The fate of Software inventions related to information processing

Rob Raheja | January 28, 2015

Content Extraction and Transmission LLC v. Wells Fargo Bank, N.A. et al.

December 23, 2014

Panel: Chen, Dyk and Taranto.  Opinion by Chen.

Summary

The Federal Circuit held that the claims of the asserted patents were invalid as patent-ineligible under 35 U.S.C.S. § 101 because none of asserted claims amounted “to ‘significantly more’ than the abstract idea of extracting and storing data from hard copy documents using generic scanning and processing technology.”

Details

Content Extraction and Transmission LLC (“CET”) owns four patents having substantially the same specification drawn to a method that can be performed by software on an automated teller machine (ATM) that recognizes information written on a scanned check, such as the check’s amount, account number, and identity of account holder, and stores that information in a computer’s memory.

Representative claim 1 from one of the four asserted patents recites:

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

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

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

(c) storing information from said portions of said hard copy documents corresponding to said first data field into memory locations for said first data field.

CET filed infringement actions against Wells Fargo and The PNC Financial Services Group, Inc. and PNC Bank (“PNC”), alleging that they were using ATMs with check deposit software that infringed its patents.

PNC filed a Rule 12(b)(6) motion to dismiss CET’s complaint on the ground that all asserted claims were invalid as patent-ineligible under 35 U.S.C. § 101.

The district court granted the PNC’s motion agreeing that all CET’s asserted claims were invalid as patent-ineligible under § 101. CET appealed to the Federal Circuit.

Relevant law

An invention is patent-eligible if it claims a “new and useful process, machine, manufacture, or composition of matter.” However, the Supreme has held that claims drawn to “laws of nature, natural phenomena, and abstract ideas” are not patentable.

In Mayo and Alice, the Supreme Court set forth a two-step frame work, in which step one is to determine “whether a claim is directed to a patent-ineligible abstract idea” and if it is determined that the claim is directed to abstract idea, then, in step two, “the elements of the claim are considered –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. This is the search for an ‘inventive concept’–something sufficient to ensure that the claim amounts to ‘significantly more’ than the abstract idea itself.”

Analysis

Applying step one, the Federal Circuit found “that the claims of the asserted patents are drawn to the abstract idea of 1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory.” The court stated that “[t]he concept of data collection, recognition, and storage is undisputedly well-known. Indeed, humans have always performed these functions. And banks have, for some time, reviewed checks, recognized relevant data such as the amount, account number, and identity of account holder, and stored that information in their records.”

CET argued “that its claims are not drawn to an abstract idea because human minds are unable to process and recognize the stream of bits output by a scanner.” The Federal Circuit did not find the CET’s argument distinguished over Alice. They noted that “the claims in Alice also required a computer that processed streams of bits, but nonetheless were found to be abstract. Similar to how the computer-implemented claims in Alice were directed to ‘the concept of intermediated settlement,’ and the claims in Dealertrack were directed to the concept of ‘processing information through a clearinghouse,’ CET’s claims are drawn to the basic concept of data recognition and storage.”

Applying the step two, the Federal Circuit agreed with “the district court that the asserted patents contain no limitations–either individually or as an ordered combination–that transform the claims into a patent-eligible application.” Based on the CET’s concession “at oral argument that the use of a scanner or other digitizing device to extract data from a document was well-known at the time of filing, as was the ability of computers to translate the shapes on a physical page into typeface characters”, the Federal Circuit held that “CET’s claims merely recite the use of this existing scanning and processing technology to recognize and store data from specific data fields such as amounts, addresses, and dates.” Therefore, the Federal Circuit held that “[t]here is no ‘inventive concept’ in CET’s use of a generic scanner and computer to perform well-understood, routine, and conventional activities commonly used in industry. At most, CET’s claims attempt to limit the abstract idea of recognizing and storing information from hard copy documents using a scanner and a computer to a particular technological environment. Such a limitation has been held insufficient to save a claim in this context.”

Therefore, the Federal Circuit affirmed the decision of the district court.

Take away

Claims to information processing that use known data recognition and storage techniques without more are likely patent ineligible.

Full Opinion

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