Intervening Rights Apply When There Is a Product that Infringes the Original Claim that Does Not Infringe the Amended Claim

Presidio Components, Inc. v. American Technical Ceramics Corp., [2016-2607, 2016-2650] (November 21, 2017) the Federal Circuit affirmed the district court’s holdings that the claims are not indefinite and that ATC is entitled to absolute intervening rights because a substantive amendment was made during reexamination, but reversed the award of lost profits and remanded for determination of a reasonable royalty.
The case involved U.S. Patent No. 6,816,356 on a multilayer capacitor.

1. A capacitor comprising:
a substantially monolithic dielectric body;
a conductive first plate disposed within the dielectric body;
a conductive second plate disposed within the dielectric body and forming a capacitor with the first plate;
a conductive first contact disposed externally on the dielectric body and electrically
connected to the first plate; and
a conductive second contact disposed externally on the dielectric body and electrically connected to the second plate, and
the second contact being located sufficiently close to the first contact in an edge to
edge relationship in such proximity as to form a first fringe-effect capacitance with
the first contact that is capable of being determined by measurement in terms of a
standard unit.

Regarding indefiniteness, the claim required “first fringe-effect capacitance with
the first contact that is capable of being determined by measurement in terms of a
standard unit.”  Although industry standards for insertion loss testing had not been published at the time the patent was filed, Presidio’s expert testified that insertion loss testing had been well known for many decades and that a person of ordinary skill could use insertion loss measurements to measure capacitance in terms of Farads, the standard unit of measurement for capacitance.   Presidio’s expert further testified that a person of skill in the art would know how to measure fringe-effect capacitance by using insertion loss measurements. The Federal Circuit said that a claim is not indefinite if a person of skill in the art would know how to utilize a standard measurement method, such as insertion loss, to make the necessary measurement, adding that a patent need not explicitly include information that is already well
known in the art.  The Federal Circuit noted that if a skilled person would choose an established method of measurement, that may be sufficient to defeat a claim of indefiniteness, even if that method is not set forth in haec verba in the patent itself.

On the issue of intervening rights, Presidio contested the application of absolute intervening rights.  The Federal Circuit observed that the owner of a patent that survives reexamination is not entitled to infringement damages for the time period between the date of issuance of the original claims and the date of issuance of the reexamined claims if the original and amended claims are not “substantially identical.  In other words, the Federal Circuit said, if an amendment during reexamination makes a substantive change to an original claim, the patentee is only entitled to infringement damages for the changed claim for the period following issuance of the reexamination certificate.  The Federal Circuit reviewed the district court’s assessment of the scope of the original and reexamined claims de novo, and agreed that the scope had changed.  Presidio argued that the scope of the claims did not change because its stated goal in amending the claims was to adopt the district court’s construction in prior litigation.  However, the Federal Circuit said that the patentee’s intent in making the
amendment is not determinative or controlling in determining claim scope.  The relevant inquiry is whether the scope of the amended claims is actually identical to the scope of
the original claims based on normal claim construction analysis, articulated in Phillips. To determine whether an amended claim is narrower in scope, one determines whether there is any product or process that would infringe the original claim, but not infringe the amended claim. The Federal Circuit found that while the construction of the prior claim required that the fringe capacitance be determined, it did not specify it be determined by testing, as the amended claim required, so the claims did in fact have different scopes.

On the issue of lost profits, Presidio claimed lost profits for its sales of the BB capacitors, which Presidio claimed were adversely affected by the sale of ATC’s infringing 550 line of capacitors.  To recover lost profits, the Presidio had to show a reasonable probability that, “but for” infringement, it would have made the sales that were made by the infringer.  “But-for” causation can be proven using the four factor test in Panduit, which requires the patentee to show: (1) demand for the patented product; (2) an absence of acceptable, noninfringing substitutes; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of profit that would have been made.  A patentee can recover lost profits even if its product does not practice
the claimed invention, where the product directly competes with the infringing device.  Although the BB capacitor does not practice the ’356 patent, Presidio could still recover lost profits because the BB capacitor competes directly with the infringing 550
capacitors.  However the correct inquiry under Panduit is whether a non-infringing alternative would be acceptable compared to the patent owner’s product, not whether it is a substitute for the infringing product.  Thus while defendant’s 560L product was not a an adequate substitute for the accused 550 product, it might be an adequate non-infringing substitute for Presidio’s BB.  The Federal Circuit found that Presidio failed to prove that the 560L was not an acceptable substitute for its BB product, and reversed the award of lost profits, and remanded for a determination of a reasonable royalty.

The Federal Circuit found no abuse of discretion in the district court’s refusal to award increased damages despite the finding of willfulness.  The Federal Circuit also vacated the injunction in view of its reversal of the lost profits award, and remanded the case for the district court to redetermine the propriety of a permanent injunction.


Breadth is not Indefiniteness; If the Relevant Skilled Artisan has Reasonable Certainty as to What is Covered the Claim is Not Indefinite

In BASF Corp. v. Johnson Matthey Inc., [2016-1770](November 20, 2017), the Federal Circuit reverse the judgment of invalidity for indefiniteness of U.S. Patent No. 8,524,185,
which describes and claims systems for performing catalytic conversion of nitrogen oxides (NOx) in an exhaust gas stream, and remanded.

The ’185 patent claims a partly-dual-layer arrangement of catalytic coatings on a substrate over which exhaust gas passes, e.g., the walls of a flow-through chamber having a honeycomb structure, whose function is to remove NOx from a stream of exhaust gas while minimizing the amount of ammonia that ends up being released
from the system.  The claims require a “composition . . . effective to catalyze” or a “composition . . . effective for catalyzing.”  The accused infringer argued, and the district court agreed, that the phrases are indefinite, because the “effective to catalyze” language used to identify the claim compositions is functional, and there are no objective boundaries on (1) what amount of effectiveness is required, or (2) how to measure the effectiveness.

The Federal Circuit framed the issue of indefiniteness after Nautilus as: would the “composition . . . effective to catalyze” language, understood in light of the rest of the patent and the knowledge of the ordinary skilled artisan, have given a person of ordinary skill in the art a reasonably certain understanding of what compositions are covered?  The Federal Circuit found that the district court’s analysis supplied no basis to answer this question in Johnson’s favor.

While the district court focused on the functional nature of the language, Federal Circuit noted that the Nautilus standard of “reasonable certainty” does not exclude claim language that identifies a product by what it does. The Federal Circuit said that nothing inherent in the standard of “reasonable certainty” precludes a relevant skilled artisan from understanding with reasonable certainty what compositions perform a particular function, and noted that it has held that nothing in the law precludes, for indefiniteness, “defining a particular claim term by its function.”  Rather, what is needed is a context-specific inquiry into whether particular functional language actually provides the required reasonable certainty.

The district court also noted that the claims did not recite a minimum level of function needed to meet the “effective” limitation nor a particular measurement method for determining effectiveness.  However the Federal Circuit said that the mere observation of information not recited did not answer the question of whether a person of ordinary skill in the art would need to be given the level and measurement information to understand, with reasonable certainty, whether a composition is “effective to catalyze” the SCR (of NOx) or AMOx reactions.

While the district court said that without this information a person of ordinary skill in the art could not determine which materials are within the limitations and which are not, the Federal Circuit said this conclusion was “entirely unsupported”. The Federal Circuit said that the district court did not consider that the specification makes clear that it is the arrangement of the catalysts, rather than the selection of particular catalysts, that purportedly renders the inventions claimed in the ’185 patent a patentable advance over the prior art.  The Federal Circuit found that the claims and specification let the public know that any known catalysts can be used as long as they play their claimed role in the claimed architecture.

The district court credited the accused infringer’s argument that “a practically limitless number of materials” could meet the claim requirements, and treated this scope as indicating that the claims, as written, fail to sufficiently identify the material  compositions. However the Federal Circuit admonished: “breadth is not indefiniteness.” The Federal Circuit found no persuasive support for the necessary conclusion that a relevant skilled artisan would lack reasonable certainty as to what compositions
are “effective to catalyze” the reactions at issue.

The Federal Circuit focused on the point of novelty, noting:

The intrinsic evidence in this case makes clear that the asserted advance over the prior art is in the partly-dual-layer arrangement to create a two-phase operation for performing the identified conversion processes, not in the choices of materials to perform each of the required catalytic processes. It is in this context that the question of the certainty or uncertainty experienced by a relevant skilled artisan in understanding the claims, read in light of the specification, is presented. And it is in this context that the relevant skilled artisan would be informed by the specification’s numerous examples of qualifying compositions A and B,

The Federal Circuit concluded that the record did not contain intrinsic or extrinsic evidence that would support a judgment of indefiniteness.


Rule of Reason Applies to Priority

In Perfect Surgical Techniques, Inc., v. Olympus America, Inc., [2015-2043] (November 15, 2016), the Federal Circuit reversed the PTAB decision in an IPR invalidating claims 1, 4–6, 8, 9, 11, 12, 38, 41–44, 46, 47, and 49 of U.S. Patent No. 6,030,384.

The Board determined that PST failed to antedate the prior art because it had not proven that the inventor of the ’384 patent was reasonably diligent in reducing his invention to practice, and that the invention was anticipated or rendered obvious from the prior art.

The Federal Circuit found that the Board erroneously applied a heightened burden of proof which “infected” its analysis. The Federal Circuit said that the Board should have weighed evidence of priority of inventorship under a rule of reason.   Instead, the Board fixated on the portions of the critical period where PST did not provide evidence of the inventor’s specific activities to conclude the exercise of diligence was not “continuous.” The Federal Circuit said that under a rule of reason analysis, an inventor is not required to corroborate every day or what was done.

The Federal Circuit found that the Board compounded its error by summarily dismissing the activities of the inventor’s attorney.  An attorney’s work in preparing a patent application is evidence of an inventor’s diligence.  The Federal Circuit further found that the Board’s focus on gaps of inactivity also led it to make fact findings unsupported by substantial evidence.

The Federal Circuit instructed that on remand, the question before the Board is whether all of patent owner’s evidence, considered as a whole and under a rule of reason, collectively corroborates the inventor’s testimony that he worked reasonably continuously within the confines of his and his attorney’s occupations to diligently finalize the patent application during the critical period.

The claim construction issues revolved around the construction of “perforated,” in the claim language “wherein at least one of the jaws is perforated to permit the release of steam during use.” The Board reasoned that the specification, which states “the jaws may be perforated or otherwise provided with passages,”  described passages as another form of perforations and did not distinguish between these terms.” Because of this equivalence between perforations and passages, the prior art disclosure of passages anticipated the claims, which required perforations.  The Federal Circuit found that the Board used extrinsic evidence (a dictionary) to establish the equivalence of that perforations included passages.  The Federal Circuit agreed with the patent owner  that the description in the specification that the device “may be perforated or otherwise provided with passages” evidences a difference in meaning between passages and perforations. The Federal Circuit said that the specification’s separation of the terms perforated and passages with the disjunctive phrase “or otherwise” makes clear that the patentee intended that the term “perforated” is not the same as “passages.” The patentee claimed only jaws that are “perforated”; this claim does not extend to passages. In light of the intrinsic record, we conclude that the term “perforated” is not coextensive with or the same as “passages.”

Thus the Board’s finding that JP ’551 disclosed at least one “perforated” jaw because JP ‘551 referenced “a passage” cannot be supported. The Federal Circuit  vacate the Board’s decision invalidating claims 11, 38, 41–44, 46, 47, and 49 over JP ’551 and remanded for proceedings consistent with this construction.


Perhaps Out of Guilt, the Federal Circuit Grants Mandamus to Permit Venue Challenge

In In re Micron Technology, Inc., [2017-138] (November 15, 2017), the Federal Circuit granted Microns’ petition for Mandamus to permit it to challenge venue of the patent infringement case brought against it.   The District of Massachusetts refused to allow the challenge, finding that the Supreme Court’s decision was not a change of law that would make
Rule 12(g)(2) and hence Rule 12(h)(1)(A) inapplicable.

The Federal Circuit concluded as a matter of law that a venue defense was not “available” to Micron in August 2016, because until the Supreme Court decided TC Heartland because, before then, it would have been improper, given controlling precedent, for the district court to dismiss or to
transfer for lack of venue.  The Federal Circuit said that where controlling law precluded the district court, at the time of the motion, from adopting a defense or objection and on that basis granting the motion, it is natural to say, in this context, that the defense or objection was not “available” to the movant.  The Federal Circuit added that when a defense or objection is
futile in the sense that the law bars the district court from adopting it to dismiss, to require the assertion of the defense or objection in an initial motion to dismiss, on pain of waiver, would generally be to require the waste of resources, contrary to Rule 1.

The Federal Circuit said that this case is one in which controlling precedent precluded the district court from adopting an objection to
venue before the Supreme Court decided TC Heartland—specifically, from adopting such an objection in August 2016, when Micron made its first Rule 12 motion. On the patent-specific issue of the proper interpretation of 28 U.S.C. § 1400(b), the district court was bound by Federal Circuit  precedent.  Circuit-court precedent is binding on district courts notwithstanding the mere possibility that the Supreme Court might come to
disapprove that precedent.

The Federal Circuit reasoned that TC Heartland was a change in law because the Supreme Court had never construed §1400(b) under the particular versions of §1391,  That change of law, severing §1400(b) from §1391(c), made available to Micron in this case the objection
that it does not come within the meaning of “resides” for purposes of venue under §1400(b).

The Federal Circuit thus granted the petition for mandamus vacating the Order denying Micron’s Rule 12(b)(3) motion, and remanding the case for further proceedings consistent with its Order.


Patent Owner Reminded that All or Nothing Approach to Damages has Two Possible Outcomes

In Promega Corp. v. Life Technologies Corp., [2013-1011, 2013-1029, 2013-1376] (November 13, 2017), the Federal Circuit on remand from the Supreme Court, reaffirm its holdings on the enablement, licensing, and active inducement, and on reexamination of its reversal of the district court’s grant of Life’s motion for judgment as a matter of law (JMOL) that
Promega failed to prove its infringement case under 35 U.S.C. § 271(a), affirmed the district court, and on reexamination of its vacatur of the district court’s denial of Promega’s motion for a new trial on damages and infringement, the Federal Circuit affirmed the district court.

Life filed a renewed motion for JMOL pursuant to FRCP 50(b), arguing that Promega “failed to prove the applicable damages for patent infringement” and was therefore entitled to no damages, which the district court granted because Promega evidence could not support a finding that all of the accused products were sold or imported into the United States, even when all reasonable inferences were drawn in Promega’s favor.  The Federal Circuit originally reversed, based upon its construction of §271(a) that all of Life’s products infringed.  On remand, the Federal Circuit, after noting that Promega waived reasonable royalty damages and sought only lost profits damages, found that Promega failed to meet its burden of proof.

Promega moved for a new Trial arguing for the first time that the
evidence could support a damages award based on a subset of worldwide sales. The district court denied Promega’s motion. The district court reiterated that Promega had waived any argument based on a subset of
worldwide sales by failing to respond to Life’s argument on this issue in its JMOL briefing.  The Federal Circuit originally vacated the district court’s action, but on remand found that under the law of the case doctrine,
the district court properly exercised its discretion by relying on its waiver finding from its JMOL ruling to support its decision to deny Promega’s motion for a new trial.  Further, the Federal Circuit approved the district court’s reliance on 7th Circuit precedent that a party may not
introduce evidence or make arguments in a Rule 59 motion that could or should have been presented to the court prior to judgment.  The Federal Circuit said that If Promega wanted to argue that the evidence at trial supported a damages calculation based on anything other than worldwide sales, it should have raised such an argument at trial and in response to
Life’s Rule 50(b) motion, which specifically attacked Promega’s damages case on that very ground.  The Federal Circuit observed that Promega did not, choosing instead to continue to solely pursue an all-or-nothing damages strategy.  The Federal Circuit said:

When a plaintiff deliberately takes a risk by relying at trial exclusively on a damages  theory that ultimately proves unsuccessful, and, when challenged, does not dispute that it failed to present an alternative case for damages, a district court does not abuse its discretion by declining to give that plaintiff  multiple chances to correct deficiencies in its arguments or the record.

Because it held that Promega is not entitled to any damages, the Federal Circuit affirmed the district court’s denial of Promega’s motion for enhanced damages under § 284. The Federal Circuit also affirmed the district court’s denial of Promega’s motion for a permanent injunction, given that the patent had expired.  Further, finding that Promega cannot be the “prevailing party” in this litigation under 35 U.S.C. § 285, the Federal Circuit affirmed the district court’s denial of Promega’s motion for
an exceptional case finding.



Amendment of Claims in Parent Application Do Not Apply to Continuation Claims that do not have the Amended Language

In Sanofi v Watson Laboratories, Inc., [2016-2722, 2016-2726](November 9, 2017), the Federal Circuit affirmed the district court’s final judgment rejecting the obviousness challenge to claims 1–6, 8–13, and 16 of the U.S. Patent No. 8,410,167; finding inducement of infringement, by both
defendants, of all of those claims except claim 5; and finding infringement by both defendants of claims 1–3, 5-9, and 12–15 of U.S. Patent No. 8,318,800, and by Watson of claims 10 and 11 as well.

On appeal, Watson and Sandoz challenge the district court’s inducement
finding as to the ’167 patent, the district court’s rejection of their obviousness challenge to that patent, and the district court’s rejection of their prosecution disclaimer argument for limiting the scope of the ’800
patent claims.

On the inducement issues, the Federal Circuit said that it reviews the district court’s finding of inducement based on encouragement and inferred intent for clear error, which the Federal Circuit found was absent.  The Federal Circuit noted that the label directed medical providers to information identifying the desired benefit for only patients with the patent-claimed risk factors.  The Federal Circuit rejected Watson and Sandoz argument that substantial noninfringing uses not forbidden by the
proposed labels prevented a finding of intent to encourage an infringing use.  The Federal Circuit found no legal or logical basis for the suggested limitation on inducement.

On the obviousness issue, Watson and Sandoz only challenged the district court’s finding of no expectation of success.  The Federal Circuit said that although the evidence might well have supported the opposite finding, it could not conclude that the district court clearly erred in its finding.

On the infringement issue, the Federal Circuit rejected the argument that Watson and Sandoz  that the district court erred by failing to limit
the claims of the ’800 patent to exclude polysorbate surfactants.  While while prosecuting the parent application, which issued as U.S. Patent No. 7,323,493, Sanofi amended the sole independent claims
(hence all claims)f so as expressly to exclude pharmaceutical
compositions with a “polysorbate surfactant.”  Based on that amendment,
Watson and Sandoz contend that Sanofi made a “prosecution
disclaimer” that also limits the scope of the claims of the ’800 patent, despite the absence of any limiting language in the ’800 patent’s claims.

The Federal Circuit said that a prosecution disclaimer occurs when a patentee, either through argument or amendment, surrenders claim
scope during the course of prosecution.  But when the purported
disclaimers are directed to specific claim terms that have been omitted or materially altered in subsequent applications (rather than to the invention itself), those disclaimers do not apply.  The general ruling being that a prosecution disclaimer will only apply to a subsequent patent if that patent contains the same claim limitation as its predecessor.

The Federal Circuit observed that in prosecuting the application
that issued as the ’493 patent, was to write an express limitation into the claims: “provided that the pharmaceutical composition does not contain a polysorbate surfactant.” This language does not appear in the ’800 patent claims at issue, and Sanofi did not argue during prosecution that the unamended claim language of the ’493 patent, or the disclosed invention generally, excluded polysorbate surfactants.  The Federal Circuit said that the prosecution followed a familiar pattern:

an applicant adopts an explicit claim-narrowing limitation to achieve immediate issuance of a patent containing the narrowed claims and postpones to the prosecution of a continuation application further arguments
about claims that lack the narrowing limitation.

The Federal Circuit said that without more than exists here, that process does not imply a disclaimer as to claims, when later issued in the continuation, that lack the first patent’s express narrowing
limitation.  The Federal Circuit affirmed the district court’s ruling that the
scope of the claims of the ’800 patent should not be limited so as to exclude polysorbate surfactants.

Expert Testimony on Lack of Motivation Won the Battle, but Lost the War

In BayerPharma AG v. Watson Laboratories, Inc., [2016-2169] (November 1, 2017), the Federal Circuit reversed the district court’s holding that claims 9 and 11 of U.S. Patent No. 8,613,950 would not have been obvious.

The district court rejected each of Watson’s arguments. It found a person of ordinary skill in the art would not have been motivated to
create an ODT formulation of vardenafil and would not have used mannitol and sorbitol as excipients. It found the prior art taught away from formulating vardenafil ODT as immediate-release. The district court also addressed Bayer’s objective evidence of nonobviousness and
found it supported its conclusion that Watson failed to prove by clear and convincing evidence that claims 9 and 11 would have been obvious.

The district court determined that Watson failed to meet its burden of proving by clear and convincing evidence that there would have been a motivation to formulate vardenafil as an ODT formulation largely on the court’s finding the testimony of Bayer’s expert, Dr. Wicks, more persuasive than the testimony of Watson’s expert, Dr. Jacobs.  The Federal Circuit said that the clear error in the district court fact finding that there was no motivation to formulate ED drugs in ODTs, is that it concluded that the record did not contain an indication that ED drugs would be good candidates for ODT formulations.  The Federal Circuit noted that the district court’s opinion did not discuss any of the references that Watson cited to show that ED drugs would be good candidates for ODT formulations.

It is well within the district court’s discretion to credit one expert’s competing testimony over another. The Federal Circuit said it must give due regard to the trial court’s opportunity to judge the witnesses’ credibility.  However, a district court cannot, through a credibility determination, ignore the wealth of evidence, especially as in this case where the expert did not even address it.

The Federal Circuit also faulted the district court’s focus on the fact that  no ODT ED drug had gained FDA approval as of ’950 patent’s priority date.  The Federal Circuit said that  the motivation to combine inquiry is not limited to what products are forthcoming or currently available on the market.  The Federal Circuit said that any motivation, “whether articulated in the references themselves or supported by evidence of the knowledge of a skilled artisan, is sufficient.

The Federal Circuit was left with the definite and firm conviction that the district court clearly erred when it found there would not have been a motivation to formulate vardenafil ODT.

The district court also found a person of ordinary skill in the art would not have been motivated to use mannitol and sorbitol in an ODT formulation, again finding Dr. Wicks’ testimony on this limitation more credible than Dr. Jacobs’.  The Federal Circuit did not question the district court’s credibility determinations. However, the district court’s analysis for the sorbitol and mannitol limitation focused on the  commercial availability of products while failing to address relevant prior art. Upon consideration of the entire record and under a proper analysis, we conclude that the district court clearly erred in finding a person of ordinary skill in the art would not have been motivated to formulate an  ODT with sorbitol and mannitol.

Finally, the Federal Circuit rejected the district court’s determination that vardenafil’s expected bitter taste taught away from an oral formulation.  The Federal Circuit noted that a reference teaches away when it suggests that the line of development flowing from the reference’s disclosure is unlikely to be productive of the result sought by the applicant.  The Federal Circuit said that the district court did not find that a person of ordinary skill in the art would have believed vardenafil’s expected bitter taste and increased bioavailability would have
likely rendered an immediate-release formulation unproductive, but instead focused on whether a person of ordinary skill in the art would have pursued other alternatives.  The Federal Circuit said that the teaching away inquiry does not focus on whether a person of ordinary
skill in the art would have merely favored one disclosed option over another disclosed option.  In assessing whether prior art teaches away, that better alternatives exist in the prior art does not mean that an inferior combination is inapt for obviousness purposes.

Weighing all four Graham factors, the Federal Circuit concluded that
claims 9 and 11 of the ’950 patent would have been obvious. The repeated suggestion in the prior art to make an ODT formulation of an ED drug and the suggestion to use the combination of sorbitol and mannitol as excipients were strong evidence of a motivation to make the claimed combination.

Federal Circuit Endorses the Use of a Claim Preamble (Which Isn’t Even a Limitation, Right?) to Find the Claim Was Directed to an Abstract Idea

In Two-Way Media Ltd. v. Comcast Cable Communications, LLC, [2016-2531, 2016-2532] (November 1, 2017), the Federal Circuit affirmed the district court’s determination that the asserted patents were directed
to patent ineligible subject matter under 35 U.S.C. § 101.

At issue were claims of U.S. Patent Nos. 5,778,187,  5,983,005, 6,434,622, and 7,266,686 on a “Multicasting Method and Apparatus,” and generally relate to a system for streaming audio/visual data over a communications system like the internet.  The district court denied the patent owner’s request to take judicial notice of materials from prior procedings relating to the novelty and non-obviousness of the invention, saying that the novelty and nonobviousness of the claims under 35 U.S.C. §§ 102 and 103 does not bear on whether the claims are directed to patent-eligible subject matter under §101.

The district court found that the ‘187 and ’005 patents were directed to the abstract idea of (1) sending information, (2) directing the sent information, (3) monitoring receipt of the sent information, and (4) accumulating records about receipt of the sent information. The claims are thus directed to methods of sending and monitoring the delivery of audio/visual information, and did not recite a saving inventive
concept under Alice step two.  The district court also determined that the ’622 patent was directed to the abstract idea of monitoring the delivery of real-time information to a user or users, and the ’686 patent was directed to the abstract idea of measuring the delivery of real-time information for commercial purposes, and the claims contained no saving inventive concept because although they recited some
computer components, they required only ordinary functionality
of these components.

Regarding the ’187 and ’005 patents, the Federal Circuit said that under Alice Step I the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter.  The Federal Circuit added that claims directed to generalized steps to be performed on a computer using conventional computer activity are not patent eligible. The Federal Circuit disagreed with Two-Way Media argument that the district court erred by oversimplifying the claim and ignoring claim limitations present in its proposed constructions.  The Federal Circuit said that the claims required the functional results of “converting,” “routing,” “controlling,” “monitoring,” and “accumulating records,” but did not sufficiently describe how to achieve these results in a non-abstract way. The Federal Circuit further found Two-Way’s constructions merely propose the use of generic  computer components to carry out the recited abstract idea.

At Alice Step II, the Federal Circuit considered the elements of the
claim, both individually and as an ordered combination, to assess whether the additional elements transform the nature of the claim into a patent-eligible application of the abstract idea.  Merely reciting the use of a generic computer or adding the words “apply it with a computer” cannot convert a patent-ineligible abstract idea into a patent eligible
invention.  To save the patent at Step II, an inventive concept must be evident in the claims, and the Federal Circuit said that Two-Way Media could not overcome that the claim — as opposed to something purportedly described in the specification — is missing an inventive concept.

Regarding the ’622 and ’686 patents, at Step I the Federal Circuit rejected Two-way’s argument that the district court erred by  oversimplifying the claims down to merely their preamble and failing to recognize the claims solve technical problems.  The Federal Circuit saw no error here in the district court citing to the preamble in its review of whether the claims are directed to an abstract idea, citing BASCOM and Elec. Power Grp.  The Federal Circuit further agreed that the claims suffered from the same infirmities as the claims of the first two patents.

At Step II, the Federal Circuit agreed with the district court that nothing in these claims requires anything other than conventional computer and network components operating according to their ordinary functions. The Federal Circuit further did not find any inventive concept in the ordered combination of these steps.

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