On November 1, 2016, the Court of Appeals for the Federal
Circuit ("CAFC") in Amdocs (Israel) v. Openet
Telecom, No. 2015-1180 ("Amdocs II"),
rendered a precedential opinion with regard to the issue of patent
eligibility and reversed the district court's finding of patent
ineligibility under 35 U.S.C. § 101.
The suit between Amdocs and Openet was brought in 2010 in the
District Court for the Eastern District of Virginia
("EDVA") by Amdocs, asserting that Openet infringed
claims of four patents. Openet asserted patent invalidity,
unenforceability, and non-infringement. The EDVA granted
Openet's motion for summary judgment of non-infringement, but
denied the parties' motions for summary judgment with respect
to validity. Amdocs appealed. In Amdocs (Israel) v. Openet
Telecom, 761 F.3d 1329, 1331-36 (Fed. Cir. 2014)
("Amdocs I"), the CAFC rendered an opinion
regarding claim construction and non-infringement. Following the
remand from the CAFC in Amdocs I, Openet moved for judgment with
respect to validity, asserting that, pursuant to Alice,
[i] all asserted claims were ineligible under §
101. Openet's motion was granted, and the EDVA found the
asserted claims of all four patents ineligible under § 101.
Amdocs again appealed.
In analyzing patent eligibility of claims, the CAFC in Amdocs
II adopted a flexible common law approach in which claims were
compared with eligible and ineligible claims of a similar nature
from past cases.
The CAFC recognized that even though the more comprehensive
analysis in search of the "inventive concept" is
generally reserved to step two of the two-step patent eligibility
framework set out by the Supreme Court in Alice and
Mayo, [ii] there is "considerable overlap
between step one and step two" and "in some situations
this analysis could be accomplished without going beyond step
one." [iii] According to the CAFC, the more
detailed analysis could be undertaken either at step one or at step
two. In both situations, "the analysis presumably would be
based on a generally-accepted and understood definition
of, or test for, what an 'abstract idea' encompasses."
[iv]
The CAFC further recognized the lack of a "single, universal
definition of 'abstract idea'" and the difficulty to
"fashion a workable definition to be applied to as-yet-unknown
cases with as-yet-unknown inventions." [v]
According to the CAFC, when a single governing definitional context
is not available, "examin[ing] earlier cases in which a
similar or parallel descriptive nature can be seen—what prior
cases were about, and which way they were decided" is
"the classic common law methodology for creating law"
that the court should follow. [vi]
The patents-in-suit include U.S. Patent Nos. 7, 631,065
("'065 patent"), 7,412,510 ("'510
patent"), 6,947,984 ("'984 patent"), and
6,836,797 ("'797 patent"). These patents concern,
among other things, "parts of a system designed to solve an
accounting and billing problem faced by network service
providers." [vii] As an example, claim 1 of the
'065 patent ("claim 1") recites:
1. A computer program product embodied on a computer readable
storage medium for processing network accounting information
comprising:
computer code for receiving from a first source a first network
accounting record;
computer code for correlating the first network accounting record
with accounting information available from a second source;
and
computer code for using the accounting information with which the
first network accounting record is correlated to enhance the first
network accounting record. [viii]
Applying the common law approach, the CAFC compared claim 1 with
eligible and ineligible claims from past cases and concluded that
claim 1 was much closer to eligible claims from BASCOM
[ix] and DDR Holdings [x] than those
ineligible claims from Digitech, [xi]
Content Extraction, [xii] and In re TLI
Commc'ns. [xiii] No determination of
"abstract idea" was made.
The CAFC explained that according to the approved claim
construction in Amdocs I, "enhance" means
"to apply a number of field enhancements in a distributed
fashion," and that the "in a distributed fashion"
and the "close to the source" of network information
requirements are read into the term "enhance."
[xiv] Based on the claim construction, the CAFC stated
that the claim "entails an unconventional technological
solution (enhancing data in a distributed fashion) to a
technological problem (massive record flows which previously
required massive databases)." [xv] The CAFC
reasoned that even though the solution requires "arguably
generic components," "the claim's enhancing
limitation necessarily requires that these generic components
operate in an unconventional manner to achieve an improvement in
computer functionality." [xvi] In addition, the
enhancing limitation also depends upon the network devices and
gatherers working together in a distributed manner.
[xvii] The "enhancing limitation necessarily
involves the arguable generic gatherers, network devices, and other
components working in an unconventional distributed fashion to
solve a particular technological problem."
[xviii]
Claim 1 was therefore found to be distinct from the ineligible
claims in Digitech, Content Extraction, and
In re TLI Commc'ns that were "not tied to any
particularized structure, broadly preempted related technologies,
and merely involved combining data in an ordinary manner without
any inventive concept." [xix] Claim 1 was also
distinct from the ineligible claim in Content Extraction,
"which involved the generic, well-known steps of collecting
data, recognizing data, and storing data." [xx] In contrast,
like the eligible claims in DDR Holdings and
BASCOM, claim 1 involved limitations that "when
considered individually and as an ordered combination recite an
inventive concept" through the use of the distributed
architecture. [xxi]
Claim 1 of the '065 patent was therefore eligible. The majority
found the other representative claims of the '510 patent,
'984 patent, and the '797 patent eligible for the similar
reasons as stated for claim 1 of the '065 patent.
In sum, the CAFC adopted a common law approach for analyzing patent
eligibility. It will be interesting to see if more CAFC's
patent eligibility decisions will be based on this approach.
Footnotes
[i] Alice Corp. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014).
[ii] Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 10 (2012).
[iii] Amdocs II, at 8 (citing Enfish, LLC, v. Microsoft Corp., 822 F.3d 1327, 1334-36 (Fed. Cir. 2016) and Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016)).
[iv] Id. at 9.
[v] Id.
[vi] Id. at 9-10 (citing KARL N. LLEWELLYN, THE COMMON LAW TRADITION: DECIDING APPEALS (1960)) (modified).
[vii] Id. at 2.
[viii] U.S. Patent No. 7,631,065, at 16:4–14.
[ix] BASCOM Global Internet Servs. v. AT&T Mobility, 827 F.3d 1341 (Fed. Cir. 2014).
[x] DDR Holdings, LLC v. Hotels.com, LP, 773 F.3d 1245 (Fed. Cir 2014).
[xi] Digitech Image Techs., LLC v. Electronics for Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014).
[xii] Content Extraction & Transmission, LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343 (Fed. Cir. 2014).
[xiii] In re TLI Commc'ns, LLC Patent Litigation, 823 F. 3d 607 (Fed. Cir. 2016); see Amdocs II, at 20-25.
[xiv] Amdocs II, at 22 (citing Amdocs I, at 1338-40).
[xv] Id. at 22.
[xvi] Id. at 22-23.
[xvii] Id. at 23.
[xviii] Id. at 23-24.
[xix] Id. at 24.
[xx] Id. at 24 (citing Alice, 134 S. Ct. at 2355).
[xxi] Id. at 25 (emphasis added).
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