The Software IP Report

Does Claim Construction Matter in Determining Patent-Eligibility under 35 U.S.C. § 101?

Patent applicants and owners should position claims for narrow constructions where subject matter is susceptible to challenge under 35 U.S.C. § 101, suggests a recent decision from the USPTO’s Patent Trial and Appeal Board (PTAB).  In a Covered Business Method (CBM) review Final Written Decision, the PTAB held that claims of U.S. Patent No. 8,402,281, directed to a “data security system for a database,” were patent-ineligible under 35 U.S.C. § 101.  Epicor Software Corp. v. Protegrity Corp., CBM2015-00006 (PTAB April 18, 2016).  In reaching its conclusions, the PTAB repeatedly rejected the patent owner’s arguments that claims were not directed to abstract ideas, or recited a patentable innovation, explaining that these arguments would apply only if the claims had a narrower construction than the PTAB’s construction.

Claim Construction

Independent claim 33 of the ’281 patent recites:

A computer-implemented data processing method comprising:

maintaining a database comprising a plurality of data portions, each data portion associated with a data category;

maintaining a separate data protection table comprising, for at least one data category, one or more data processing rules associated with the data category that must each be satisfied before a data portion associated with the data category can be accessed;

receiving a request to access a data portion associated with a first data category from a user;

determining whether each of the one or more data processing rules associated with the requested data portion are satisfied; and

granting the user access to the requested data portion responsive to each of the retrieved one or more data processing rules being satisfied.

In its Decision to Institute CBM proceedings, the PTAB had construed certain claim terms, including “database” and “data portion.”  Considering those  and other claim terms under the “broadest reasonable interpretation standard,” the PTAB maintained its earlier, broad constructions, and rejected narrower  constructions set forth by the patent owner.

Concerning “database,” the patent owner proposed that the term be construed as “a data processing system for managing an organized collection of structured data.”  The PTAB discounted extrinsic evidence including expert testimony and manuals that the patent owner proposed.  Noting that the intrinsic evidence, including the patent Specification, did not mention the limitations that the patent owner wanted to import from extrinsic evidence, the PTAB adopted the petitioner’s broader position “that the broadest reasonable construction, in light of the specification of the ’281 patent, and the proffered evidence, of ‘database’ is ‘an organized collection of structured data.’”

Concerning “data portion,” the patent owner argued that “the broadest reasonable construction of ‘data portion’ is ‘data element value,’ because the ’281 patent describes the invention as working on the ‘data element level.’” The PTAB disagreed.  The ’281 patent specification did not explicitly define the term.  Howeber, the PTAB’s thought its construction consistent with the words used in the Specification, without importing terms as the patent owners construction would have done.  Therefore, the PTAB found that “the broadest reasonable construction, in light of the specification of the ’281 patent, of ‘data portion’ is a part or share of the database.”

Standing for CBM Review

Of interest as a threshold matter is the finding, confirming the analysis in the PTAB’s Decision to Institute, that the ’281 patent qualified as a “covered business method patent” under America Invents Act (AIA) § 18(d)(1).  The statute requires that a patent

claims a method or corresponding apparatus for performing data processing or other operations used in the practice, administration, or management of a financial product or service, except that the term does not include patents for technological inventions.

The PTAB does “not interpret the statute as requiring the literal recitation of terms of data processing of financial products or services.”  The ’281 patent specification disclosed application of the claimed data processing rules in the field of banking, a “financial activity.”  A preponderance of the evidence showed that one claim had a financial application.  That claim recited a “database  and data portion,” which the patent owner argued presented technological elements destroying standing attached to a petition for CBM review of the ’281 patent.  However, under the PTAB’s broadest reasonable interpretations of those claim terms, they could be read broadly enough so as to exclude features that the patent owner argued were a technological innovation. That was enough for the ’281 patent to qualify as a CBM patent.

Patent-Ineligibility

The PTAB’s claim constructions likewise meant that the patent owner would lose its argument that the ’281 patent claims included an innovation sufficient to overcome a finding of a patent-ineligible abstract idea under Alice and 35 U.S.C. § 101.  The PTAB found “that the claims are directed to the abstract idea of determining whether access to data should be granted based on whether one or more rules are satisfied.”  The patent owner’s argument to the contrary was defeated by the PTAB’s claim constructions, i.e., turned out to be

based upon elements not required by the claims. [Citation omitted.] Given our construction of “data portion” and “database” in section II (A) above, the claims do not require protection on the data element level based on rules stored in a separate database, where the first database calls out to the second database. Patent Owner’s argument is not commensurate with the scope of the claims.

For similar reasons, the claims simply recited use of conventional elements to perform conventional steps, such as granting access to a database.  Even when claim elements were considered in combination, claims including claim 33 “convey nothing more meaningful than the fundamental concept of determining whether access to data should be granted based on whether one or more rules are satisfied.”  Again, the patent owner’s arguments to the contrary assumed elements not in the claims and could have carried the day only if the claims were more narrowly construed.

Finally, the PTAB rejected the patent owner’s argument under DDR Holdings, LLC v. Hotels.com, LP., 773 F.3d 1245 (Fed. Cir. 2014).  The claims were not directed to solving a problem rooted in computer technology, but rather simply recited conventional steps.

Conclusion

A difference between a district court and the PTAB is that the PTAB usually dives right in and performs any needed claim constructions.  A district court, on the other hand, may not perform claim construction until discovery is well under way, or even complete.  District courts sometimes decline to decide the patent-eligibility question early in litigation, stating that claim construction is needed first.  One often wonders how claim construction might make a difference.  This case provides an explicit illustration.

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