The Software IP Report

Split Fed. Cir. Panel Bases Patent-Eligibility of Network Management Claims on Claim Construction

By Charles Bieneman

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

Co-authored by Mark St. Amour.

How much does claim construction matter when determining patent-eligibility under 35 USC § 101? In Amdocs Ltd. V. Openet Telecom, Inc., (Fed. Cir. Nov. 1, 2016) a split Federal Circuit panel reversed a district court decision holding claims of four patents invalid under 35 U.S.C. § 101 as directed to abstract ideas. The patents were directed to “a system designed to solve an accounting and billing problem faced  by network service providers.”  Relying heavily on the written descriptions of the patents, the majority held that the claims were unconventional solutions to technical problems, and were therefore patent-eligible.  Judge Plager wrote the majority opinion and was joined by Judge Newman; Judge Reyna dissented.

Majority Opinion

The patents at issue (U.S. 7,631,065; U.S. 7,412,510; U.S. 6,947,984; and U.S. 6,836,797) were all based on a common parent application. Disclosed system components included network devices, information source modules, gatherers, a central event manager, a central database, a user interface, and terminals. The court highlighted that the system components were described to be “arrayed in a distributed architecture that minimizes the impact on network and system resources.” The distributed architecture “allows data to reside close to the information sources, thereby reducing the congestion in network bottlenecks, while still allowing data to be accessed from a central location.”

Exemplary Claim 1 of the ‘065 patent recites:

A computer program product embodied on a computer readable storage medium for processing network accounting information comprising:

computer code for receiving from a first source a first network accounting record;

computer code for correlating the first network accounting record with accounting information available from a second source; and

computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.

In a decision prior to the Supreme Court’s decision in Alice Corp. Pty. Ltd. v. CLS Bank Intern., 134 S. Ct. 2347 (2014), the Federal Circuit had reversed the district court’s summary judgment of non-infringement and, in so doing, addressed certain claim constructions.  In particular, the Federal Circuit had construed the term “enhance” as meaning “to apply a number of field enhancements in a distributed fashion,” noting that the district court explained that “in this context ‘distributed’ means that the network usage records are processed close to their sources before being transmitted to a centralized manager.” This construction required a reliance on the invention’s disclosed distributed architecture, and the fact that that the network devices and gathers work together in a distributed manner.

The Federal Circuit had construed claim terms from other patents-in-suit similarly, specifically finding that each claim relied on the distributed architecture. For example, the term “completing” in claim 16 of the ’510 patent was construed to mean to “enhance a record until all fields have been populated,” where “enhance” carried the same meaning as in the ’065 patent. In a further example, the claimed methods in claim 1 of each the ’984 patent and the ’797 patent required the use of the distributed architecture described in the specification of the parent application.

Citing the patent claims’ reliance on the distributed architecture, and comparing the distributed architecture to claims of prior patents evaluated under the Alice/Mayo framework, in this most recent appeal the Federal CIrcuit reversed the trial court and held that all four patent were directed to patent-eligible subject matter. Specifically, the claims were patentable under step two of Alice/Mayo (they recited significantly more than an abstract idea) because the distributed architecture provided “an unconventional technological solution (enhancing data in a distributed fashion) to a technical problem (massive record flows which previously required massive databases).”

Judge Reyna’s Dissent

One wonders whether the ’984 and ’797 patents would have been found patent-eligible had they been evaluated in a vacuum.  As Judge Reyna noted in his dissent, those patents did not even claim the distributed architecture. The majority relied on a general discussion of those claims with reference to the rationale from the ’065 patent, which did recite the “distributed architecture.”  According to Judge Reyna, the majority improperly imported meaning into the claims from the patent specification.  Judge Reyna agreed that, based on “only the written description of the asserted patents,” he would “conclude that the network monitoring system disclosed therein is eligible for patenting.”  But the Alice inquiry, Judge Reyna said, must focus on the claims.

Further, Judge Reyna’s dissent makes a criticism that underlines the undeniable subjectivity of patent-eligibility analysis under Alice: “[t]he majority avoids determining whether the asserted claims are directed to an abstract idea, or even identifying what the underlying abstract idea is.”

Considering claim 1 of the ’065 patent, Judge Reyna found “no specific process for accomplishing the abstract goal of combining data from two sources.” And the claims did not recite significantly more than this abstract idea: “[l]imiting the abstract idea to the context in which the information relates to network accounting records is a field-of-use limitation that does not supply an inventive concept.”  Judge Reyna also would have held the claims of the ’797 patent ineligible.  Interestingly, though, Judge Reyna agreed that the claims of the ’510 and ’797 patents recited inventive software process and structure, and would have held them patent-eligible.


The outcome in Amdocs provides affirmation of two emerging trends in a post-Alice world: 1) courts are increasingly considering whether a patent application provides an inventive technical solution to a technical problem; and 2) claim construction can be leveraged to construe patent claims in light of portions of the patent specification to demonstrate that the claims solve a technical problem.

However, an even more fundamental lesson of this case may be that court’s analyses of patent-eligibility questions continue to be unpredictable.  Regardless, Amdocs reinforces the desirability of drafting patent applications that identify technical problems and include claims narrowly tailored to a technological solution addressing that problem.