United States: Data Transmission And Storage Invention Held Not Patent Eligible; Telephone Not Specialized Machine

Background

In Cyberfone Systems, LLC v. CNN Interactive Group, Inc.,1 the Federal Circuit held a telephone/transaction entry device used to enter transaction data into databases was ineligible subject matter for a patent. The Federal Circuit explained that the claimed device merely used the well-known concept of collecting information in classified form, then separating and transmitting that information according to its classification. The Federal Circuit also reasoned that the claimed process of sending exploded data transactions over a channel was insufficient to meet the transformation prong of the patent eligibility test, and the claimed telephone that obtained data only when in an unclaimed mode of operation and which could be a range of different machines was not considered a particular machine.

Cyberfone Systems, LLC ("Cyberfone") was the assignee of U.S. Patent No. 8,019,060 ("the '060 patent"). The '060 patent related to methods and a system for capturing and storing data. In September 2011, Cyberfone sued eighty-one defendants, alleging, inter alia, infringement of the '060 patent. In May 2012, multiple defendants moved for summary judgment on the ground that the '060 patent claimed unpatentable subject matter under 35 U.S.C. § 101.2

Representative claim 1 asserted:

1. 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 transaction[s] 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.3

Thus, the method steps required obtaining data, "exploding" the data, i.e., separating it into component parts, and sending those parts to different destinations. The district court found that the subject matter of the '060 patent was "nothing more than a disembodied concept of data sorting and storage" and granted summary judgment of invalidity under 35 U.S.C. § 101.4

The Federal Circuit's Decision

On appeal, the Federal Circuit affirmed. The Federal Circuit noted that the Supreme Court has offered guidance on patentable subject matter, including the establishment of a bar on patenting "laws of nature, natural phenomena, and abstract ideas."5 The Supreme Court has also held that "[a] principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, as no one can claim in either of them an exclusive right."6 The Federal Circuit stated that, under Supreme Court precedent, basic tools of scientific and technological work are also not patentable.7

The Federal Circuit also noted that in Bilski, the Supreme Court rejected claims that sought to patent the fundamental economic practice of hedging, on the basis that those claims were merely well-established concepts and therefore were unpatentable as abstract ideas.8 The Federal Circuit stated that claim 1, like the unpatentable claims in Bilski, involved abstract ideas. "Like protecting against risk, using categories to organize, store, and transmit information is well-established," the Federal Circuit said after examining claim 1.9 As the Federal Circuit explained:

Here, the well-known concept of categorical data storage, i.e., the idea of collecting information in classified form, then separating and transmitting that information according to its classification, is an abstract idea that is not patent-eligible.10

Cyberfone argued that the patent was not directed to abstract ideas because a human, unaided by devices, would not be able to perform all of the recited steps. This, the Federal Circuit said, was a misunderstanding of the applicable standard. Although it acknowledged that methods that can be performed by the human mind alone are not patentable, it also stated that "the category of patent-ineligible abstract ideas is not limited to methods that can be performed in the human mind."11

The Federal Circuit noted, however, that determining when an abstract idea is ineligible subject matter is just the first step in the process. The second step requires the court to assess whether, through "'additional substantive limitations'" the patentee has been able to "'narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.'"12

Cyberfone argued that claim 1was sufficiently limited by the machinery that it required and the transformations that were performed.13 The Federal Circuit explained that although it has held that a process that is either tied to a particular machine or apparatus or transforms an article into a different state can be patent-eligible, in such a scenario, the machine or apparatus must be pivotal to permitting the claimed method to be performed. The Federal Circuit remarked that it is not enough for the computer to merely implement an abstract concept, without imposing any meaningful limitations on that concept.14

Turning to claim 1, the Federal Circuit reasoned:

Cyberfone asserts that the method of claim 1 requires a "telephone," and that it is a specific machine that plays an integral role in the method. But the specification explains that "[w]hen in telephone mode, the telephone operates in a conventional manner."

The telephone can only obtain data "in the transaction entry mode, [when] menus are used to navigate the user to forms which facilitate the entry of data." Thus, the telephone does not obtain data when it is functioning as a telephone, only when in an unclaimed mode of operation. . . .The "telephone" recited in claim 1 is not a specific machine, and adds nothing of significance to the claimed abstract idea.15

The Federal Circuit also rejected Cyberfone's argument that the reference in claim 1 to sending exploded data transactions over a channel "requires an additional specific machine." The argument fails, the Federal Circuit explained, because Cyberfone provided no guidance as to what particular machine is required to perform the function of the recited channel.16

The Federal Circuit then addressed Cyberfone's contention that the claims are sufficiently limited by the transformation that results from "exploding" data transactions, i.e., sending information, in whole or in part, gathered from one source to different destinations. The Federal Circuit rejected this theory as follows:

Here, 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. As in Mayo, the "ordered combination adds nothing" because it follows from the underlying idea of categorical information storage.17

The Federal Circuit agreed with the district court that the '060 patent claims were directed to ineligible subject matter and thus it affirmed that the patent was invalid under § 101.18

Going Forward

The line continues to be blurry as to when a computer software application invention is patent eligible. The Federal Circuit appears to have again confused patent eligible subject matter with anticipation and obviousness and consistency in this area of the law is lacking. For example, in SIRF Technology v. ITC,19 the Federal Circuit held that the claimed method was properly directed to patentable subject matter because the claims explicitly required the use of a GPS receiver, which was a particular machine, and the method could not be performed without the use of such a GPS receiver.

Contrast the decision in this case, Cyberfone Systems, LLC v. CNN Interactive Group, Inc., with the en banc decision of the Federal Circuit in In re Alappat,20 where the Federal Circuit held that a general purpose computer becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software:

Alappat admits that claim 15 would read on a general purpose computer programmed to carry out the claimed invention, but argues that this alone does not justify holding claim 15 unpatentable as directed to nonstatutory subject matter. We agree. We have held that such programming creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software. . . . Consequently, a computer operating pursuant to software may represent patentable subject matter, provided, of course, that the claimed subject matter meets all of the other requirements of Title 35.21

Patent filers are well-advised to ensure that the patent specification and claims describe the computer-implemented aspects of the invention in as much detail as possible. To the extent an invention involves the use of multiple computers/processors/computer systems and/or intricate computer processes, such an invention is more likely to be patent eligible when properly disclosed and claimed.

For More Information

Irah H. Donner
212.806.6630
idonner@stroock.com

Footnotes

1. Cyberfone Systems, LLC v. CNN Interactive Group, Inc., Civ. App. 2012-1673, 2014 WL 718153 (Fed. Cir. February 26, 2014) (Unpublished).

2. Id., slip op. at 4.

3. Id., slip op. at 4-5.

4. Id., slip op. at 5. Section 101 allows an inventor to obtain a patent for "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof."

5. Id., slip op. at 6 (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293, 101 USPQ2d 1961, 1965 (2012)).

6. Id., slip op. at 6 (quoting Bilski v. Kappos, 130S.Ct. 3218, 3230, 95 USPQ2d 1001, 1009 (2010)).

7. Id., slip op. at 6 (citing Gottschalk v. Benson, 409 U.S. 63, 175 USPQ 673(1972)).

8. Id., slip op. at 6 (citing Bilski v. Kappos, 130 S.Ct. 3218, 3230, 95 USPQ2d 1001, 1009 (2010)).

9. Id., slip op. at 7.

10. Id., slip op. at 7.

11. Id., slip op. at 8.

12. Id., slip op. at 8 (quoting Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1341, 108 USPQ2d 1173, 1177 (Fed.Cir.2013).

13. Id., slip op. at 8-9.

14. Id., slip op. at 9.

15. Id., slip op. at 9-10.

16. Id., slip op. at 10.

17. Id., slip op. at 10 (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1298, 101 USPQ2d 1961, 1968 (2012)).

18. Id., slip op. at 10.

19. SIRF Technology v. ITC, 601 F.3d 1319, 94 USPQ2d 1607 (Fed. Cir. 2010).

20. In re Alappat, 33 F.3d 1526, 31 USPQ2d 1545 (Fed. Cir. 1994) (en banc).

21. Id., 31 USPQ2d at 1558 (citing In re Freeman, 573 F.2d 1237, 1247 n.11, 197 USPQ 464, 472 n.11 (C.C.P.A. 1978); In re Noll, 545 F.2d 141, 148, 191 USPQ 721, 726 (C.C.P.A. 1976); In re Prater, 415 F.2d 1393, 1403 n.29, 162 USPQ 541, 549–50 n.29 (C.C.P.A. 1969)).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Finnegan, Henderson, Farabow, Garrett & Dunner, LLP
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions