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

November 3, 2016

Overview

Amdocs is a ‎§ 101 split decision in which the majority compares the claims at issue to the claims in other Circuit post-Alice decisions instead of following the typical Alice/Mayo two-step process. The dissent argues this analysis “is contrary to the Supreme Court’s direction in Alice” and “ignores and undermines” the Circuit’s holdings in Enfish and other recent Circuit cases.

Amdocs v. Openet– A divided panel reverses a determination of invalidity under ‎§ 101‎ of four patents directed to a system designed to solve an accounting and billing problem faced by network service providers.‎ In an interesting discussion comparing the claims in the four patents to those in prior post-Alice Circuit cases, the majority holds that the claims recite technological solutions to problems that were presented in the prior art and therefore are patent-eligible.

The majority first lays out the Alice/Mayo two-step process but then notes that recent Circuit cases suggest “there is considerable overlap between step one and step two, and in some situations this analysis could be accomplished without going beyond step one” (citing Enfish, Elec. Power, and BASCOM,all decided this year). The majority then says that there is no easily understood definition or test for what an “abstract idea” encompasses. Instead of attempting to formulate such a definition, the majority looks to the most pertinent post-Alice Circuit decisions, but a sharply worded dissent by Judge Reyna criticizes the majority for not commenting on all of the post-Alice cases. However, it might be noted that, as written, the opinion and dissent are already 61 pages long. The majority responds: “Discussing in an opinion only the most relevant prior opinions, rather than every ‎prior opinion in an actively-litigated field, is a necessary discipline if opinions are to be read, rather than just written.‎” I’m not sure a 61 page opinion is really readable by many of us, but we have edited the opinion down to 10% of that, which we found quite interesting, so we hope you’ll “Read More” of the opinion.

The majority finds the claims at issue much closer to those in BASCOM and DDR Holdings than those in Digitech, ‎Content Extraction, and In re TLI. Even assuming that the claims are directed to an ineligible ‎abstract idea under step one, the majority holds that the claims are eligible under step two because they contain a sufficient “inventive concept.” Claim 1 of the ’065 patent requires “computer code for using the accounting information with which the ‎first network accounting record is correlated to enhance the first network accounting record.” “Enhance” was construed as being dependent upon the invention’s distributed architecture. In other words, this claim entails an unconventional technological solution (enhancing data in a ‎distributed fashion) to a technological problem (massive record flows which previously required massive ‎databases). The solution requires arguably generic components, including network devices and ‎‎“gatherers” which “gather” information. However, according to the majority, the claim’s enhancing limitation necessarily requires that ‎these generic components operate in an unconventional manner to achieve an improvement in computer ‎functionality.‎ The dissent argues that this is incorporating limitations from the specification instead of focusing on the claims to determine if they are patent-eligible.

The majority goes through much the same analysis as to the three other patents in suit. The dissent argues that the majority opinion contravenes Alice because it fails to determine whether the claims are directed to an abstract idea.

 
   

Amdocs (Israel) Limited v. Openet Telecom, Inc., Fed. Cir. 2015-1180 (November 1, 2016)

The patents in suit concern parts of a system designed to solve an accounting and billing problem faced by network service providers. The patents are related in that one of the patents in suit, the ’797 patent, issued as a result of a continuation-in-part application, while the other three patents issued as a result of continuation applications of the same parent.

The ’065 patent concerns a system, method, and computer program for merging data in a network-based filtering and aggregating platform as well as a related apparatus for enhancing networking accounting data records. The ’510 patent concerns a system, method, and computer program for reporting on the collection of network usage information. The ’984 patent concerns a system and accompanying method and computer program for reporting on the collection of network usage information from a plurality of network devices. The ’797 patent concerns a system, method, and computer program for generating a single record reflecting multiple services for accounting purposes.

Importantly, these components are arrayed in a distributed architecture that minimizes the impact on network and system resources. Through this distributed architecture, the system minimizes network impact by collecting and processing data close to its source. The system includes distributed data gathering, filtering, and enhancements that enable load distribution. This allows data to reside close to the information sources, thereby reducing congestion in network bottlenecks, while still allowing data to be accessible from a central location. Each patent explains that this is an advantage over prior art systems that stored information in one location, which made it difficult to keep up with massive record flows from the network devices and which required huge databases.

Amdocs sued Openet for patent infringement in the Eastern District of Virginia, alleging that Openet infringed the ’065, ’984 and ’797 patents. In due course, the district court granted Openet’s motion for judgment on the pleadings and invalidated the asserted claims of all four patents as ineligible under § 101.

The Alice/Mayo Two-Step Framework

The two-step framework, set out by the Supreme Court for distinguishing patents that claim so-called laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts, is now familiar law. See Alice, 134 S. Ct. 2347 (2014) (following Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012)). This framework is sometimes collectively referred to as Alice/Mayo. First, we determine whether “the claims at issue are directed to one of those patent-ineligible concepts.” If so, we next consider elements of each claim both individually and “as an ordered combination” to determine whether the additional elements “‘transform the nature of the claim’ into a patent-eligible application.” The Court describes step two of this analysis as a search for an “inventive concept”—i.e., an element or ordered combination of elements that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”

Instead of Attempting to Formulate a Definition of “Abstract Idea,” the Majority Looks to the Rulings on Claims in Prior Cases

The Cases: Our cases generally follow the step one/step two Supreme Court format, reserving step two for the more comprehensive analysis in search of the “inventive concept.” Recent cases, however, suggest that there is considerable overlap between step one and step two, and in some situations this analysis could be accomplished without going beyond step one. See Enfish, LLC, v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016); see also Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016) (“the two stages involve overlapping scrutiny of the content of the claims . . . [and] there can be close questions about when the inquiry should proceed from the first stage to the second); BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016) (“[T]he claims and their specific limitations do not readily lend themselves to a step-one finding that they are directed to a nonabstract idea. We therefore defer our consideration of the specific claim limitations’ narrowing effect for step two.”).

Whether the more detailed analysis is undertaken at step one or at step two, the analysis presumably would be based on a generally-accepted and understood definition of, or test for, what an “abstract idea” encompasses. However, a search for a single test or definition in the decided cases concerning § 101 from this court, and indeed from the Supreme Court, reveals that at present there is no such single, succinct, usable definition or test. The problem with articulating a single, universal definition of “abstract idea” is that it is difficult to fashion a workable definition to be applied to as-yet-unknown cases with as-yet-unknown inventions. That is not for want of trying; to the extent the efforts so far have been unsuccessful it is because they often end up using alternative but equally abstract terms or are overly narrow.

Instead of a definition, then, the decisional mechanism courts now apply is to 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. See, e.g., Elec. Power Grp. That is the classic common law methodology for creating law when a single governing definitional context is not available. This more flexible approach is also the approach employed by the Supreme Court. See Alice. We shall follow that approach here.

The Claims of the ’065 Patent Provide an Inventive Concept Through the Use of Distributed Architecture Like BASCOM and DDR Holdings, and Are Therefore Patent-Eligible ‎

Claim 1 is representative:

1. A computer program product embodied on a computer readable storage medium for processing network accounting information comprising:

computer code for receiving from a first source a first network accounting record;

computer code for correlating the first network accounting record with accounting information available from a second source; and

computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.

In this case, the claims are much closer to those in BASCOM and DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) than those in Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014), Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343 (Fed. Cir. 2014), and In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607 (Fed. Cir. 2016). Indeed, even if we were to agree that claim 1 is directed to an ineligible abstract idea under step one, the claim is eligible under step two because it contains a sufficient “inventive concept.” Claim 1 requires “computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.” In Amdocs I, we construed “enhance” as being dependent upon the invention’s distributed architecture. We construed “enhance” as meaning “to apply a number of field enhancements in a distributed fashion.” We took care to note how the district court explained that “in this context, ‘distributed’ means that the network usage records are processed close to their sources before being transmitted to a centralized manager.” And we specifically approved of the district court’s “reading the ‘in a distributed fashion’ and the ‘close to the source’ of network information requirements into the term ‘enhance.’”

In other words, this claim entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows which previously required massive databases). The solution requires arguably generic components, including network devices and “gatherers” which “gather” information. However, the claim’s enhancing limitation necessarily requires that these generic components operate in an unconventional manner to achieve an improvement in computer functionality.

Claim 1 is therefore distinct from the ineligible claims in Digitech, Content Extraction, and In re TLI Commc’ns. The claim in Digitech was not tied to any particularized structure, broadly preempted related technologies, and merely involved combining data in an ordinary manner without any inventive concept. In contrast, claim 1 of the ’065 patent is tied to a specific structure of various components (network devices, gatherers, ISMs, a central event manager, a central database, a user interface server, and terminals or clients). It is narrowly drawn to not preempt any and all generic enhancement of data in a similar system, and does not merely combine the components in a generic manner, but instead purposefully arranges the components in a distributed architecture to achieve a technological solution to a technological problem specific to computer networks. Similarly, claim 1 is distinct from the representative claim in Content Extraction, which involved the generic, well-known steps of collecting data, recognizing data, and storing data. Unlike the claim in Content Extraction, claim 1 of the ’065 patent depends upon a specific enhancing limitation that necessarily incorporates the invention’s distributed architecture—an architecture providing a technological solution to a technological problem. This provides the requisite “something more” than the performance of “well-understood, routine, [and] conventional activities previously known to the industry.”

Claim 1 is similar to the claims in DDR Holdings and BASCOM. As in DDR Holdings, when the claim limitations were considered individually and as an ordered combination, they recited an invention that is not merely the “routine or conventional use” of technology. Here, claim 1 solves a technological problem (massive data flows requiring huge databases) akin to the problem in DDR Holdings (conventional Internet hyperlink protocol preventing websites from retaining visitors). Cf. Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363 (Fed. Cir. 2015). Claim 1 involves some arguably conventional components (e.g., gatherers), but the claim also involves limitations that when considered individually and as an ordered combination recite an inventive concept through the system’s distributed architecture.

Claim 1 is also like the claims in BASCOM because even though the system in the ’065 patent relies upon some arguably generic limitations, when all limitations are considered individually and as an ordered combination, they provide an inventive concept through the use of distributed architecture. This is similar to the design in BASCOM which permitted the invention to have a filtering tool with the benefits of a filter on a local computer and the benefits of a filter on an ISP server.

For all these reasons, and with the understanding that claim 1 is representative, we reverse the district court’s judgment that claims 1, 4, 7, 13, and 17 of the ’065 patent are ineligible under § 101.

For Similar Reasons, the Claims of the ’510 Patent Are Patent-Eligible

Claim 16 is representative:

16. A computer program product stored in a computer readable medium for reporting on a collection of network usage information from a plurality of network devices, comprising:

computer code for collecting network communications usage information in real-time from a plurality of network devices at a plurality of layers;

computer code for filtering and aggregating the network communications usage information;

computer code for completing a plurality of data records from the filtered and aggregated network communications usage information, the plurality of data records corresponding to network usage by a plurality of users;

computer code for storing the plurality of data records in a database;

computer code for submitting queries to the database utilizing predetermined reports for retrieving information on the collection of the network usage information from the network devices; and

computer code for outputting a report based on the queries;

wherein resource consumption queries are submitted to the database utilizing the reports for retrieving information on resource consumption in a network; and

wherein a resource consumption report is outputted based on the resource consumption queries.

This claim is eligible for patenting for reasons similar to those that undergirded the eligibility of the ’065 patent claims. In this instance, the district court concluded under step one that claim 16 was directed to an abstract idea—“using a database to compile and report on network usage information” without any sufficient “inventive concept” under step two. However, contrary to the district court’s analysis, even if claim 16 were directed to an abstract idea under step one, the claim is eligible under step two.

Claim 16 requires, inter alia, that the network usage information is collected in real-time from a plurality of network devices at a plurality of layers and is filtered and aggregated before being completed into a plurality of data records. In Amdocs I, we approved of the district court’s construction of “completing” to mean “enhance a record until all required fields have been populated,” in which “enhance” carried the same meaning as the same term in the ’065 patent.

The collection, filtering, aggregating, and completing steps all depend upon the invention’s unique distributed architecture—the same architecture outlined in our earlier analysis of the ’065 patent.

With this understanding, it is clear that even if claim 16 were viewed as being directed to an abstract idea under step one—rather than to an improvement in computer functionality—claim 16 satisfies step two. The collection, filtering, aggregating, and completing (including enhancing) steps all depend upon the system’s unconventional distributed architecture. While some individual limitations arguably may be generic, others are unconventional and the ordered combination of these limitations yields an inventive concept sufficient to confer eligibility without undue preemption. The claim recites a technological solution to a technological problem specific to computer networks—an unconventional solution that was an improvement over the prior art. The claim is therefore more similar to the eligible claims in DDR Holdings and BASCOM than the ineligible claims in Digitech, Content Extraction, and In re TLI Commc’ns.

For those reasons, and with the understanding that claim 16 is representative, we reverse the district court’s judgment that claims 16, 17, and 19 of the ’510 patent are ineligible under § 101.

The Claims of the ’984 Patent Are Similarly Patent-Eligible

Claim 1 is representative:

1. A method for reporting on the collection of network usage information from a plurality of network devices, comprising:

(a) collecting network communications usage information in real-time from a plurality of network devices at a plurality of layers utilizing multiple gatherers each including a plurality of information source modules each interfacing with one of the network devices and capable of communicating using a protocol specific to the network device coupled thereto, the network devices selected from the group consisting of routers, switches, firewalls, authentication servers, web hosts, proxy servers, netflow servers, databases, mail servers, RADIUS servers, and domain name servers, the gatherers being positioned on a segment of the network on which the network devices coupled thereto are positioned for minimizing an impact of the gatherers on the network;

(b) filtering and aggregating the network communications usage information;

(c) completing a plurality of data records from the filtered and aggregated network communications usage information, the plurality of data records corresponding to network usage by a plurality of users;

(d) storing the plurality of data records in a database;

(e) allowing the selection of one of a plurality of reports for reporting purposes;

(f) submitting queries to the database utilizing the selected reports for retrieving information on the collection of the network usage information from the network devices; and

(g) outputting a report based on the queries.

Claim 1 is eligible for patenting for reasons similar to those already discussed with respect to the ’065 and ’510 patents. Claim 1 requires the completion of a plurality of data records in a manner that depends upon enhancement—which depends upon the system’s distributed architecture, as explained previously. Similarly, claim 1 requires collecting, filtering, and aggregating information in a manner that also depends upon the system’s distributed architecture. Claim 1 is therefore eligible for the same reasons that supported eligibility with respect to claim 16 of the ’510 patent. The written description in both patents describes the collection, filtering, and aggregation in terms of the invention’s distributed architecture. Although some of the components and functions may appear generic, several limitations are individually unconventional (e.g., completing depends upon distributed enhancing) and the overall ordered combination of all of the limitations was unconventional. It produced the advantage over the prior art by solving the technological problem at stake.

For those reasons, and with the understanding that claim 1 is representative, we reverse the district court’s judgment that claims 1, 2, 7, 8, and 13 of the ’984 patent are ineligible under § 101.

The Claims of the ’797 Patent Are Also Patent-Eligible

Claim 1 is representative:

1. A method for generating a single record reflecting multiple services for accounting purposes, comprising:

(a) identifying a plurality of services carried out over a network;

(b) collecting data describing the plurality of services; and

(c) generating a single record including the collected data, wherein the single record represents each of the plurality of services;

wherein the services include at least two services selected from a group consisting of a hypertext transfer protocol (HTTP) session, an electronic mail session, a multimedia streaming session, a voice over Internet Protocol (IP) session, a data communication session, an instant messaging session, a peer-to-peer network application session, a file transfer protocol (FTP) session, and a telnet session;

wherein the data is collected utilizing an enhancement procedure defined utilizing a graphical user interface by:

listing a plurality of available functions to be applied in real-time prior to end-user reporting,

allowing a user to choose at least one of a plurality of fields, and

allowing the user to choose at least one of the listed functions to be applied to the chosen field in real-time prior to the end-user reporting.

Here again claim 1 is eligible for patenting for reasons similar to those discussed with respect to the claims in the ’065, ’510, and ’984 patents. As with the other patents, the collecting, generating, and enhancement procedure required by claim 1 all depend upon the system’s distributed architecture. Regarding collection, see, e.g., ’797 patent at 5:39–45 (“The system is based on a modular, distributed, highly scalable architecture capable of running on multiple platforms. Data collection and management is designed for efficiency to minimize impact on the network and system resources. The system minimizes network impact by collecting and processing data close to its source.”).

Similar to the other examined claims in the patents at issue, representative claim 1 recites a series of limitations that, when considered individually and as an ordered combination, provide an inventive concept sufficient to confer eligibility. While the components and functionality necessarily involved in the ’797 patent (e.g., ISMs, gatherers, network devices, collection, aggregation, and enhancement) may be generic at first blush, an examination of the claim in light of the written description reveals that many of these components and functionalities are in fact neither generic nor conventional individually or in ordered combination. Instead, they describe a specific, unconventional technological solution, narrowly drawn to withstand preemption concerns, to a technological problem.

For those reasons, and with the understanding that claim 1 is representative, we reverse the district court’s judgment that claims 1, 2, 7, 8, and 19 of the ’797 patent are ineligible under § 101.

Accordingly, we reverse the district court’s judgment that the claims at issue in the ’065, ’510, ’984, and ’797 patents are invalid under § 101 of the Patent Act. We remand for the trial court to undertake further proceedings as called for by the issues as yet unaddressed, and such other proceedings as the court may deem appropriate.

Judge Reyna’s Dissent

The majority finds that the claims of all four asserted patents are directed to eligible subject matter. To make its determination, the majority undertakes “to examine earlier cases in which a parallel descriptive nature can be seen—what prior cases were about and which way they were decided.” In application, the majority’s approach involves the mechanical comparison of the asserted claims in this case to the claims at issue in some, but not all, of the cases where we have addressed patent eligibility after the Supreme Court’s decision in Alice.

The majority avoids determining whether the asserted claims are directed to an abstract idea, or even identifying what the underlying abstract idea is. I believe that approach to section 101 is contrary to the Supreme Court’s direction in Alice (“First, we determine whether the claims at issue are directed to one of those patent-ineligible concepts.”). Declining to engage in the step 1 inquiry also ignores and undermines this court’s holdings in Enfish, McRO, Inc. v. Bandai Namco Games Am Inc., 2016 WL4896481 (Fed. Cir. Sept. 13, 2016), Affinity Labs of Texas, LLC v. DirecTV, LLC, 2016 WL 5335501 (Fed. Cir. Sept. 23, 2016), and Affinity Labs of Texas, LLC v. Amazon.com Inc., 2016 WL 5335502 (Fed. Cir. Sept. 23, 2016).

The majority also relies on the specification to import innovative limitations into the claims at issue. For each of the four patents at issue, the majority’s eligibility determination rests on the use of a “distribution architecture.” However, this limitation is insufficient to satisfy Alice step two. Indeed, that limitation does not exist in all of the claims at issue. This contravenes the fundamental principal that the section 101 inquiry is about whether the claims are directed to a patent-eligible invention, not whether the specification is so directed. See Synopsys, Inc. v. Mentor Graphics Corp., No. 2015-1599 *20−21 (Oct. 17, 2016) (“The § 101 inquiry must focus on the language of the Asserted Claims themselves. . . . complex details from the specification cannot save a claim directed to an abstract idea that recites generic computer parts.”) (citing Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336 (Fed. Cir. 2013)).

Because I do not agree that the ’065 and ’797 patents are § 101 eligible, nor with the basis expressed by the majority for finding all four patents subject matter eligible under § 101, I dissent.

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