System and Method Claims Directed to Abstract Idea Properly Bounced on 12(b)(6) Motion

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In Fairwarning IP, LLC v. Iatric Systems, Inc., [2015-1985] (October 11, 2016), the Federal Circuit affirmed the district court’s dismissal of the complaint because U.S. Patent No. 8,578,500, claimed patent-ineligible subject matter under 35 U.S.C. § 101.

The patent related to ways to detect fraud and misuse by identifying unusual patterns in users’ access of sensitive data.   At step I of the Supreme Court’s two step framework for determining patent eligibility, the Federal Circuit found that the patent was directed to the abstract idea of analyzing records of human activity to detect suspicious behavior.  The Federal Circuit noted that the “realm of abstract ideas” includes “collecting information, including when limited to particular content.”  Furthermore, analyzing
information by steps people go through in their minds, or by mathematical algorithms, without more, as essentially mental processes within the abstract-idea category.  Finally, “merely presenting the results of abstract processes of collecting and analyzing
information, without more (such as identifying a particular tool for presentation), is abstract as an ancillary part of such collection and analysis.”

The Federal Circuit distinguished McRO where it was the incorporation of the claimed rules, not the use of the computer, that improved the existing technological process.  In contract, the Federal Circuit found the claims in suit to be more like those in Alice, merely implement an old practice in a new environment.  The “rules” in the patents in suit pose the same questions that humans in analogous situations
detecting fraud have asked for decades, if not centuries.  The Federal Circuit also distinguished Enfish where the claimed invention was “directed to a specific improvement to the way computers operate.”

Because it found the claims were directed to an abstract idea at step one of the patent-eligibility inquiry, the Federal Circuit proceeded to step two.  After scrutinizing the claim elements more microscopically under step two, ithe Federal Circuit found nothing sufficient to transform the nature of the claim into a patent eligible application.  The claim limitations, analyzed alone and in combination, fail to add “something more” to “transform” the claimed abstract idea of collecting and analyzing information to
detect misuse into “a patent-eligible application.”

The Federal Circuit also found the system claim patent ineligible, noting that while it is not always true that related system claims are patent-ineligible because similar method
claims are, when they exist in the same patent and are shown to contain insignificant meaningful limitations, the conclusion of ineligibility is inescapable.

FairWarning tried to save the claims, arguing that they solved the problem of compiling and combining disparate information sources, but the Federal Circuit that these features were not in the claims.  The Federal Circuit concluded:

After closely examining the claims of the ’500 patent in search of “something more” to transform the  underlying

abstract idea into a patent-eligible application, we conclude that there is nothing claimed in the patent—either by considering the claim limitations individually or as an ordered combination—that makes its claims patent eligible.

FairWarning complained that the district court’s reliance on the finding that “the human mind can perform each step” was improper.  The Federal Circuit dodged the issue, commenting that “the inability for the human mind to perform each claim step
does not alone confer patentability.”  Likewise the Federal Circuit rejected FairWarning’s argument about preemption, noting that while preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.

 

 

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Internal Fight Over Role of Appellate Court Reveals Substantial Difference of Opinion over Substantial Evidence at Federal Circuit

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In Apple, Inc., v. Samsung Electronics Co., Inc., [2015-1171, 2015-1195, 2015-1994] (October 7, 2016), the en banc Federal Circuit completely undid the panel decision with respect to three patents, with the three original panel judges dissenting.

The district court granted summary judgment that Samsung infringed U.S. Patent No. 8,074,172, and jury found that the claims were not invalid.  The jury found that Samsung infringed U.S. Patent No. 5,946,647 and U.S. Patent No. 8,046,721, and that these patents were not invalid.  The district court denied Samsung’s motions for JMOL.  A panel of the Federal Circuit reversed.  On Apple’s petition for en banc review, the Federal Circuit granted the petition “to affirm our understanding of the appellate function as limited to deciding the issues raised on appeal by the parties, deciding these issues only on the basis of the record made below, and as requiring appropriate deference be applied to the review of fact findings.”

The ’647 Patent

The jury found that Samsung infringed the ‘647 patent and awarded Apple $98,690,625. Because there was substantial evidence to support the jury’s verdict, the en banc Federal Circuit affirmed.  The Court found that the panel used extra-record extrinsic evidence to modify the agreed upon and unappealed construction.  The Court pointed out that the claim construction was not appealed, and it did not agree with the Panel that that Apple agreed to the panel’s change to the construction.  Samsung did not appeal the validity of the ‘647 patent

The ’721 Patent

The jury found that the ‘721 patent was infringed and would not have been obvious. Because there was substantial evidence to support the jury’s underlying fact findings, and that these fact findings supported the conclusion that Samsung failed to establish by clear and convincing evidence that the claims of the ‘721 patent would have been obvious.  The Court noted its restricted role on appeal:

Our job is not to review whether Samsung’s losing position was also supported by substantial evidence or to weigh the relative strength of Samsung’s evidence against Apple’s evidence. We are limited to determining whether there was substantial evidence for the jury’s findings, on the entirety of the record.

The ‘172 Patent

The district court granted summary judgment of infringement of the ‘172 patent, and the jury found the patent not invalid, and awarded $17,943,750 in damages.  Samsung appealed the denial of its JMOL.  The Federal Circuit found substantial evidence supporting the jury verdict, and affirmed.  The Court further commented on its role as an appellate court:

Even in cases in which a court concludes that a reasonable jury could have found some facts differently, the verdict must be sustained if it is supported by substantial evidence on the record that was before the jury. But as an appellate court, it is beyond our role to reweigh the evidence or consider what the record might have supported, or investigate potential arguments that were not meaningfully raised.  Our review is limited to whether fact findings made and challenged on appeal are supported by substantial evidence in the record, and if so, whether those fact findings support the legal conclusion of obviousness.

The Federal Circuit affirmed and reinstated the district court judgment as
to the ’647, ’721, and ’172 patents, and well as the portions of the panel decision pertaining to four other patents.

 

 

Anything You Say Can and Will be Used Against You in a Court of Law

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Consistent with the Miranda warning that anything you say can (and will) be used against you in a court of law.  The Federal Circuit looks to every part of a patent when construing the claims, including the lowly abstract.  In Hill-Rom Co. v. Kinetic Concepts, Inc., 209 F.3d 1337, 1341 (Fed. Cir. 2000) the Federal Circuit used the Abstract to support its claim construction.  The Federal Circuit rejected the argument that 37 CFR 1.72(b) provides that the abstract “shall not be sued for interpreting the scope of the claims,” pointing out that this was a Patent Office rule, governing the conduct of patent examiners examining patent applications, and not construction of claims by the courts.  The Hill-Rom court noted other instances where it used the Abstract to construe claims: United States Surgical Corp. v. Ethicon, Inc., 103 F.3d 1554, 1560, 41 USPQ2d 1225, 1230 (Fed.Cir. 1997)(citing the description in the Abstract); Stryker Corp. v. Intermedics Orthopedics, Inc., 96 F.3d 1409, 1412, 40 USPQ2d 1065, 1066 (Fed.Cir. 1996)(citing the description in the Abstract); Moleculon Research Corp. v. CBS, Inc., 793 F.2d 1261, 1269, 229 USPQ 805, 810 (Fed.Cir. 1986)(citing the description in the Abstract), and found no legal principle that would require it “to disregard that potentially helpful source of intrinsic evidence as to the meaning of claims.”  The Federal Circuit also looked to the Abstract in Honeywell Inc. v. Victor Co. of Japan Ltd., 298 F3d 1317, 63 USPQ2d 1904 (Fed. Cir. 2002).

However, in Innova’Pure Water, Inc., v. Safari Water Filtration Sys., Inc., 381 F.3d 1111, 1121 [72 USPQ2d 1001, 1008] (Fed. Cir. 2004), the Federal Circuit discounted statements made in an Abstract, noting “While a statement in the Abstract may operate as a clear expression of manifest exclusion, for several reasons, this statement does not.”

 

What’s in a Name?

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Does the title have a role in claim construction?  In Poly-America LP v. GSE Lining Technology Inc., 383 F3d 1303, [72 USPQ2d 1685, 1689] (Fed. Cir. 2004), the Federal Circuit found that the title of the patent in suit (5,763,047) — Blown-film Textured Liner Having a Smooth Welding Strip — supported treating the term blown-film in the preamble of the claims as a claim limitation.

But, see, Moore U.S.A., Inc. v. Standard Register Co., 229 F.3d 1091, 1111 [56 USPQ2d 1225] (Fed. Cir. 2000) (“[T]he bar on importing limitations from the written description into the claims applies no less forcefully to a title.”); Pitney Bowes, Inc. v. Hewlett-Packard Co., 182 F.3d 1298, 1312 [51 USPQ2d 1161] (Fed. Cir. 1999) (noting patent title’s“near irrelevancy” in claim construction).

If You Can’t Say Anything Nice About the Prior Art, Don’t Say Anything at All

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It turns out that Mom was right when she said: “If you can’t say anything nice about someone, don’t say anything at all.”  Criticism of the prior art can limit the scope of your claims.  In UltimatePointer, LLC v. Nintendo Co., 816 F.3d 816 [118 USPQ2d 1125, 1130] (Fed. Cir. 2016), the Federal Circuit found that the patentee’s disparagement of indirect pointing devices supported the conclusion that such devices were not encompassed by “pointing device” in the claim.  The Federal Circuit said that “the repeated criticism of indirect pointing” clearly pointed to the conclusion that the “handheld device” in the claims is limited to a direct-pointing device.

The lesson is to not disparage any feature of the prior art that might be incorporated into a device that you would want to claim infringes your claims.   You are free to disparage problems of the prior art that are eliminated by the claimed invention.  However, if you disparage the prior art, and the accused infringer’s product suffers from the same problem you criticized, then the accused product may not be found to infringe your claims.  And Mom would say, “it serves you right.”

 

When Does Meat Tenderizer Stop Working?

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Edmund C. Rogers, a well-known patent attorney in St. Louis, and a past president of the AIPLA, would often muse at lunch, “when does meat tenderizer stop working?”  A similar question might be posed about any of the qualifying language we lawyers pack into our applications and other legal writings.  In two cases this year, the Federal Circuit addressed to what the qualifications “in the preferred embodiment” and “the present invention” apply.

In Howmedica Osteonics Corp. v. Zimmer, Inc., 822 F.3d 1312 [119 USPQ2d 1290] (Fed. Cir. 2016), the Federal Circuit (O’Malley, Plager and Wallach) rejected Stryker’s arguments that the introductory clause “in the preferred embodiment” applies to not only to the sentences in which it is located, but also to the entirety of the passage. Thus it is error to import the “essentially midway” language from the specification in the claim.  The Federal Circuit disagreed, finding that “context reveals that such introductory clauses limit only the sentences in which they are located in this case.”

In Unwired Planet, LLC v. Apple Inc., 119 USPQ2d 1517 (Fed. Cir. 2016), the Federal Circuit (Moore, Bryson and Reyna), rejected the District Court’s determination that details in a paragraph of the description following a sentence that began “The present invention” became mandatory claim limitations to be read into the claims.  The Federal Circuit disagreed that “the second sentence in the summary of the invention constitutes a disclaimer that limits the scope of every claim.”

The lesson from these cases is that when you use qualifying language, you have to be clear when it applies and when it doesn’t.  You need to be clear what is part of the preferred embodiment and what isn’t.  Likewise, if you can’t resist the temptation to use “the present invention,” you have to control to when, it applies and when it doesn’t.

Controlling language is within our power, meat tenderizer on the other hand . . .

Even Prior to Abrogation Form 18, Joint Infringement Pleadings Had to Meet Iqbal and Twombly

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In Lyda v. CBS Corporation, [2015-1923] (September 30, 2016), the Federal Circuit affirmed the dismissal under FRCP 12(b)(6) of the Complaint for infringement of U.S. Patent Nos. 7,434,243 and 7,730,506, directed to methods and systems for obtaining
real time responses to remote programming.

Making the case a historic artifact, the Federal Circuit found that because the Amended Complaint was filed in 2014, and the case was terminated when the complaint was dismissed in July 2015, the repeal of Form 18 did not apply to this case.  Until the abrogation of Form 18, compliance with Form 18 ws sufficient to plead direct infringement, but because allegations of induced or contributory infringement have additional elements than direct infringement, they are not governed by Form 18.

 

The Federal Circuit said that to prove joint infringement where multiple actors are involved in practicing the claim steps, the patent owner must show that the acts of one party are attributable to the other such that a single entity is responsible for the infringement.  According to the Federal Circuit, an entity will be responsible for others’ performance of method steps in two circumstances: (1) where that entity directs or controls others’ performance, and (2) where the actors form a joint enterprise. The Federal Circuit noted that allegations of joint infringement require elements beyond those for act of direct infringement, and concluded that Form 18 is not sufficient for claims of joint infringement, and that pleadings of joint infringement must be measured by the Iqbal and Twombly standard.  The Federal Circuit instructed:

A claim of joint infringement thus requires pleading facts sufficient to allow a reasonable inference that all steps of the claimed method are performed and either (1) one party exercises the requisite “direction or control” over the others’ performance or (2) the actors form a joint enterprise such that performance of every step is attributable to the controlling party.

 

The Federal Circuit found that Lyda was claiming joint infringement, and by his own admission did not plead in compliance with Iqbal and Twombly, and thus the case was properly dismissed.

Judge Mayer Finds that Section 101 Bars Patents on Software

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In Intellectual Ventures v. Symantec, [2015-1769, 2015-1770, 2015-1771](September 30, 2016), the Federal Circuit affirmed summary judgment, that the asserted claims of the ‘050 and ‘142 patents were directed to ineligible subject matter, and reversed the finding that the asserted claim of the ‘610 patent covered eligible subject matter.

At Step I of the Alice/Mayo Test for the ‘050, the Federal Circuit agreed that the ‘050 patent was directed to the abstract idea of filtering emails, noting that it it was long-prevalent practice for people receiving paper mail to look at an envelope and discard certain letters, without opening them, from sources from which they did not wish to receive mail based on characteristics of the mail.  At Step II of the Alice/Mayo Test the Federal Circuit rejected the argument that because the jury determined that the prior art did not anticipate or make obvious the claimed invention, the claims necessarily met Step II, noting the fact that the claims may not have been anticipated or obvious does
not suggest that the idea of “determining” and “outputting” is not abstract, much less that its implementation is not routine and conventional.

At Step I of the Alice/Mayo Test for the ‘142 patent, the Federal Circuit found that the ‘142 patent itself demonstrates that the claims were directed to abstract ideas, analogizing the technology to post offices, and demonstrating that the concepts were well-known and abstract.  At Step II, again the ‘142 patent was its own undoing, the Federal Circuit finding that the “specification thus confirms that the implementation of the abstract idea is routine and conventional.”

At Step 1 of the Alice/Mayo Test for the ‘601 patent, the Federal Circuit again found that patent was its own undoing, acknowledging that virus screening was known prior to the invention.  As a result the Federal Circuit said that virus screening is both well-known and an abstract idea.  The Federal Circuit disagreed that the narrowness of the claim made it patent eligible, noting that a narrow claim directed to an abstract idea is not necessarily patent eligible.  The Federal Circuit said that the claims were directed to the use of conventional or generic technology in a nascent but wellknown environment, without any claim that the invention reflects an inventive solution to any problem presented by combining the two.

What is most notable about the case is Judge Mayer’ concurrence, where he makes to points:

(1) patents constricting the essential channels of online communication run afoul of the First Amendment; and

(2) claims directed to software implemented on a
generic computer are categorically not eligible for patent.

Mayer comments that although the claims at issue here disclose no new technology, they have the potential to disrupt, or even derail, large swaths of online communication.  He further suggests that Essential First Amendment freedoms are abridged when the Patent and Trademark Office (“PTO”) is permitted to balkanize the Internet, granting patent owners the right to exact heavy taxes on widely-used conduits for online expression.  Mayer points to the distinction between idea and expression in copyright law as providing a balance between the First Amendment and the Copyright Act by permitting free communication of facts while still protecting an author’s expression.”  Mayer further points to fair use, that even permits the use of the author’s expression.  He concludes that restrictions on patent eligibility restrictions on subject matter eligibility can be used to keep patent protection within constitutional bounds. He states that:

Section 101 creates a “patent-free zone” and places within it the indispensable instruments of social, economic, and scientific endeavor.

He believes that Section 101, if properly applied, can preserve the Internet’s open architecture and weed out those patents that chill political expression and impermissibly obstruct the marketplace of ideas.

Mayer goes on to state that “m]ost of the First Amendment concerns associated with patent protection could be avoided if this court were willing to acknowledge that Alice sounded the death knell for software patents.  Arguing that software is a form of language, he states that it is It is inherently abstract because it is merely an idea without physical embodiment, and concludes that all software implemented on a standard computer should be deemed categorically outside the bounds of section 101.

This is justified in Mayer’s mind because computer are indispensible, and a basic tool of modern life and thus not subject to the patent monopoly:

In the section 101 calculus, adding software (which is as abstract as language) to a conventional computer (which rightfully resides in the public domain) results in a patent eligibility score of zero.

Mayer goes on to identify four insurmountable problems with patent protection for software:

  1. Their scope is generally vastly disproportionate to their technological
    disclosure.
  2. They provide incentives at the wrong time.
  3. Their sheer number.
  4. Most fundamentally, generically implemented software invariably lacks the concrete borders the patent law demands.

He concludes that eliminating generically-implemented software patents would clear the
patent thicket, ensuring that patent protection promotes, rather than impedes, “the onward march of science,” and allowing technological innovation to proceed apace.

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Friday Musings: Newton’s Laws of Claim Construction

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When you stop and think about it, Newton’s Laws can be applied to the all-important issue of claim construction.

Newton’s First Law of Claim Construction:  A term in a claim has its ordinary meaning to a person of skill in the art, unless acted upon by the specification or prosecution history.

Newton’s Second Law of Claim Construction: Claim scope is directly proportional to specification disclosure, and inversely proportional to the scope of the prior art.  Put another way, claim scope is the product of the patent’s disclosure and the prior art.

Newton’s Third Law of Claim Construction: For every canon of claim construction, there is an equal an opposite canon of claim construction.

For example: Canon: “Each Word in Claim is Presumed to Have Meaning.”  See Foremost In Packaging Sys. v. Cold Chain Technologies, 485 F.3d 1153 (2007); In re Gabapentin Patent Litigation, 503 F.3d 1254, (2007); Stumbo v. Eastman Outdoors, Inc., 508 F3d 1358, [85 USPQ2d 1275] (Fed. Cir. 2007); Bicon v. Straumann, 441 F.3d at 950 (2006)(Rejecting patentee’s proferred construction, in part because that construction would render some of the claim language superfluous.).   Opposite Canon: “A Preamble is Generally Not a Limitation.”  See Allen Eng’g Corp. v. Bartell Indus., Inc., 299 F.3d 1336, 1346 [63 USPQ2d 1769] (Fed. Cir. 2002)(“Generally”. . . the preamble does not limit the claims.”).

Look for more on Newton’s Third Law of Claim Construction in future posts.

 

 

Let the Punishment Fit the Crime

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In Drone Technologies, Inc. v. Parrot S.A., [2015-1892, 2015-1955] (September 29, 2016), the Federal Circuit vacated the final judgment and the awards of damages ($7.8 millon) and attorney fees ($1.7 million), finding that the district court abused its discretion in issuing the two discovery orders and in entering a default judgment against Parrot for its failure to comply with those orders.

Parrot first contested jurisdiction, arguing that Drone did not have standing to bring suit. Relying on the presumption that the named inventors  are the true and only inventors, the Federal Circuit saw no reason why Parrot should be allowed to reassert an invalidity challenge under the guise of a motion to dismiss for lack of standing.

Parrot’s main argument on appeal is that the district court twice abused its discretion: first, when it directed Parrot to turn over its on-board source code; and, second, when it sanctioned Parrot by entering a default judgment against it after it failed to produce the source code.  Parrot contended that it produced documents sufficient to show the operation of the accused products as required by LPR 3.1, while Drone argued, and the Court agreed, that Parrot had to produce its source code.   Parrot failed to produce the Source Code, the district court rejecting Parrots attempts to avoid having to disclose its source code.  The district concluded that “lesser sanctions” would have been inadequate, and entered a default judgment against Parrot as to liability and struck its
answer and counterclaims.  The Federal Circuit denied Parrot’s petitions for mandamus, and the case went to trial on the issue of damages.

The Federal Circuit found that the district court twice abused its discretion: first, when it issued the July 1 and July 25 Orders; and second, when it imposed a default sanction on Parrot for not complying with those orders. Regarding the discovery orders, the Federal Circuit said found that the district court failed to follow its local patent rules (as well as the Federal Rules) and also failed to provide any explanation for its deviation from those rules. The Federal Circuit noted that there was no finding that Parrot did not comply with LPR 3.1.  The  Federal Circuit also found no explanation why the source code had to be produced, instead of the inspection and copying mentioned in the rule. was not sufficient.  The Federal Circuit also found no explanation why the orders were not limited to the products “identified in the claims pled.”  Finally the Federal Circuit noted the absence of any showing of relevance or need for the source code.

The Federal Circuit observed district court should have compared the needs of the case with both the burden placed on Parrot to produce “all source code” and the significant
consequences that might result from unauthorized or inadvertent disclosure, noting that protective orders are not fool -proof.

Turning to the propriety of the sanctions, the Federal Circuit reviewed the Poulis factors applied by the Third Circuit:

(1) the extent of the party’s personal responsibility; (2) whether the party had a history of dilatoriness; (3) whether the conduct of the party or the attorney was willful or in bad faith; (4) the meritoriousness of claims or defenses; (5) the prejudice to the adversary caused by the party’s conduct; and (6) the effectiveness of sanctions other than dismissal or default.

Because the apparent prejudice to Drone is unsubstantiated, the Federal Circuit said that the fifth factor disfavors a severe sanction.Turning to the effectiveness of the sanctions, the Federal Circuit said that the district court’s analysis suggests it did not seriously consider alternative sanctions, observing:

Notwithstanding the “strong presumption” against a “drastic” sanction like default, the court rejected all alternatives without explanation.

The Federal Circuit found that Parrot’s offers of alternative production were not indicative of a party trying to hide a smoking gun. Accordingly, it found that the district court abused its discretion in concluding that default was the only available remedy.

The Federal Circuit did not find Parrot blameless, however, and noted that if Drone should bring a further motion for actions, the Court was free to consider whether lesser sanctions were warranted.