I/P Engine, Inc. v. AOL Inc. (Fed. Cir. 2014)

By Michael Borella --

Ever since the 2010 Supreme Court opinion in Bilski v. Kappos was handed down, the debate over the scope of patent-eligibility under 35 U.S.C. § 101 has been at times stimulating, complex, comical, and frustrating.  Now it has taken a turn for the disturbing.

I/P Engine sued AOL and several other parties in the United States District Court for the Eastern District of Virginia, alleging infringement of U.S. Patent Nos. 6,314,420 and 6,775,664.  As an example, claim 26 of the '664 patent recites:

A method for obtaining information relevant to a first user comprising:
    searching for information relevant to a query associated with a first user in a plurality of users;
    receiving information found to be relevant to the query by other users;
combining the information found to be relevant to the query by other users with the searched information; and
    content-based filtering the combined information for relevance to at least one of the query and the first user.

After a trial, the verdict was that both patents were infringed, not anticipated, and not obvious.  On appeal, the Federal Circuit panel of Judges Wallach, Mayer, and Chen reversed the District Court on the grounds that the claims were obvious.  Judge Chen dissented from this non-precedential decision.

Where this case gets interesting, however, is Judge Mayer's concurrence.  Neither the majority opinion nor Judge Chen's dissent invoke § 101, but Judge Mayer has a lot to say about that part of the statute.

In Judge Mayer's view, the recent high court Alice v. CLS Bank opinion "made clear that abstract ideas untethered to any significant advance in science and technology are ineligible for patent protection."  He referred to the two-prong CLS Bank test as a "technological arts test for patent-eligibility."  In applying this test, Judge Mayer believes that "advances in non-technological disciplines, such as business, are irrelevant."  Further, he writes that the Supreme Court did not address the "issue of whether [Alice's] claimed intermediated settlement technique represented an innovative method for improving commercial transactions" because these claims were non-technical in nature.

It worthwhile to note at this point that the Supreme Court did not close the door on business method patents.  While three of the nine justices are of the mind that "any claim that merely describes a method of doing business does not qualify as a 'process' under §101," this was not the majority holding.  Instead, as reflected in the USPTO's June 25, 2014 Preliminary Examination Instructions, Alice v. CLS Bank "neither creates a per se excluded category of subject matter, such as software or business methods, nor imposes any special requirements for eligibility of software or business methods."  Also, Congress has explicitly acknowledged the existence of business method patents in the AIA's Covered Business Method review program.

The Supreme Court has adopted the Mayo v. Prometheus patent-eligibility test for all claim types that contains any of the judicial exclusions to § 101.  This test, no doubt, makes it more difficult to obtain some types of business method patents, but falls short of the extreme position that Judge Mayer is taking.

Regardless, Judge Mayer continued to stake out this shaky ground by asserting that "if claims are drawn to the application of principles outside of the scientific realm -- such as principles related to commercial or social interaction -- no amount of specificity can save them from patent ineligibility."  While he acknowledged that in some cases it can be difficult to determine "whether claims are sufficiently 'technological' to warrant patent protection," Judge Mayer's view is that claims can fail the Mayo / CLS Bank test because they are "overly broad."

One would think that it is meaningless to state that claims are too broad without a reference point -- the prior art.  On one hand, Judge Mayer seems to agree, and states that there is "'overlap' between the eligibility analysis under section 101 and the obviousness inquiry under 35 U.S.C. § 103" but "the section 101 inquiry is broader and more essential: it asks whether the claimed subject matter, stripped of any conventional elements, is the kind of 'discovery that the patent laws were intended to protect."  On the other hand, he appears to suggest that the breadth of claims should be "in proportion to the technological dividends they yield."  But how to quantify "breadth" and the extent of these "technological dividends" is left unsaid.

Applying this reasoning to I/P Engine's claims, Judge Mayer found they failed the Mayo / CLS Bank test.  He wrote that "[t]he asserted claims simply describe the well-known and widely-applied concept that it is often helpful to have both content-based and collaborative information about a specific area of interest."  Their alleged use of the Internet to do so is "well-understood and routine."

Judge Mayer concludes his concurrence by opining that the § 101 analysis should precede novelty, non-obviousness, and written description analyses because "[p]atent eligibility issues can often be resolved without lengthy claim construction, and an early determination that the subject matter of asserted claims is patent ineligible can spare both litigants and courts years of needless litigation."

So we have three of nine Supreme Court justices, and at least one Federal Circuit judge, ready to bar business method patents completely.  The math is simple -- patentees are one Federal Circuit judge away from a panel that will likely find any business method claim patent-ineligible, regardless of whether its contribution is novel and non-obvious.  Further, the evidentiary standard for invalidating a patent under § 101 appears to be quite low as well as subjective -- just throw around the words "routine," "conventional," "generic," and "too broad" rather than compare the language of the claims to relevant prior art.

If claims are to be analyzed, as Judge Mayer suggests, under § 101 first, patent-eligibly will take a few more steps toward being a conclusory "I know it when I see it" test.  The well-understood § 103 analysis asks whether the differences between the claimed invention and the prior art would have been obvious to one of ordinary skill in the art.  The Mayo / CLS Bank test, for a claim that incorporates a preexisting algorithm or a longstanding practice, inquires if the claim adds "significantly more" to that algorithm or practice.  The substantive difference between the two is that the § 103 test is grounded using prior art as a reference point for what is known, while the Mayo / CLS Bank test is not.

I/P Engine, Inc. v. AOL Inc. (Fed. Cir. 2014)
Nonprecedential disposition
Panel: Circuit Judges Wallach, Mayer, and Chen
Per curiam opinion; concurring opinion by Circuit Judge Mayer; dissenting opinion by Circuit Judge Chen

Comments

[Dan Feigelson]

"[P]rinciples related to commercial or social interaction" sounds like economics to me, which when you get down to it is the attempt to explain and predict human behavior. Explaining and predicting is, of course, the hallmark of scientific inquiry. Maybe that's why a lot of economics, just like a lot of physics (and these days, some biology) involves heavy-duty mathematical modeling. Is one science and the other not? Does the difference (if there is one) lie in the fact that if I apply some principles of physics, I can make a telegraph, or a laser, or a smartphone, whereas if I apply some principles of economics, I can't really build you something physical but I may be able to tell you when to buy or sell something? Or maybe the difference is that economics is less scientific, in the sense that it's hard or impossible to run large-scale, controlled experiments to test hypotheses, and in real life there are often too many variables to account to make accurate predictions?

And what's "overly broad"? What's "technological"?

What a mess.

[EG]

Michael,

This isn't the first time Judge Mayer has grossly overreached his judicial authority in raising patent-eligibility issues that neither party has raised. And as you correctly point, a majority of Our Judicial Mount Olympus hasn't ruled so-called "business methods" patent-ineligible, nor should they. (Besides Mayer, I've also got nothing but contempt for the 3 Justices in Alice who won't obey Congress' implicit if not explicit recognition that at least some so-called "business methods" are patent-eligible.)

[Skeptical]

I see the disturbance: one of three judges telling us what the law is based on three of nine Supreme Court Justices' view of the words of Congress.

Are my naysayers still holding the line that the law is being "interpreted" rather than being re-written?

While the good news is that this decision is labeled nonprecedential, the bad news is that panel composition will play a part in binding decisions and woe to those that draw Judge Mayer and one other like-minded judge to a panel. Clearly, we have a problem in the judiciary in which judges are refusing to honor precedent and are pursuing their own pre-ordained views of what the law is (or rather, what they want the law to be).

The power to write law is indeed addictive. This addiction needs to be addressed, not coddled or ignored.

But will our Congress, divided by partisanship, enthralled by lobbyists, and seemingly unable to recognize the basics of innovation theory, be able to step up to their "Churchill" task?

Sadly, I remain...

[Dr. Sinai Yarus]

The scary thing is:"...the § 101 analysis should precede novelty, non-obviousness, and written description analyses because "[p]atent eligibility issues can often be resolved without lengthy claim construction,..."

Whatever happened to "The name of the game is the claim?"

It seems as though at least one judge is anxious to clear the docket quickly. I thought the backlog was at the USPTO not the CAFC.

[James Demers]

"Patent eligibility issues can often be resolved without lengthy claim construction." Oy.

Perhaps it's time to revisit the notion that a 101 analysis needs to be carried out as a threshold test, prior to evaluation under 102, 103 and 112. (Memo to Judge Mayer: "overly broad" is a 112 issue.)

My impression is that judges, faced with claims that they desperately want to find invalid, have been committing judicial mayhem: mangling the law to fit the Procrustean 101 bed presented by the case before them, in what could/should have been open-and-shut 103 cases. And now we have Judge Meyer trying to drag some of that muddy thinking into what is at heart a 103 case.

Wouldn't we be better off if 101, 102, 103 and 112 questions were addressed in parallel?

[mmm]

The problem is: what this tries to claim is old. So old, in fact, that this was never properly the subject matter of patents. And doing it on a computer doesn't make it patent eligible.

The claim method is the same thing any and every genealogist has used. "Oh, you're looking for some aspect of so and so. Someone else also was looking for so and so. I can use those results, and give you the aspect you're looking for."

I don't see that even Judge Mayer's position is so out in left field.

This was the plainly correct result.

[Mike Borella]

The result is not at issue. The process used to get there is problematic, as it could be used to invalidate / reject inventions that patentably distinguish over the prior art.

[sidi]

both the USPTO and Jury found the patents valid and infringed...what, 7th amendment doesn't apply anymore?

Google itself admitted they never raised the 101 defense...what happened to the federal rules of civil procedures?