The Software IP Report

Is Section 101 Patent Eligibility Determined By Claim Breadth?

By Charles Bieneman

Categories: Patent Eligibility, Software Patents, The Software IP Report

A Federal Circuit panel has held invalid, for not reciting patent-eligible subject matter under 35 U.S.C. § 101, patent claims directed to separating telephone transaction data into component parts, and storing it at different destinations.  CyberFone Sys., LLC v. CNN Interactive Group, Inc., Nos. 2012-1673, 2012-1674 (Fed. Cir., Feb. 26, 2014).  An opinion authored by Judge Dyk, and joined by Judges Lourie and Wallach, explained that the claims were directed to an “abstract idea.”

Representative claim 1 of U.S. Patent No. 8,019,060 recited:

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 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.

The district court had granted summary judgment of Section 101 invalidity after finding that the recited subject matter amounted to “nothing more than a disembodied concept of data sorting and storage.”

The Federal Circuit began with a discussion of familiar Section 101 president, including Mayo Collaborative Servs. v. Prometheus Labs., Inc., and Bilski v. Kappos.  Under that precedent, “[p]atents that merely claim well-established, fundamental concepts fall within the category of abstract ideas.”

The court analogized the data storage claims in this case to the claims directed to hedging risk in commodities transactions in Bilski.  In this case, “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.”

The patent owner argued that the recited subject matter could not “be an abstract idea because a human, unaided by devices, could not perform the steps recited.”  The court responded that, while “methods that can be performed in the human mind alone are not eligible for patent protection,” the reverse is not necessarily true.  That is, “the category of patent-eligible abstract ideas is not limited to methods that can be performed in the human mind.”

However, just because an abstract idea is not eligible for patent protection does not mean the inquiry is over.  Under Mayo, a further step of determining whether the claim has “additional substantive limitations” that “narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.”  The claim here was not so limited.  Instead, the recited “telephone,” was disclosed to be a conventional telephone that, in the context of the claim, operated in a conventional manner.  It was “not a specific machine, and add[ed] nothing of significance to the claimed abstract idea.”

The patent owner also argued that “the claims are sufficiently limited by the transformation that results from ‘exploding’ data transactions, i.e., sending information . . . gathered from one source to different destinations.”  However, merely collecting and organizing data does not a patentable transformation make.  Here, the supposed transformation conferred no meaningful limitation on the claim “because it follows from the underlying idea of categorical information storage.

Accordingly, the district court’s finding of patent-ineligible subject matter, and holding of invalidity under Section 101, was affirmed.