept itself must be new technology, a novel application of scientific principles and natural laws to solve problems once thought intractable. See id. at 1002 (“Although business method applications may use technology—such as computers—to accomplish desired results, the innova-tive aspect of the claimed method is an entrepreneurial rather than a technological one.”). The claims at issue in Alice may well have described a useful and innovative method of doing business,2 but because they did not

2 In Alice, the Supreme Court concluded that the concept of intermediated settlement was a patent-ineligible abstract idea. 134 S. Ct. at 2355-57. But whether the “concept” of intermediated settlement is an abstract idea is a wholly different question from whether the claimed invention provided a useful and innovative application of that concept. Significantly, in determining whether the asserted claims disclosed an inventive con-cept sufficient to make the claimed abstract idea patent eligible, the Court looked solely at the technology—asking only whether the recited computer elements were “well-understood, routine, [and] conventional.” Id. at 2359 (citations and internal quotation marks omitted). The issue of whether the claimed intermediated settlement technique represented an innovative method for improv-ing commercial transactions was not addressed because


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disclose any significant advance in science or technology, they fell outside section 101. See 134 S. Ct. at 2359 (noting that the claimed method simply “require[d] a generic computer to perform generic computer functions”).

Section 101 mandates not only that claims disclose an advance in science or technology—as opposed to an inno-vation in a non-technological discipline such as business, law, sports, sociology, or psychology—but also that this advance be both significant and well-defined. Id. at 2360 (“[T]he claims at issue amount to nothing significantly more than an instruction to apply the abstract idea of intermediated settlement using some unspecified, generic computer.” (citations and internal quotation marks omit-ted) (emphasis added)); see also Mayo, 132 S. Ct. at 1297 (“The question before us is whether the claims do signifi-cantly more than simply describe” a law of nature. (em-phasis added)). Of course, if claims are drawn to the application of principles outside of the scientific realm—such as principles related to commercial or social interac-tion—no amount of specificity can save them from patent ineligibility. In Bilski, for example, a method was reject-ed under section 101 notwithstanding the fact that it described a very specific method of using historical weather-related data to hedge against price increases. 130 S. Ct. at 3223-24; see Parker v. Flook, 437 U.S. 584, 593 (1978) (“Flook”) (rejecting the argument “that if a process application implements a principle in some specif-ic fashion, it automatically falls within the patentable subject matter of § 101”). Meaningful, well-defined limits on the application of a principle or idea are thus a neces-sary, but not a sufficient, prerequisite for patent eligibil-ity. Requiring carefully circumscribed bounds on the

advances in non-technological disciplines, such as busi-ness, are irrelevant for purposes of the section 101 in-quiry.


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application of scientific principles and natural laws serves to ensure that “the basic tools of scientific and technologi-cal work,” Gottschalk v. Benson, 409 U.S. 63, 67, (1972), remain “free to all men and reserved exclusively to none,” Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130 (1948); see Mayo, 132 S. Ct. at 1293.3

In the more difficult cases—where it is uncertain whether claims are sufficiently “technological” to warrant patent protection—subject matter eligibility will often turn on whether the claims describe a narrow inventive application of a scientific principle, or instead simply recite steps that are necessarily part of the principle itself. See Mayo, 132 S. Ct. at 1297 (explaining that a process reciting a law of nature is not patent eligible unless it “has additional features that provide practical assurance that the process is more than a drafting effort designed to monopolize the law of nature itself”). In Mayo, for example, claims were rejected, in part, because they were “overly broad,” id. at 1301, and did “not confine their reach to particular applications,” id. at 1302. The need for specificity sufficient to cabin the scope of an invention is particularly acute in the software arena, where claims tend to be exceedingly broad, development proceeds at breakneck speed, and innovation often occurs

3 There is, of course, some “overlap” between the el-igibility analysis under section 101 and the obviousness inquiry under 35 U.S.C. § 103. Mayo, 132 S. Ct. at 1304. Section 103, however, asks the narrow question of wheth-er particular claims are obvious in view of the prior art. By contrast, the section 101 inquiry is broader and more essential: it asks whether the claimed subject matter, stripped of any conventional elements, is “the kind of ‘discover[y]’” that the patent laws were intended to pro-tect. Flook, 437 U.S. at 593.


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despite the availability of patent protection rather than because of it.

Finally, and most importantly, the technological arts test recognizes that there has to be some rough correla-tion between “the give and the get”—applicants who make little, if any, substantive contribution to the existing body of scientific and technological knowledge should not be afforded broad monopoly rights that potentially stifle future research and development. In assessing patent eligibility, “the underlying functional concern . . . is a relative one: how much future innovation is foreclosed relative to the contribution of the inventor.” Mayo, 132 S. Ct. at 1303. At its core, section 101 prohibits claims which are “overly broad,” id. at 1301, in proportion to the technological dividends they yield.

II. I/P Engine’s claimed invention, which describes a sys-

tem which filters information for relevance to a user’s query using combined content and collaborative data, see U.S. Patent No. 6,314,420 col.28 ll.1-15; U.S. Patent No. 6,775,664 col.27 ll.27-37, does not pass muster under section 101. The asserted claims do not meet subject matter eligibility requirements because they do not “im-prove the functioning of the computer itself” or “effect an improvement in any other technology or technical field.” Alice, 134 S. Ct. at 2359. To the contrary, the use of search engines was well-established and the clear ad-vantages of combining content-based and collaborative filtering were widely recognized at the time of the claimed invention. See ante at 8-9.

The asserted claims simply describe the well-known and widely-applied concept that it is often helpful to have both content-based and collaborative information about a


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specific area of interest.4 A person planning to visit London, for example, might consult a guidebook that would provide information about particular museums in London (content data) as well as information about what other people thought of these museums (collaborative data). See J.A. 4255-56.

I/P Engine’s claimed system is merely an Internet it-eration of the basic concept of combining content and collaborative data, relying for implementation on “a generic computer to perform generic computer functions.” Alice, 134 S. Ct. at 2359; see also id. (explaining that using a computer to obtain data is “well-understood” and “routine” (citations and internal quotation marks omit-ted)); CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1370 (Fed. Cir. 2011) (concluding that a claim which disclosed the “mere collection and organization of data regarding credit card numbers and Internet addresses” was patent ineligible).

Moreover, the scope of the claimed invention is stag-gering, potentially covering a significant portion of all online advertising. I/P Engine’s asserted claims fall outside section 101 because their broad and sweeping

4 In its appeal brief, I/P Engine notes that the shared specification of the asserted patents describes “a variety of ways in which content and collaborative feed-back data can be combined,” including through the use of a “complex neural network function.” Br. of Plaintiff-Cross Appellant at 10. As we recently made clear, howev-er, “the important inquiry for a § 101 analysis is to look to the claim[s].” Accenture Global Servs., GmbH v. Guide-wire Software, Inc., 728 F.3d 1336, 1345 (Fed. Cir. 2013). Accordingly, “the complexity of the implementing soft-ware or the level of detail in the specification does not transform a claim reciting only an abstract concept into a patent-eligible system or method.” Id.


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reach is vastly disproportionate to their minimal techno-logical disclosure.

III. The Supreme Court has dictated that the subject mat-

ter eligibility analysis must precede the obviousness inquiry. Flook, 437 U.S. at 593 (“The obligation to deter-mine what type of discovery is sought to be patented” so as to determine whether it falls within the ambit of sec-tion 101 “must precede the determination of whether that discovery is, in fact, new or obvious.”); Bilski, 130 S. Ct. at 3225 (explaining that the issue of whether claims are directed to statutory subject matter is “a threshold test”); see also In re Comiskey, 554 F.3d 967, 973 (Fed. Cir. 2009) (“Only if the requirements of § 101 are satisfied is the inventor allowed to pass through to the other require-ments for patentability, such as novelty under § 102 and . . . non-obviousness under § 103.” (citations and internal quotation marks omitted)). To fail to address at the very outset whether claims meet the strictures of section 101 is to put the cart before the horse. Until it is determined that claimed subject matter is even eligible for patent protection, a court has no warrant to consider subordinate validity issues such as non-obviousness under 35 U.S.C. § 103 or adequate written description under 35 U.S.C. § 112.

From a practical perspective, there are clear ad-vantages to addressing section 101’s requirements at the outset of litigation. Patent eligibility issues can often be resolved without lengthy claim construction, and an early determination that the subject matter of asserted claims is patent ineligible can spare both litigants and courts years of needless litigation. To the extent that certain classes of claims—such as claims on methods of doing business—are deemed presumptively patent ineligible, moreover, the United States Patent and Trademark Office will have more resources to devote to expeditiously pro-


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cessing applications which disclose truly important ad-vances in science and technology.

Even more fundamentally, the power to issue patents is not unbounded. To the contrary, the constitutional grant of authority “[t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries,” U.S. Const. art. I, § 8, cl. 8, “is both a grant of power and a limitation,” Graham v. John Deere Co., 383 U.S. 1, 5 (1966); see Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 146 (1989). Section 101’s vital role—a role that sections 103 and 112 “are not equipped” to take on, Mayo, 132 S. Ct. at 1304—is to insure that patent protection promotes, rather than impedes, scientific progress and technological innovation. A robust application of section 101 ensures that the nation’s patent laws remain tethered to their constitu-tional moorings.


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______________________


v.

AOL INC., GOOGLE INC., IAC SEARCH & MEDIA, INC., GANNETT COMPANY, INC., AND TARGET

CORPORATION, Defendants-Appellants. ______________________

2013-1307, -1313

______________________


______________________ CHEN, Circuit Judge, dissenting.

After a twelve-day trial during which both sides pre-sented evidence about the teachings of the prior art, the jury made detailed factual findings pertaining to the obviousness of the ’420 and ’664 patents. The jury found, among other findings, that elements of the asserted claims were not present in the prior art. Based on the jury’s findings, the district court determined that the Defendants had failed to prove by clear and convincing evidence that the asserted claims were obvious. In re-versing the district court’s judgment, the majority finds


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that the prior art discloses a key claim limitation that the jury found was missing, and also concludes that the district court erred in failing to use “common sense” to bridge the differences between the prior art and the claims. In my view, the majority fails to accord sufficient deference to the jury’s findings of fact. Moreover, I find that the majority’s use of common sense to bridge the gap between the prior art and the claims is unsupported by sufficient evidence and reasoning. I respectfully dissent.

At the outset, it is worth noting that obviousness is a mixed question of law and fact. Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342, 1356 (Fed. Cir. 2012). Although we must examine the legal conclusion of obviousness de novo, we should tread lightly when review-ing a legal conclusion—reached by a trial court—that rests upon a jury’s findings of fact. See Polaroid Corp. v. Eastman Kodak Co., 789 F.2d 1556, 1558 (Fed. Cir. 1986) (“Though it is well settled that the ultimate conclusion on obviousness is . . . a legal conclusion, that does not mean . . . that we may proceed on a paper record as though no trial had taken place. This court reviews judgments. Because we do not retry the case, [the appel-lant] must to prevail convince us that the judgment cannot stand on the record created at trial . . . . ”); cf. Haebe v. DOJ, 288 F.3d 1288, 1299 (Fed. Cir. 2002) (“[G]reat deference must be granted to the trier of fact who has had the opportunity to observe the demeanor of the witnesses, whereas the reviewing body looks only at cold records.”) (internal quotation marks omitted). Where a jury’s findings concerning the prior art are supported by substantial evidence, and where a trial court makes its obviousness determination based on those findings, I would exercise caution in wielding our own common sense as part of our review of the judgment.

The asserted claims in this case are based, in part, on filtering techniques used in two types of information systems found in the prior art: content-based systems and


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profile-based (or “collaborative”) systems. Content-based systems filtered search results for relevance to a user’s query, as reflected in “conventional search engines.” See Majority Op. at 10 (quoting ’420 patent col.2 ll.15–18). Collaborative systems, meanwhile, filtered information for relevance based on “the user’s long-term information desires or preferences,” and incorporated the information preferences of similar users. J.A. 3690.

As the majority explains, the prior art suggested that content-based and collaborative filtering could be com-bined. See Majority Op. at 8–9. The majority identifies prior art systems that passed content-based results (which were returned based on the user’s query) over to a distinct collaborative filter. The query in these systems was used only to obtain the initial results; it played no role in subsequent filtering on the collaborative side. The asserted claims, however, require using the query itself—not just the results returned by the query—on the collabo-rative side, thus combining content-based and collabora-tive filtering. See ’420 patent, col.28 ll.1–15; ’664 patent, col.27 ll.27–37.

At trial, experts for both sides testified about whether a person of skill in the art would have found it obvious to supply the key claim limitation missing from the prior art—the use of the query as part of a combined content-based and collaborative filter. I/P Engine’s expert testi-fied that a person of skill in the art in 1998 would not have “appreciated the advantages of tight integration” of search systems and profile systems, particularly with regard to the “relevance to the query.” J.A. 3739. In response, the Defendants’ expert testified that the prior art did “feature a tight integration between the search system and the content collaborative sys-tem . . . [b]ecause . . . it would have been obvious to one of ordinary skill in the art that if you are filtering search results, it’s obvious to keep around the query and use that also for filtering.” Id. at 3172–73.


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With respect to both patents, the jury found that the prior art “did not disclose a tightly integrated search system, and could not filter information relevant to the query.” J.A. 4170, 4172. The majority downplays the significance of the jury’s findings, explaining that the jury “never determined whether it would have been obvious to one skilled in the art to bridge any differences between the prior art and the claimed invention.” Majority Op. at 17. Without such a determination, the majority suggests, we must resort to “common sense” to address the question left unanswered by the jury—that is, whether it would have been obvious to one of skill in the art to use the search query as part of the filtering of collaborative data.1

We have explained that “the mere recitation of the words ‘common sense’ without any support adds nothing to the obviousness equation. Thus, we have required that obviousness findings grounded in ‘common sense’ must contain explicit and clear reasoning providing some rational underpinning why common sense compels a

1 The majority also concludes that this claim limita-tion is taught by the Culliss patent because that reference “squarely discloses using combined content and collabora-tive data in analyzing items for relevance to a query.” Majority Op. at 11–12. But the majority’s conclusion squarely conflicts with the jury’s express finding that Culliss “lack[s] any content analysis and filtering for relevance to the query.” J.A. 4170. Based on the record, I would defer to the jury’s fact finding. In the face of con-flicting testimony about what Culliss disclosed, the jury was free to credit the opinion of I/P Engine’s expert. See Power-One, Inc. v. Artesyn Technologies, Inc., 599 F.3d 1343, 1351 (Fed. Cir. 2010) (explaining that the jury was free to either credit or disbelieve expert testimony about “the differences between the prior art and the invention claimed”).


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finding of obviousness.” Plantronics, Inc. v. Aliph, Inc., 724 F.3d 1343, 1354 (Fed. Cir. 2013) (internal citations omitted). As the Supreme Court emphasized, “it can be important to identify a reason that would have prompted a person of ordinary skill in the relevant field to combine the elements in the way the claimed new invention does . . . because inventions in most, if not all, instances rely upon building blocks long since uncovered, and claimed discoveries almost of necessity will be combina-tions of what, in some sense, is already known.” KSR Int’l Co. v. Teleflex Inc., 550 U.S. 398, 418 (2007). We may not find a patent invalid for obviousness on the basis of “mere conclusory statements.” In re Kahn, 441 F.3d 977, 988 (Fed. Cir. 2006).

Here, in support of its finding of a “strong prima facie case of obviousness,” the majority concludes that “retain-ing the query for use in filtering combined content and collaborative data was entirely predictable and grounded in common sense.” Majority Op. at 15, 19 (internal quota-tions omitted).2 The use of the query is a matter of com-

2 The majority also takes issue with the jury’s find-ings on secondary considerations, noting that two of the findings with respect to the ’420 patent and the ’664 patent “appear internally inconsistent.” Majority Op. at 16. The majority generally characterizes the findings on secondary considerations as a “mixed bag.” Id. Even assuming, however, that the jury’s secondary considera-tion findings are as muddled as the majority describes, they are relevant only insofar as the majority is correct that its invocation of “common sense” may support a prima facie case of obviousness that must be overcome. See Dow Chemical Co. v. Halliburton Oil Well Cementing Co., 324 U.S. 320, 330 (1945) (“[Secondary] considerations are relevant only in a close case where all other proof leaves the question of invention in doubt.”).


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mon sense, the majority explains, “[b]ecause the query was readily available and closely correlated to the overall relevance of search results.” Id. at 14. In support of its suggestion that one of skill in the art would find it obvious to use the readily available query, the majority cites the testimony of the Defendants’ expert:

As [the Defendants’ expert] explained, the query would be just “sitting there” with the results of a search, and it would have been obvious to one skilled in the art to “keep around the query and use that also for filtering.”

Id. (citing J.A. 3173). I find this testimony inadequate to support the major-

ity’s conclusion. The expert’s “sitting there” explanation tells us nothing about whether one of skill in the art in 1998 would have been struck by common sense to modify collaborative filtering systems so as to incorporate search queries. All prior art references are “just sitting there” in the metaphorical sense. What is needed—and what is missing from the cited testimony—is some explanation of why one would use the query as the asserted claims do. See Innogenetics, N.V. v. Abbott Labs., 512 F.3d 1363, 1374 (Fed. Cir. 2008) (“[S]ome kind of motivation must be shown from some source, so that the jury can understand why a person of ordinary skill would have thought of either combining two or more references or modifying one to achieve the patented method.” (internal citations omitted)). Such evidence or reasoning is lacking here. The testimony of the Defendants’ expert amounts to a “mere conclusory statement” that may not serve as a basis for finding the asserted claims obvious. See In re Kahn, 441 F.3d at 988; see also InTouch Techs., Inc. v. VGO Commc’ns, Inc., 751 F.3d 1327, 1352 (Fed. Cir. 2014) (holding that expert’s testimony could not support a finding of obviousness where “testimony primarily con-sisted of conclusory references to [the expert’s] belief that


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one of ordinary skill in the art could combine these refer-ences, not that they would have been motivated to do so”).

As for the majority’s observation that the query is “closely correlated to the overall relevance of search results,” no one disputes that the prior art taught that a query was relevant to a user’s content-based search. What is disputed is whether the prior art taught the query’s “overall relevance” to collaborative filtering. See J.A. 3172–73, 3739. To bridge the gap, we must identify a non-circular reason that would have prompted a person of skill in the art to appreciate the relevance of the query to collaborative data. See KSR, 550 U.S. at 418.

The gap in the prior art references here is unlike gaps we have encountered in other cases—cited by the majori-ty—where we have found patents obvious for merely adding “the Internet” or “a web browser” to a well-known prior art reference. See Majority Op. at 14–15 (citing Soverain Software LLC v. Newegg Inc., 705 F.3d 1333, 1344, amended on reh’g (Fed. Cir. 2013); Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008)). In those cases, we observed that skilled artisans had already performed the same type of combination with similar elements. See Soverain, 705 F.3d at 1344 (finding that the use of use of hypertext to perform the known process of transmitting documents “was a routine incorporation of Internet technology into existing processes”); Muniauc-tion, 532 F.3d at 1326–27 (concluding that “[t]he record in this case demonstrates that adapting existing electronic processes to incorporate modern internet and web browser technology was similarly commonplace at the time the ’099 patent application was filed”).

In this case, the majority does not identify analogous “routine” combinations that would render obvious the patents’ incorporation of the search query into a collabo-rative filtering system. The asserted patents did not merely combine information technology with “the Inter-


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net.” Rather, the patents combined elements from two known information filtering systems. The patents took the query data (input for a content system) and mixed it with collaborative data (input for a profile-based system). What was claimed was the combination of elements of two evolving systems in the field of information science, not a combination of a known process and a web browser.

Nor is this case like Perfect Web Technologies, Inc. v. InfoUSA, Inc., 587 F.3d 1324 (Fed. Cir. 2009), where we affirmed a district court’s conclusion that a patent was obvious as a matter of common sense. In Perfect Web, the asserted patent claimed a four-step method for distrib-uting bulk emails. It was undisputed that the first three steps of the method were disclosed in the prior art. Id. at 1330. The fourth step—which was not present in the prior art—recited repeating the first three steps over and over until all the emails were delivered. As we described the method, it “simply recites repetition of a known procedure until success is achieved.” Id. Moreover, we found that the “relevant art required only a high school education and limited marketing and computer experi-ence,” and that no expert opinion was required to appreci-ate the value of repeating the three steps. Id.

In affirming the district court’s conclusion that the patented method was obvious, we observed that “simple logic suggests that sending messages to new addresses is more likely to produce successful deliveries than re-sending messages to addresses that have already failed.” Id. at 1331. To put it another way, one of skill in the art would have been motivated to add the fourth step because it would increase success—more recipients would receive email messages. We identified a benefit that would have been readily apparent to one of skill in the art at the time of the invention.

Here, by contrast, the record does not suggest a bene-fit or rationale that would have caused a skilled artisan to


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use the query as part of collaborative filtering in 1998. Although we know that the query was “sitting there,” we do not know why one of skill in the art would have thought that mixing the query with the collaborative filter would produce, to use the language of Perfect Web, “suc-cessful” filtering. We need something beyond the invoca-tion of the phrase “common sense” or “simple logic” to demonstrate the reason to combine the prior art refer-ences in this case. See KSR, 550 U.S. at 418; Innogenet-ics, 512 F.3d at 1374.

For these reasons, I respectfully dissent from the ma-jority’s holding that the asserted claims of the ’420 and ’664 patents are invalid for obviousness.


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______________________

PLANET BINGO, LLC, Plaintiff-Appellant,

v.

VKGS LLC (doing business as Video King), Defendant-Appellee.

______________________

2013-1663 ______________________

Appeal from the United States District Court for the

Western District of Michigan in No. 12-CV-0219, Judge Robert Holmes Bell.

______________________

Decided: August 26, 2014 ______________________

KAREN J.S. FOUTS, Weiss & Moy, P.C., of Grand Rap-

ids, Michigan, argued for plaintiff-appellant. With her on the brief were VERONICA-ADELE R. CAO and KENNETH M. MOTOLENICH-SALAS, of Scottsdale, Arizona.

STEVEN L. UNDERWOOD, Price Heneveld LLP, of

Grand Rapids, Michigan, argued for defendant-appellee. With him on the brief was MATTHEW J. GIPSON.

______________________


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PLANET BINGO, LLC v. VKGS LLC 2

Before TARANTO, BRYSON, and HUGHES, Circuit Judges. HUGHES, Circuit Judge.

Planet Bingo, LLC, owns two patents for computer-aided management of bingo games. After Planet Bingo filed an infringement action against VKGS, LLC, the district court granted summary judgment of invalidity, concluding that the patents do not claim patentable subject matter under 35 U.S.C. § 101. Because a straight-forward application of the Supreme Court’s recent holding in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014), leads us to the same result, we affirm.

I Planet Bingo alleged that VKGS infringed U.S. Patent

Nos. 6,398,646 and 6,656,045. The ’045 patent states that it is a continuation of the ’646 patent. The claims at issue recite computer-aided methods and systems for managing the game of bingo. Generally, the claims recite storing a player’s preferred sets of bingo numbers; retrieving one such set upon demand, and playing that set; while simul-taneously tracking the player’s sets, tracking player payments, and verifying winning numbers. See, e.g., ’646 patent col. 8 l. 45–col. 9 l. 18, col. 9 l. 33–col. 10 l. 13. Variations between the claims include display capabilities and options to purchase sets of bingo numbers.

Following a Markman order, VKGS filed a motion for summary judgment that the asserted claims are directed to a patent-ineligible concept. Applying the majority opinion’s approach in CLS Bank International v. Alice Corp., 685 F.3d 1341 (Fed. Cir. 2012) (en banc), the dis-trict court determined that “each method claim encom-passes the abstract idea of managing/playing the game of Bingo.” Planet Bingo, LLC v. VKGS, LLC, 961 F. Supp. 2d 840, 851 (W.D. Mich. 2013). The district court deter-mined that the use of a computer in the method claims “adds nothing more than the ability to manage . . . Bingo


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more efficiently,” id. at 852, and that “the limitations of the system claims are the same as the limitations of the method claims that failed to result in an ‘inventive con-cept,’” id. at 854. The district court stated that the sys-tem claims employ a computer “only for its most basic functions,” including “storing numbers, assigning identifi-ers, allowing for basic inputs and outputs, printing of a receipt, displaying of numbers, and/or matching . . . for verification.” Id. at 854–55. The court granted summary judgment on the grounds that all of the asserted claims are invalid under § 101. Id. at 857.

Planet Bingo appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II We review the grant of summary judgment under the

law of the regional circuit. Charles Mach. Works, Inc. v. Vermeer Mfg. Co., 723 F.3d 1376, 1378 (Fed. Cir. 2013). The Sixth Circuit reviews the grant or denial of summary judgment de novo. Tompkins v. Crown Corr, Inc., 726 F.3d 830, 837 (6th Cir. 2013). We review de novo whether a claim is valid under § 101. In re Nuijten, 500 F.3d 1346, 1352 (Fed. Cir. 2007).

A patent may be obtained for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. The Supreme Court has “long held that this provi-sion contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.” Alice, 134 S. Ct. at 2354 (quoting Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 2107, 2116 (2013)); see also Gottschalk v. Benson, 409 U.S. 63, 67 (1972) (“Phenomena of nature, though just discov-ered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work.”). But the application of these concepts to new and useful ends remains eligible for


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patent protection. Id. at 2355. Accordingly, the Court has described a framework for identifying patent-eligible claims, wherein a court must determine whether the claims at issue are directed to a patent-ineligible concept and, if so, whether additional elements in the claims transform the claims into a patent-eligible application. Id.

A As a preliminary matter, we agree with the district

court that there is no meaningful distinction between the method and system claims or between the independent and dependent claims. See Planet Bingo, 961 F. Supp. 2d at 854, 857. The system claims recite the same basic process as the method claims, and the dependent claims recite only slight variations of the independent claims.

In this case, the claims at issue are drawn to patent-ineligible subject matter. The ’646 and ’045 patents claim managing a bingo game while allowing a player to repeat-edly play the same sets of numbers in multiple sessions. The district court correctly concluded that managing the game of bingo “consists solely of mental steps which can be carried out by a human using pen and paper.” Planet Bingo, 961 F. Supp. 2d at 851. Claim 7 of the ’646 patent, for example, recites the steps of selecting, storing, and retrieving two sets of numbers, assigning a player identi-fier and a control number, and then comparing a winning set of bingo numbers with a selected set of bingo numbers. ’646 patent col. 9 l. 33–col. 10 l. 13. Like the claims at issue in Benson, not only can these steps be “carried out in existing computers long in use,” but they also can be “done mentally.” 409 U.S. at 67.

Planet Bingo argues that “in real world use, literally thousands, if not millions of preselected Bingo numbers are handled by the claimed computer program,” making it impossible for the invention to be carried out manually. Appellant’s Reply Br. 14. But the claimed inventions do


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not require as much. At most, the claims require “two sets of Bingo numbers,” “a player,” and “a manager.” ’646 patent col. 8 ll. 54–55, col. 9 l. 17; see also ’045 patent col. 9 ll. 5–6. We need not, and do not, address whether a claimed invention requiring many transactions might tip the scales of patent eligibility, as the claims fall far short of capturing an invention that necessarily handles “thou-sands, if not millions” of bingo numbers or players.

Moreover, the claims here are similar to the claims at issue in Bilski v. Kappos, 130 S. Ct. 3218 (2010), and Alice, 134 S. Ct. 2347, which the Supreme Court held were directed to “abstract ideas.” For example, the claims here recite methods and systems for “managing a game of Bingo.” ’646 patent col. 8 l. 46; see also id. col. 9 l. 33; ’045 patent col. 8 l. 64. This is similar to the kind of “organiz-ing human activity” at issue in Alice, 134 S. Ct. at 2356. And, although the ’646 and ’045 patents are not drawn to the same subject matter at issue in Bilski and Alice, these claims are directed to the abstract idea of “solv[ing a] tampering problem and also minimiz[ing] other security risks” during bingo ticket purchases. Appellant’s Br. 10, 20. This is similar to the abstract ideas of “risk hedging” during “consumer transactions,” Bilski, 130 S. Ct. at 3231, and “mitigating settlement risk” in “financial transac-tions,” Alice, 134 S. Ct. at 2356–57, that the Supreme Court found ineligible. Thus, we hold that the subject matter claimed in the ’646 and ’045 patents is directed to an abstract idea.

B Abstract ideas may still be patent-eligible if they con-

tain an “‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Alice, 134 S. Ct. at 2357 (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1294, 1298 (2012)).


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Apart from managing a game of bingo, the claims at issue also require “a computer with a central processing unit,” “a memory,” “an input and output terminal,” “a printer,” in some cases “a video screen,” and “a program . . . enabling” the steps of managing a game of bingo. ’646 patent col. 8 ll. 45–53, col. 9 l. 29. These elements, in turn, select, store, and retrieve two sets of numbers, assign a player identifier and a control number, and then compare a winning set of bingo numbers with a selected set of bingo numbers.

“[I]f a patent’s recitation of a computer amounts to a mere instruction to ‘implemen[t]’ an abstract idea ‘on . . . a computer,’ . . . that addition cannot impart patent eligibility.” Alice, 134 S. Ct. at 2358 (quoting Mayo, 132 S. Ct. at 1301). In this case, the claims recite a generic computer implementation of the covered abstract idea.

Planet Bingo argues that the patents recite “signifi-cantly more” than an abstract idea because the invention includes “complex computer code with three distinct subparts.” Appellant’s Br. 33, 38. We disagree. The ’646 and ’045 patents do not claim the “accounting program,” “ticket program,” and “verification program” that Planet Bingo identifies in its briefs. Instead, the claims recite a program that is used for the generic functions of storing, retrieving, and verifying a chosen set of bingo numbers against a winning set of bingo numbers. And, as was the case in Alice, “the function performed by the computer at each step of the process is ‘[p]urely conventional.’” Alice, 134 S. Ct. at 2359 (quoting Mayo, 132 S. Ct. at 1298).

Accordingly, we hold that the claims at issue do not have an ‘inventive concept’ sufficient to ‘transform’ the claimed subject matter into a patent-eligible application.

III We have considered Planet Bingo’s remaining argu-

ments and find them unpersuasive. Applying the Su-


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preme Court’s precedents, the claims at issue are invalid under § 101.

AFFIRMED


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__________________________

ULTRAMERCIAL, LLC AND ULTRAMERCIAL, INC., Plaintiffs-Appellants,

v. HULU, LLC,

Defendant, and

WILDTANGENT, INC., Defendant-Appellee.

__________________________

2010-1544 __________________________

Appeal from the United States District Court for the Central District of California in case No. 09-CV-6918, Judge R. Gary Klausner.

___________________________

Decided: September 15, 2011 ___________________________

LAWRENCE M. HADLEY, Hennigan Dorman, LLP, of Los Angeles, California, argued for plaintiffs-appellants. With him on the brief were HAZIM ANSARI and MIEKE K.MALMBERG.

GREGORY C. GARRE, Latham & Watkins, LLP, of Washington, DC, argued for defendant-appellee. On the


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brief were RICHARD G. FRENKEL and LISA K. NGUYEN, Menlo Park, California. Of counsel was RICHARD P. BESS.

__________________________

Before RADER, Chief Judge, LOURIE and O’MALLEY, Circuit Judges.

RADER, Chief Judge. The United States District Court for the Central Dis-

trict of California dismissed Ultramercial, LLC and Ultramercial, Inc.’s (collectively, “Ultramercial”) patent infringement claims, finding that U.S. Patent No. 7,346,545 (“the ’545 patent”) does not claim patent-eligible subject matter. Because the ’545 patent claims a “proc-ess” within the language and meaning of 35 U.S.C. § 101, this court reverses and remands.

I

The ’545 patent claims a method for distributing copy-righted products (e.g., songs, movies, books) over the Internet where the consumer receives a copyrighted product for free in exchange for viewing an advertise-ment, and the advertiser pays for the copyrighted content. Claim 1 of the ’545 patent reads:

A method for distribution of products over the Internet via a facilitator, said method comprising the steps of:

a first step of receiving, from a content pro-vider, media products that are covered by intellectual property rights protection and are available for purchase, wherein each said media product being comprised of at least one of text data, music data, and video data;


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a second step of selecting a sponsor message to be associated with the media product, said sponsor message being selected from a plu-rality of sponsor messages, said second step including accessing an activity log to verify that the total number of times which the sponsor message has been previously pre-sented is less than the number of transac-tion cycles contracted by the sponsor of the sponsor message;

a third step of providing the media product for sale at an Internet website;

a fourth step of restricting general public access to said media product;

a fifth step of offering to a consumer access to the media product without charge to the consumer on the precondition that the con-sumer views the sponsor message;

a sixth step of receiving from the consumer a request to view the sponsor message, wherein the consumer submits said request in response to being offered access to the media product;

a seventh step of, in response to receiving the request from the consumer, facilitating the display of a sponsor message to the con-sumer;

an eighth step of, if the sponsor message is not an interactive message, allowing said con-sumer access to said media product after said step of facilitating the display of said sponsor message;


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a ninth step of, if the sponsor message is an in-teractive message, presenting at least one query to the consumer and allowing said consumer access to said media product after receiving a response to said at least one query;

a tenth step of recording the transaction event to the activity log, said tenth step including updating the total number of times the sponsor message has been presented; and

an eleventh step of receiving payment from the sponsor of the sponsor message displayed.

’545 patent col.8 ll.5-48. Ultramercial filed suit against Hulu, LLC (“Hulu”),

YouTube, LLC (“YouTube”), and WildTangent, Inc. (“WildTangent”), alleging infringement of the ’545 patent. Hulu and YouTube have been dismissed from the case. WildTangent filed a motion to dismiss for failure to state a claim, arguing that the ’545 patent did not claim patent-eligible subject matter. The district court granted Wild-Tangent’s motion to dismiss. Ultramercial appeals. This court has jurisdiction under 28 U.S.C. § 1295(a)(1).

This court reviews a district court’s dismissal for fail-ure to state a claim without deference. Gillig v. Nike, Inc., 602 F.3d 1354, 1358 (Fed. Cir. 2010). This court also reviews determinations regarding patent-eligible subject matter under 35 U.S.C. § 101 without deference. In re Ferguson, 558 F.3d 1359, 1363 (Fed. Cir. 2009).

Il

The district court dismissed Ultramercial’s claims for failure to claim statutory subject matter without formally construing the claims. This court has never set forth a


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bright line rule requiring district courts to construe claims before determining subject matter eligibility. Indeed, because eligibility is a “coarse” gauge of the suitability of broad subject matter categories for patent protection, Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 869 (Fed. Cir. 2010), claim construction may not always be necessary for a § 101 analysis. See, e.g., Bilski v. Kappos, 130 S. Ct. 3218, 3231 (2010) (find-ing subject matter ineligible for patent protection without claim construction). On many occasions, however, a definition of the invention via claim construction can clarify the basic character of the subject matter of the invention. Thus, claim meaning may clarify the actual subject matter at stake in the invention and can enlighten, or even answer, questions about subject matter abstractness. In this case, the subject matter at stake and its eligibility does not require claim construction.

lll

35 U.S.C. § 101 sets forth the categories of subject matter that are eligible for patent protection: “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title” (emphasis added). In Bilski, the Supreme Court ex-plained that “[i]n choosing such expansive terms modified by the comprehensive ‘any,’ Congress plainly contem-plated that the patent laws would be given wide scope.” 130 S. Ct. at 3225 (quoting Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980)). After all, the purpose of the Patent Act is to encourage innovation, and the use of broadly inclusive categories of statutory subject matter ensures that “ingenuity . . . receive[s] a liberal encouragement.” Chakrabarty, 447 U.S. at 308.


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More importantly, as § 101 itself expresses, subject matter eligibility is merely a threshold check; claim patentability ultimately depends on “the conditions and requirements of this title,” such as novelty, non-obviousness, and adequate disclosure. 35 U.S.C. § 101; see Classen Immunotherapies, Inc. v. Biogen IDEC, Nos. 2006-1634, 2006-1649, 2011 WL 3835409, at *6 (Fed. Cir. Aug. 31, 2011) (pointing out the difference between “the threshold inquiry of patent-eligibility, and the substantive conditions of patentability”). By directing attention to these substantive criteria for patentability, the language of § 101 makes clear that the categories of patent-eligible subject matter are no more than a “coarse eligibility filter.” Research Corp., 627 F.3d at 869. In other words, the expansive categories—process, machine, article of manufacture, and composition of matter—are certainly not substitutes for the substantive patentability require-ments set forth in § 102, § 103, and § 112 and invoked expressly by § 101 itself. Moreover, title 35 does not list a single ineligible category, suggesting that any new, non-obvious, and fully disclosed technical advance is eligible for protection, subject to the following limited judicially created exceptions.

In line with the broadly permissive nature of § 101’s subject matter eligibility principles, judicial case law has created only three categories of subject matter outside the eligibility bounds of § 101—laws of nature, physical phenomena, and abstract ideas. Bilski, 130 S. Ct. at 3225. Indeed, laws of nature and physical phenomena cannot be invented. Abstractness, however, has pre-sented a different set of interpretive problems, particu-larly for the § 101 “process” category. Actually, the term “process” has a statutory definition that, again, admits of no express subject matter limitation: a title 35 “process” is a “process, art or method, and includes a new use of a


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known process, machine, manufacture, composition of matter, or material.” 35 U.S.C. § 100(b). Indeed, the Supreme Court recently examined this definition and found that the ordinary, contemporary, common meaning of “method” may include even methods of doing business. See Bilski, 130 S. Ct. at 3228. Accordingly, the Court refused to deem business methods ineligible for patent protection and cautioned against “read[ing] into the patent laws limitations and conditions which the legisla-ture has not expressed.” Id. at 3226 (quoting Diamond v. Diehr, 450 U.S. 175, 182 (1981)). And this court detects no limitations or conditions on subject matter eligibility expressed in statutory language. See, e.g., Ass’n for Molecular Pathology v. U.S. Patent & Trademark Office, No. 2010-1406, 2011 WL 3211513, at *14 (Fed. Cir. July 29, 2011) (patent-ineligible categories of subject matter are “judicially created exceptions”); Prometheus Labs., Inc. v. Mayo Collaborative Servs., 628 F.3d 1347, 1353 (Fed. Cir. 2010), cert. granted, 130 S.Ct. 3543 (2010) (patent-ineligible categories are “not compelled by the statutory text”); see also Bilski, 130 S. Ct. at 3225 (Su-preme Court acknowledging that judge-created “excep-tions are not required by the statutory text”).

In an effort to grapple with the non-statutory “ab-stractness” limit, this court at one point set forth a ma-chine-or-transformation test as the exclusive metric for determining the subject matter eligibility of processes. In re Bilski, 545 F.3d 943, 956 (Fed. Cir. 2008), aff'd on other grounds, Bilski, 130 S.Ct. 3218. The Supreme Court rejected this approach in Bilski, noting that the machine-or-transformation test is simply “a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101” and is not “the sole test for deciding whether an invention is a patent-eligible ‘process.’” 130 S. Ct. at 3227 (emphasis


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added). While machine-or-transformation logic served well as a tool to evaluate the subject matter of Industrial Age processes, that test has far less application to the inventions of the Information Age. See id. at 3227-28 (“[I]n deciding whether previously unforeseen inventions qualify as patentable ‘processes,’ it may not make sense to require courts to confine themselves to asking the ques-tions posed by the machine-or-transformation test. Sec-tion 101’s terms suggest that new technologies may call for new inquiries.”). Technology without anchors in physical structures and mechanical steps simply defy easy classification under the machine-or-transformation cate-gories. As the Supreme Court suggests, mechanically applying that physical test “risk[s] obscuring the larger object of securing patents for valuable inventions without transgressing the public domain.” Id. at 3228.

Both members of the Supreme Court and this court have recognized the difficulty of providing a precise formula or definition for the judge-made ineligible cate-gory of abstractness. See id. at 3236 (Stevens, J., concur-ring) (“The Court . . . [has] never provide[d] a satisfying account of what constitutes an unpatentable abstract idea.”); Research Corp., 627 F.3d at 868. Because technol-ogy is ever-changing and evolves in unforeseeable ways, this court gives substantial weight to the statutory reluc-tance to list any new, non-obvious, and fully disclosed subject matter as beyond the reach of title 35. In sum, § 101 is a “dynamic provision designed to encompass new and unforeseen inventions.” J.E.M. Ag Supply, Inc. v. Pioneer Hi-Bred Int’l, Inc., 534 U.S. 124, 135 (2001). With this in mind, this court does “not presume to define ‘ab-stract’ beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary


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attention on the patentability criteria of the rest of the Patent Act.” Research Corp., 627 F.3d at 868.

Although abstract principles are not eligible for pat-ent protection, an application of an abstract idea may well be deserving of patent protection. See Diehr, 450 U.S. at 187 (“an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection”); Parker v. Flook, 437 U.S. 584, 591 (1978) (“While a scientific truth, or the mathe-matical expression of it, is not a patentable invention, a novel and useful structure created with the aid of knowl-edge of scientific truth may be.”). The application of an abstract idea to a “new and useful end” is the type of invention that the Supreme Court has described as de-serving of patent protection. Gottschalk v. Benson, 409 U.S. 63, 67 (1972). After all, unlike the Copyright Act which divides idea from expression, the Patent Act covers and protects any new and useful technical advance, including applied ideas.

Turning to the ’545 patent, the claimed invention is a method for monetizing and distributing copyrighted products over the Internet. As a method, it satisfies § 100’s definition of “process” and thus falls within a § 101 category of patent-eligible subject matter. Thus, this court focuses its inquiry on the abstractness of the subject matter claimed by the ’545 patent.

“[I]nventions with specific applications or improve-ments to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.” Research Corp., 627 F.3d at 869. The ’545 patent seeks to remedy problems with prior art banner advertising, such as declining click-through rates, by introducing a method of product distri-bution that forces consumers to view and possibly even


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interact with advertisements before permitting access to the desired media product. ’545 patent col.2 ll.14-18. By its terms, the claimed invention purports to improve existing technology in the marketplace. By its terms, the claimed invention invokes computers and applications of computer technology. Of course, the patentability of the ’545 patent, though acknowledged by the U.S. Patent Office, would still need to withstand challenges that the claimed invention does not advance technology (novelty), does not advance technology sufficiently to warrant patent protection (obviousness), or does not sufficiently enable, describe, and disclose the limits of the invention (adequate disclosure).

Returning to the subject matter of the ’545 patent, the mere idea that advertising can be used as a form of cur-rency is abstract, just as the vague, unapplied concept of hedging proved patent-ineligible in Bilski. However, the ’545 patent does not simply claim the age-old idea that advertising can serve as currency. Instead the ’545 patent discloses a practical application of this idea. The ’545 patent claims a particular method for monetizing copyrighted products, consisting of the following steps: (1) receiving media products from a copyright holder, (2) selecting an advertisement to be associated with each media product, (3) providing said media products for sale on an Internet website, (4) restricting general public access to the media products, (5) offering free access to said media products on the condition that the consumer view the advertising, (6) receiving a request from a con-sumer to view the advertising, (7) facilitating the display of advertising and any required interaction with the advertising, (8) allowing the consumer access to the associated media product after such display and interac-tion, if any, (9) recording this transaction in an activity log, and (10) receiving payment from the advertiser. ’545


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patent col.8 ll.5-48. Many of these steps are likely to require intricate and complex computer programming. In addition, certain of these steps clearly require specific application to the Internet and a cyber-market environ-ment. One clear example is the third step, “providing said media products for sale on an Internet website.” Id. col.8 ll.20-21. And, of course, if the products are offered for sale on the Internet, they must be “restricted”—step four—by complex computer programming as well. Viewing the subject matter as a whole, the invention involves an extensive computer interface. This court does not define the level of programming complexity required before a computer-implemented method can be patent-eligible. Nor does this court hold that use of an Internet website to practice such a method is either necessary or sufficient in every case to satisfy § 101. This court simply find the claims here to be patent-eligible, in part because of these factors.

In this context, this court examines as well the con-tention that the software programming necessary to facilitate the invention deserves no patent protection or amounts to abstract subject matter or, in the confusing terminology of machines and physical transformations, fails to satisfy the “particular machine” requirement. This court confronted that contention nearly two decades ago in the en banc case of In re Alappat, 33 F.3d 1526 (Fed. Cir. 1994). At that time, this court observed that “programming creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program soft-ware.” Id. at 1545. As computer scientists understand:

the inventor can describe the invention in terms of a dedicated circuit or a process that emulates that circuit. Indeed, the line of demarcation between a


157

dedicated circuit and a computer algorithm ac-complishing the identical task is frequently blurred and is becoming increasingly so as the technology develops. In this field, a software process is often interchangeable with a hardware circuit.

Id. at 1583 (J. Rader, concurring). In other words, a programmed computer contains circuitry unique to that computer. That “new machine” could be claimed in terms of a complex array of hardware circuits, or more effi-ciently, in terms of the programming that facilitates a unique function. The digital computer may be considered by some the greatest invention of the twentieth century, and both this court and the Patent Office have long ac-knowledged that “improvements thereof” through inter-changeable software or hardware enhancements deserve patent protection. Far from abstract, advances in com-puter technology—both hardware and software—drive innovation in every area of scientific and technical en-deavor.

This court understands that the broadly claimed method in the ’545 patent does not specify a particular mechanism for delivering media content to the consumer (i.e., FTP downloads, email, or real-time streaming). This breadth and lack of specificity does not render the claimed subject matter impermissibly abstract. Assuming the patent provides sufficient disclosure to enable a person of ordinary skill in the art to practice the invention and to satisfy the written description requirement, the disclosure need not detail the particular instrumentalities for each step in the process.

That a process may be patentable, irrespective of the particular form of the instrumentalities used, cannot be disputed. If one of the steps of a process


158

be that a certain substance is to be reduced to a powder, it may not be at all material what in-strument or machinery is used to effect that ob-ject, whether a hammer, a pestle and mortar, or a mill.

Benson, 409 U.S. at 69-70 (quoting Cochrane v. Deener, 94 U.S. 780, 787-88 (1876)). Moreover, written description and enablement are conditions for patentability that title 35 sets “wholly apart from whether the invention falls into a category of statutory subject matter.” Diehr, 450 U.S. at 190 (quoting In re Bergy, 596 F.2d 952, 961 (C.C.P.A. 1979)). The “coarse eligibility filter” of § 101 should not be used to invalidate patents based on con-cerns about vagueness, indefinite disclosure, or lack of enablement, as these infirmities are expressly addressed by § 112. See 35 U.S.C. § 112; see also Research Corp., 627 F.3d at 869 (“In section 112, the Patent Act provides powerful tools to weed out claims that may present a vague or indefinite disclosure of the invention.”).

Finally, the ’545 patent does not claim a mathemati-cal algorithm, a series of purely mental steps, or any similarly abstract concept. It claims a particular method for collecting revenue from the distribution of media products over the Internet. In a recent case, this court discerned that an invention claimed an “unpatentable mental process.” CyberSource Corp. v. Retail Decisions, Inc., No. 2009-1358, 2011 WL 3584472, at *3 (Fed. Cir. Aug. 16, 2011). The eligibility exclusion for purely mental steps is particularly narrow. See Prometheus Labs., 628 F.3d at 1358 (noting that claims must be considered as a whole and that “the presence of mental steps [in a claim] does not detract from the patentability of [other] steps”). Unlike the claims in CyberSource, the claims here re-quire, among other things, controlled interaction with a


159

ULTRAMERCIAL v. HULU

14

consumer via an Internet website, something far removed from purely mental steps.

In sum, as a practical application of the general con-cept of advertising as currency and an improvement to prior art technology, the claimed invention is not “so manifestly abstract as to override the statutory language of section 101.” Research Corp., 627 F.3d at 869. Accord-ingly, this court reverses the district court’s dismissal of Ultramercial’s patent claims for lack of subject matter eligibility and remands for further proceedings. This decision does not opine at all on the patentability of the claimed invention under the substantive criteria set forth in § 102, § 103, and § 112.

REVERSED AND REMANDED


160

DISTRICT COURT DECISIONS

Similar to the appellate level, most of the federal district courts throughout the country have invalidated many cases brought to them with an invalidity claim under 35 U.S.C. § 101. Of the cases presented here, only Card Verification and California Institute of Technology were affirmed as valid 101 patents.


161

Parties ENFISH, LLC v. MICROSOFT CORPORATION

Case No. 2:12–cv–07360–MRP–MRW

District Court C.D. California, Western Division

Date November 3, 2014

Patents 6,151,604, 6,163,775

Claim [a] method for storing and retrieving data in a computer

memory, comprising the steps of:

configuring said memory according to a logical table,

said logical table including:

a plurality of logical rows, each said logical row including

an object identification number (OID) to

identify each said logical row, each said logical row

corresponding to a record of information;

a plurality of logical columns intersecting said plurality

of logical rows to define a plurality of logical cells, each said

logical column including an OID to identify each said logical

column; and

indexing data stored in said table.


162


163

Abstract (P. 6)

All asserted claims of the '604 and '775 patents are directed to

abstract ideas. Every claim has a similar purpose: storing,

organizing, and retrieving memory in a logical table. Memory

represents data or information.FN8 For millennia, humans have

used tables to store information. See Martin Campbell–Kelly et al.,

The History of Mathematical Tables: From Sumer to Spreadsheets 19

(Oxford 2003) (showing example of ancient Mesopotamian table for

year 1295 B.C.); see also id. at 86 (showing example of life table from

seventeenth-century England). Tables continue to be elementary

tools used by everyone from school children to scientists and

programmers. Tables are a basic and convenient way to organize

information on paper; unsurprisingly, they are a basic and

convenient way to organize information on computers. Cf. id. at 324

(“[A] writing surface affords the property of organizing information in

a two-dimensional grid, and therefore tables can be viewed almost as

a historical inevitability ... [that] would arise spontaneously in any

civilization where a writing surface was used.... The screen of a

personal computer shares the two-dimensional character of a writing

surface.”). A patent on the pervasive concept of tables would preempt

too much future inventive activity. The fact that the patents claim a

“logical table” demonstrates abstractness. The term “logical table”

refers to a logical data structure, as opposed to a physical data

structure. See Claim Construction Order at 7, Dkt. No. 86 (“[A logical

table has] a data structure that is logical as opposed to physical, and

therefore does not need to be stored contiguously in memory.”).

Under this construction, it does not matter how memory is

physically stored on the hardware. In essence, the claims capture

the concept of organizing information using tabular formats. As


164

such, the claims preempt a basic way of organizing information,

without regard to the physical data structure. There can be little

argument that a patent on this concept, without more, would greatly

impede progress.

Significantly more (P. 7)

These limitations comprise a series of conventional elements.

“[C]onfiguring said memory according to a logical table” simply

means storing computer information, possibly for later retrieval. The

purpose of all tables is to store information for later retrieval. As

such, this limitation is conventional because it recites the obvious

purpose of all tables. The “logical table” element merely indicates

that the table can store memory noncontiguously. Non-contiguous

memory allocation is the concept of storing a program in various

parts of the memory. The concept of non-contiguous memory is

ubiquitous in the art and therefore conventional. See D.M.

Dhamdhere, Operating Systems: A Concept–Based Approach 213 (2d

ed. 2006) (“In the noncontiguous memory allocation model, several

non-adjacent memory areas are allocated to a process.”); Robert C.

Daley & Jack B. Dennis, Virtual Memory, Processes, and Sharing in

MULTICS 309 (May 5, 1968),


165

Parties EVERY PENNY COUNTS, INC. v. WELLS FARGO BANK, N.A.

Case No. 8:11–cv–2826–T–23 TBM

District Court M.D. Florida, Tampa Division

Date September 11, 2014

Patents 7,571,849, 8,025,217

Claim A method for performing a payment transaction, the method

comprising:

electronically receiving, in connection with the payment

transaction, a determinant, apportioning data, payment

transaction data comprising a transaction amount, and

operating account identifying data that identifies an operating

account;

generating a rounder amount based on the transaction

amount and the determinant, wherein generating a rounder

amount is performed after receiving a plurality of payment

transactions;

modifying a balance of the operating account based on the

transaction amount and the rounder amount; apportioning at

least a portion of the rounder amount to one or more other

accounts selected by a holder of the operating account; and

depositing the apportioned parts of the rounder amount to


166

the one or more other accounts.


167


168


169

Abstract (P. 4)

As a first step, Alice instructs the district court to determine whether

the concept that each patent is “directed to” or “drawn to” is a

patentable concept. 134 S.Ct. at 2355. The '849 and '217 patents are

“directed to” or “drawn to” the concept of routinely modifying

transaction amounts and depositing the designated, incremental

differences into a recipient account. FN5 Like the intermediated

settlement claimed in Alice (and th0e risk hedging claimed in Bilski ),

the concept claimed in the '849 and '217 patents is a “basic concept”

and a “fundamental economic practice long prevalent in our system

of commerce” and, hence, an abstract idea. Alice, 134 S.Ct. at 2356.

As discussed above, economic actors of every description and every

motive—from the scam artist to the frugal wage-earner to the

government— have understood and exploited the elemental notion of

regularly and frequently capturing a small and inconspicuous

quantity and segregating and retaining the captured quantities until

the quantities accumulate into a large quantity—a program indebted

only and entirely to the fundaments of elemental arithmetic—simple

addition.


The '849 patent's “representative” method, Alice, 134 S.Ct. at 2359,

comprises (1) electronically receiving data, including the transaction

amounts,FN6 (2) modifying the transaction amounts in accord with a

formula, (3) depositing the differences between the modified and

unmodified transaction amounts into one or more recipient

accounts, and (4) adjusting each account balance accordingly. The

function performed by the computer at each step of the method is

“purely conventional.” Alice, 134 S.Ct. at 2358. The first two steps—

(1) electronically receiving data (or, in the words of Alice, “us[ing] a


170

computer to obtain data”) and (2) rounding, or adding a percentage

or fixed number—are “well-understood, routine, conventional

activities previously known to the industry.” Alice, 134 S.Ct. at 2359

(internal quotation marks omitted). “The same is true with respect to

[steps three and four,] the use of a computer to ... adjust account

balances....” Alice, 134 S.Ct. at 2359. Also, by adding “nothing

significantly more than an instruction to apply the abstract idea ...

using some unspecified, generic computer,” FN7 the four steps of the

method are not “ ‘enough’ to transform an abstract idea into a

patent-eligible invention.” Alice, 134 S.Ct. at 2360.


171

Parties GENETIC TECHNOLOGIES LTD. v. BRISTOL-MYERS SQUIBB

COMPANY

Case No. 12-394-LPS

District Court DISTRICT OF DELAWARE

Date October 30, 2014

Patents 5,612,179

Claim 1. A method for detection of at least one coding region allele of a

multi-allelic genetic locus comprising:

a) amplifying genomic DNA with a primer pair that spans a

non-coding region sequence, said primer pair defining a DNA

sequence which is in genetic linkage with said genetic locus and

contains a sufficient number of non-coding region sequence

nucleotides to produce an amplified DNA sequence

characteristic of said allele; and

b) analyzing the amplified DNA sequence to detect the allele.


172


173

Abstract (P. 11)

The correlations between variations in non-coding regions of DNA-

formerly known as "junk DNA" - and variations in coding regions of

DNA - specifically, alleles - are natural phenomena. A correlation

that preexists in the human body is an unpatentable phenomenon.

See, e.g., Lab. Corp. of Am. Holdings v. Metabolite Labs., Inc., 548

U.S. 124, 135 (2006) (finding correlation between homocysteine in

human body fluid and vitamin deficiency is "natural phenomenon").

In Mayo 132 S. Ct. at 1296-97, the Supreme Court evaluated a

patent related to the correlation between concentrations of certain

metabolites in the blood and the likelihood that a dosage of a

thiopurine drug will prove ineffective or cause harm. The Court

found that"[ w ]hile it takes a human action (the administration of a

thiopurine drug) to trigger a manifestation of this relation in a

particular person, the relation itself exists in principle apart from

any human action." Id. at 1297 ("The relation is a consequence of the

ways in which thiopurine compounds are metabolized by the body-

entirely natural processes.")…

Therefore, just as the relationship at issue in Mayo was entirely a

consequence of the body's natural processes for metabolizing

thiopurine, so too is the correlation here (between variations in the

non-coding regions and allele presence in the coding regions) a

consequence of the naturally occurring linkages in the DNA

sequence. See also Genetic Techs. Ltd. v. Agilent Techs., Inc., -

F.Supp.2d-, 2014 WL 941354, at *3 (N.D. Cal. Mar. 7, 2014) (stating

correlations between variation in non-coding and coding regions

alone are unpatentable natural laws despite not being "universal" or

"immutable scientific truths"). Regardless of whether the correlations

change over time due to evolution or are not identical across every


174

organism, the genetic correlations here exist apart from any human

action. Accordingly, Plaintiffs arguments are unavailing.


Having determined that claim 1 recites a process focused on a

natural law, the Court must now determine whether the additional

steps in the claim are sufficient to satisfy patent eligibility.

Specifically, "do the patent claims add enough to their statements of

the correlations to allow the processes they describe to qualify as

patent-eligible processes that apply natural laws?" Mayo, 132 S. Ct.

at 1297 (emphasis in original). When the newly discovered DNA

correlations are set aside and the additional steps are examined,

claim 1 of the '179 patent is ineligible. The asserted claim recites a

series of steps to manifest the natural law - that is, to detect the

natural correlations between coding and noncoding sequences. The

added steps used to discern these correlations consist only of routine

and conventional techniques. The patent specification states this

outright, making this one of the (perhaps rare) occasions in which

further factual development and claim construction are not

necessary and invalidity can properly be determined at the 12(b )( 6)

stage.9 Without any inventive steps employed before the correlation

is detected, the claims might still meaningfully limit themselves to an

application of this newly-discerned DNA correlation. However, it is

undisputed here that once the correlation is detected, the claim

stops. Hence, under the guidance of Mayo and Myriad, the additional

steps do not add enough to transform the claim on a natural

phenomenon into patent eligible subject matter.


175

Parties Eclipse IP LLC v. McKinley Equipment Corporation

Case No. CV 14-154-GW(AJWx)

District Court CENTRAL DISTRICT OF CALIFORNIA


Patents 7,064,681, 7,113,110, 7,119,716

Claim A method for communications in connection with a computer-

based notification system, comprising:

initiating a notification communication to a personal

communications device [“PCD”] associated with a party, the

notification communication relating to a task to be performed;

during the notification communication, receiving a response

from the party’s personal communications device, indicating

whether or not the party associated with the personal

communications device will perform the task;

when the party is willing to perform the task, refraining from

sending any further notification communications to provoke

performance of the task and monitoring for detection of one or

more events to indicate accomplishment of the task by the

party, the one or more events comprising at least one of the

following: receipt of a second communication from the party’s

personal communications device; expiration of a predefined time


176

period;

or arrival or departure of a mobile thing at or from a location,

respectively; and

when the party is not willing to perform the task, initiating

another notification communication to another personal

communications device associated with another party in order

to request assistance in the task from the another party.


177


178

Abstract (P. 10)

That analysis fits the ‘681 Patent’s claims precisely. The claims are

directed to the abstract idea of asking someone whether they want to

perform a task, and if they do, waiting for them to complete it, and if

they do not, asking someone else.


The claims also direct that the method be performed “in connection

with a computer system.” There are likely a myriad number of ways

to do so, and the ‘681 Patent preempts them all. The claims capture

that broad scope without any “inventive concept” or other limiting

principle. Of course, the computers used to implement the idea will

have to be “specially programmed” to carry out the instructions. But

that is true of all computer implemented inventions. A patent

applicant may not “claim any principle of the physical or social

sciences by reciting a computer system configured to implement the

relevant concept.” Alice, 134 S. Ct. at 2359.


179

Parties DIETGOAL INNOVATIONS LLC v. BRAVO MEDIA LLC (DIVISION

OF NBC UNIVERSAL MEDIA, LLC)

Case No. 13 Civ. 8391 (PAE)

District Court Southern District Of New York

Date July 8, 2014

Patents 6,585,516

Claim A system of computerized meal planning, comprising:

a User Interface;

a Database of food objects organizable into meals; and

at least one Picture Menus, which displays on the User

Interface meals from the Database that a user can select from to

meet customized eating goal.

A system of computerized meal planning, comprising:

a User Interface;

a Database of food objects; and

a Meal Builder, which displays on the User Interface meals

from the Database, and wherein a user can change content of

said meals and view the resulting meals’ impact on customized

eating goals.


180


181

Abstract (P. 17)

Using the Supreme Court’s precedents on patent-eligibility as

“guideposts,” it is clear that the claims of the ’516 Patent are directed

to an impermissible abstract idea or mental concept.6 The ’516

Patent claims a process for computerized meal planning; in essence,

it recites a computer program that allows the user to create meals

from a database of food objects according to his or her preferences

and dietary goals, to change those meals by adding or subtracting

food objects, and to view the dietary impact of changes to those

meals on a visual display. DietGoal attempts to dress up the claims

as a computerized process for “behavior analysis” and “training.” But

the claims of the ’516 Patent recite nothing more than the abstract

concept of selecting meals for the day, according to one’s particular

dietary goals and food preferences. Meal-planning is surely a “long

prevalent” practice, Bilski II, 130 S. Ct. at 3231 (internal quotation

marks omitted). It is, by any reckoning, at least as longstanding as

the economic practices of risk-hedging (invalidated in Bilski) and

intermediated settlement (invalidated in Alice). If anything, it is more

venerable: Although specific approaches to meal planning have

evolved as dietary knowledge has advanced and social mores have

changed, humans have assuredly engaged at least in rudimentary

meal-planning “for millennia.” Lumen View, 984 F. Supp. 2d at 200

(finding relevant, in invalidating patent claiming computerized

method for facilitating matchmaking, that the claimed process was

nothing more than mathematical manifestation of a fundamental

process, which matchmakers had been doing “all through human

history”). Sustaining DietGoal’s patent would thus “effectively grant a

monopoly over an abstract idea.” Bilski II, 130 S. Ct. at 3231.

Moreover, like the claims invalidated in Benson and Flook, the


182

claims of the ’516 Patent recite steps that, although computer-

implemented by virtue of the patent application, could “be performed

in the human mind, or by a human using a pen and paper,” and “a

method that can be performed by human thought alone is merely an

abstract idea and is not patent-eligible under § 101.” Cybersource,

654 F.3d at 1372, 1373. In Benson, the Court held that the

computerized method claimed in the patent for converting BCD

numerals into pure binary code was directed toward an

impermissible abstract idea, in part because “[t]he conversion of

BCD numerals to pure binary numerals can be done mentally.” 409

U.S. at 66, 67. Similarly, in Flook, the Court held that a well-known

method for calculating alarm limits could be done using “pencil and

paper,” and thus the patent claiming computerized application of

that method was outside the scope of § 101. 437 U.S. at 586.


Although DietGoal contends that the display functionality is “highly

particularized,” DietGoal Alice Letter at 2, the claimed process could

“be carried out in existing computers long in use, no new machinery

being necessary,” Benson, 409 U.S. at 67. Indeed, the steps required

by the ’516 Patent—preparing lists of food items, creating meals from

those lists of food items, using known nutritional information to

calculate the dietary impact of changes to those meals, and visually

displaying the results—are far more “routine” and “conventional”

than the computerized applications of the economic concepts

invalidated in Bilski and Alice. These computerized elements, taken

separately, do nothing to “transform” the nature of the claim from

the mental process of meal planning into a novel method or unique

application of that idea, and thus are insufficient to render the

claims of the ’516 Patent patent-eligible.

The outcome is no different when one considers the claims “as an


183

ordered combination.” That is because the claims of the ’516 Patent,

viewed as a whole, recite nothing more than “the concept of [meal

planning] as performed by a generic computer.” Alice, 573 U.S. at ___

(slip op., at 15). The Patent specifies that the user can choose preset

meals and food items from the Databases, see those meals displayed

using the Picture Menus, and change those meals on the Meal

Builder, as well as visualize the impact of those changes. These

steps, however, are insufficient to transform the abstract idea of

meal planning into a patentable process. See Mayo, 132 S. Ct. at

1300 (“[S]imply appending conventional steps, specified at a high

level of generality, to laws of nature, natural phenomena, and

abstract ideas cannot make those laws, phenomena, and ideas

patentable.”). The addition of a computer to perform calculations,

retrieve data, and visually display images is nothing more than

“post-solution activity” that cannot render the process patentable.

Flook, 437 U.S. at 590. In sum, the addition of the computer here is

not “‘sufficient to ensure that the patent in practice amounts to

significantly more than a patent upon the [ineligible concept] itself.’”

Alice, 573 U.S. at ___ (slip op., at 7) (quoting Mayo, 132 S. Ct. at

1294) (alteration in Alice). Accordingly, the ’516 Patent does not

recite a patent-eligible invention.


184

Parties GENETIC TECHNOLOGIES LIMITED v. LABORATORY

CORPORATION OF AMERICA HOLDINGS

Case No. 12-1736-LPS-CJB

District Court District Of Delaware


Patents 7,615,342

Claim A method to predict potential sprinting, strength, or power

performance in a human comprising:

a) analyzing a sample obtained from the human for the

presence of one or more genetic variations in a-actinin-3

(ACTN3) gene;

b) detecting the presence of two 577R alleles at the loci

encoding amino acid number 577 of the a-actinin-3 (ACTN3)

protein; and

c) predicting the potential sprinting, strength, or power

performance of the human, wherein the presence of two copies

of the 577R allele is positively associated with potential

sprinting, strength, or power performance.


185


186

Abstract (P. 20)

Claim 1 of the '342 Patent sets out the correlation between a

particular genetic variation and sprinting, strength or power

performance: "the presence of two copies of the 577R allele is

positively associated with potential sprinting, strength, or power

performance." ('342 Patent, col. 29:50-61) Thus, according to the

claim, if a person has two copies of the 577R allele, he is likely to be

a better sprinter than if he did not. Like the correlations at issue in

Prometheus and PerkinElmer found to be natural laws, the link

between a particular genetic variation and the potential for elite

athletic performance embodied in Claim 1 is "a natural process, an

eternal truth that 'exists in principle apart from any human action."'

PerkinElmer, 496 F. App'x at 70 (quoting Prometheus, 132 S. Ct. at

1297). The correlation is the handiwork of nature-man did not do

anything to bring about this relationship.


Indeed, the specification of the '34 2 Patent indicates that the user of

the process may employ any number of well-known methods to

analyze the sample. For instance, when introducing the description

of several embodiments of the claimed process, the specification

notes that "[i]t will be obvious ... to one skilled in the art that

practicing the various embodiments does not require the

employment of all or even some of the specific details outlined

herein. In some cases, well known methods or components have not

been included in the description." ('342 Patent, col. 4:30-35) As this

"analyzing" step essentially tells users to analyze the sample through

whatever known processes they wish to use, it, like the "measuring"

step in PerkinElmer, amounts to a simple instruction to them to

'"engage in well-understood, routine, conventional activity previously


187

engaged in by scientists who work in the field."' PerkinElmer, 496 F.

App'x at 71 (quoting Prometheus, 132 S. Ct. at 1298). Indeed, at oral

argument, Plaintiff did not really attempt to argue that claim 1 is

directed to an inventive method of "analyzing" such a sample, and

did not appear to dispute that the "analyzing" step itself employs

routine, conventional processes. (See, e.g., Tr. at 36-37 (Plaintiff's

counsel explaining that "[p]atents are just combinations of known

elements put together" and accusing Defendants of merely "parsing

the patent in little pieces and saying that's routine, that's routine

and not looking at the patent claim as a whole"); id. at 48 (Plaintiff's

counsel acknowledging, when asked how the "analyzing" step is

"transformative[,]" that "I haven't figured that out yet")) "Purely

conventional or obvious pre-solution activity is normally not

sufficient to transform an unpatentable law of nature into a patent-

eligible application of such a law." Prometheus, 132 S. Ct. at 1298

(internal quotation marks and citations omitted); see also

PerkinElmer, 496 F. App'x at 71.

Second, the "detecting" step fares no better. It simply tells users of

the process to detect the presence of two 577R alleles in the sample,

again without specifying any particular method for doing so. ('342

Patent, col. 29:55-57) The patent's specification teaches that users of

the process can choose from multiple well-known detection methods.

(See, e.g., id. at col. 11:1-2 ("Various forms of amplification are well

known in the art and any such known method may be used."); id. at

col. 13:52-55 (same)) And, just as with the "analyzing" step, Plaintiff

has not explained how, in light of the patent's language, claim 1

could be said to be directed to a method of "detecting" the alleles that

involves anything more than the employment of a routine,

conventional process. Therefore, this step, like the "analyzing" step

(and like the "determining" step at issue in PerkinElmer), consists of


188

the use of well-understood, routine, and conventional.

Third, the "predicting" step, which tells users of the process to

predict the athletic performance of the person based on the presence

of two 577R alleles in the sample, amounts to no more than an

"instruction [to] apply the [natural] law."


189

Parties AMDOCS (ISRAEL) LIMITED v. OPENET TELECOM, INC. et al.

Case No. I:10cv910 (LMB/TRJ)

District Court EASTERN DISTRICT OF VIRGINIA Alexandria Division

Date October 24, 2014

Patents 6,836,797, 7,631,065, 7,412,510, 6,947,984

Claim A computer program product embodied on a computer readable

storage medium for processing network account information

comprising:

computer code for receiving from a first source a

first network accounting record;

computer code for correlating the first network accounting

record with accounting information available from a second

source; and

computer code for using the accounting information with

which the first network accounting record is correlated to

enhance the first network accounting record.


190


191

Abstract (P. 13)

To determine whether the claim is patent eligible, the Court employs

the two-step analysis articulated in Alice. Step one requires

determining whether the claim is directed to an abstract idea. On its

face and looking past the mere claim language, claim 1 focuses on

the concept of correlating two network accounting records to

enhance the first record. As the claim satisfies step one by being

drawn to an abstract idea,


Claim 1 does not limit the correlation to any specific hardware, nor

give any detail regarding how the records are "correlated" or

"enhanced." Accordingly, the claim amounts to "nothing significantly

more than an instruction to apply the abstract idea" of correlating

two network accounting records "using some unspecified, generic"

computer hardware. See Alice, 134 S.Ct. at 2360 (internal quotation

marks omitted). Accordingly, claim 1 is invalid under 35 U.S.C. §

101.


192

Parties CMG FINANCIAL SERVICES, INC. v. PACIFIC TRUST BANK,

F.S.B.

Case No. CV 11–10344 PSG (MRWx)

District Court C.D. California

Date August 29, 2014

Patents 7,627,509

Claim A system for providing an integrated line of credit mortgage

account and checking account to a mortgagee, while

simultaneously paying off the mortgage loan balance of the

mortgagor, comprising:

an integrated account consisting of a line of credit mortgage

having a line of credit account balance and integrated with a

dedicated checking account having a checking account balance

independent of said line of credit account balance comprised of

funds periodically deposited therein by said mortgagee;

mortgage payment means associated with the integrated

account paying down the mortgage balance of said mortgagee

upon depositing of funds into said integrated account therein to

debit the checking account balance by the amount of funds

automatically moved and crediting the line of credit account

balance;

said integrated account providing both a line of credit


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account, secured by the mortgagee's property and based on the

equity said mortgagor has in the predetermined value of the

mortgagee's property, and an integrated checking account to

said mortgagee with said integrated account providing for said

funds to be deposited into said checking account of said

integrated account;

said integrated account having means for moving said funds

simultaneously and automatically from said checking account

into said line of credit of said integrated account after the

depositing of said funds into said checking account;

means associated with both said line of credit account and

said checking account allowing withdrawal of funds from said

integrated account by said mortgagee in order to pay other living

expenses by automatically transferring funds from said line of

credit account to said checking account to fund withdrawals or

debits from said checking account to credit checking account

balance and debit the line of credit account balance by said

transfer amount.


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Abstract (P. 17)

We find that the '509 Patent's eleven Claims are directed at the

abstract idea of a mortgagee paying down a mortgage early when

funds are available and borrowing funds as needed to reduce the

overall interest charged by the mortgage. The Claims are not tied to a

specific structure or machine … Specifically, Claim 1 recites the

system for integrating a credit mortgage account and a checking

account, periodically receiving deposits in a checking account, and

transferring funds between accounts. Similarly, Claims 3 and 11

describe associating two accounts together, depositing funds into an

account, moving funds between accounts, and withdrawing funds.

Claims 2 and 4 require a credit limit on a line of credit, and Claims

7–10 describe the requirement of transferring funds between

accounts to reflect the interest charged. These claims merely recite

basic, longstanding banking principles.


Looking at the methods and systems claimed, separately and as an

ordered combination, Alice Corp., 134 S.Ct. at 2359, the '509 Patent

claims the deposit, transfer, and withdrawal of funds to make

account balance adjustments, the computation of interest, and

calculation of interest savings. Fundamentally, each of these claimed

methods and systems are routine and conventional banking

activities; they require the performance of a series of functions

already known to, and used regularly in, the banking industry. Id. at

2359–60. The claimed methods and systems do not transform the

claimed abstract ideas into a patent-eligible invention. Id. at 2360.


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Parties INTELLECTUAL VENTURES I LLC v. MANUFACTURERS AND

TRADERS TRUST COMPANY

Case No. 13-1274-SLR

District Court DISTRICT OF DELAWARE

Date December 18, 2014

Patents 7,664,701, 8,083,137, 7,603,382, 7,260,587, 6,182,894

Claim A method comprising: storing, in a database, a profile keyed to a user identity and containing one or more user-selected categories to track transactions associated with said user identity, wherein individual user-selected categories include a user pre-set limit; and causing communication, over a communication medium and to a receiving device, of transaction summary data in the database for at least one of the one or more user selected categories, said transaction summary data containing said at least one user-selected category's user pre-set limit, and wherein said transaction summary data is configured to be presented by the receiving device in a table.


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Abstract (P. 11)

Using the framework set forth in Alice, the court first determines the

central idea of the patent. Plaintiffs argue that the '137 patent

"discloses and claims a specific application of administering financial

accounts[, or] a practical application of the broader idea of

electronically administering financial accounts using computer and

database technology." (D.I. 18 at 8) However, the core idea of the

patent is allowing users to set self-imposed limits on their spending

and receive notifications regarding such limits, i.e., setting up a

budget and tracking their spending. Budgeting is a longstanding and

fundamental practice, utilized in personal and business finances.


As to the type of technology used to implement the claims, plaintiffs

argue that: "a computer is used in a specific way to perform the

claims and implements the integral steps of setting, storing,

monitoring the limits and restrictions and alerting the user based on

the data;" practicing the invention without a computer is impossible,

because it would require too much manpower and overhead for bank

personnel; and, "[w)hile a general computer database was well

known or generic, using a specially programmed database in the way

claimed by the '1[3]7 patent was not generic or known at the time."

(D.I. 18 at 11) These arguments fail under the Alice framework for

analyzing § 101 issues. That the abstract idea implemented on a

computer allows for more or faster monitoring of accounts is not the

crux of the patentability analysis. See SiRF Tech., Inc. v. Int'/ Trade

Comm'n, 601F.3d1319, 1333 (Fed. Cir. 2010) ("In order for the

addition of a machine to impose a meaningful limit on the scope of a

claim, it must play a significant part in permitting the claimed

method to be performed, rather than function solely as an obvious


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mechanism for permitting a solution to be achieved more quickly,

i.e., through the utilization of a computer for performing

calculations.").

The computer and components (central processor) described in the

specification are generic. The database is also generic; the

specification does not describe a "specially programmed database,"

but a database used to store data: "Processor 15, in conjunction with

database 16 and profiles 17, then categorizes the various purchases

being made and stores those purchase amounts and categories in

database 16, according to profiles of user 17, as stored, for example,

in profile data[]base 17." ('137 patent, 3:4 7-52) The patent describes

the "auxiliary database 16-1" as holding any type of information. (Id.

at 4:59-5:2) While plaintiffs argue that the claims use "computer

implemented algorithms" as a meaningful and specific use of

technology, there are no algorithms described in the claims. Instead,

as discussed above, the claims are directed to generic computing

functions such as storing and processing data.


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Parties JOAO BOCK TRANSACTION SYSTEMS, LLC, v. JACK HENRY &

ASSOCIATES, INC.

Case No. 12-1138-SLR


Date December 15, 2014

Patents 7,096,003

Claim A transaction security apparatus, comprising: a memory device,

wherein the memory device stores a limitation or restriction

regarding a banking transaction, wherein the banking

transaction involves a withdrawal from a checking account or a

cashing of a check on a checking account, wherein the

limitation or restriction contains information for prohibiting a

withdrawal from a checking account or for prohibiting a cashing

of a check on a checking account, wherein the limitation or

restriction is transmitted from a communication device

associated with an individual account holder, and further

wherein the limitation or restriction is transmitted to a receiver

on or over at least one of the Internet and the World Wide Web,

wherein the limitation or restriction is automatically received by

the receiver, and further wherein the limitation or restriction is

automatically stored in the memory device; and

a processing device, wherein the processing device processes


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information regarding a banking transaction, wherein the

processing device utilizes the limitation or restriction

automatically stored in the memory device in processing the

banking transaction, and further wherein the processing device

generates a signal containing information for allowing or

disallowing the banking transaction.


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Abstract (P. 13)


Plaintiff's expert, Cheng, stated that none of the asserted claims

require only a conventional processing device and a memory device.

Every asserted claim requires significantly more, including in some

claims receivers, transmitters, communications devices (in some

claims very specific communications devices), data entry devices,

input devices, network computers, central transaction processing

computers, the Internet and World Wide Web ....

(D.I. 144, ex. 22 at~ 49) This conclusory statement, however, does


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not provide any examples of any of the components performing

functions other than traditional computing functions such as

storing, processing, and transmitting. Cf. In re Katz, 639 F.3d 1303,

1316 (Fed. Cir. 2011) (in analyzing means-plus-function claims,

finding that "the functions of 'processing,' 'receiving,' and 'storing'

are coextensive with the structure disclosed, i.e., a general purpose

processor," such "functions can be achieved by any general purpose

computer without special programming"). The computer components

are being employed for basic functions, including storage,

transmitting and receiving information, and, the court concludes

that such components are not "specific" or "special purpose"

computers. 7 While the computer components do allow the abstract

idea to be performed more quickly, this does not impose a

meaningful limit on the scope of the claim. Bancorp, 687 F.3d at

1278.

As the Federal Circuit explained in DOR Holdings, in order to pass

muster under § 101, it is no longer sufficient to use the Internet

through generic computer components to achieve a useful result.

The "inventive concept" required under the second step of the Alice

test must now "specify how interactions with the Internet are

manipulated to yield a desired result .... " DOR Holdings, 2014 WL

6845152 at *12. The claims in DOR Holdings, for example, stood

apart "because they [did] not merely recite the performance of some

business practice known from the pre-Internet world along with the

requirement to perform it on the Internet. Instead, the claimed

solution [was] necessarily rooted in computer technology in order to

overcome a problem specifically arising in the realm of computer

networks." Id. at *10. The claims at issue fall squarely within the

former category of patent ineligible claims.


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Parties WALKER DIGITAL, LLC. v. GOOGLE, INC.

Case No. 11-318-LPS



Patents 5,884,270, 5,884,272

Claim A method for operating a computer system to facilitate an

exchange of identities between two anonymous parties,

comprising the steps of:

receiving from a first party first data including an identity of

said first party;

receiving from said first party at least two first-party rules for

releasing said first data including a rule for releasing said

identity of said first party;

receiving from a second party a search request comprising at

least one search criterion;

receiving from said second party second data including an

identity of said second party;

receiving from said second party at least two second-party

rules for releasing said second party data including a rule for

releasing said identity of said second party;

processing said search request to determine if said first data


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satisfies said search criterion;

and if said first data satisfies said search criterion, then

exchanging said first and second data, except said identities of

said first and second parties, between said first and second

parties in accordance with said first-party and second-party

rules, after said exchanging step, upon satisfying said first-party

rule for releasing said identity of said first party, transmitting

said identity of said first party to said second party, and after

said exchanging step, upon satisfying said second-party rule for

releasing said identity of said second party, transmitting said

identity of said second party to said first party.


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Abstract (P. 5)

none of these limitations adds anything meaningful to the basic

concept of controlled exchange of information about people as

historically practiced by matchmakers and headhunters - and as

disclosed in the patent specification itself.3 By contrast, all of these

steps could be performed (and have been performed) by human

beings interacting with one another prior to the filing of the '270

patent.


Much like the "rules" listed in SmartGene, the additional "steps" of

the claims of the '270 patent are merely "a series of mental steps that

people, aware of each step, can and regularly do perform in their

heads." The claim limitations essentially recite a generic

headhunting or matchmaking request by two parties. There is

nothing "inventive" about any of the listed rules or any other steps of

the claims, including the order in which they are to be performed.4

Instead, the claim limitations simply lay out an interaction whereby

two parties share a series of demands with a third party, where one

of the demands of both parties is that the parties' identities remain

anonymous unless and until there is at least some overlap between

the demands and requirements of the two parties.


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Parties AMERANTH, INC. v. GENESIS GAMING SOLUTIONS, INC.

Case No. SACV 11-00189 AG (RNBx)

District Court Central District of California


Patents 8,393,969

Claim A computer system for monitoring a physical casino poker game

comprising:

a. a system database;

b. software enabled to set up and maintain poker game types

and tables associated with said poker game types, wherein said

software is configured to provide real time table availability

status in the system database;

c. software enabled to facilitate the receipt of a poker player

check-in input including player identification information and

the player’s poker game type preference and identifying the

particular player from the player check-in input utilizing a

player database which includes information regarding previously

registered players;

d. software enabled to determine table availability in real time

for said particular player’s poker game type preference;

e. software enabled to add said particular player to a waitlist for


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said poker game type preference if no matching table is

currently available;

f. software enabled to display indicia identifying said particular

player on a public waitlist display, said public display including

the display of information comprising at least two different poker

game types and waiting players for each game type and wherein

said display is suitable for viewing by a multiplicity of players or

prospective players throughout the poker room;

g. software enabled to select said particular waiting player for an

available table matching said waiting player’s selected game type

when it is available and then assigning said player to that

available table;

h. software enabled to receive check-out input regarding said

particular player containing player identification information;

wherein said software is configured to identify the particular

player from the player check-out input information, to remove

the player from the game and from the table, to update the table

availability to reflect that a seat for the particular poker game

type at said table is currently available;

i. software enabled to calculate the total elapsed time between

receiving the check-in input and the check-out input of the

particular player, wherein said software is configured to store

the calculated playing time of said particular player in at least

one of the system database or the player database;

j. wherein all of the said software is enabled to operate as a

synchronized system.


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Abstract (P. 13)

There is nothing in claim 27 about a loyalty program. In their reply

brief, Defendants respond to this absence by arguing that limitation

(i) involves storing playing time, and ²the purpose of calculating and

storing the playing time is part and parcel to the customer loyalty

program.² (Reply, Dkt. 76 at 5.) Defendants cite no authority for the

proposition that the abstract idea in step one of the Alice/Mayo test

can be something that the claimed invention might be useful for, as

opposed to what the claim itself covers. And Defendants do not show

that calculating and storing playing time is only useful for a

customer loyalty program …

Therefore, Defendants have not established even the first step of

the Alice/Mayo test is satisfied for the system claims.

Significantly more See above.


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Parties CARD VERIFICATION SOLUTIONS, LLC. v. CITIGROUP INC

Case No. 13 C6339

District Court Northern District Of Illinois Eastern Division


Patents 5,826,245

Claim A method for giving verification information for a transaction

between an initiating party and a verification-seeking party, the

verification information being given by a third, verifying party,

based on confidential information in the possession of the

initiating party, the method comprising:

on behalf of the initiating party, generating first and second

tokens each of which represents some but not all of the

confidential information, sending the first token electronically

via a nonsecure communication network from the initiating

party to the verification-seeking party, sending the second

token electronically via a nonsecure communication network

from the initiating party to the verifying party, sending the first

token electronically via a nonsecure communication network

from the verification-seeking party to the verifying party,

verifying the confidential information at the verifying party

based on the first and second tokens, and sending the


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verification information electronically via a nonsecure

communication network from the verifying party to the

verification-seeking party.


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Abstract (P. 7)

It follows from these cases, and CyberSource in particular, that the

claims within the ‘245 Patent are directed to an abstract idea. The

very title of the ‘245 Patent is “Providing Verification Information for

a Transaction.” Card Verification’s claims involve a method of

passing along confidential information through a trusted, third-party

intermediary to ensure both that a consumer can complete the

transaction and that the necessary confidential information remains

secure. On their face, the claims are drawn to the concept of

verifying transaction information, and like the risk hedging in Bilski

or verification of similar information in CyberSource, the concept of

transaction verification is “a fundamental economic practice long

prevalent in our system of commerce.” See Bilski, 130 S. Ct. at 3231.

Even when looking at the patent in the light most favorable to Card

Verification, it is directed toward a patent-ineligible abstract idea.


Although simply implementing an abstract idea on a computer is not

a patentable application of the idea, see Alice, 134 S. Ct. at 2357, a

plausibly narrowing limitation is that of required pseudorandom tag

generating software. The question whether a pseudorandom number

and character generator can be devised that relies on an algorithm

that can be performed by a human with nothing more than pen and

paper poses a factual question inappropriate at the motion to

dismiss stage. Without discovery on the issue, the Court is bound to

make all reasonable inferences in favor of Card Verification. Here, an

entirely plausible interpretation of the claims include a limitation

requiring pseudorandom tag generating software that could not be

done with pen and paper. Accordingly, Card Verification has

plausibly alleged a method that does not comprise a “mental


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process.” …

But the claims may be sufficiently limited by the plausible

transformation that occurs when the randomly-generated tag is

added to the piece of confidential information. Typically,

transforming data from one form to another does not qualify as the

kind of transformation regarded as an important indicator of patent

eligibility. See CyberSource, 654 F.3d at 1375 (“[T]he mere

manipulation or reorganization of data … does not satisfy the

transformation prong.”). But here, the claimed invention goes beyond

manipulating, reorganizing, or collecting data by actually adding a

new subset of numbers or characters to the data, thereby

fundamentally altering the original confidential information. Contra

id. at 1372 (process of constructing “map” of credit card numbers

was no different than writing down a list of numbers and compiling

information).

The patent not only recites a process for verifying transaction

information, it also involves a protocol for making the

communication system itself more secure. (‘245 Patent, 2:14-20).

Therefore, even though the method does not result in the physical

transformation of matter, see Diehr, 450 U.S. 175, it utilizes a

system for modifying data that may have a concrete effect in the field

of electronic communications. Accordingly, when viewing the patent

in the light most favorable to Card Verification, it plausibly recites a

patent-eligible application of the abstract idea of verifying a

transaction. Citigroup’s Motion to Dismiss is therefore denied

without prejudice. Citigroup is free to challenge the validity of the

‘245 Patent after discovery and claim construction are completed in

this case.


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Parties CAL. INST. OF TECH. v. HUGHES COMMUNS., INC.

Case No. 2:13-cv-07245-MRP-JEM

District Court Central District of California, Western Division


Patents 7,421,032, 7,116,710, 7,916,781, 8,284,833

Claim 1. A method comprising: receiving a collection of message bits

having a first sequence in a source data stream;

generating a sequence of parity bits, wherein each parity bit

“xj” in the sequence is in accordance with the formula xj=xj-

1+∑i=1λ v(j-1) λ+i, where “xj−1” is the value of a parity bit

“j−1,” and ``∑i=1a v(j-1) a+1″ is the value of a sum of “a”

randomly chosen irregular repeats of the message bits; and

making the sequence of parity bits available for transmission

in a transmission data stream.


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Abstract (P. 13)

As such, the purpose of these claims—encoding and decoding data

for error correction—is abstract. These ideas, stated at this level of

generality, existed long before the patents and were well known in

the field. This fact compels the Court’s conclusion. Also buttressing

the Court’s conclusion is the prevalence of these error correction

techniques in the field. The primary method of error correction is

encoding and decoding data. Admittedly, this patent claims specific

methods of encoding and decoding data for error correction. But at

step one, the Court looks only to the general purpose of the claims,

as the Supreme Court did in Bilski, Mayo, and Alice. At step two, the

Court focuses on specific limitations.


Despite being generally directed to abstract concepts, the asserted

claims contain meaningful limitations that represent sufficiently

inventive concepts, such as the irregular [*48] repetition of bits and

the use of linear transform operations. Although many of these

limitations are mathematical algorithms, these algorithms are

narrowly defined, and they are tied to a specific error correction

process. These limitations are not necessary or obvious tools for

achieving error correction, and they ensure that the claims do not

preempt the field of error correction. The continuing eligibility of this

patent will not preclude the use of other effective error correction

techniques. Therefore, all of the asserted claims are patentable.


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