Eastern District of Texas and PTAB Issue Conflicting Decisions on Same Patent
By Joseph Herndon --
IV sued J. Crew for patent infringement of three patents: U.S. Patent Nos. RE43,715, 6,782,370, and 5,969,324. J. Crew filed a Motion to Dismiss, contending that the asserted patents are drawn to patent-ineligible subject matter under 35 U.S.C. § 101. Ultimately, the District Court concluded that the claims of the '715 and '370 patents are directed to patent-ineligible subject matter, and the claims of the '324 patent are not directed to patent-ineligible subject matter.
Below is a summary of the reasoning for these decisions for each patent. However, interestingly, on August 2, 2016, the PTAB at the U.S. Patent Office came to a contrary decision with respect to the '324 patent, and determined that it is more likely than not that claims of the '324 patent are unpatentable under 35 U.S.C. § 101, within a decision to institute a trial in a covered business method (CBM) patent review of the '324 patent between Sally Beauty Holdings, Inc. and IV. We recently discussed that decision here. It appears that IV has asserted the '324 patent against numerous defendants, and at least one has been able to raise the question of § 101 successfully so as to institute a CBM review.
A. The '715 patent
The '715 patent is directed to a method for allowing an internet user to create a web page that may simultaneously display public and private data as integrated data on one digital screen or other network device. Claim 20 is representative and is reproduced below.
20. A method of integrating and delivering data available over a network, said method including the steps of:
acquiring public data from at least one publicly available data store coupled to said network, wherein said public data is determined by private data;
acquiring said private data from at least one private data store coupled to said network;
integrating said public data and said private data to form integrated data; and
delivering said integrated data to a user system.
The District Court found that the '715 Patent is directed toward the abstract idea of combining data from two sources for delivery to a user. The District Court found no meaningful limitations on any of the generic steps in claim 20 that render the claim any less abstract.
Figure 6 of the '715 patent teaches the invention through the use of an exemplary website, americanexpress.com, which displays one embodiment of the invention: a single webpage simultaneously displaying private data (account balance) and public data (promotional information). The District Court found that this makes clear that the '715 patent merely discloses the use of generic computer network technology to achieve an online variation of a well-established, real-world practice. Long before the advent of online credit card billing, printed account statements resembling Figure 6's webpage were regularly mailed to credit card members that combined private account information along with public promotional information.
Since the asserted claims of the '715 patent were found to be directed toward an abstract idea, the District Court next determined that there was no inventive concept sufficient to transform the claims into patent-eligible subject matter. The claims' references to computer components are generic and tangential. Combining generic data, from generic data stores, across generic networks does not reflect the necessary innovation to salvage this underlying abstract idea.
The District Court noted that the only arguably inventive concepts disclosed by the '715 patent are (1) the distinction between "public data" and "private data", and (2) the method by which public data is "determined by" private data. But a review of the claims exposes these concepts as vague and uninventive, and subjective.
B. The '370 patent
The '370 patent discloses a method for using a network for the recommendation of goods and services based on a potential customer's selection of goods and services and a database of previous customer purchase history. Claim 1 is representative and is reproduced below.
1. A computer-implemented method for the recommendation of goods and/or services to potential customers over a distributed network based on customer buying history utilizing an information processing system containing processing means having transmission means for receiving and transmitting data, and database storage means for receiving and transmitting data, and database storage means for storing information in database files, the method comprising the steps of:
receiving customer commands specifying a particular good or service to be used as filter data;
storing information pertaining to goods and/or services purchase history of previous customers;
comparing said filter data with said stored information and determining whether, for said filter data, corresponding entries exist within the stored information; and
if corresponding entries exist, displaying the identity of other goods and/or services purchased by said previous customers who have purchased the good and/or services used as said filter data.
The District Court found that the '370 Patent is directed toward the abstract idea of recommending products to customers based on purchase history. The District Court contended that the typical sales clerk at a hardware store often performs these same steps.
In search of an inventive concept, the District Court looked to the preamble to claim 1, which (even if assumed to be limiting) merely provides computer implementation of this abstract marketing idea.
C. The '324 patent
The '324 patent discloses a method for storing and retrieving transaction information via a nonpredictable barcode. A point-of-sale transaction system utilizes a nonpredictable barcode in connection with generating information related to the transaction, storing that data, and retrieving it from a remote computer system. The transaction data is tied to a nonpredictable barcode, which can help prevent unauthorized access to the transaction data. Claim 1 is representative and is reproduced below.
1. A database management method comprising the steps of:
receiving and storing transaction information associated with a nonpredictable bar code, the transaction information generated by a transaction terminal;
receiving a request for the transaction information including data associated with the nonpredictable bar code;
retrieving the transaction information based upon the nonpredictable bar code; and
communicating the transaction information.
Crew contended that the '324 patent is directed toward the abstract idea of retrieving transaction records. The District Court concluded that J. Crew had not met its burden under the Alice framework because J. Crew took an overly generalized view of the claim language that vitiated meaningful limitations.
The District Court found that J. Crew's recitation of the claims ignored (or at least evaded) the elements of "nonpredictable bar code" and "transaction information associated with a nonpredictable bar code." The District Court found that the invention lies in the combined use of nonpredictable bar codes with transaction information, and this was far from conventional, resulting in an improvement over the mid-1990s accounting software, which relied on manual entry of transaction information. Considering all of the above, the District Court found the asserted claims of the '324 patent to be directed to patent-eligible subject matter.
It's interesting to contrast the District Court's reasoning with the PTAB's findings for the '324 patent in which the PTAB accepted that the '324 patent is directed merely to an abstract idea of "storing and retrieving transaction information through the use of a well-known security feature." The '324 patent itself concedes that it was intended to automate a manual process and the claims describe the automation of the fundamental economic concept of recording and retrieving transaction information through the use of generic computer functions.
With respect to the "bar code", the PTAB found that the claims recite receiving transaction information associated with a nonpredictable bar code, rather than use of a bar code. No scanning or querying of any type of bar code is specifically recited, such that the independent claims need only handle the associated information, post-derivation, to satisfy the steps of claim 1. As such, from a standpoint of determining if the claims are directed to an abstract idea, any consideration of the use of a nonpredictable bar code is not necessary.
Conflicting opinions issued by the PTAB and the District Court illustrate the difficulties and problems with the Alice framework for determining patent eligible subject matter under § 101.
Intellectual Ventures I LLC v. J. Crew Group, Inc. (E.D. Tex. 2016)
Memorandum Opinion and Order by District Judge Rodney Gilstrap