Salesforce.com, Inc. v. VirtualAgility, Inc.: Final Written Decision CBM2013-00024
Tuesday, September 23, 2014

Takeaway: Findings by the Board of Patent Appeals and Interferences and a district court that the claims of a patent cover patent-eligible subject matter is not persuasive if those findings occurred prior to the Supreme Court’s Alice decision.

In its Final Written Decision, the Board found that the challenged claims (1-21) of the ’413 Patent are unpatentable under 35 U.S.C. §§ 101 and 102, and denied Patent Owner’s Motion to Amend. The ’413 Patent is directed to a method and apparatus for managing collaborative activity by using a computer database created with data representing models of the collaborative activity that are arranged into hierarchies and can be shared between different people.

The Board first discussed whether the ’413 Patent is eligible for covered business method review. In the Decision on Institution, the Board already concluded it was.  In its Response, Patent Owner argued that the ’413 Patent is not directed to a financial product or service, but does implement a technological solution.  The Board was not persuaded by this argument, finding that the ’413 Patent “discloses use of the claimed method and apparatus for the practice, administration, or management of collaborative activity that can include financial aspects or activities of an organization.”  The Board also noted that the legislative history of the AIA indicated that the phrase “financial product or service” is not limited to products directly related to the financial services industry and is to be broadly interpreted.  The Board also rejected Patent Owner’s argument that covered business method patent review is not appropriate for claims grouped in class 705 during prosecution because the determination of whether a patent is eligible for review is governed by the AIA, not by the classification.  Additionally, the Board did not find Patent Owner’s argument that the covered business method review is intended only for patents that did not undergo thorough review by the USPTO persuasive, noting that the statute authorizing review does not support this position.

The Board then turned to claim construction, noting that terms should be given their broadest reasonable construction in light of the specification. The Board first examined the meaning of the term “system being implemented using a processor and a storage device accessible to a processor” that is recited in the preamble of claim 1.  Petitioner argued that the processor and storage device need not be components of the claimed system because they are not positively recited elements, but the Board disagreed because the processor and storage device serve as the antecedent basis for “said processor” and “the storage device” recited in the body of the claims.  The Board then reviewed the construction of “model entities,” construing it as it is defined in the specification.  Next, the Board reviewed the term “hierarchies having a plurality of types,” adopting Patent Owner’s definition that accounts for multiple levels of subordination and different subject matter.  Finally, the Board construed “model entities as ordered by a value in the information concerning the collaborative activity” to mean “model entities sorted into an order based on any value in the information concerning the collaborative activity.”

Next, the Board discussed Petitioner’s first ground of unpatentability, that the challenged claims are directed to non-statutory subject matter under 35 U.S.C. § 101. The Board first looked to define the statutory class of subject matter, noting that to be patent eligible, the subject matter must be either a process, machine, manufacture, or composition of matter.  Citing to recent Supreme Court precedent, including Alice Corp. Pty, Ltd. v. CLS Bank International, 134 S. Ct. 2347 (2014), the Board found that the challenged claims are directed to an abstract idea of using intangible models to process management information and to manage collaborative activity.  The Board specifically rejected Patent Owner’s argument that the challenged claims were patentable because they were reviewed by the Patent Board of Appeals and Interferences and by a district court, and noted that Patent Owner’s reliance on Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335 (Fed. Cir. 2013) was unpersuasive because it had been vacated in light of Alice.  The Board then found that the claims lack an inventive concept to transform them into a patent-eligible application of an abstract idea.  Specifically, the Board found that the claims do not recite a specialized algorithm that could move the claims from the abstract to concrete, that at least operations (ii) through (vi) are actually carried out by the user, and that executing an abstract concept on a computer does not render the computer “specialized.”

The Board then discussed Petitioner’s second ground of unpatentability – that the challenged claims are anticipated by Ito. The Board looked at the issues which are in dispute, examining first whether Ito discloses a “model entity being capable of simultaneously belonging to a hierarchy having one of the types and a hierarchy having another of the types.”  The Board found that Patent Owner was interpreting the claim too narrowly, and adopted Petitioner’s reading that the term is disclosed in Ito.  The Board then addressed whether Ito discloses “viewing model entities as ordered by a value in the information concerning the collaborative activity,” again stating that Patent Owner’s reading of the claims was too narrow because it was based solely on the description of the invention in the specification.  The Board then found that Ito discloses “a first hierarchical relationship between the model entity and another model entity belonging to the hierarchy” and “a second hierarchical relationship between the model entity and a third model entity belonging to the other hierarchy.”

The Board then turned to Patent Owner’s Motion to Amend. The Board found that Patent Owner failed to address the level of ordinary skill in the art or the prior art known to the Patent Owner with respect to the feature that it added to the original patent claims.  During oral argument, counsel for Patent Owner acknowledged that at least part of that feature was known in the art.  Patent Owner also failed to account for the relevant prior art contained in the record of the proceeding.  Finally, Patent Owner’s attempt at adding limitations to direct the patent to a specially programmed machine, rather than an abstract idea, failed, and Patent Owner did not show patentability under 35 U.S.C. § 101.

Salesforce.com, Inc. v. VirtualAgility, Inc., CBM2013-00024
Paper 47: Final Written Decision
Dated: September 16, 2014
Patent: 8,095,413 B1
Before: Jameson Lee, Georgianna W. Braden, and Christopher M. Kaiser
Written by: Braden

 

NLR Logo

We collaborate with the world's leading lawyers to deliver news tailored for you. Sign Up to receive our free e-Newsbulletins

 

Sign Up for e-NewsBulletins