Federal Circuit Broadens Base for Patent Eligibility in Amdocs v. Openet Telecom

November 18, 2016

By: N. Scott Pierce

Hamilton Brook Smith Reynolds Alert

 

  • For only the third time, eligibility upheld at “step one” of Alice test
  • Patent eligibility decided in view of written description in patent at issue
  • Dissent argues that a desired goal absent structural or procedural means for its achievement is an “abstract idea”

 
The Court of Appeals for the Federal Circuit, in Amdocs (Israel) Limited v. Openet Telecom, Inc., recently reversed a district court decision and upheld the patent eligibility of patent claims based, in part, on the supporting specification of the patent.  The claims were directed to a computer networking system employing a “distribution architecture” that minimizes network impact by collecting and processing data close to its source.  Four related patents were at issue, three of which were continuation applications, and therefore shared a common written description.  The fourth was a “continuation-in-part,” meaning that it included additional subject matter.

Summarizing the eligibility test announced in Alice Corp. v. CLS Bank Int’l., the Federal Circuit stated that, “[f]irst, we determine whether ‘the claims at issue are directed to one of those patent ineligible concepts,’” of laws of nature, natural phenomena, and abstract ideas, followed by “step two,” of the analysis, which is a “search for an inventive ‘concept.’”  The court also stated 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.”  According to the court, the “more detailed analysis” of a search for an inventive concept can occur “without going beyond step one,” but to do so requires a “definition of, or test for, what an ‘abstract idea’ encompasses.”  Since “there is no such single, succinct, usable definition or test,” the “decisional mechanism courts now apply is to examine earlier cases….”  In its analysis, the court relied on the district court’s “reading the ‘in a distributed fashion’ and the ‘close to the source’ of network information requirements,” which appeared in the specification of the patent, into the term “enhance” that appeared in the claims.  The court concluded, based on its review of earlier cases, that, under step one of the two-step analysis, the claims were not directed to an abstract idea, but rather entailed an “unconventional technological solution (enhancing data in a distributed fashion) to a technical problem (massive record flows which previously required massive databases).”  Eligibility, therefore, was based on claim construction conducted at the district court level that employed terminology found only in the specification of the patent at issue.  The court held the “claims at issue, understood in light of [the] written description, to be eligible for patenting.”

For its part, the dissent noted that the “Alice framework leaves open at least three questions:  (1) what makes an idea ‘abstract’;  (2) what it means for a claim to be ‘directed to’ an abstract idea; and (3) what limitations provide an “inventive concept?’”  Relying on Supreme Court precedent, the dissent concluded that “the abstract idea exception must be applied in a way that reserves patent protection for means rather than for ends and thus maintains the incentive of ‘some future inventor, in the onward march of science’ to discover new ways of achieving the same result more cheaply and efficiently than has the patentee.”  Accordingly, a “desired goal (i.e., a result or an effect”), absent structural or procedural means for achieving that goal” is an “abstract idea” and, under Supreme Court’s decision in Alice, “unless step one is a nullity, the phrase ‘directed to’ must therefore mean more than merely ‘embody, use, reflect, rest upon, or apply.’”  Rather, a claim is “directed to” an “abstract goal” if it fails to describe how -- whether the particular process or structure -- the goal is accomplished.”  Under “step two,” claims that are found to be “directed to” an abstract idea are analyzed under a “limitation-by-limitation analysis” to ensure that “the claim recites an ‘inventive concept.’”  According to the dissent, “[c]laims that fail to recite how a desired goal is accomplished do not recite an inventive concept.”  Further, the dissent stated that it is “not whether the specifications disclose a patent-eligible system, but whether the claims are directed to a patent-eligible concept.”  The dissent would have found that, while the “monitoring system” disclosed in the written description of the asserted patents was “eligible for patenting,” the subject matter of the claims, where considered as a whole, were eligible for patent protection only where specific means were recited.  In this case, the dissent concluded that the subject matter of the claims of only one of the four patents (not the continuation-in-part) should have survived the two-part test for eligibility. 

Only twice before, in Enfish, LLC v. MicroSoft Corp., (822 F.3d 1327 (Fed. Cir. 2016)), which was decided earlier this year, and even more recently, in McRO, Inc. v. Bandai Namco Games America, Inc. (No. 15-1080, 2016 WL 4896481 (Fed. Cir. Sept. 13, 2016)), has the Federal Circuit upheld the eligibility of claims under § 101 at “step one” by holding that the claims were not, in fact, directed to an abstract idea.  However, those seeking guidance under those cases and Amdocs will likely have difficulty predicting, under the majority opinion of Amdocs, whether limitations found only in a patent specification can be relied upon to determine if claims are “directed to” ineligible subject matter under recent precedent and whether, given the “complexities of § 101,” the law is, in fact, “evolving into greater certitude based on experience, not on generalizations,” as was asserted by the majority in this case. 

 

Overview

November 18, 2016

By: N. Scott Pierce

Hamilton Brook Smith Reynolds Alert

 

  • For only the third time, eligibility upheld at “step one” of Alice test
  • Patent eligibility decided in view of written description in patent at issue
  • Dissent argues that a desired goal absent structural or procedural means for its achievement is an “abstract idea”

 
The Court of Appeals for the Federal Circuit, in Amdocs (Israel) Limited v. Openet Telecom, Inc., recently reversed a district court decision and upheld the patent eligibility of patent claims based, in part, on the supporting specification of the patent.  The claims were directed to a computer networking system employing a “distribution architecture” that minimizes network impact by collecting and processing data close to its source.  Four related patents were at issue, three of which were continuation applications, and therefore shared a common written description.  The fourth was a “continuation-in-part,” meaning that it included additional subject matter.

Summarizing the eligibility test announced in Alice Corp. v. CLS Bank Int’l., the Federal Circuit stated that, “[f]irst, we determine whether ‘the claims at issue are directed to one of those patent ineligible concepts,’” of laws of nature, natural phenomena, and abstract ideas, followed by “step two,” of the analysis, which is a “search for an inventive ‘concept.’”  The court also stated 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.”  According to the court, the “more detailed analysis” of a search for an inventive concept can occur “without going beyond step one,” but to do so requires a “definition of, or test for, what an ‘abstract idea’ encompasses.”  Since “there is no such single, succinct, usable definition or test,” the “decisional mechanism courts now apply is to examine earlier cases….”  In its analysis, the court relied on the district court’s “reading the ‘in a distributed fashion’ and the ‘close to the source’ of network information requirements,” which appeared in the specification of the patent, into the term “enhance” that appeared in the claims.  The court concluded, based on its review of earlier cases, that, under step one of the two-step analysis, the claims were not directed to an abstract idea, but rather entailed an “unconventional technological solution (enhancing data in a distributed fashion) to a technical problem (massive record flows which previously required massive databases).”  Eligibility, therefore, was based on claim construction conducted at the district court level that employed terminology found only in the specification of the patent at issue.  The court held the “claims at issue, understood in light of [the] written description, to be eligible for patenting.”

For its part, the dissent noted that the “Alice framework leaves open at least three questions:  (1) what makes an idea ‘abstract’;  (2) what it means for a claim to be ‘directed to’ an abstract idea; and (3) what limitations provide an “inventive concept?’”  Relying on Supreme Court precedent, the dissent concluded that “the abstract idea exception must be applied in a way that reserves patent protection for means rather than for ends and thus maintains the incentive of ‘some future inventor, in the onward march of science’ to discover new ways of achieving the same result more cheaply and efficiently than has the patentee.”  Accordingly, a “desired goal (i.e., a result or an effect”), absent structural or procedural means for achieving that goal” is an “abstract idea” and, under Supreme Court’s decision in Alice, “unless step one is a nullity, the phrase ‘directed to’ must therefore mean more than merely ‘embody, use, reflect, rest upon, or apply.’”  Rather, a claim is “directed to” an “abstract goal” if it fails to describe how -- whether the particular process or structure -- the goal is accomplished.”  Under “step two,” claims that are found to be “directed to” an abstract idea are analyzed under a “limitation-by-limitation analysis” to ensure that “the claim recites an ‘inventive concept.’”  According to the dissent, “[c]laims that fail to recite how a desired goal is accomplished do not recite an inventive concept.”  Further, the dissent stated that it is “not whether the specifications disclose a patent-eligible system, but whether the claims are directed to a patent-eligible concept.”  The dissent would have found that, while the “monitoring system” disclosed in the written description of the asserted patents was “eligible for patenting,” the subject matter of the claims, where considered as a whole, were eligible for patent protection only where specific means were recited.  In this case, the dissent concluded that the subject matter of the claims of only one of the four patents (not the continuation-in-part) should have survived the two-part test for eligibility. 

Only twice before, in Enfish, LLC v. MicroSoft Corp., (822 F.3d 1327 (Fed. Cir. 2016)), which was decided earlier this year, and even more recently, in McRO, Inc. v. Bandai Namco Games America, Inc. (No. 15-1080, 2016 WL 4896481 (Fed. Cir. Sept. 13, 2016)), has the Federal Circuit upheld the eligibility of claims under § 101 at “step one” by holding that the claims were not, in fact, directed to an abstract idea.  However, those seeking guidance under those cases and Amdocs will likely have difficulty predicting, under the majority opinion of Amdocs, whether limitations found only in a patent specification can be relied upon to determine if claims are “directed to” ineligible subject matter under recent precedent and whether, given the “complexities of § 101,” the law is, in fact, “evolving into greater certitude based on experience, not on generalizations,” as was asserted by the majority in this case. 

 

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