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Federal Circuit Dives into Specification to Determine Patent Eligibility

Addressing a district court’s determination that the claims of four patents were not directed to patent-eligible subject matter under 35 USC § 101, the US Court of Appeals for the Federal Circuit reversed, finding that the claims, understood in light of the written description, did define patent-eligible subject matter. Amdocs (Israel) v. Openet Telecom, Case No. 15-1180 (Fed. Cir., Nov. 1, 2016) (Plager, J) (Reyna, J, dissenting).

After Amdocs appealed the district court’s decision granting Openet’s motion for summary judgment of non-infringement, the Federal Circuit modified the district court’s claim construction and remanded the matter in view of the modified claim construction. Following remand, the district court permitted, and then granted, Openet’s motion for judgment on the pleadings, invalidating Amdoc’s patents under § 101 in view of the Supreme Court of the United States’ decision in Alice v. CLS Bank Int’l (IP Update, Vol. 17, No. 7). Amdocs again appealed.

Determining whether a claim is directed to a patent-ineligible concept involves a two-step process. First, a court must determine whether the claim at issue is directed to one of the patent-ineligible concepts identified by the Supreme Court. If so, the court then proceeds to consider whether additional elements of the claim transform the nature of the claim into a patent-eligible application. Step two is a search for an “inventive concept”—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. 

The claims of the first patent at issue recite, in part, “computer code for using . . . accounting information with which [a] first network accounting record is correlated to enhance the first network accounting record.” According to the district court, correlating two network accounting records to enhance the first record was merely an abstract idea (under step one). Under step two, the district court found that the claim limitations did not add a sufficient “inventive concept” to confer eligibility. 

On appeal, the Federal Circuit panel majority focused its analysis of the claims on the second part of the Alice/Mayo test, simply accepting the district court’s view that the claims of all four patents were directed to an abstract idea. As for the step two analysis, the majority found that the “enhancing limitation . . . is individually sufficient for eligibility.” The majority, focusing on its earlier claim construction that the term “enhance” meant “to apply a number of field enhancements in a distributed fashion,” found that this limitation went to the disclosed invention’s distributed architecture, which included specific devices that work together in a distributed manner. Based on this construction, the majority found that the claims provide an unconventional technical solution (enhancing data in a distributed fashion) to a technological problem (massive record flows that previously required massive databases).

The majority identified limitations in the claims of the other asserted patents that, when viewed in light of the patent specification and prior claim construction, also depended upon the disclosed distributed architecture. For example, the term “completing” as used in the limitation of “completing a plurality of data records from the filtered and aggregated network communications usage information” was found to mean “enhance a record until all required fields have been populated,” with the term “enhance” carrying the same meaning discussed previously.

Based on its claim construction, the majority found the claims to be akin to prior decisions BASCOM (IP Update, Vol. 19, No. 8) and DDR Holdings (IP Update, Vol. 18, No. 1), which found patent-eligible subject matter under Alice/Mayo step two because the claims contained a sufficient inventive concept, and distinguishable from cases such as Digitech (IP Update, Vol. 17, No. 8), Content Extraction (IP Update, Vol. 18, No. 1) and TLI Commc’ns, (IP Update, Vol. 19, No. 6), which did not.

In dissent, Judge Reyna agreed with the majority that the specification disclosed a patent-eligible system, but took aim at the majority’s reliance on importing patent-eligible subject matter from the specification into the claims. Reyna argued that the § 101 inquiry is directed to whether the claims are directed to a patent-eligible concept, not whether the specification discloses a patent-eligible system. The dissent found that the “distributed fashion” limitation cannot provide an “inventive concept” because it has no meaning in the claims, which “fail[] to recite any structure or process limiting the claim[s] to a particular means of combining accounting data from different sources.”

Practice Note: A determination of patent-eligible subject matter by construing claim terms in view of the specification is likely to be the subject of ongoing judicial controversy.

© 2020 McDermott Will & EmeryNational Law Review, Volume VI, Number 364


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