Data Processing Software Checks Out As Patent Eligible
Addressing an issue of software subject matter eligibility, the US Court of Appeals for the Federal Circuit reversed the district court’s judgment on the pleadings under 35 USC § 101, finding claims related to error checking patent eligible. Koninklijke KPN N.V. v. Gemalto M2M GMBH et al., Case Nos. 18-1862, -1864, -1865 (Fed. Cir. Nov. 15, 2019) (Chen, J).
KPN asserted a patent that describes a device and improved method for error detection in data transmission systems. As binary code information travels through the air, environmental factors affect the transmission of data in different ways. Some environmental factors cause random errors whereas others may cause certain errors to repeat themselves through a data block in the same way. These persistent errors, also known as “systematic errors,” are the focus of the patent.
Data transmissions systems commonly generate a “check data” that checks whether data was accurately transmitted over a communications channel. Error detection systems compare data generated at both ends of the communications channel to infer whether errors occurred during transmission.
Prior technologies were unable to reliably detect systematic errors because they generated the same check data for corrupted and uncorrupted data. The invention overcame these problems by varying the way check data is generated from time to time so that the same defective check data does not continue to be produced for the same types of persistent systematic error.
Gemalto filed a motion for judgment on the pleadings under FRCP 12(c), asserting that all four claims of the patent were ineligible under § 101. The district court agreed. Applying the two-step framework laid out in the 2014 Supreme Court decision in Alice Corp. v. CLS Bank International (IP Update, Vol. 17, No. 7), the district court found all claims of the patent to be patent ineligible as directed to an abstract idea and containing no saving inventive concept. At step one of Alice, the district court found that the claims were directed to the “abstract idea of reordering data and generating additional data,” likening the asserted claims to data manipulation claims found ineligible in multiple Federal Circuit cases. The district court explained that the claims of the patent were abstract because they did “not say how data is reordered, how to use reordered data, how to generate additional data, how to use additional data, or even that any data is transmitted.” At step two, the district court concluded that the claims were ineligible because KPN’s “purported inventive concept [was] not captured in the claims.” KPN appealed, but only as to specific claims.
The Federal Circuit determined that the appealed claims were directed to a non-abstract improvement in an existing technological process (i.e., error checking in data transmissions) and therefore were patent eligible. Specifically, the Court found that claim 2 recited a specific implementation of varying the way check data is generated that improves the ability of prior art detection systems, and this improvement was akin to the type of non-abstract improvement the Court found to be patent eligible in its 2018 decision in Finjan v. Blue Coat System (IP Update, Vol. 21, No. 2). The Court found that the appealed claims represented a non-abstract improvement in the functionality of an existing technology process and not simply an abstract idea of manipulating data.
Practice Note: To increase the likelihood of a successful appeal on a § 101 issue case, patent owners should consider focusing their appeal on only the claim(s) most likely to pass muster under Alice—even if it means that other claims may be abandoned.