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Fresh From the Bench: Recent Patent Cases From the ‎Federal Circuit ‎

September 8, 2014


Buysafe Claims directed to a system for ensuring security for online sales are no different than Alice's computerized method of managing risk in financial trading, so Buysafe's patent is found invalid under § 101.

Epos The district court's claim construction regarding four different claim terms is erroneous so the Circuit vacates and remands summary judgments of literal noninfringement and under the doctrine of equivalents where the district court "shortcut" consideration of the equivalence evidence.

Buysafe, Inc. v. Google, Inc., Fed. Cir. Case 2013-1575 (September 3, 2014)

The Circuit finds that claims directed to "methods and machine-readable media encoded to perform steps for guaranteeing a party's performance of its online transaction" do not push or even test the boundaries of the Supreme Court precedents under § 101, ruling the claims invalid.

Claim 1 recites a method in which (1) a computer operated by the provider of a safe transaction service receives a request for a performance guarantee for an "online commercial transaction"; (2) the computer processes the request by underwriting the requesting party in order to provide the transaction guarantee service; and (3) the computer offers, via a "computer network," a transaction guaranty that binds to the transaction upon the closing of the transaction.

The Supreme Court has interpreted patentable subject matter for more than 150 years as excluding laws of nature, natural phenomena, and abstract ideas. In identifying the three types of excluded matter, the underlying concern is that patent law not inhibit further discovery by improperly tying up the future use of these building blocks of human ingenuity. In defining the excluded categories, the Court has ruled that the exclusion applies if a claim involves a natural law or phenomenon or abstract idea, even if the particular natural law or phenomenon or abstract idea at issue is narrow. Mayo rejected the contention that the very narrow scope of the natural law at issue was a reason to find patent eligibility, explaining the point with reference to both natural laws and one kind of abstract idea, namely, mathematical concepts. Also excluded is the subject matter of certain claims that by their terms read on a human-made physical thing ("machine, manufacture, or composition of matter") or a human-controlled series of physical acts rather than laws of nature, natural phenomena, and abstract ideas.

Several decisions of the Supreme Court have involved the "abstract idea" category at issue here. Two aspects of those decisions are important for present purposes: what type of matter the Court has held to come within the category of "abstract idea"; and what invocations of a computer in a claim that involves such an abstract idea are insufficient to pass the test of an inventive concept in the application of such an idea.

As to the first question: The relevant Supreme Court cases are those that find an abstract idea in certain arrangements involving contractual relations, which are intangible entities. Bilski v. Kappos, 561 U.S. 593 (2010) involved a method of entering into contracts to hedge risk in commodity prices, and Alice involved methods and systems for exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk. In both cases the Court relied on the fact that the contractual relations at issue constituted "a fundamental economic practice long prevalent in our system of commerce."

In simultaneously rejecting a general business method exception to patent eligibility and finding hedging claims invalid, Bilski makes clear that the recognition that the formation or manipulation of economic relations may involve an abstract idea does not amount to creation of a business-method exception. The required §101 inquiry has a second step beyond identification of an abstract idea. If enough extra is included in a claim, it passes muster under § 101 even if it amounts to a "business method." As to the second question: Alice made clear that a claim directed to an abstract idea does not move into § 101 eligibility territory by "merely requiring generic computer implementation."

According to the panel, the Supreme Court explained that the method claims in Alice invoke "the use of a computer to create electronic records, track multiple transactions, and issue simultaneous instructions," "electronic recordkeeping," and "the use of a computer to obtain data, adjust account balances, and issue automated instructions." They do not, for example, purport to improve the functioning of the computer itself. They do not effect an improvement in any other technology or technical field, and they merely invoke some unspecified, generic computer. The system claims in Alice are no different, the Court added, explaining that they invoke a "‘data processing system' with a ‘communications controller' and ‘data storage unit,'" which are "purely functional and generic" components for "performing the basic calculation, storage, and transmission functions required by the method claims." Finally, the Court viewed the claims to a computer-readable medium for the methods as indistinguishable for § 101 purposes.

Given the new Supreme Court authority in this delicate area, and the simplicity of the present case under that authority, the panel saw no need to parse its own precedents here. The claims in this case do not push or even test the boundaries of the Supreme Court precedents under § 101. The claims are squarely about creating a contractual relationship—a "transaction performance guaranty"—that is beyond question of ancient lineage.

The dependent claims' narrowing to particular types of such relationships, themselves familiar, does not change the analysis. This kind of narrowing of such long-familiar transactions does not make an idea non-abstract for §101 purposes. The claims are directed to an abstract idea, and the invocation of computers adds no inventive concept. The computer functionality is generic— a computer receives a request for a guarantee and transmits an offer of guarantee in return. There is no further detail. That a computer receives and sends the information over a network—with no further specification—is not even arguably inventive. And it likewise cannot be enough that the transactions being guaranteed are themselves online transactions. At best, that narrowing is an attempt to limit the use of the abstract guarantee idea to a particular technological environment, which has long been held insufficient to save a claim. In short, with the approach to this kind of §101 issue clarified by Alice, it is a straightforward matter to conclude that the claims in this case are invalid.


The panel describes the analysis for determining whether a claim is patent-eligible as: whether the claim is directed to one of the three excluded categories -laws of nature, natural phenomena, and abstract ideas; and if so, is there enough extra included in the claim that it passes muster under §101 (and it can do so even if it is a business method). In applying the first step, the breadth or narrowness of the law, phenomenon or idea is not relevant. With regard to the second step, as noted in Alice and the Circuit's recent Planet Bingo case, simply requiring generic computer implementation does not move the claim into the realm of patentable subject matter.

Epos Technologies Ltd., et al. v. Pegasus Technologies Ltd., et al., Fed. Cir. Case 2013-1330 (September 5, 2014)

The patents in suit relate to pens that digitize writing and devices for retrofitting writing surfaces so that writing can be digitally captured. The panel finds that the district court improperly construed the terms ‎‎"drawing implement," "given time interval," "marking implement," ‎and "temporary attachment." The panel also determines that issues of equivalence remain that preclude summary judgment of noninfringement under the doctrine of equivalents.

Construction of "drawing implement"

Claim 1 of the '565 patent recites a transmitter device for use with a system for digitizing operative strokes of a handheld drawing ‎implement, the drawing implement having a body ‎and an operative tip, the transmitter device including a microswitch operating said transmitter for a given ‎time interval after said microswitch ceases ‎to indicate a force exerted on said housing ‎towards the operative tip of the drawing ‎implement.‎

‎The district court construed "drawing implement" as ‎‎"a conventional writing utensil that can be used alone or ‎together with the invention." According to the panel, the correct construction should exclude the word "conventional" since that term is not recited in the claims, and the "drawing implement" is much more broadly described in the specification.

Construction of "given time interval"

The panel finds that the district court's limiting a "given time interval" as ‎"fixed at a few seconds or less" is without basis in the patent. The patent merely describes and claims embodiments with time intervals that can "preferably" or "typically" be used with ‎lower-bound time intervals. Although the word "given" may indicate that a time ‎interval is fixed, specified, or predetermined by an operator or a programmer, the intrinsic evidence does not limit ‎‎"given time interval" to "fixed at a few seconds or less." ‎By limiting the term "given time interval" to "a few seconds or less," the district court erroneously imported a ‎limitation from a preferred embodiment.

Construction of "marking implement"

Claim 1 of the '461 patent describes a retrofittable apparatus for converting a substantially planar surface into a writing surface including a tracking ‎function to determine the position of a ‎marking implement on the writing surface.‎‎ The district court construed "marking implement" as ‎‎"an implement that has a marker tip (and not a pen tip)." But according to the panel, nothing in the '461 patent limits a "marking implement" in this way. A pen or pencil—not just a ‎‎"marker" or an implement with a "marker tip"—can mark ‎surfaces. Moreover, the specification interchangeably ‎refers to a "marking implement" as a "marker" and as a ‎‎"pen." It also refers to the marking implement's tip ‎as a "pen tip." Given these broad disclosures, the ‎court's construction was too narrow.

Construction of "temporary attachment"

Claim 1 of the ‘051 patent describes a "temporary attachment" in the context of a retrofittable apparatus as a temporary attachment for removably affixing a sensor array proximate to a ‎substantially planar surface.‎ The district court construed "temporary attachment"‎ as "an element that can be removed from the device's ‎‘retrofittable apparatus.'" ‎On its face, claim 1 requires that the "temporary attachment" is an element of the "retrofittable apparatus." So ‎the "temporary attachment" is not something that can be ‎removed from the retrofittable apparatus. Instead, the ‎retrofittable apparatus has two components: a sensor ‎array and a temporary attachment. The attachment is ‎‎"temporary" not because the mechanism itself can be ‎removed from the sensor array, but because it is "for ‎removably affixing" the sensor array to the board. ‎

The specification discloses that a key aspect of the invention is that the sensor array assembly "may be repeatedly removed and affixed to any substantially planar ‎surface." The configurations of Figures 2, 4 and 5 provide easy and repeatable affixation and removal.‎ The panel notes that a claim construction ‎that excludes a preferred embodiment is rarely, if ever ‎correct and would require highly persuasive evidentiary ‎support. Here, the district court's construction reads out preferred embodiments of figures 4 and 5, and there is no highly persuasive evidence to support that. ‎Thus, the panel vacates the district court's construction of "temporary attachment."‎

Summary judgment of noninfringement under the doctrine of equivalents

All of the claims at issue in ‎the '371 patent claim a handheld device for use with a ‎board comprising several components, including an ‎ultrasonic receiver or transmitter device for receiving or ‎transmitting an "intermittent" ultrasound signal. ‎

The district court adopted Pegasus' proposed construction of "intermittent" as "something that ‎occurs occasionally, in a non-continuous manner, in a ‎random or unpredictable manner, or at selected times." ‎The court stated ‎that "intermittent" could "refer only to those times when ‎the user is actively using the device." Applying its construction, the district court ‎determined that EPOS is entitled to ‎summary judgment on Pegasus's claim of literal infringement because the EPOS Products generate a continuous ultrasound signal. ‎Pegasus does not appeal these determinations.‎

The district court devoted only two sentences to its ‎decision on infringement of the '371 patent under the ‎doctrine of equivalents. It reasoned that allowing continuous ultrasound signals to be equivalents "would eliminate the intermittent limitation entirely," and that "the ‎doctrine of equivalents cannot extend that far."

The panel states that when addressing the doctrine of equivalents, a court ‎must ask whether an asserted equivalent is an "insubstantial difference" from the claimed element, or whether it ‎matches the "function, way, and result of the claimed element. Courts should be cautious not to shortcut ‎this inquiry by identifying a ‘binary' choice in which an ‎element is either present or ‘not present.'" ‎

Here, the district court shortcut the inquiry by identifying a binary choice (continuous or intermittent) that is ‎not compelled by the '371 patent or the evidence. ‎The court's decision does not consider the functioning of the EPOS Products as part of its determination, and did not consider Pegasus' expert ‎declaration explaining why the EPOS Products' signals ‎are equivalent to the claimed intermittent ultrasound ‎signal.

The panel therefore vacates the district court's constructions of "drawing implement," "given time interval," "marking implement," and "temporary attachment," and reverses the summary judgments of noninfringement based upon those faulty constructions. The panel also vacates the district court's ‎grant of summary judgment of noninfringement of the '371 ‎patent under the doctrine of equivalents and remands for proceedings consistent with this ‎opinion.‎