By Michael Borella --
Intellectual Ventures I (IV) brought an action against Erie Indemnity Company in the Western District of Pennsylvania, alleging infringement of U.S. Patent No. 7,757,298. Erie filed a motion to dismiss under Rule 12(b)(6), contending that the claims of the '298 patent did not meet the eligibility requirements of 35 U.S.C. § 101. The District Court granted the motion and IV appealed.
The Supreme Court's Alice Corp. v. CLS Bank Int'l case set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101. One must first decide whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea. If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion. But generic computer implementation of an otherwise abstract process does not qualify as "significantly more." On the other hand, a claimed improvement to a computer or technological process is typically patent-eligible.
Claim 1 of the '298 patent recites:
A computer-implemented method for identifying and characterizing stored electronic files, said method comprising:
under control of one or more configured computer systems:
selecting a file from a plurality of files stored in a computer storage medium, wherein selecting the file is performed according to at least one of:
selecting the file based on the size of the file by determining whether an aggregate size of plural identically-sized files exceeds a predetermined threshold;
selecting the file based on whether content of the file matches a file type indicated by a name of the file; or
selecting the file based on whether the file comprises data beyond an end of data marker for the file;
generating an identification value associated with the selected file, wherein the identification value is representative of at least a portion of the content of the selected file;
comparing the generated identification value to one or more identification values associated with one or more of a plurality of unauthorized files; and
characterizing the file as an unauthorized file if the identification value matches one of the plurality of identification values associated with the unauthorized files.
According to the patent, the claimed invention "improve[s] upon the prior art by providing a method and apparatus to detect undesirable files stored on computer storage devices according to pre-set criteria." These detected files can be reviewed in order to reduce legal risk to a corporation. For instance, such an entity may be unknowingly or inadvertently storing files that contain copyrighted media or pornography. The patent purports to detect "various characteristics of files . . . that give away illegal, illicit, or offensive content . . . and in so doing, saves Web hosting services from criminal, copyright, or some other liability."
Notably, claim 1 includes three distinct file selection criteria claimed in the disjunctive: the size of the file matches the size of other files and their aggregate size exceeds a threshold (an indication that a potentially copyrighted media file has been broken into smaller chunks in order to hide its presence), the content of the file not matching the filename extension of the file (e.g., a *.jpg file should actually contain a JPEG image), and whether the file contains data beyond its end of file marker (an indication that this extra data may be illicit).
The District Court applied part one the Alice test and found that the '298 patent "merely claims a computerized solution to a longstanding problem that exists outside of computers: identifying and categorizing illicit files, the possession of which might subject an individual or organization to liability." The District Court further found the claimed invention analogous to "a librarian tasked with marking and removing books containing pornographic material from a library." IV asserted that the claims were not abstract because they "improve upon how computer systems detect unauthorized files by teaching a specific way of identifying unauthorized files using specific selection criteria that humans did not use." Indeed, the District Court's analogy is tortured at best, as each of the three selection criteria are specific to problems with computer files, and there are no clear or logical analogies to how a librarian would analyze books, CDs, or DVDs.
The Federal Circuit reviewed the claims and found them "directed to the identification of unwanted files in a particular field (i.e., a computer network) and otherwise concern data collection related to such identification." Based on previous Federal Circuit cases, such as Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n and FairWarning IP, LLC v. Iatric Systems, Inc., the Court ruled the claims abstract. To back up this decision, the Court pointed to how the specification admits that "selection of errant files generally could be performed by humans" with respect to the first two selection criteria. Regarding the third criterion, the Court noted that it had "found the idea of performing a search to ferret out sources with unwanted material based on characteristics of the source to be directed to an abstract idea." Thus, the Court ruled that the third criterion was also abstract.
In an interesting exchange, IV argued that the claimed invention was similar to that of McRO, Inc. v. Bandai Namco Games America Inc., where a software invention using rules to map audio phonemes to facial characteristics was found to be not abstract under part one of Alice. The Court admitted that "[i]n McRO, we held that, although the processes were previously performed by humans, the traditional process and newly claimed method produced results in fundamentally different ways." But then it went on to state, in a conclusory fashion, that "the claims of the '298 patent merely implement an old practice in a new environment." Perhaps this decision was based on IV not arguing that its claimed method was different from the ones used by humans. The Court also found that, unlike those of Enfish v. Microsoft, the claims of the '298 patent "are not directed to an improvement in the way computers operate," and instead merely use a computer to perform a task faster and more accurately.
IV further argued that the claims were similar to a patent-eligible example claim in the USPTO's Subject Matter Eligibility Guidelines. But the Court rapidly dismissed this point, stating that it was not bound by the Guidelines.
Turning to part two of Alice, the Court set out to decide whether the claim elements, "when viewed individually and as an ordered combination -- contain an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application." The District Court answered this inquiry in the negative, holding that the claims recite "generic functions, even if performed by a computer, that are not inventive because selecting files based on identifiers and matching different files/identifiers is just what computers do." Furthermore, the District Court opined that even though the claims were allowed under the pre-Alice machine or transformation test, this test is "not sufficient to render a claim patent-eligible, as not all transformations or machine implementations infuse an otherwise ineligible claim with an inventive concept."
IV asserted that the claims "recite novel file identification software that analyzes and identifies files in unconventional ways -- applying three specific selection criteria and then performing a digital-signature-based lookup process." The Federal Circuit, however, took a different view, finding that the generic computer components of the claims did not amount to significantly more than the abstract idea therein. It is unclear from the opinion whether the Court considered the claims as an ordered combination under part two.
As a consequence, the claims failed both parts of the Alice test and were found ineligible.
Over the last year and a half, the Federal Circuit has effectively compressed the two parts of the Alice test into one. According to Enfish and McRO, one can establish the non-abstractness of a claim, or that the claim contains an inventive concept, by showing that it improves the operation of a computer or a technological process. Here, IV lost this case on the analogies made during the part one analysis. Once the Court settled on the claimed invention being analogous to previously-performed human activity, it essentially ignored any assertion that the claimed invention provides a technological improvement. (Or if the Court did consider such improvements, it did not explain its reasoning in this opinion.)
And the analogies made in this case are . . . not good. Especially with respect to determining "whether the file comprises data beyond an end of data marker for the file," it appears that Erie painted with an overly broad brush, and the Federal Circuit bought into it. When viewed as a whole, the claim is clearly directed to and limited to solving a problem that specifically arises in computing. Maybe the claim is obvious, but the process it describes is not any more abstract than the eligible claim at issue in DDR Holdings v. Hotels.com.
But even if the Court did carefully consider the analogies and did come up with reasoning for why the claim is abstract, an explicit rendition of that reasoning is missing from the opinion. As a result, this is likely to become yet another case, like last year's Electric Power Group v. Alstom, where the USPTO, the district courts, and even the Federal Circuit itself, read the holding so broadly that virtually any method claim can be made to look abstract.
Intellectual Ventures I LLC v. Erie Indemnity Co. (Fed. Cir. 2017)
Panel: Chief Judge Prost and Circuit Judges Reyna and Wallach
Opinion by Circuit Judge Wallach