Cindy Chen | November 21, 2016
Amdocs (Israel) Limited v. Openet Telecom, Inc.
November 1, 2016
Before Newman, Plager, and Reyna. Opinion by Plager. Dissenting opinion by Reyna.
A trio of Federal Circuit decisions on patent eligible subject matter in the past month offers additional guidance on how to survive scrutiny under 35 U.S.C. §101. The focus will be on Amdocs (Israel) Limited v. Openet Telecom, Inc., in which the Federal Circuit found eligibility, but for the sake of comparison, the Federal Circuit’s decisions in FairWarning IP, LLC v. Iatric Systems, Inc. and Synopsys, Inc. v. Mentor Graphics Corporation, in which the Federal Circuit reached the opposite conclusion, will be briefly summarized.
Amdocs (Israel) Limited (“Amdocs”) sued Openet Telecom, Inc. (“Openet”) for infringing a group of Amdocs’ patents that broadly relate to the monitoring of activity on computer networks, and the processing and management of accounting records reflecting that activity. Specifically at issue were U.S. Patent Nos. 7,631,065; 7,412,510; 6,947,984; and 6,836,797. Openet countered Amdocs’ infringement allegations by moving to invalidate Amdocs’ patents as being directed to patent ineligible subject matter.
The 065 patent concerns the merging of data in a network-based filtering and aggregating platform, as well as the enhancement of network accounting data records. Representative claim 1 recites “a computer program product on a computer readable storage medium” comprising “computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record”.
The 510 patent relates to the reporting of collected network usage information. Representative claim 16 recites “a computer program product” comprising “a computer code for completing a plurality of data records from the filtered and aggregated network communications usage information”.
The 984 patent relates to the reporting on network usage information collected from multiple networks. Representative claim 1 recites a reporting method comprising “completing a plurality of data records from the filtered and aggregated network communications usage information”.
The 797 patent relates to the generation of a single record reflecting multiple network services for accounting and billing purposes. Representative claim 1 recites a record-generating method comprising collecting data “utilizing an enhancement procedure”.
In evaluating the patent eligibility of the Amdocs claims, the majority reiterated the now-familiar two-step Alice/Mayo framework: (1) determine whether the claim at issue is “directed to” a patent ineligible concept, such as an abstract idea; and if so, then (2) examine the elements of the claim, both individually and “as an ordered combination”, to determine whether the claim contains an “inventive concept” sufficient to “transform the nature of the claim into a patent-eligible application”.
To make the Alice/Mayo determination, the majority adopted a “common law methodology” that harked back to a law school’s legal writing class: “examine earlier cases in which a similar or parallel descriptive nature can be seen—what prior cases were about, and which way they were decided”.
Following that common law approach, the majority identified five of what they considered to be the most relevant prior decisions:
- Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014) (presented by Bill Schertler)
- claim at issue recited a “method of generating a device profile that describes properties of a device in a digital image reproduction system”, which includes the steps of “generating first data…generating second data…combining said first and second data into the device profile”
- the Federal Circuit in Digitech interpreted the claim as being directed to an “abstract process of gathering and combining data that does not require input from a physical device”, which by itself merely “employs mathematical algorithms to manipulate existing information to generate additional information” and is therefore patent ineligible
- Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343 (Fed. Cir. 2014) (presented by Rob Raheja)
- claim at issue recited a “method of processing information from a diversity of types of hard copy documents”, which included the steps of “(a) receiving output representing a diversity of types of hard copy documents…and storing information from said diversity of types of hard copy documents into a memory…(b) recognizing portion of said hard copy documents corresponding to a first data field; and (c) storing information from said portions…into memory locations for said first data field”
- the Federal Circuit found that the claim was directed to the abstract idea of collecting, recognizing, and storing data, and the claim elements were “well-known, routine, and conventional functions of computers” that fell short of transforming the claimed subject matter into a patent eligible application of the abstract idea
- In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607 (Fed. Cir. 2016) (presented by Mike Caridi)
- claim at issue recited a “method for recording and administering digital images”, which included the steps of “recording images…storing the images…transmitting data including at least the digital images and classification information to a server…receiving the data by the server…extracting classification information…and storing the digital images in the server….”
- the Federal Circuit found that the claim was directed to the abstract idea of “classifying and storing digital images in an organized manner”, and being “well-understood, routine, and conventional activities previously known in the industry”, the claimed steps were insufficient to confer eligibility
- DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) (presented by Tom Brown)
- claims at issue were directed to generating a composite web page that combines visual elements of a host website with content of a third-party merchant when a user clicks a third-party hyperlink on the host website, which allowed the host website to retain the user
- the claims were patent eligible because they recited a “[technical] solution necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks”
- BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016) (presented by John Kong)
- claims were directed to a specific implementation of filtering content in a manner that can be customized for the person making the website access request, while avoiding the need for local servers or computers to perform such filtering
- even though the claims recited generic computer, network, and internet components, an inventive concept was found in the “non-conventional and non-generic arrangement of known, conventional pieces”, which combined to describe a patent eligible “technical improvement” in the performance of a computer system
Comparing the Amdocs claims with the prior decisions, the majority concluded that the claims were more closely analogous to DDR Holdings and BASCOM than to Digitech, Content Extraction, or TLI.
First, looking to the patent specifications, the majority was able to immediately determine that Amdocs’ invention provided a technological solution to an identified technological problem affecting the prior art.
The patent specification explained that whereas existing systems centralized network usage information before processing, which would make massive recordkeeping impractical, Amdocs’ system processed data according to a “distributed architecture”. In this “distributed architecture”, data were processed in parallel at decentralized locations before being aggregated in a central database.
The majority then determined that the Amdocs claims “entailed” the technological solution (distributed architecture for data processing) to the identified technological problem (impracticality of processing massive record flows in centralized databases).
But, where does “distributed architecture” exist in the claims?
The majority seemed to find the “distributed architecture” in the claims solely by way of the district court’s claim constructions, which were undisputed.
Claim 1 of the 065 patent recites using network information to “enhance” a network accounting record, and claim 1 of the 797 patent recites collecting data using “an enhancement procedure”. The district court had construed “enhance” to mean “to apply a number of field enhancements in a distributed fashion”. The term “distributed” was explained to mean that “network usage records are processed close to their sources before being transmitted to a centralized manager”. In addition, claim 16 of the 510 patent and claim 1 of the 984 patent both recite “completing” data records using collected network usage information. The district court had construed “complete” to mean “enhance a record until all required fields have been populated”, with “enhance” bearing the same meaning as in the 065 and 797 patents.
According to the majority, the “enhancing” limitation “necessarily incorporates the invention’s distributed architecture—an architecture providing a technological solution to a technological problem”. In this way, the majority readily analogized the facts of this case to DDR Holding (reciting a technological solution (a composite webpage) to a technological problem in the prior art (“conventional internet hyperlink protocol preventing websites from retaining visitors”)) and BASCOM (reciting a technological solution (providing individualized filtering at the ISP server) to a technological problem in the prior art (inadequate protection offered by a one-size-fits-all filter at the ISP server)). By this analogy, the majority found that Amdocs’ patent claims were eligible.
The majority also identified various components (e.g., network devices, gatherers) that worked together to perform the “enhancing” limitation in a distributed manner. Recognizing that those components were generic, the majority nevertheless concluded that the “enhancing limitation necessarily involves the arguably generic gatherers, network devices, and other components working in an unconventional distributed fashion to solve a particular technological problem”.
What was not immediately clear from the decision was how the majority’s “common law methodology” applied the Alice/Mayo framework.
The majority mainly framed the eligibility of the Amdocs claims in the context of a technological solution, which seems to fall into the second Alice/Mayo step. However, at one point in the opinion, the majority also characterized the “enhancing” limitation as “achiev[ing] an improvement in computer functionality”. This characterization seems to concern the first Alice/Mayo step, and follows the reasoning behind Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016). The majority in Amdocs did not use Enfish as a basis for analogy.
It would therefore appear as though the majority had collapsed the two Alice/Mayo steps into a single inquiry. As it turned out, toward the end of the decision, in answer to the dissent’s criticism, discussed below, the majority clarified that “[f]or argument’s sake we accepted the district court’s view of the disqualifying abstract ideas”.
Judge Reyna’s dissenting opinion articulated a stricter approach to the Alice/Mayo analysis than that adopted by the majority. Judge Reyna began by criticizing the majority’s common law approach as being inconsistent with the Alice/Mayo framework, to which the majority answered with the above clarification. The dissent also criticized the majority’s focus on the “distributed architecture” as being misplaced reliance on the specifications’ disclosures—the focus should be on the claims, which did not include the “distributed architecture” limitation.
Instead, to determine in the first Alice/Mayo step whether a claim is “directed to” an abstract concept, the dissent believed that the question to ask should be whether the claim is limited to a specific means (i.e., process or structure) for achieving the claimed invention’s underlying goal. The claim should be similarly scrutinized when determining in the second Alice/Mayo step whether a claim involves an inventive concept. On this latter point, the dissent offered an in-depth discourse on distinguishing an “inventive concept” from: (i) “ contextual limitations” (claim elements that merely limit an abstract idea to a particular field of use are not inventive); (ii) “extra-solution limitations” (claim elements that describe insignificant extra-solution activity “unrelated to how the solution is achieved” are not inventive); and (iii) “illusory limitations” (claim elements that describe “procedure or structure common to every means of accomplishing a given results”, for example, a general purpose computer, are not inventive).
A brief comparison of Amdocs with FairWarning IP, LLC v. Iatric Systems, Inc.; Synopsys, Inc. v. Mentor Graphics Corporation
A couple of weeks before the Amdocs decision, the Federal Circuit issued the FairWarning and Synopsys decisions. Both decisions seem to have flown under the radar because in both decisions, the claims were found to be patent ineligible.
FairWarning IP, LLC v. Iatric Systems, Inc.
(Before Lourie, Plager, and Stoll. Opinion by Stoll)
At issue in FairWarning was U.S. Patent No. 8,578,500, directed to the detection of fraud and misuse of a patient’s protected health information by identifying unusual patterns in the access of the sensitive information. Claim 1 recites:
A method of detecting improper access of a patient’s protected health information (PHI) in a computer environment, the method comprising:
generating a rule for monitoring audit log data representing at least one of transactions or activities that are executed in the computer environment, which are associated with the patient’s PHI, the rule comprising at least one criterion…
applying the rule to the audit log data to determine if an event has occurred, the event occurring if the at least one criterion has been met;
storing, in a memory, a hit if the event has occurred; and
providing notification if the event has occurred.
Following the stricter Alice/Mayo analysis that the Amdocs dissent preferred, the Federal Circuit first determined that the claimed method was directed to the abstract idea of “analyzing records of human activity to detect suspicious behavior”. The claimed method merely automated a mental process that could be performed identically by humans. While the claimed method offered certain improvement (i.e., automation sped up detection of anomaly), this was achieved not by the claimed method, but by the implementation of the claimed method on a computer, which could be any general purpose computer. In this way, FairWarning’s claims were distinguishable from McRO, Inc. v. Bandai Namco Games America, Inc. (Fed. Cir. 2016). In McRO, the claimed rules, and not a computer, improved the existing technology (automating a process of lip synchronizations and facial expression animations that is performed differently by humans). In contrast, in FairWarning, a computer, and not the claimed rules, improved the existing practice of analyzing for anomalous access to a database.
Next, the Federal Circuit determined that FairWarning’s claims did not recite an inventive concept sufficient to transform the abstract idea into patent eligible subject matter. By requiring that the claimed method be performed “in a computer environment”, FairWarning’s claims added no more than mere “contextual limitation” to an abstract concept.
Synopsys, Inc. v. Mentor Graphics Corporation
(Before Lourie, Moore, and Chen. Opinion by Chen)
At issue in Synopsys were U.S. patent Nos. 5,530,841; 5,680,318; 5,748,488, which related to the conversion of a user description of a logic circuit into a hardware component diagram of the logic circuit. Representative claim 1 of the 841 patent recites:
A method for converting a hardware independent user description of a logic circuit…into logic circuit hardware components comprising:
converting the flow control statements and directive statements in the user description for a logic signal Q into an assignment condition AL(Q) for an asynchronous load function AL() and an assignment condition AD(Q) for an asynchronous data function AD(); and
generating a level sensitive latch when both said assignment condition AL(Q) and said assignment condition AD(Q) are non-constant;
wherein said assignment condition AD(Q) is a signal on a data input line of said flow through latch;
said assignment condition AL(Q) is a signal on a latch gate line of said flow through latch; and
an output signal of said flow through latch is said logic signal Q.
Again, applying the Alice/Mayo framework more strictly, the Federal Circuit first characterized the claims as being directed to the abstract idea of “translating a functional description of a logic circuit into a hardware component description of the logic circuit”. However, the claimed method could be performed mentally, and the examples set forth in the patent specification were in fact performed mentally by inventors without use of computers. The Federal Circuit recognized that the claimed method may be “intended” to be used with a computer, but noted that on their face, the claims did not require implementation on a computer or any other physical device.
The Federal Circuit also did not find an inventive concept in the claims. The purpose of the claimed invention was to aid circuit designers in designing complex logic circuits, so that the claimed rules “merely aid in mental translation as opposed to computer efficacy”. As such, the claimed method did not provide a technological solution to a technological problem.
Claim constructions can be important to a determination of patent eligibility.
An argument for patent eligibility could be strengthened by:
- describing in the specification technological aspects of the invention, for example, the technological problem(s) that the claimed invention purports to resolve, and/or the technological advance(s)/improvement that the claimed invention offer;
- reciting in the claims how (i.e., specific process and/or structure) the claimed invention accomplishes its intended objective(s), as opposed to simply describing what the intended objective(s) are
Associate the claimed invention with improvement(s) in the underlying technology (e.g., in terms of computer functionality), and not merely with its implementation(s).