The Software IP Report

Fed. Cir: Patent Claim Not Indefinite System/Method Hybrid

A patent claim directed to a system comprising multiple elements including a “CRM software application” that according to the claim “presents,” “receives,” and “generates” various data was not indefinite under 35 USC § 112, second paragraph, for reciting method steps in the context of a system claim. MasterMine Software, Inc. v. Microsoft Corp., No. 2016-2465 (Fed. Cir. Oct. 30, 2017).  Instead, said the Federal Circuit, “the claims merely use permissible functional language to describe the capabilities of the claimed system,” and therefore “it is clear that infringement occurs when one makes, uses, offers to sell, or sells the claimed system.”  The court distinguished the claims here from the claims held invalid in IPXL Holdings, LLC v. Amazon. com, Inc., 430 F. 3d 1377 (Fed. Cir. 2005), the seminal case on indefiniteness stemming from mixed system and method claims.

The patent owner had appealed “from a stipulated judgment of noninfringement and invalidity following adverse claim construction and indefiniteness rulings” relating to U.S. Patent Nos. 7,945,850 and 8,429,518. The court affirmed the District Court’s claim construction, but reversed its holding of indefiniteness.

Briefly, the claim term whose construction was at issue was “pivot table,” e.g., as seen in claim 1 of the ’850 patent. The question, in essence, was whether the definition of “pivot table” required the table to be populated with data. The patent owner said no, but the accused infringer, the district court, and the Federal Circuit, all said yes. The specification always described the pivot table in terms of something used to display data. Further, although not so clear and unambiguous as to constitute a disclaimer, the applicant had made an argument to distinguish prior art during prosecution implying that a pivot table had to be populated.

Now turning to the question of more general interest, the court turned to whether certain claims of the two patents could be understood with “reasonable certainty,” the standard as set forth in Nautilus, Inc. v. Biosig Instruments, Inc., 134 S. Ct. 2120 (2014). The court looked at language from claim 8 of the ’850 patent:

a reporting module installed within the CRM software application . . . ;

. . . .

wherein the reporting module installed within the CRM software application presents a set of userselectable database fields as a function of the selected report template, receives from the user a selection of one or more of the user-selectable database fields, and generates a database query as a function of the user selected database fields;

. . . .

The court reviewed IPXL and its progeny at the Federal Circuit. In some of these cases, functional limitations “claim[ed] activities performed by the user.” In others, claims simply recited a system possessing “the recited structure [which is] capable of performing the recited functions.”  The court explained that the present

claims make reference to user selection, they do not explicitly claim the user’s act of selection, but rather, claim the system’s capability to receive and respond to user selection. The limitations at issue here (“receiv[ing] from the user a selection” and “generat[ing] a database query as a function of the user selected database fields”) focus on the capabilities of the system, whereas the claims in IPXL Holdings (“the user uses the input means”) and Katz (“said individual callers digitally enter data”) focus on specific actions performed by the user. Moreover, unlike the claims in Rembrandt, the functional language here does not appear in isolation, but rather, is specifically tied to structure: the reporting module installed within the CRM software application.

Based on this reasoning, the Federal Circuit reversed the district court’s holding of invalidity based on indefiniteness.

Lessons for Practice

If you look at the excerpts from claims discussed in IPXL and its progeny in the current opinion (linked to above), you may find it hard to distinguish between claims that recite method steps as opposed to claims that simply recite functional description. But that is the distinction that the Federal Circuit has drawn in past cases, and that it drew here.

The PatentlyO blog raised the possibility that Nautilus lowered the bar for fighting off indefiniteness challenges based on reciting functional steps in a method claim – and I agree that it is regrettable that the court here only cited Nautilus in passing without explaining how it influenced the outcome.  Many practitioners would welcome such a “Nautilus effect,” because it is not always possible to avoid the kind of language at issue here, and certainly it is not possible to avoid functional claiming as a general proposition. However, wherever possible, despite the outcome of this and other cases, it is always a good idea to try to avoid active verbs and language connoting carrying out a function where possible.