The Software IP Report

Automating Data Verification Ineligible under Section 101

Claims directed to automating employment verification data were held invalid under 35 U.S.C. § 101 in the Southern District of Indiana. Tenstreet, LLC v. DriverReach, LLC, No. 1:18-cv-03633 (S.D. Ind. Sep. 30, 2019).

Plaintiff Tenstreet owns U.S. Patent No. 8,145,575, which is directed to peer-to-peer job applicant data transmission to verify employment history of commercial truck drivers. Defendant DriverReach moved to dismiss under Rule 12(b)(6) alleging that the ‘575 patent is ineligible under 35 U.S.C. § 101. Claim 1 is representative and recites, in part:

A method for peer-to-peer sharing of job applicant verification data over a network, the network comprising; a computerized exchange being in communication with one or more requesters, providers, and job applicants…said method comprising the steps of:

…assigning an attribute to each requester, provider, and job applicant…

…receiving a verification request from a requester through the communication channel of the requester;

…and routing the received verification data through the communication channel of the requester….

The Court granted the motion, holding the claims of the ‘575 patent invalid under § 101. Under the first step of the two step Alice test, the Court considered whether the claims of the ‘575 patent were directed to an abstract idea. The Court held that the ‘575 patent “is a quintessential do it on a computer patent,” noting that employment data previously collected and stored by humans via phone, fax, or a database were now collected by a computer. While Plaintiff argued that the ‘575 patent was directed to improving the process of employment verification, the Court held that the network “merely automated human tasks onto a computer” and, damningly, “merely implements a business practice onto a computer.”

For the second step of the Alice test, the Court held that the “computerized exchange” that performed the data verification and the method recited “can be performed on a conventional computer and network.” This automated process “is not an inventive concept that makes any improvement to existing computer technology.” In particular, the Court noted that the facilitation of communication in the network are “basic computer capabilities” that claimed “[n]o software or network improvements” to perform.

Lessons for Practice

When a court describes a claim as “merely implement[ing] a business practice onto a computer,” invalidity is inevitable. While it is not clear how these particular claims could have been drafted to survive § 101, drafting claims with a focus on technological improvement instead of data processing and automation will at least help courts avoid obvious § 101 ineligibility traps.