Power Analytics Corp. v. Operation Technology, Inc. (C.D. Cal. 2017)

Interpreting Real-Time Sensory Data from Electrical System Found to Be Abstract Idea and Patent Ineligible

By Joseph Herndon --

Power Analytics Corp. sued Operation Technology in the U.S. District Court for the Central District of California for infringement of U.S. Patent Nos. 7,693,608; 7,729,808; 7,286,990; and 7,840,395, who responded by filing a partial summary judgment as to invalidity on the basis of the patents being invalid under 35 U.S.C. § 101.  The District Court ultimately found all patents invalid under 35 U.S.C. § 101.

It is unfortunate that with today's application of 35 U.S.C. § 101, despite the claims reciting a physical server communicating data with a physical client terminal, in which the data includes updating system models and determining electrical system health, that the claims can somehow be considered to be too abstract to qualify as patentable subject matter.

The asserted patents are in the field of modeling electrical systems.  They share portions of a common specification.  Each relates to computer modeling and focuses on computer simulation techniques with real-time system monitoring and prediction of electrical system performance.  The specifications of the asserted patents acknowledge that it was already known that models could be used to simulate and predict the performance of monitored electrical systems.

The asserted patents purport to introduce the idea of comparing live, i.e., "real-time," data to predicted data.  This permits an assessment of the system's health and performance.  Depending on a level of deviation that is determined, it may also permit an update to the prediction model.  The real-time data is collected from sensors and then processed and compared to the model's predictors for those sensors.  Any deviation between live and predicted values is evaluated and potentially acted upon, such as to generate an alarm condition for the values in question and/or a calibration request that is sent to a calibration engine for updating the model.

Figure 1 of the '608 patent, reproduced below, illustrates the system used for predictive analysis of the performance of the monitored electrical system.

Plaintiff asserted 138 claims from the four asserted patents.  Defendants chose claim 1 of the '608 patent as representative, and that claim is reproduced below.

1.  A system for filtering and interpreting real-time sensory data from an electrical system, comprising:
    a data acquisition component communicatively connected to a sensor configured to acquire real-time data output from the electrical system;
    a power analytics server communicatively connected to the data acquisition components, comprising,
        a virtual system modeling engine configured to generate predicted data output for the electrical system utilizing a virtual system model of the electrical system,
        an analytics engine configured to monitor the real-time data output and the predicted data output of the electrical system, the analytics engine further configured to initiate a calibration and synchronization operation to update the virtual system model when a difference between the real-time data output and the predicted data output exceeds a threshold, and
        a decision engine configured to compare the real-time data output against the predicted data output to filter out and interpret indicia of electrical system health and performance; and
        a client terminal communicatively connected to the power analytics server and configured to display the filtered and interpreted indicia.

The other asserted claims vary.  However, each claim recites the idea of evaluating and reacting to prediction deviations along with functionally recited "engines" and "components."  Each also refers to ancillary steps such as collecting and evaluating the data and displaying the results of the evaluation.

The District Court followed the two-step approach for resolving the section 101 challenge to the patents.  First, the court determines whether the claims at issue are directed to a patent-ineligible concept.  If so, then in the second step, the court considers elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application, i.e., search for an inventive concept.

Step One – Whether the Asserted Claims are Directed to a Patent-Ineligible Concept

As noted by the Federal Circuit in McRO, Inc. v. Bandai Namco Games Am. Inc., the step-one inquiry determines whether the claims focus on a specific means or method that improves the relevant technology or are directed to a result or effect that itself is the abstract idea and merely invoke generic processes and machinery.  837 F.3d 1299, 1314 (Fed. Cir. 2016).

The District Court stated that the asserted claims focus on gathering information, e.g., real-time and predicted data values, and analyzing and updating a model with that information, e.g., comparing the gathered data and evaluating the prediction deviations to update the model.  The District Court concluded that this type of information gathering and analysis has been addressed by the Federal Circuit and has been held to fall into a class of claims directed to a patent-ineligible concept.  The example used for comparison was the Elec. Power Grp., LLC v. Alstom S.A. case which noted that collecting information, including when limited to particular content that does not change its character as information, is within the realm of abstract ideas.  830 F.3d 1350, 1353 (Fed. Cir. 2016).

The District Court further noted that the claims recite the idea as a function or result, rather than a particular way of performing that function or achieving that result.  For example, claim 1 of the '608 Patent recites that "an analytics engine" is "configured to initiate a calibration and synchronization operation to update the virtual system model when a difference between the real-time data output and the predicted data output exceeds a threshold."  The language focuses on the result rather than how the operation is achieved.

Similarly, claim 1 recites that "a decision engine" is "configured to compare the real-time data output against the predicted data output to filter out and interpret indicia of electrical system health and performance."  Again, it does not specify how the engine is configured, and none of the claims recites a particular structure for how to compare the real-time and predicted values, how to pick the threshold values, or how to update the virtual model.

For claims implemented on a computer, the Federal Circuit has determined that it is relevant to ask whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea.  This comes from Enfish LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016).  Here, the District Court found that the asserted patents purport to solve a data problem, i.e., a discrepancy between the real-time and data predicted using a model, not a computer problem, and that neither the problem nor the solution is rooted in computer technology.  The District Court concluded that instead, like the patents in Electric Power Group, the asserted patents claim a purported advance in uses for existing computer capabilities, not new or improved computer capabilities.  Thus, the claims were found to be directed to an abstract idea.

Step Two – Whether the Asserted Claims Included an "Inventive Concept"

The Federal Circuit has noted that to satisfy this prong, the claims must include additional features that are significantly beyond well-understood, routine, conventional activity or a simple instruction to implement or apply the abstract idea on a computer.  BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1349 (Fed. Cir. 2016).

Here, the District Court noted that, as in Electric Power Group, the field-of-use restrictions in the asserted claims, which limits them to the technological environment of electrical system monitoring, is insufficient to save them.  The District Court simplified the claims as merely reciting (i) various types of information content gathered and used, e.g., "real-time data", "predicted data," "virtual system model," contingency event," "environmental data," "real time domain model data", "real-time system reliability data, and "real time model"; and (ii) various sources of such information, e.g., "sensors," "data acquisition component," "virtual system modeling database".  The District Court concluded that none of these steps differentiates a process from ordinary mental ones, and that any further recited functions of reporting analysis results is more appropriately characterized as an insignificant "post-solution activity" that does not support the invention having an inventive concept.

For claims that recite an "engine" to perform the function, the District Court found that the patents describe "engine" in functional terms without purporting to add any particular inventive implementation.

The District Court concluded that the claims in the asserted patents focus on the idea of comparing live data to predicted data and updating a prediction model, which is directed to data manipulation rather than a physical transformation of an article, and thus, Diamond v. Diehr, 450 U.S.175, 177 (1980), did not apply.

As a result, the District Court found that none of the claim elements identified by Plaintiff exceeds the abstract idea of evaluating and reacting to prediction deviations, and therefore, the asserted patents are ineligible under § 101.

Order by District Judge John A. Kronstadt

Comments

[EG]

Hey Joseph,

Yet another "poster child" for why the nonsensical and unworkable Mayo/Alice framework needs to be dumped ASAP. How this claimed invention (filtering and interpreting real-time sensory data from an electrical system) can be deemed "abstract" under 101 blows my mind. If it is truly just a "functional result," it should be judged under 112, not 101.

[Joe Barrera]

Perhaps, the problem that the district court sees is that many practitioners in these section 101 cases attempt to disguise means-plus function claims as questionable structure claims. The court is looking for some inventive structure in at least one element and sees none. In this case, each element of the claim 1 could have been written in a means plus function format. To be fair, I have not read the patent specification to determine if any such structure can be found, and if such structure is linked to its corresponding function.

I also understand that the "broad" electrical monitoring and correction claim could have been analyzed under 102/103, but the court's do not seem to want to go there. Was each step known in the art? Which is the inventive step? Does the patent explain what is actually inventive about claim 1? What story does the patent specification tell? It is almost like the courts are analyzing claims in some form of prima facie 101. If the courts do not identify any structure to define a particular element, then they are not going to parse the specification for that structure. That job is for the practitioner.

My point is if a practitioner desires to define an "inventive" process by function, then use P6, and force the court to look to the specification for that linking structure. And of course, lay out what you believe are the inventive features of the claimed process.

[Martin H Snyder]

No invention there. We need a better way to find that out early, but with more rigor than the totally subjective 101 inquiry.

Also, of course, the problem is that all information is abstract, but some information my meet all of the criteria for patenting.

But how to approach distinguishing them?

[Skeptical]

Is the nature of the alleged infringement something that occurs "totally within the mind?"

If not, then "abstract" no matter how NOT defined is not likely being used correctly.