Cyberfone Systems, LLC v. CNN Interactive Group, Inc. (Fed. Cir. 2014)

By Michael Borella --

In 2011, Cyberfone sued CNN and 80 other defendants in the U.S. District Court for the District of Delaware for infringement of U.S. Patent No. 8,019,060.  On the defendants' motion for summary judgment, the District Court held the claims of the '060 patent invalid under 35 U.S.C. § 101 as being directed to patent-ineligible subject matter.  In a non-precedential ruling, the Federal Circuit panel of Judges Lourie, Dyk, and Wallach affirmed.

Claim 1 of the '060 patent recites:

A method, comprising:
    obtaining data transaction information entered on a telephone from a single transmission from said telephone;
    forming a plurality of different exploded data transactions for the single transmission, said plurality of different exploded data transactions indicative of a single data transaction, each of said exploded data transactions having different data that is intended for a different destination that is included as part of the exploded data transactions, and each of said exploded data transactions formed based on said data transaction information from said single transmission, so that different data from the single data transmission is separated and sent to different destinations; and
    sending said different exploded data transactions over a channel to said different destinations, all based on said data transaction information entered in said single transmission.

After dispensing with the usual overview of § 101 case law, Judge Dyk, writing for the panel, applied the two-step analysis of Mayo v. Prometheus.  First, he concluded that claim 1 involves an abstract idea.  He characterized this abstract idea as "collecting information in classified form, then separating and transmitting that information according to its classification."  Next, he examined the remaining limitations of claim 1 to determine whether "additional substantive limitations . . . narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself."

In its defense, Cyberfone asserted that claim 1 meets both prongs of the machine or transformation test of Bilski v. Kappos, and therefore meets the requirements of § 101 for this reason.  Particularly, Cyberfone took the position that claim 1 requires a telephone, contending that it is a specific machine integral to the claimed method.  However, in line with reasoning of several Federal Circuit judges, Judge Dyk warned that "[f]or a machine to impose a meaningful limit . . . it must play a significant part in permitting the claimed method to be performed [and] simply implementing an abstract concept on a computer, without meaningful limitations to that concept, does not transform a patent-ineligible claim into a patent-eligible one."

To determine whether the claimed telephone is indeed significant to the claim, Judge Dyk looked to the specification of the '060 patent.  He focused on text that states that the invention relates to "a transaction entry device which can selectively operate in a telephone mode and a transaction entry mode."  While in the telephone mode, "the transaction entry device operates as a conventional telephone," but in the transaction entry mode, "menus are used to navigate the user to forms which facilitate the entry of data."  From this distinction, Judge Dyk concluded that "the telephone does not obtain data when it is functioning as a telephone, only when in an unclaimed mode of operation."

In contrast to Judge Dyk's conclusion, the '060 patent does not state that the telephone and transaction entry modes are mutually exclusive.  Rather, at col. 6, line 53 through col. 7, line 14, the '060 patent describes how these modes can be used together.  Particularly, the telephone mode requires use of a telephone line for telephony calling, while the transaction entry mode would also use such a telephone line for modem-based data transaction.  However, the specification notes that "[i]n telephone mode, one or more lines may be connected so as to allow simultaneous use of the transaction entry device without interfering with the modem connection."  Therefore, the '060 explicitly permits the telephone to obtain data when it is functioning as a telephone.

Furthermore, Judge Dyk stated that the obtaining of data is "an unclaimed mode of operation."  Perplexingly, the first element of claim recites "obtaining data transaction information entered on a telephone."   Claim 1 goes on to recite how this data is processed and used.  Therefore, it is unclear how Judge Dyk attained this interpretation of the claim, especially since the claim itself makes no mention of the device being in either mode.  Does Judge Dyk's reasoning, taken to its logical extreme, mean that my cell phone is no longer a cell phone when I use the keypad to enter a number, but suddenly becomes one again when I press "send" to call that number?

Regardless, Judge Dyk went on to state that "the recited telephone can be a range of different machines: a conventional telephone, a portable telephone, [or] a battery operated portable device which is a cross between a laptop computer and a cellular telephone." (Citations omitted.)  Based on these broad definitions of the term "telephone," Judge Dyk concluded that "[t]he telephone recited in claim 1 is not a specific machine, and adds nothing of significance to the claimed abstract idea."  Cyberfone argued further that the claimed step of "sending said different exploded data transactions over a channel to said different destinations" required a specific machine, but Judge Dyk found this point unconvincing, asserting that "Cyberfone provides no guidance as to what particular machine is required to perform the function of the recited channel."

Finally, Cyberfone attempted to invoke the transformation prong of the machine or transformation test, in that the "exploded data transactions involve such a transformation."  Judge Dyk, however, was skeptical, and stated that "the exploding step effects no meaningful transformation because it merely makes the originally-gathered information accessible to different destinations without changing the content or its classification.  Nor does the particular configuration of steps -- obtaining, separating, and then sending information -- confer patentability."

For the second time in two months, the Federal Circuit has come down with a non-precedential opinion that serves to further illustrate the Court's position on § 101 and computer-implemented technologies (see Smartgene, Inc. v. Advanced Biological Laboratories, SA).  In this case, the plain text of the specification appears to contradict the panel's reasoning.  Perhaps the panel used uncited information in the record to reach its conclusion?

One factor that may have worked against Cyberfone is the structure of the claim.  Claim 1 requires "obtaining data transaction information  . . . from [a] telephone," and "sending . . . exploded data transactions over a channel to said different destinations."  However, it is not clear which of these devices (the telephone or the destinations) performs the steps of the claim.  In other words, claim 1 could be viewed as a disembodied method, perhaps one that could be performed by a human.  In that light, the § 101 rejection of the claim has a stronger basis in precedent.

Regardless, patent drafters might find Judge Dyk's conclusion of the telephone not being a specific device troublesome.  It is very common for the specification of a computing-related patent to define a "computing device" or a "communication device" to include embodiments such as a personal computer, tablet computer, cell phone, or any other type of computer with networking capabilities.  This is done in order to provide a basis for arguing (e.g., in a Markman brief) that the term should be construed broadly.  Will the Federal Circuit adopt the reasoning of this non-precedential opinion to hold such language against the applicant in § 101 analyses?

Cyberfone Systems, LLC v. CNN Interactive Group, Inc. (Fed. Cir. 2014)
Panel: Circuit Judges Lourie, Dyk, and Wallace
Opinion by Circuit Judge Dyk

Comments

[JNG]

The CAFC opinions are getting... goofier and goofier

By their logic, a "specific" machine would be one and exactly one machine, and no other machine, to make it "specific." Never mind that any computer scientist will tell you a general computer programmed in a particular way is a different "machine."

[EG]

Michael,

The patentee here couldn't have drawn a worst panel (Dyk, Lourie and Wallach) for reviewing the patent-eligibility issue. That Dyk misconstrued what is being claimed here isn't surprising. Frankly, Dyk is "poison" when it comes to patent-eligibility issues.

[AAA JJ]

If I recall correctly it was J. Dyk who wrote in an opinion, and I'm paraphrasing here, "I don't care what the claims say, I'm going to look to the specification to figure out what the patentee invented."

He needs to go.

[Mike Borella]

This one has me scratching my head. I am thinking of looking at the District Court proceedings to see if Cyberfone's counsel was precluded from making certain arguments that would have rebutted the positions taken by the CAFC.

Regardless, it seems that this case would be a candidate for en banc review, at least because the panel seems to have erred in terms of both law and facts.

[Skeptical]

To paraphrase a well-known pundit, people should not be able to patent phones any more.

Of course, this logic leads to not being able to patent anything, but the person who put forth the comment is not known for their grasp of logic, of law, of facts,...

Who needs Duell?