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Here is a sign that the USPTO’s January, 2019, guidance on 35 U.S.C. § 101 and patent-eligibility may have an immediate and significant impact on USPTO rejections under the Mayo/Alice abstract idea test. The guidance became effective January 7, 2019. The Patent and Trial and Appeal Board (PTAB) soon thereafter decided In re Smith (Appeal No. 2018-000064; Application 13/715,476; Feb. 1, 2019), reversing an examiner’s § 101 rejection of claims directed to “trading derivatives in a hybrid exchange system.” Then, on March 19, 2019, the PTAB singled out Smith for designation as “informative.”

The PTAB only very rarely designates a decision as “informative,” which it does according to a strictly defined “Standard Operating Procedure.” The “informative” designation means that, while the decision “is not binding authority,” it is deemed to “provide the Board’s general consensus on recurring issues and guidance to examiners, appellants, patent owners, or petitioners in areas where parties routinely misapply the law.”

And what is the patent claim that exemplifies the PTAB’s general consensus? Consider the representative independent claim at issue in Smith:

A method of trading derivatives in a hybrid exchange system comprising:

collecting orders, via a communication network and order routing system, for derivatives and placing them in an electronic book database;

identifying at an electronic trade engine a new quote from a first in-crowd market participant, wherein one of a bid or an offer price in the new quote matches a respective price in an order in the electronic book database from a public customer;

removing at least a portion of the order in the electronic book database, delaying automatic execution of the new quote and the order, and starting a timer;

reporting, via the communication network and an electronic reporting system, a market quote indicative of execution of the at least a portion of the order while delaying automatic execution;
receiving at the electronic trade engine a second quote from a second in-crowd market participant after receiving the new quote from the first in-crowd market participant and before an expiration of the timer, wherein the second quote matches the respective price of the public customer order in the electronic book database; and
allocating the order between the first and second in-crowd market participants at the electronic trade engine, wherein the order is not executed until expiration of the timer.

Now, as a reference point, consider one of the method claims held invalid under § 101 in Alice Corp. Pty. Ltd. v. CLS Bank Intern., 134 S. Ct. 2347, 2361 n2 (2014):

A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:

(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions

(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;

(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party’s shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and

(d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.

You may not see a material difference between Smith’s claims and the claims in Alice, but the Smith majority did. True, applying the January, 2019, guidance, the Smith majority determined that Smith’s above claim was directed to “the concept of trading derivatives,” which was a “fundamental economic practice.” Therefore, the claims were directed to a judicial exception; moreover, Smith’s “computer-related limitations” were not enough “to integrate the judicial exception into a practical application.” But the additional limitations related to the delay and timing of order execution were enough, the majority said, to “integrate the recited judicial exception of derivative training into a practical application.” The dissent disagreed, finding that “the delay of matching market orders” would be necessary in any derivatives trade.

Lessons for Practice

As reflected by the fact that three-judge panel in Smith was actually split 2-1, one might question the “general consensus” that Smith is purported to represent. Nonetheless, the lesson here hardly need be stated – the PTAB has gone out of its way to state a broadening view of § 101 and patent-eligibility.

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Finding that competing expert declarations raised a factual question concerning whether claims recited an inventive concept, a  Delaware magistrate judge found that a summary judgment motion for invalidity of claims of U.S. Patent No. 8,490,123 under 35 USC § 101 and the Mayo/Alice test should be denied. S.I.SV.EL. Societa ltaliana per lo Sviluppo Dell’Elettronica S.p.A v. Rhapsody International Inc., Civil Action No. 18-69-MN-CJB (March 12, 2019). A defense expert said that there was no novelty in an ordered combination recited in the claims, and the plaintiff’s expert said there was. This was enough for the court to deny the summary judgment motion.

The ’123 patent is directed to “generating a user profile on the basis of playlists.” Representative claim 1 recites:

A method of generating a user profile for a given user from at least one first playlist including a first sequence of content and being associated with the given user and stored on a media device, said method comprising:

automatically searching for the at least one first playlist among a plurality of playlists, wherein the plurality of playlists includes at least one of a second playlist and a third playlist, wherein the second playlist has a second sequence of content and is associated with a different user and the third playlist has a third sequence of content and is associated with the given user, and each playlist of the plurality of playlists including at least one identifying characteristic of content stored on the media device;

analyzing the at least one first playlist and automatically deriving from the at least one analyzed first playlist at least one playlist feature expressing at least one property of the at least one first playlist, the at least one playlist feature comprising an occurrence frequency or at least a content relationship of the plurality of playlists; and

automatically generating a user profile for the given user based on the analyzed at least one first playlist and the derived at least one playlist feature;

wherein at least one of the said searching, analyzing, and generating comprises use of computerized hardware including a processing element.

The court seemed to find compelling the Defendants’ contention that “[t]he claims of the ‘123 patent are directed to the abstract idea of creating a user profile based upon lists of what a user likes.” But instead of making a finding on the first prong of the subject matter eligibility the court simply assumed arguendo that the defendant was correct. Why? Because the court was able to say that, under the second prong of the patent-eligibility test, the claims recited an inventive concept beyond the abstract idea.

The court began its “inventive concept” analysis by noting “that there is surely more in the claims beyond ‘creating a user profile based upon lists of what a user likes.’” There were specific limitations on creating the user profile and determining playlist features. But under “Alice’s step two, [did] these additions, individually or viewed as an ordered combination with the rest of the claim elements, amount to the ‘something more’ that defines an inventive concept?”

Everyone agreed that playlists were not new. But was there something in the claims that was unconventional, more than an application of generic technology, or something “necessarily rooted in computing technology?” (Enumerating these questions, the court cited Content Extraction and Transmission LLC v. Wells Fargo Bank, Nat. Ass n., 776 F.3d 1343 (Fed. Cir. 2014), BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016), and DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014).)

The defense expert had provided one paragraph in his declaration stating that “[a]s an ordered combination, the claimed limitations were still well-known and conventional to a [person of skill in the art].” This, and a conclusory sentence that “[s]earching for a user’s playlist(s), analyzing identified features of content from the user’s playlist(s), and generating a user profile based upon analysis of those features was a well-known and conventional methodology far before the relevant date for the ‘123 patent,” were all the defense expert had to say to address Alice prong two.

The plaintiff’s expert said a bit more, and “included more than just conclusory statements about ‘unconventionality.’” Notably, he talked about a problem, and how the patent addressed that problem in a novel way, specifically “a cold start problem: recommendations to new users are not useful until the user has used the system for a meaningful period [ of] time, allowing the system to infer their interests from their ratings or behavior.” Moreover, the court thought that the “patent specification seems to speak to what [the expert] was getting at here;” the patent specification discussed problems with playlists, and inefficiencies caused to users. And the plaintiff’s expert further explained that the claims recited a novel  ordered combination of elements that solved problems with recommender systems.

Thus, even though the claims appeared uncomplex to the court, and the court appeared skeptical of patent-eligibility, “on the question of whether the ordered combination of elements in the claims amount to an inventive concept, there appear to be material disputes of fact.” Therefore, “a factfinder should really weigh in on this eligibility issue.”

Editorial Comment

As we have noted in several recent posts, courts sometimes welcome the opportunity to defer questions of patent-eligibility. That seems to be what happened here. And interestingly, the court here did not really discuss the Federal Circuit’s decision in Berkheimer v. HP, Inc., 881 F. 3d 1360 (Fed. Cir. 2018), or acknowledge that a claim’s “inventive concept” was a question of fact only as subsidiary to the legal question of subject matter eligibility.

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Once again, a district court in California urged parties to improve their pleadings before deciding patent eligibility under 35 U.S.C. § 101. In Kajeet v. Qustodio, CV18-01519 JAK (Feb. 28, 2019), the Central District of California granted, without prejudice, a motion to dismiss a complaint for patent infringement under F.R.C.P. 12(b)(6).

Plaintiff Kajeet, Inc. asserted U.S. Patent Nos. 8,712,371, 8,630,612, and 8,667,559, directed toward rule enforcement for mobile devices, against Defendant Qustodio, LLC. Defendant filed a motion to dismiss under Rule 12(b)(6), alleging that the claims of the asserted patents were ineligible under § 101. Defendant analogized the claims to those in Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, arguing that the concepts embodied in the claims were well-known and conventional, failing the second part of the two-part Alice v. CLS Banktest. Plaintiff provided an expert declaration to support that the claims were directed to a technical improvement that would satisfy the second part of the Alice test.

The Court relied on the Federal Circuit’s recent decisions in Berkheimer v. HP Inc.and Aatrix Software, Inc. v. Green Shades Software, Inc., noting two main points: (1) eligibility is a question of law that can contain underlying factual determinations, and (2) a complaint that properly alleges that elements of a claim are not well-understood, routine, or conventional may suffice to survive a motion to dismiss on the pleadings.  

In the Ninth Circuit, analysis of a motion to dismiss can only rely on “the complaint, the patent, and materials subject to judicial notice” and may not consider material outside of the pleadings. The Court noted that “the inquiry at Alicestep two may involve and require the assessment of underlying questions of fact” and that [i]f the statements in the [declaration] are accepted…it would be premature to determine that the asserted claims are drawn to patent-ineligible subject matter.” However, because the expert declaration was extrinsic to the pleadings (and thus unavailable for analysis), the Court granted the motion to dismiss. In particular, the Court felt that “it is not appropriate to make a determination regarding patent eligibility” until Plaintiff has had a chance to file an amended complaint to allege facts supporting eligibility of the asserted claims.

Lessons for Practice

Delaying determination of patent eligibility is a hot topic in California right now. In light of Berkheimer and Aatrix, courts want more facts to chew on before making a decision on patent eligibility, and they will offer parties ample opportunities to beef up their pleadings. Plaintiffs may see an opportunity to predict judges’ concerns and provide additional facts in the complaint to support patent eligibility.

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A finding that prior art inherently disclosed elements of claims of U.S. Patent No. 7,802,310 was not supported by substantial evidence; the Federal Circuit therefore reversed the Patent Trial and Appeal Board’s conclusion that the ’310 patent was unpatentable as obvious. Personal Web Technologies, LLC  v. Apple, Inc., No. 2018-1599 (Fed. Cir. Mar. 8, 2019). This precedential opinion arose from an inter partesreview (IPR) proceeding, but will be of interest to patent prosecutors, inasmuch as inherency is often used (and misused) by patent examiners.

Claim 24 of the ’310 patent, reproduced below, was discussed as representative:

A computer-implemented method implemented at least in part by hardware comprising one or more processors, the method comprising:

(a) using a processor, receiving at a first computer from a second computer, a request regarding a particular data item, said request including at least a content-dependent name for the particular data item, the content-dependent name being based, at least in part, on at least a function of the data in the particular data item, wherein the data used by the function to determine the content-dependent name comprises at least some of the contents of the particular data item, wherein the function that was used comprises a message digest function or a hash function, and wherein two identical data items will have the same content-dependent name; and

(b) in response to said request:

(i) causing the content-dependent name of the particular data item to be compared to a plurality of values;

(ii) hardware in combination with software determining whether or not access to the particular data item is unauthorized based on whether the content-dependent name of the particular data item corresponds to at least one of said plurality of values, and

(iii) based on said determining in step (ii), not allowing the particular data item to be provided to or accessed by the second computer if it is determined that access to the particular data item is not authorized.

The claim limitation at issue, which Apple contended was disclosed by U.S. Patent No. 5,649,196 (Woodhill), was “causing the content-dependent name of the particular data item to be compared to a plurality of values.”

The parties had been arguing about this claim limitation since the IPR was filed in 2013. The PTAB in 2014 found ’310 patent claims obvious over Woodhill and U.S. Patent No. 7,359,881 (Stefik), with Stefik allegedly teaching “causing the content -dependent name . . .” In 2015, the Federal Circuit reversed and remanded this decision because Apple had relied on Woodhill, not Stefik for this claim element, and because the PTAB’s reason to have combined the references was “nothing more than that the two references could be combined,” and moreover lacked “explanation as to how the combination of the two references was supposed to work.” (Emphasis in original.)

On remand, the PTAB then found that Woodhill disclosed “causing the content -dependent name of the particular data item to be compared to a plurality of values” by disclosing a file update request that included “the Binary Object Identification Record 58 for the previous version of each binary object as well as the list of ‘contents identifiers’ calculated in step 444.” The PTAB relied on Apple’s expert’s declaration that, were Woodhill to fulfill its update request, “the remote backup fileserver of Woodhill must be able to reference its local files using the information it receives – namely the Binary Object Identification Record.” (Emphasis by Federal Circuit.) Even though Woodhill did not disclose comparing “a Binary Object Identifier to a plurality of Binary Object Identifiers,” the PTAB found this comparison inherently disclosed by agreeing with the expert that Woodhill would have had to have maintained reference data allowing “the Binary Object Identification Record to serve as a lookup of the requisite file data that is to be restored.”

But Woodhill’s purported comparison of its Binary Object Identification Record to reference data was at most possible, not necessary, found the Federal Circuit, citing PAR Pharm., Inc. v. TWI Pharm., Inc., 773 F.3d 1186 (Fed. Cir, 2014).The patent owner plausibly suggested that it was equally possible for Woodhill to have used “conventional file names and locations to locate files and the Binary Object Offset field to locate a given binary object within a file.” Woodhill’s file could be “user-specified,” and therefore the “Board’s proffered look-up table is therefore unnecessary.”

Lessons for Practice

When patent examiners are missing a claim element in prior art, they often will allege that the element is inherent in one reference or another. This case reinforces what the Federal Circuit’s repeated admonition in cases such as PAR Pharm., Southwire Co. v. Cerro Wire LLC, 870 F.3d 1306 (Fed. Cir 2017), and others: inherency has a high bar. That bar is not met were a reference could include a feature, but might not, or might include some other feature.

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Delaware District Court grants-in-part and denies-in-part patentee’s motion for summary judgment regarding accused infringer’s defense of intervening rights.  Sonos, Inc. v. D&M Holdings, Inc.,No. 14-1330-WCB (D. Del. Nov 7, 2017).

The owner of a patent that survives reexamination “is only entitled to infringement damages for the time period between the date of issuance of the original claims and the date of the reexamined claims if the original and the reexamined claims are substantially identical.” Convolve, Inc. v. Compaq Comput. Corp.,812 F.3d 1313, 1322-23 (Fed. Cir. 2016). This case pertains to an issue of law not squarely addressed by the Federal Circuit—i.e., whether 35 U.S.C. § 252, second paragraph, first sentence extends to process claims (or only to product claims).  First, a little background…

The first sentence of 35 U.S.C. § 252, second paragraph commonly is referred to as a defense of absolute intervening rights.

This defense allows a party whose products infringe a reissued or reexamined patent to continue to use or sell specific products that were made, purchased, or used before the reissuance or reexamination, if the asserted claim was not in the original patent, so long as the accused infringer began its infringing activity before the patent was reissued or reexamined.

35 U.S.C. § 252, second paragraph, second sentence commonly is referred to as a defense of equitable intervening rights.

This provision authorizes the court to provide for the continued manufacture, use, offer for sale, or sale of the thing made, purchased, offered for sale, used, or imported as specified, or for the manufacture, use, offer for sale, or sale in the United States of which substantial preparation was made before the grant of the reissue, and the court may also provide for the continued practice of any process patented by the reissue that is practiced, or for the practice of which substantial preparation was made, before the grant of the reissue, to the extent and under such terms as the court deems equitable for the protection of investments made or business commenced before the grant of the reissue, under such terms as the court deems equitable for the protection of investments made or business commenced.  See also Shockley v. Arcan, Inc., 248 F.3d 1349, 1360-61 (Fed. Cir. 2001).

In the instant case, Sonos (the patentee) asserted that D&M (a direct competitor) infringed, among other patents, U.S. Pat. 8,588,949 (the ‘949 patent which had successfully undergone reexamination).  As discussed below, in response, D&M only asserted a defense of absolute intervening rights; it did not assert a defense of equitable intervening rights.

The ‘949 patent is directed to a multimedia controller that controls multiple multimedia players in a local area network (e.g., group audio volume control).  The claims at issue included a product claim and a method claim (both amended during the reexamination to overcome an anticipatory reference). 

Claim 1 provided for a multimedia controller including a processor that was configured to perform various functions, including to:  accept via the user interface an input to facilitate formation of the player group, wherein the input to facilitate formation of the player group indicates that at least two of the plurality of players in the local area network are to be included in the player group for synchronized playback of a multimedia output from the same multimedia source… (emphasis on the limitation added to overcome the anticipatory reference).

Claim 16 provided for a method, comprising, inter alia:  receiving via the user interface an input to facilitate formation of the player group, wherein the input to facilitate formation of the player group indicates that at least two of the plurality of players in the local area network are to be included in the player group for synchronized playback of a multimedia output from the same multimedia source… (emphasis on the limitation added to overcome the anticipatory reference).

Sonos argued that the amendment was for clarification purposes only (making explicit what was always implicit in the original claims, when viewed in light of intrinsic evidence)—accordingly, Sonos argued that the amendments did not substantively change the scope of the claims and the defense of absolute intervening rights was not applicable.  Under this analysis, D&M infringed both the product and process claims and no genuine issue of material fact existed.

Further, Sonos argued that since D&M asserted only the defense of absolute intervening rights, Sonos was entitled to judgment as a matter of law with regard to the infringement of the process claim 16—as the defense under 35 U.S.C. § 252, second paragraph, first sentence did not apply to process claims.

With respect to Sonos ‘clarifying’ assertions, D&M disagreed.  D&M argued that amendments made to overcome a prior art rejection during reexamination are “a highly influential piece of prosecution history,” and it is “difficult to conceive of many situations in which the scope of a rejected claim that became allowable when amended is not substantively changed by the amendment,” citing Laitram Corp. v. NEC Corp.,163 F.3d 1342, 1348 (Fed. Cir. 1998).  Under this analysis, D&M would infringe neither the product nor process claims; at the least, a genuine issue of material fact existed as to the substantive nature of the amendments.

Further, D&M argued that to interpret 35 U.S.C. § 252, second paragraph, first sentence in accordance with Sonos’ arguments permits the rule to swallow the defense—e.g., when the patentee claims parallel process and method claims, as Sonos did.  In the ‘949 patent, Sonos claimed a processor (claim 1) configured to execute a logic block that accepts via the user interface an input … and a method (claim 16) that comprises receiving via the user interface an input … (essentially the same limitations).  Stated differently, D&M argued that the defense of absolute intervening rights is of no benefit if Sonos simply can assert the parallel process claim (claim 16) against the process that was used to make the very same product (of claim 1), which was intended to be protected by absolute intervening rights.

Since the Delaware District Court determined a genuine issue of material fact existed with respect to Sonos’ amendments during reexamination, summary judgment with regard to the product claim (claim 1) was denied.  Since the Delaware District Court determined a genuine issue of material fact existed with respect to Sonos’ amendments during reexamination, summary judgment with regard to the process claim (claim 16) also was denied. Denial of summary judgment regarding the process claim was based on defendant’s argument regarding form over substance:  namely, that the defense of absolute intervening rights should apply to the process claim (claim 16)—which recites parallel limitations to the product claim; failing to permit this defense in these circumstances would permit the patentee to undermine the statutory protection afforded by § 252, second paragraph, first sentence.  Lastly, since D&M failed to assert the defense of equitable intervening rights, the district court granted Sonos summary judgment with respect to any claims thereto .

Lessons for Practice

To patentees:  at least for applications which are considered to be of greater value, when possible, draft parallel process and product claims.  This is particularly true in the computer processing context where computer product claims often mirror method claims.  Mirrored claims may give a litigator on behalf of the patentee options, particularly under similar circumstances as those set forth in the Sonos case, and especially where the Federal Circuit has not weighed-in on the matter (namely, while the district court sympathized with the defendant here, a different district court or the appellate court could take the stance:  you could have pled the defense of equitable intervening rights, you simply failed to do so, and the defense was waived).

To competitors:  if you assert a defense of intervening rights under § 252, assert defenses of both absolute intervening rights and equitable intervening rights—e.g., particularly when the claims at issue include a process claim.

Conclusion

If this case is appealed and the Federal Circuit issues a precedential opinion regarding 35 U.S.C. § 252, second paragraph, second sentence, I will address this topic in a follow-up blog post.

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How much evidence and claim construction does a court need to make a determination on eligibility under 35 U.S.C. § 101? According to district courts in California, it depends? In SkyHawke Techs. v. DECA Int’l, CV 18-1234-GW(PLAx) (C.D. Cal. Feb. 4, 2019), the Central District of California granted a motion for partial judgment on the pleadings under FRCP 12(c), admonishing Plaintiff to amend its complaint. In contrast, in Express Mobile v. Core and Theory, 18-cv-04679-RS (N.D. Cal. Jan. 29, 2019), the Northern District of California denied Defendants’ motions to dismiss, holding claims of U.S. Patent Nos. 6,546,397 and 7,594,168, could not be invalidated even after claim construction had occurred.

The SkyHawke plaintiffs asserted U.S. Patent No. 6,456,938 under 35 U.S.C. § 101, directed to golf course GPS devices, and pled that the ‘938 patent is eligible under 35 U.S.C. § 101. The defendants argued that claim 1 of the ‘938 patent is invalid under § 101 as an abstract idea without something more. In granting the motion, the Court noted the complaint was filed in 2011, predating crucial decisions on § 101 including Mayo Collaborative Servs. v. Prometheus Labs and Alice Corp. v. CLS Bank, but Plaintiff did not amend its complaint to address these decisions.

On the other hand, the Court seemed to admit that questions of fact remain, especially in light of Berkheimer v. HP, in which the Federal Circuit held that the question of whether elements are “routine” or “conventional” is one of fact. Moreover, such questions could not be resolved on a Rule 12 motion; notably, the Court wondered why “[Plaintiff] would put the burden on [Defendant] to submit evidence to support [the] position that that the claims recite only routine and conventional components” when “evidence outside the pleadings is not properly considered in the context of a motion at the pleading stage.”

Further, the SkyHawke Court considered Defendant’s arguments that Plaintiff’s claim constructions have changed and appeared unsure whether claim construction would affect patent eligibility. The Court granted the motion but felt that it was “premature to make a § 101 determination on the current record” because the “operative complaint does not include allegations that support” eligibility.

The asserted patents in Express Mobile are directed to building web pages as user-selected objects instead of complete code files, improving efficiency of storage for websites. Notably, the Court there relied on Enfish LLC v. Microsoft, Inc., to delineate between patents that use a computer to perform known tasks (which would likely fail under Alice) and patents that relate to the functioning of computers. This latter category is “substantially less easily characterized as merely abstract ideas.” Finding that the claims of the ‘397 and the ‘168 patents were directed to the functioning of computers, the Court held that the question of eligibility under § 101 simply could not be resolved on the record, so the motions to dismiss must be denied.

Lessons for Practice

The Court in SkyHawke, despite finding “no material issue of fact [that] remains to be resolved,” gave the Plaintiff another bite at the apple to plead facts supporting patent-eligibility. The court in Express Mobile hesitated to decide patent-eligibility even after claim construction had occurred. These two cases show how some courts go very slowly in deciding questions of patent-eligibility – and sometimes even seek to avoid the issue altogether.

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In a Claim Construction Memorandum and Order, a court recently held a claim term indefinite for mixing an apparatus and a method. Wireless IP Holdings, L.P., v. Samsung Electronics Co., Ltd., et al. No. 2:18-CV-28-JRG, (E.D. Texas, Jan. 29, 2019).

Plaintiff Wireless IP Holdings alleged infringement of United States Patents No. 8,014,284 (“the ‘284 Patent”), 8,559,312 (“the ‘312 Patent”), and 9,392,638 (“the ‘638 Patent”) by Defendant Samsung Electronics Co.Following a Markman Hearing, the Court construed a plurality of claim terms. This blog post discusses a claim term held to be indefinite for mixing apparatus and method subject matter classes.

The claim term in question recites “the add-on base station . . . is [owned and] installed by an individual or entity, separate and distinct from the telephone service provider, with access to the public Internet.”

The parties disputed the interpretation of “is owned and installed by an individual or entity separate and distinct from the telephone service provider.”

DefendantSamsung argues that the recitation is indefinite for impermissibly mixing an apparatus and a method. The term does not include language such as “capable of” (installation by an individual), or anything similar. Rather, the term affirmatively requires that the add-on base station is “owned and installed” by an individual. In support of its position, Samsungcites IPXL Holdings, LLC v. Amazon.com, Inc, 430 F.3d 1377, 1384, (Fed. Cir. 2005) IPXL Holdings, LLC v. Amazon.com, Inc, 430 F.3d 1377, 1384, (Fed. Cir. 2005) holding a claim term indefinite for covering both an apparatus and a method of using the apparatus.

Plaintiff Wireless IP argued that jurors would know exactly what this phrase means – that the add-on base stations can be installed by consumers on their own. The limitation recites the capability of the base station to be installed by a consumer. Wireless IP relied on UltimatePointer, L.L.C. v. Nintendo Co., Ltd., 816 F.3d 816, 827 (Fed. Cir. 2016), for the proposition that IPXL does not apply where the limitation at issue “reflects the capability of the structure rather than the activities of the user.”

The Court found here that UltimatePointeris distinguishable because the present claims do not recite a mere capability. The claims recite that the add-on base station “is owned and installed by an individual or entity” (rather than a telephone service provider). Per the Court, “[i]t is unclear whether infringement of [the claim] occurs when one creates a system that allows the user to [own and install the add-on base station], or whether infringement occurs when the user actually [owns and installs the add-on base station]. IPXL, 430, F.3d at 1384. The Court further noted that language contrasted with recitals of “adapted to” which appear in claim 1 of the ‘638 patent. Accordingly, the Court held the claims including the recitation indefinite.

Lessons for Practice

In an apparatus claim, recite attributes of the apparatus, not actions by other entities. It appears, based on the court’s comments, that reciting “adapted to be installed by an individual or entity” instead of “is installed by an individual or entity” would have resulted in a different result, i.e., a single class, allowable claim. Thus, juxtaposition of a few words transformed patentable subject matter into an indefinite claim.

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The Eastern District of Texas recently denied a Rule 12(b)(6) motion to dismiss based on lack of patent-eligible subject matter, under 35 U.S.C. § 101 and the Alice/Mayo test, in claims of U.S. Patent Nos. 9,154,734; 9,253,444; and 9,419,939 each directed to a videoconferencing system using an Internet Protocol (IP). Teleconference Systems LLC, v. Metaswitch Networks Corp., No. 18-CV-234-JDK (E.D. Tex. Feb. 5, 2019).The claims of the ‘734 patent were eligible because the claims were not directed toward an abstract idea, but rather were directed toward “a specific device – an allegedly improved videoconferencing services switch – not merely the idea of video conferencing itself.” Additionally, the claims “described a new videoconferencing services switch comprised of several modules and a policy engine to improve on the…videoconferencing technology.”

Teleconference did not dispute Metaswitch Networks’ assertion that claim 11 of the ‘734 patent is representative for each patent. Claim 11 is reproduced here:

A videoconferencing services switch adapted for deployment in a service provider Internet Protocol (IP) network and capable of processing a videoconferencing call between an origination terminal and a destination terminal, the origination and destination terminals being located on one or more subscriber IP networks, the videoconferencing services switch comprising:

a call control module capable of performing call set-up and tear-down operations and managing call data streams for the videoconferencing call;

a quality service module capable of being configured to guarantee quality of service for the videoconferencing call placed via the switch according to the subscriber-specific settings;

a security module configured to provide firewall services for the videoconferencing call, the security module further comprising a Session Initiation Protocol (SIP) firewall module configured to use firewall settings on a per-subscriber basis to allow a subscriber-specific firewall that is custom-implemented for traffic from each subscriber;

a tunneling services module configured to provide a virtual private network (VPN) between the videoconferencing services switch and a subscriber IP network; and

a policy engine capable of being configured to enforce policies on the videoconferencing call based on subscriber-specific or user-specific settings.

The court applied the two-step Alice framework to Metaswitch Networks’ Rule 12(b)(6) motion to dismiss. The court found that representative claim 11 was “not directed to an abstract idea” because claim 11 claims “a specific videoconferencing services switch for use in an IP network.” Metaswitch Networks’ argued that the representative claim was directed to videoconferencing, which “is ‘an abstraction-an idea, having no particular concrete or tangible form,’” similar to the claims in Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343 (Fed. Cir. 2015), and Vehicle Intelligence and Safety LLC v. Mercedes-Benz USA, LLC, 635 F. App’x 914, 917 (Fed. Cir. 2015). However, the court noted that the claims in Internet Patents Corp. were ineligible “because the patent claimed well-understood, routine, and conventional activities; included no restrictions on how the desired result was accomplished; and did not describe the mechanism for the desired result.” Similarly, the court noted that the claims in Vehicle Intelligence and Safety LLC were ineligible because “the claims were not limited and did not explain how the claimed invention performed its functions.” In the present case, the court found that representative claim 11 “is not directed to videoconferencing generally,” and “the ‘focus of the claims is on [a] specific asserted improvement’ in the capabilities of videoconferencing services switches.” Therefore, the court found that representative claim 11 of the ‘734 patent was patent eligible because the claim was not directed to an abstract idea.

The court went on to analyze step two of Alice,and, citing Trading Techs. Int’l Inc. v. CQG, Inc., 675 F. App’x. 1001, 1004–05 (Fed. Cir. 2017),the court noted “specific technologic modifications to solve a problem or improve the functioning of a known system generally produce patent-eligible subject matter.” Representative claim 11 claims “a specific videoconferencing services switch designed to address problems with prior ISDN videoconferencing systems and to address ‘a number of fundamental problems’ for videoconferencing over IP networks.” The court found the patent is “directed to a technical solution to a technical problem.” Therefore, the court found representative claim 11 satisfied the Aliceframework and was patent eligible subject matter.

Lessons for Practice

Including structure in the claims and specification of software applications can be helpful in establishing patent eligible subject matter. However, as set forth in Secure Cam v. Tend Insights, the mere inclusion of physical structure will not satisfy patent eligibility requirements. Instead, as this case illustrates, system claims should be directed toward specific structure and the specification should disclose the improvements associated with the specific structure to establish patent eligibility under § 101.

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In Continental Circuits LLC v. Intel Corp. No. 2018-1076 (Fed. Cir. Feb. 8, 2019) the Federal Circuit determined the district court erred in its claim construction and explained the high bar that must be met to import limitations from a patent specification to the claims.

Plaintiff Continental Circuits, LLC, (Continental) sued Defendants Intel Corp. et. al., (Intel) for infringement of U.S. Patent Nos. 7,501,582 (“the ’582 patent”); 8,278,560 (“the ’560 patent”); 8,581,105 (“the ’105 patent”); and 9,374,912 (“the ’912 patent”)(collectively “the patents”). The patents are direct toward a “multilayer electrical device . . . having a tooth structure” and methods for making such device. The patents are continuations of each other and share a substantially common specification.

The patents’ specifications describe that the best method for producing the claimed teeth is to perform a double desmear etching process. The specifications specifically point out that the double desmear process differentiates the patents from a single desmear process used in the prior art.

During prosecution of the ‘560 patent, the claims were subject to a rejection for indefiniteness and written description under 35 U.S.C. section 112. In response, Continental submitted an expert declaration explaining that the “etching” process disclosed in the specification uses “known Probelec XB[ ]7081 resin” and “two separate swell and etch steps” as “a technique which forms the teeth.”

Based on the specification describing the double desmear process as being different than the single desmear process of the prior art, and based on the declaration used to overcome the 112 rejection, the district court construed certain elements of the claims (i.e., “surface,” “removal,” or “etching” of the di-electric material) be “produced by a repeated desmear process” even though such repeated desmear process was not recited in the claims. Continental and Intel stipulated to a judgment of noninfringement of the claims as construed by the district court. Continental appealed the claim construction.

Claim terms are construed as having their ordinary and customary meaning. Courts also look to the specification of the patent, the prosecution history, and extrinsic evidence when interpreting the claims. In order for a claim term to have a meaning other than what is ordinary and customary, i.e., for the inventor to act as their own lexicographer,  “a patentee must ‘clearly set forth a definition of the disputed claim term’ other than its plain and ordinary meaning.” Thorner v. Sony Comput. Entm’t Am. LLC,669 F.3d 1362, 1365 (Fed. Cir. 2012) (quoting CCS Fitness, Inc. v. Brunswick Corp., 288 F.3d 1359, 1366 (Fed. Cir. 2002)). In addition to acting as their own lexicographer, disavowal of claim scope by the patentee may be indicated by the specification and/or prosecution history. “To disavow claim scope, the specification must contain ‘expressions of manifest exclusion or restriction, representing a clear disavowal of claim scope.’” Retractable Techs., Inc. v. Becton, Dickinson & Co., 653 F.3d 1296, 1306 (Fed. Cir. 2011) (quoting Epistar Corp. v. Int’l Trade Comm’n, 566 F.3d 1321, 1335 (Fed. Cir. 2009)).

Intel argued that the disparagement of the single desmear process in the specification, and that the expert declaration used to overcome the 112 rejection describing the double desmear process, provided that the claims be interpreted to require a double desmear process. In other words, Intel argued that the specification and prosecution history indicated a disclaimer by Continental to products and methods that used a single desmear process.

The Federal Circuit disagreed with Intel and found the district court erred in its claim construction because none of Continental’s statements provide “a clear and unmistakable disclaimer.”  Thorner, 669 F.3d at 1367. The Federal Circuit pointed to language in the specification and the expert declaration to support its decision. Specifically, the specification explained that the double desmear process was “[o]ne technique for forming the teeth,” which is “contrary to all known teachings in the prior art,” that “the present invention can be carried out by a new use” of a dielectric material,” and that the process was “an example” of “a way of forming the teeth.” The Federal Circuit viewed these statements as providing for a method of practicing the invention, and not as a clear disavowal of claim scope.

Similarly, the Federal Circuit viewed language in the expert declaration as failing to provide a clear and unambiguous disavowal of claim scope. Specifically, the expert declaration explaining that the specification provides “a technique” for practicing the invention to overcome indefiniteness and written description rejections was not the same as disavowing claim scope.

Ultimately, the Federal Circuit concluded that the claims should not be limited to a double desmear process, vacated the stipulated infringement of the patents, and remanded the case for further proceedings giving the claim terms their plain and ordinary meaning.     

Lessons for Practice

Continental provides solid case law and analysis that would be beneficial when arguing against limiting claim construction that is narrower that what is provided under a plain and ordinarily meaning. Further, Continental provides a guide post for drafting and prosecuting applications in situations where an application may desire to disavow claim scope or give a claim term meaning outside of what is plain and ordinary. Specially, such disavowal or definition may be provided with a statement that is clear and explicit. Conversely, where an applicant wishes to rely on plain and ordinary meaning, or does not want to disavow claim scope, broadening language, such as “an example,” “a technique,” etc., may be beneficial.

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Two patents directed to monitoring network response times to determine responsiveness of network services are invalid under 35 U.S.C. § 101 and the Alice/Mayo test, held Judge Stark in the District of Delaware. Citrix Systems, Inc. v. AVI Networks, Inc., No. 17-1843-LPS (D. Del. Feb 13, 2019). Accordingly, the court granted a Rule 12(b)(6) motion to dismiss claims of infringement of US Patent Nos. 8,230,055 and 7,720,954.

The court found that claims of the ’055 and ’954 patents “are directed to the abstract idea of using a dynamic response time to determine availability.” The patents distinguish themselves from the prior art by explaining that the dynamic determination of response time, taking “into account variations due to increased load or type of request,” was more accurate than prior art methods that determined availability using static response times. Thus, in the words of the court, “the claimed innovation is the use of one formula (determining availability using an average response time) instead of another, prior art formula (determining availability using a predetermined response time) with the same arrangement of computer components.” By focusing on “the use of an ostensibly improved formula,” the court said, “the claims are directed to an abstract idea.”

The court rejected the patent owner’s argument that the claims were not directed to an abstract idea because they improved computing functionality. Even if the claims did so, they could not survive Alice “if the technical benefits flow solely from performing an abstract idea in conjunction with well-understood structure.” There were no novel technical elements here. This case was distinguishable, therefore, from Ancora Technologies, Inc. v. HTC America, Inc. (Fed. Cir. 2018), Visual Memory, LLC v. NVIDIA Corp. (Fed. Cir. 2017), and Enfish, LLC v. Microsoft Corp. (Fed. Cir. 2016).

The real question, the court said, was whether the present case was, as the patent owner argued, distinguishable from BSG Tech LLC v. BuySeasons, Inc. (Fed. Cir. 2018) (claims directed to indexing and accessing information in large databases held patent-ineligible) . No, said the court: “both this case and BSG Techinvolve patents that apply an abstract idea in a technological context to obtain a purported technical benefit.” There was no difference whether the technological context was “white access databases” improved by more efficient access as in BSG Tech, or, as in the present case, whether “the technological context as computer networks, and the purported benefits arise from more accurate determination of whether a network services available.”

Turning to the second part of the patent-eligibility test, whether an abstract idea could be patent eligible by reciting an unconventional inventive concept, not here, found the court. Even if the patent owner was right in alleging “novelty and benefits of using dynamic response times,” these did not provide an inventive concept. Use of dynamic as opposed to static response times was the “only allegedly unconventional feature of the claims,” and this had already been determined to be an unpatentable abstract idea. As such, it could not “provide an inventive concept.”

Lessons for Practice

Interestingly, the court seemed to acknowledge that the purported technological innovation, use of dynamic response times, may not be found in the prior art. While this is consistent with the case law, which distinguishes prior art and patent-eligibility questions, it is nonetheless interesting that this was not enough to confer patent-eligibility. Further, because these claims could only be practiced in a digital environment, and solved a problem in that environment, one suspects that other courts may have decided the present motion differently, at least deferring the patent-eligibility question two summary judgment.

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