Accenture Global Services, GmbH v. Guidewire Software, Inc. (Fed. Cir. 2013)

By Michael Borella --

Recipe for a contentious Federal Circuit decision:  empanel two judges who have different understandings of the patent-eligibility of computer-related inventions, sprinkle in a claim or two that could be viewed as a pure business method, let simmer.  Judge Lourie and Chief Judge Rader are at it again, carrying out their ongoing dialog that began in CLS Bank Int'l v. Alice Corp and continued in Ultramercial Inc. v. Hulu LLC.  In the former case, they set forth different patentable subject matter eligibility tests, and in the latter case they found themselves ultimately agreeing on the disposition of the claims with respect to 35 U.S.C. § 101, if not the rationale to reach that conclusion.  Here, however, they apply disparate reasoning to come to different conclusions.

On Guidewire's motion for summary judgment, the District Court for the District of Delaware held all claims of Accenture's U.S. Patent No. 7,013,284 invalid under § 101.  The District Court concluded that the patent was "directed to concepts for organizing data rather than to specific devices or systems, and limiting the claims to the insurance industry does not specify the claims sufficiently to allow for their survival."  The District Court set forth this holding despite some of the claims being system claims.  Accenture appealed for claims 1-7, the system claims, but not for claims 8-22, similar method claims.  Judge Lourie, joined by Judge Reyna, affirmed the District Court.  Chief Judge Rader dissented.

Claim 1 recites:

A system for generating tasks to be performed in an insurance organization, the system comprising:
    an insurance transaction database for storing information related to an insurance transaction, the insurance transaction database comprising a claim folder containing the information related to the insurance transaction decomposed into a plurality of levels from the group comprising a policy level, a claim level, a participant level and a line level, wherein the plurality of levels reflects a policy, the information related to the insurance transaction, claimants and an insured person in a structured format;
    a task library database for storing rules for determining tasks to be completed upon an occurrence of an event;
    a client component in communication with the insurance transaction database configured for providing information relating to the insurance transaction, said client component enabling access by an assigned claim handler to a plurality of tasks that achieve an insurance related goal upon completion; and
    a server component in communication with the client component, the transaction database and the task library database, the server component including an event processor, a task engine and a task assistant;
    wherein the event processor is triggered by application events associated with a change in the information, and sends an event trigger to the task engine; wherein in response to the event trigger, the task engine identifies rules in the task library database associated with the event and applies the information to the identified rules to determine the tasks to be completed, and populates on a task assistant the determined tasks to be completed, wherein the task assistant transmits the determined tasks to the client component.

In a nutshell, the claims require four components:  an insurance transaction database, a task library database, a client, and a server.  The client accesses the insurance transaction database to ultimately "achieve an insurance related goal."  The server communicates with the client and the two databases, responds to changes in the information stored in the database, responsively identifies associated rules in the task library database, and transmits tasks to be completed to the client.

Notably, the claims as written do not specify whether these four components are hardware, software, or some combination thereof.  Thus, given a literal interpretation, the claims could read on a pure software system comprising executing processes and data.

Judge Lourie began his discussion of the relevant law by referring to the en banc plurality opinion in CLS Bank, and more specifically, his own "inventive concept" analysis therein.  This analysis requires, for a claim that encompasses an abstract idea, that one "identify and define whatever fundamental concept appears wrapped up in the claim so that the subsequent analytical steps can proceed on a consistent footing," and then evaluate the balance of the claim "to determine whether it contains additional substantive limitations that narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself."

Judge Lourie acknowledged that this analysis was set forth in a plurality opinion.  However, he focused on the fact that a majority of the en banc panel agreed that, in CLS Bank, the method and system claim rose or fell together because "the system claim essentially implemented the process of the method claim on a general purpose computer" and that the hardware limitations were not meaningful.  Thus, he appears to believe that combining the analysis of method and system claims in similar circumstances has the weight of precedent in the Federal Circuit.

In a procedural twist, Judge Lourie noted that the District Court's judgment against the patent-eligibility of Accenture's method claims was not under appeal, and therefore was final.  Based on this conclusion, and the similarity of the system and method claims, he further concluded that the system claims must also be patent-ineligible because "the system claims offer no meaningful limitations beyond the method claims that have been held patent-ineligible and because, when considered on their own, under [Mayo Collaborative Servs. v. Prometheus Labs., Inc.,] and our plurality opinion in CLS Bank, they fail to pass muster."

In his substantive analysis of the claims, Judge Lourie compared the limitations of Accenture's system and method claims "to determine what limitations overlap, then identify the system claim's additional limitations."  He noted that system claim 1 did explicitly recite some limitations not in method claim 8, such as an insurance claim folder, a task library database, a server component, and a task engine, but that "these software components are all present in the method claims, albeit without a specific   reference to those components by name."  Indeed, these components appear to be defined functionally in claim 8.

Further, Judge Lourie noted that claim 1 did not recite specific computer hardware components, and was a mere rewriting of the limitations of method claim 8 with a preamble indicating that the claim was directed to a system.  Under his interpretation of CLS Bank and Prometheus, such a claim fails to lift any abstract idea therein to the level of being patentable subject matter.  Further, he wrote that the computer hardware described in the specification "is merely composed of generic computer components that would be present in any general purpose computer."  Thus, he implied that, even if generic computer structure were added to claim 1, these additional limitations would not be meaningful, and the claim would still fail under § 101.

Judge Lourie continued by addressing the patent-eligibility of the system claims on their own, regardless of the disposition of the associated method claims.  He found that they fall short under this analysis as well.  Accenture argued that claim 1 "narrows [the idea of generating tasks for insurance claim processing] through its recitation of . . .  an insurance transaction database, a task library database, a client component, and a server component, which includes an event processor, a task engine, and a task assistant."  Accenture further asserted that the "complexity and detail of the specification" were evidence that that invention advanced the field of computer software, and was not merely an abstract idea.

Applying his "inventive concept" analysis from CLS Bank, Judge Lourie identified the abstract idea of claim 1 as "generating tasks based on rules to be completed upon the occurrence of an event."  Then, he considered whether the claim recites any additional substantive limitations to narrow this idea so that the claim doesn't encompass the full scope of the idea.  He found that if even the claim were limited to being applied in a computing environment in the insurance industry, these restrictions were mere field of use limitations, and would not prevent the claim from preempting the abstract idea.  Judge Lourie also rejected Accenture's argument that the complexity disclosed in the specification was relevant, as this complexity, in Judge Lourie's view, was not reflected in the claims.

In comparing claim 1 to the claims he found patent-ineligible in CLS Bank and those he found patent-eligible in Ultramercial, Judge Lourie found Accenture's claim 1 similar to those in CLS Bank.  Particularly, the system claim in CLS Bank was also directed to a general purpose computer adjusting values stored in a "database" and then generating instructions.  On the other hand, Judge Lourie posited that the claim in Ultramercial contained "additional limitations from the abstract idea of advertising as currency, such as limiting the transaction to an Internet website, offering free access conditioned on viewing a sponsor message, and only applying to a media product."  Further, Judge Lourie noted that, in Ultramercial, the Federal Circuit reversed a pre-answer dismissal, whereas in the present case the Court was considering a post-claim-construction grant of summary judgment.  Thus, the burden on the moving party (in both cases, the defendant) was greater in Ultramercial.

In dissent, Chief Judge Rader took issue with the majority's reliance on CLS Bank, as he believes that that case lacks precedential value.  He pointed out that even though eight of the ten judges on the CLS Bank panel held that the method and system claims in that case rose or fell together, they did not state that all associated system and method claims must share the same fate.  Further, two judges reached this conclusion merely due to the procedural posture and stipulations of the case.

On the substance of the case, Chief Judge Rader would have found the system claims patent eligible based on the specific combination of elements in claim 1.  He faulted the majority for removing these limitations when boiling down the invention to merely "generating tasks based on rules to be completed upon the occurrence of an event."  Chief Judge Rader provided several ways in which one could generate such tasks without infringing Accenture's claims, such as using a different number of databases or a different database structure.  He also suggested that the claim required specific computer components such that "a human performing the claimed steps through a combination of physical or mental steps likewise does not infringe."

In comparing this case to CLS Bank and Ultramercial, can we provide any practical recommendations to those involved on patent prosecution or litigation?  While the landscape of § 101 remains mired in quicksand, a few solid patches of earth are beginning to emerge.

1.  Procedural posture matters.  It is possible that Judge Lourie found the claims in Ultramercial patent-eligible mainly because they were considered on an early motion to dismiss, and therefore would need to be reviewed in the light most favorable to the patentee.

2.  The Federal Circuit continues to take a dim view on claims that recite disembodied functionality, even if couched in the language of a system or device.  Despite Chief Judge Rader's belief to the contrary, in my view Accenture's claim 1 could be performed as a series of mental or paper-and-pencil calculations.  There is common thread throughout Bilski v. Kappos and Prometheus in the Supreme Court, as well as RCT v. Microsoft, CLS Bank, Ultramercial, and this case in the Federal Circuit.  Notably, claims reciting disembodied functionality are more likely to be found patent-ineligible, but claims with limitations (not just a preamble) tying such functionality to physical devices or components are more likely to be found patent-eligible.  Is the machine or transformation test making a quiet return?

3.  In the wake of CLS Bank, some commentators have advocated drafting system and method claims with varied limitations and breadth, so that they are not lumped together for the purposes of a § 101 analysis.  While this approach is commendable, it isn't a silver bullet.  In this case, the majority deemphasized the differences between the limitations of the system and method claims.  In CLS Bank, a number of claims across four related patents were lumped together despite having considerably diverse limitations.

4.  Judge Lourie's inventive concept analysis, which was ultimately derived from Justice Breyer's opinion in Prometheus, remains unsettling in its subjectivity.  A court must "identify and define whatever fundamental concept appears wrapped up in the claim."  However, few guidelines for doing so exist.  Thus, two judges could easily obtain two different variations of such an inventive concept for the same claim, one leading to the conclusion that the claim meets the requirements of § 101, the other not.  In contrast, Chief Judge Rader advocates consideration of the plain language of claims, including all recited limitations.

5.  Are § 101 appeals to the Federal Circuit likely to be determined by the luck of your panel draw?  Ending up with Judges Rader and Newman may result in a more favorable outcome to the patentee than arguing in front of, as one example, Judges Lourie and Reyna.  The existence of such a clear intra-circuit split, at best, limits the legal certainty of subject matter eligibility on both philosophical and practical levels.

Accenture Global Services, GmbH v. Guidewire Software, Inc. (Fed. Cir. 2013)
Panel: Chief Judge Rader and Circuit Judges Lourie and Reyna
Opinion by Chief Judge Rader; dissenting opinion by Circuit Judge Lourie

Comments

[Skeptical]

Your point 5 rings out loudest.

The message: Supreme Court, fix your mess.

Will they turn a deaf ear to the pleadings, or will they actually decide something in black and white terms?

I remain...

[EG]

"Despite Chief Judge Rader's belief to the contrary, in my view Accenture's claim 1 could be performed as a series of mental or paper-and-pencil calculations."

Michael,

I couldn't disagree with your characterization of claim 1 more. How, for example, can "a server component" which includes "an event processor, a task engine and a task assistant" be anything other than hardware, so that the system of claim 1 could possibly be performed by a "human with pencil and paper"?

What I do agree with is your point 4. Lourie's characterization of the claimed subject matter in Accenture, as well as CLS Bank is so subjective as to be logically nonsensical when it comes properly characterizing computerized systems and their components (e.g., the "server component"). And Lourie isn't alone on the Federal Circuit in having this myopic and nonsensical view of computerized systems, as Dyk also shares this "myopia" in spades. And I also agree with Skeptical: SCOTUS has created this mess but unfortunately shows no willingness to fix it or clean it up.

[6]

"Chief Judge Rader provided several ways in which one could generate such tasks without infringing Accenture's claims, such as using a different number of databases or a different database structure. "

Although he didn't point out what this would look like in real life since it's all a bunch of software and not actual different databases etc. And he also failed to mention at what point he, himself, Rader, would feel that the doctrine of equivalents wouldn't make them infringing anyway.

[6]

"Procedural posture matters. It is possible that Judge Lourie found the claims in Ultramercial patent-eligible mainly because they were considered on an early motion to dismiss, and therefore would need to be reviewed in the light most favorable to the patentee"

Based on his comments in the instant case I'd say it is much more likely that he simply boinked up the formulation of the abstract idea at issue since all the things he just now said would prevent the claim from preempting are simply more abstractions that should have been incorporated into the abstract idea from the get go.

[Skeptical]

6,

That does not make any sense.

[6]

"Is the machine or transformation test making a quiet return?

It never really left. It just isn't a hard and fast rule.

[6]

"Judge Lourie's inventive concept analysis, which was ultimately derived from Justice Breyer's opinion in Prometheus, remains unsettling in its subjectivity. A court must "identify and define whatever fundamental concept appears wrapped up in the claim." However, few guidelines for doing so exist. "

You just have to do the best you can as the judge or examiner on the case. People will make mistakes. See for example judge Lourie's finding of the abstract idea at issue in Wildtangent.

[6]

"Thus, two judges could easily obtain two different variations of such an inventive concept for the same claim, one leading to the conclusion that the claim meets the requirements of § 101, the other not."

Both judges need to consider both of the variations identified by each other, along with all the rest of an infinite variety of variations for the purposes of judging if the claim is preempting.

[6]

"How, for example, can "a server component" which includes "an event processor, a task engine and a task assistant" be anything other than hardware, "

Check the specification EG. Then interpret the claims in light thereof.

[6]

"6,

That does not make any sense."

Which Skeptical?

Rader certainly did not point out how, in the real world someone would realistically avoid infringement. Sorry, he just didn't. He laid out a few ways that look good on their face but in the end would just end up with them getting hit under doctrine of equivs or in some of his examples they'd still be literally infringing because the computer program is all one big thing, the differences between databases would be immaterial in an irl software embodiment and thus impossible to tell apart.

As to Lourie messing up the abstract idea formulation in Alice, what I said isn't all that complex. Lourie should reformulate his proposed abstract idea to incorporate some of the concepts that he is proposing make the claim not preempt. Simple as that. Abstractions like "on the interwebs" or "in a webpage" or "free access conditioned on viewing a message" or "pertaining to media products" are simply something that he forgot to properly incorporate into the formulation of the abstract idea at issue from the get go, not some "meaningful limitations" indicating no preemption. Though they certainly do indicate no preemption of the absurdly short proposed abstract idea at issue of "the abstract idea of advertising as currency". The analysis doesn't end there though. Gotta run through other possibilities of abstract ideas at issue. There are an infinite number of them to roll through, so you've got to try to narrow it down some.

Lourie coming in with the absurdly overly simplified "the abstract idea of advertising as currency" is preposterous for such a long abstract claim. If someone proposed to say "Alice's specific abstract idea of advertising as currency" just to save themselves having to write out the entirety of the abstraction at issue longhand then I could sympathize. The Supremes were doing the the same thing in Bilski shortening up the recitation of the abstraction at issue and not writing it out long hand. But ordinarily I feel it should be written out longhand.

[Dan Feigelson]

Lourie seems to have introduced the "pith and marrow" analysis used in other jurisdictions, with its attendant subjectiveness (i.e. unpredictability). Judge Rich must be turning in his grave.

[Mike Borella]

EG,

There is nothing in the claim that limits the scope of “a server component” to hardware. Thus, it could be a software application, such as an FTP server, web server, etc.

Taking this a step further, the required functions of this server, such as identifying tasks based on events, rules, and perhaps other information in databases, is within the realm of human capability.

Mike

[EG]

Mike,

OK, so the "server component" could include software, but if you look at what the specification in this patent describes, what I see is a computerized system using client-server type architecture. That means there's got to be "hardware" in this claimed system, it doesn't simply exist in the ether.

Also saying that what's defined in claim 1 is "within the realm of human capability" would require you to ignore what the specification describes, as well as construe the claim terms without regard to their "ordinary and customary meaning." Sorry, I agree completely with Rader: Lourie reached a dreadfully bad/wrong determination that shows no concern for reality or objectivity.

[Skeptical]

EG,

Is this a case of Broadest "Un"reasonable Interpretation, wherein the claim is being (mis)read outside of what a person having ordinary skill in the art would recognize?

[Mike Borella]

EG,

If you look back to the district court proceedings, you'll find that the judge did not construe that term, and ultimately held that the claim failed the machine prong of the machine or transformation test. Here is the relevant text:

"Although plaintiffs assert that other components (databases, client component, and server component) are important signals that claims 1 and 8 are tied to a machine, the court was not asked to define them. Notwithstanding, none of these terms imply a specific computer having any particular programming.

Without holding so expressly, it appears that claims 1 and 8 of the ′284 patent may be valid if interpreted as claiming a particular machine (computer) programmed with the software so painstakingly described in the specification. The parties have not framed their arguments in this manner and, therefore, it is unclear to the court which (if any) of the claim terms achieve this goal. It appears to be a possibility that such programming is implicit in the claims' recitation of particular “rules”-a term not presented to the court for construction. Even were this to be the case, it is unclear whether the claims are framed in a manner implicating a particular computer programmed in this fashion."

So the court is open to the idea that the server component is hardware, but did not rule as such. Based on that posture, we're left to interpret the claims literally, and I think that my point remains valid.

Rader wrote “[m]oreover, because the claims require specific computer components, a human performing the claimed steps through a combination of physical or mental steps likewise does not infringe.” He doesn’t refer to the district court’s claim construction (or lack thereof), so his conclusion seems to be...conclusory.

[EG]

Skeptical,

Couldn't have phrased it better myself. Lourie construes claim 1 as if what's described in the patent specification doesn't exist.

What has unfortunately happened in 35 USC 101 jurisprudence is a "game of semantics," rather than construing claim terms according to the "ordinary and customary meaning," and even worse, contrary to how the patent applicant defines those claim terms.

[6]

"what I see is a computerized system using client-server type architecture."

By "architecture" do you mean "hardware" or do you mean "software"? Because if you're insinuating the former, you are mistaken, based simply on the hardware depicted in the spec.

"That means there's got to be "hardware" in this claimed system, it doesn't simply exist in the ether."

Not really, "software architecture" is a term.

http://en.wikipedia.org/wiki/Software_architecture

The "client-server" type "architecture" can simply be more software.

Though if by "there's got to be hardware" you simply mean that at least a general purpose dell computer must be involved, sure thing brosef. The claim is totally limited to the field of compooting.

It appears to me based on many conversations about the case that the chief differences between the people that agree with the outcome in this case and the people that disagree with it is simply a matter of the one group understanding what was claimed and the other group not understanding, or not having taken the time to figure it out.

"Lourie construes claim 1 as if what's described in the patent specification doesn't exist."

I think Lourie specifically pointed out what was in the specification in making his decision.

"What has unfortunately happened in 35 USC 101 jurisprudence is a "game of semantics," "

You drafters started it. If you didn't try to patent on software in the first place then there wouldn't be any of this trouble.

[Skeptical]

6,

I have seen no legal argument to support a ban on software patents from you.

[6]

"I have seen no legal argument to support a ban on software patents from you."

Nor will you likely hear that from me. Though you may have caught my 4 year series on preemption. You may also have caught bits and pieces of my encouraging folks to not fall prey to the game of semantics that drafters attempt to play when attempting to patent on some software.

But if you insist I'm sure I could come up with something.

[Skeptical]

I have caught your series on preemption.

I am waiting for you to follow through on your promise, though, that will render your series on preemption as the shallow gobbledygook that it is.

I have also caught your latest in flagrante delicto about your lack of character.

Should anyone be surprised by that development? I am...

[EG]

6,

I completely agree with Skeptical's comment regarding your so-called "preemption" theory as being nothing but "shallow gobbbleygook."

Also, there's nothing wrong with trying to patent "software" (also, how do you define "software") as it was and still is statutory subject matter under 35 USC 101, no matter what you, MPEP 2106, or perhaps 4 technology-challenged Justices might believe otherwise. It's either a process, manufacture or machine, so take your pick, only one is needed to be patent-eligible under 35 USC 101

Again, software doesn't exist in the ether, it's has to be tied down to some physical structure (e.g., CD or computer hard disk) at some point in time. Software also performs the same/similar functions that hardware once did. So what you may believe otherwise about software is unpersuasive in view of the reality of what software is, where it exists, and what it does.

[PeteM]

EG: " It's either a process, manufacture or machine, so take your pick, only one is needed to be patent-eligible under 35 USC 101"

That's not the test for determining patent subject matter eligibility in the United States. I'm not sure that it ever was but it hasn't been the test for many, many years.

[Kevin E. Noonan]

Oh, Skeptical, it is cruel to entice us with the idea of 6 "in flagrante delicto" and not give us a reference, cite or URL (although I'm not sure I could handle a 6 sex tape).

Do tell.

[Skeptical]

You made me chuckle, Dr. Noonan - but please remember that the phrase only 'may' have a colloquial tie to such prurient matters.

Would anyone have the stomach for what you suggest? I (too) am...

[6]

"I am waiting for you to follow through on your promise, though,"

And which "promise" is that?

Or should I simply call you anon-boy-that-is-obsessed-with-my-"promises"?

"Oh, Skeptical, it is cruel to entice us with the idea of 6 "in flagrante delicto" and not give us a reference, cite or URL (although I'm not sure I could handle a 6 sex tape)."

That's just him talking up his own delusions Kev. Sorry to get you so excited.

All he's talking about is him trying to say that I'm not "intellectually honest" in order to trash my character (and going through significant time and trouble to establish such). And then my subsequent simple admission that 6, as a character, has no character, by design, for him to further diminish or destroy so that I could save us all a lot of time. To him, or his alter ego "anon" this is a "beatdown" because apparently destroying the rep/character (or even gaining an admission that they have no character for destruction) of a ficticious interbutts character is a big achievement for him. One with which he will be obsessed for at least another few years. But that's the regrettable part of discussing things with mentally challenged individuals.

[6]

Hey Kev, remember a few years back when you told me changing the world was hard? Nah, not that hard. :)

We haven't talked much about the Myriad decision, how'd you like them apples? I tots nailed it! Got the grounds right for the claims that went down, got the part about their admission being used to establish the grounds correct, got the cDNA right. It's all a simple matter of understanding preemption.

/e-flex

[6]

"I completely agree with Skeptical's comment regarding your so-called "preemption" theory as being nothing but "shallow gobbbleygook.""

Don't forget to add: "the law" to the end of that little list of things which preemption is EG.

I know you're not a fan, but the USSC is and the fed circ is warming to it. Also, I prefer if we just call it a doctrine, instead of a "theory". Something isn't really a "theory" when it can be empirically observed, as we do with courts invalidating patents using the preemption doctrine.

"Also, there's nothing wrong with trying to patent "software" (also, how do you define "software") as it was and still is statutory subject matter under 35 USC 101, no matter what you, MPEP 2106, or perhaps 4 technology-challenged Justices might believe otherwise."

Maybe, maybe not. But I still recommend that examiners and judges alike not pay any heed to the semantical word games played by drafters when evaluating such.

"It's either a process, manufacture or machine, so take your pick, only one is needed to be patent-eligible under 35 USC 101"

And your claim only need preempt one abstract idea for it to be excluded. So what's your point brosef?

"Again, software doesn't exist in the ether, it's has to be tied down to some physical structure (e.g., CD or computer hard disk) at some point in time. "

Sooooooooo......... Wuuuuuuuuuuuuutttttttt?

"Software also performs the same/similar functions that hardware once did. "

Dedicated hardware can still do like 99% of what is seen in garbage computer claims.

"So what you may believe otherwise about software is unpersuasive"

To whom? You? Me? Or the courts that are eventually going to get around to invalidating your sht? Or the congress that will eventually get its slow ar se in gear?

"in view of the reality of what software is, where it exists, and what it does. "

Put all that in the claim and you've got yourself a deal on probably getting yourself a patent, or at least getting by 101. Unfortunately you never want to... meh, so much the sorrier. If you actually did put "what it is" in the claim, and went ahead and listed out a bunch of 1010101010110111011011110101011010's or that sort of nonsense it would make examining the claims a lot more fun.

[Skeptical]

6,

You asked me if I had followed your series on preemption and I responded that I had.

You cannot seriously believe that I have ignored the feedback given to you throughout that series, can you?

As I said, your view on preemption is a shallow gobbledlygook, and your lack of willingness to defend your view tells me just as much as if you had tried - and had failed - to defend it.

You are welcome to engage in any type of conspiracy theory that you wish, but such would not be necessary to see through your view.

As to your character, yes, the current exchange on that subject is rather humorous, as you do not appear to understand how badly you have mangled your 'character' all on your own.

And finally, after the levity and returning to an actual legal discussion, I still have not seen any legal argument from you to support a ban on software patents.

Whether you can provide a cogent legal position, or if you are just another 'wanna-be,' well, as to the former I remain...