Review of Some 2016 Court Decisions Rejecting an Alice Challenge

The U.S. Supreme Court’s decision in Alice Corp. v. CLS Bank has undoubtedly had a significant impact on the patent landscape for software patents. The two-part test laid out in Alice has resulted in a large number of patents being invalidated. However, a number of patents have also survived the test, providing some guidance on the types of claims that would be patent eligible. Under the two-part Alice test, courts examine (1) whether the patent at issue is directed to a patent ineligible concept (e.g. abstract ideas) and, if yes, courts then inquire into (2) whether the patent at issue includes “an inventive concept that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.”

In one of our recent newsletters, we wrote about three patents, prosecuted by Farjami & Farjami LLP, that passed muster under Alice in Modern Telecom Systems LLC v. Lenovo Inc., CV 14-1266-DOC (C.D. Cal. 2015). Below is also a list of a few decisions issued in early 2016, where courts refused to invalidate claims of the patents at issue under Alice.

In Gonzalez v. Infostream Group, Inc. (E.D. Tex. Feb. 6, 2016), the court denied defendant’s motion for summary judgment of invalidity against U.S. Patent No. 7,873,665 (the “‘665 Patent”) and U.S. Patent No. 7,558,807 (the “‘807 Patent”) relating to the creation of digital labels for Internet websites. The defendant asserted that “the ‘665 and ‘807 Patents ‘[were] invalid because they claim the abstract idea of using labels to facilitate searches.’” The court disagreed with the defendant, stating: “‘[g]athering’ data may describe an abstract idea, but ‘producing’ a ‘label’ based on that data does not describe an abstract idea.”

The court then offered an example and noted that “a claim directed at using a computer to issue “revolving credit” may be directed at an abstract idea, but a claim directed at a ‘credit card’ is not an abstract idea. A ‘credit card’ works as a specific and concrete implementation of the abstract idea of revolving credit.” Based on this comparison, the court held that “using ‘labels’ serves a concrete and specific way of conducting data storage and search.” Under step two of the Alice test, the court explained that even if the claims were directed to an abstract idea, they “improve[ed] the computer system to address the Internet-centric problem of ‘surfers’ being unable to find information through word-match searches.”

In Genband US LLC v Metaswitch Networks Corp. (E.D. Tex. Jan. 6, 2016), the court denied the defendant’s motion for summary judgment, and refused to invalidate U.S. Patent No. 6,772,210 (the “‘210 Patent”) and U.S. Patent No. 7,047,561 (the “‘561 Patent”) under 35 U.S.C. § 101 for failure to claim patent-eligible subject matter.

The ‘210 patent related to a method and apparatus for exchanging communications between telephone number based devices (such as VoIP, Fax-over-IP, and IP Paging) in an Internet protocol environment. More specifically, the ‘210 patent disclosed an IP communication system with “a first network coupled to a second network through a gateway,” the gateway enabling communication between a first telephone number based device having a first address for use in the first network and a second telephone number based device in the second network. For the two devices to communicate with each other, the gateway “allocates a second address to the first telephone number based device for use in the second network” and “performs address translation on communication massages so that the first address for the first telephone number based device is used in the first network and the second address for the first telephone number based device is used in the second network.”

The defendant argued “that the claims of the ’210 Patent [were] invalid because they are directed to an abstract idea—‘allocating’ … an address within a communication message to another address and then performing ‘address translation’ on the message without any reference to material (i.e., physical) objects.” The defendant also asserted “that the claims [were] directed to “‘mere manipulation of binary data within abstractions called IP packets.’”

The court disagreed and, in response to the defendant’s arguments, held that “the fact that a claim involves the manipulation of binary data does not inherently render it abstract.” Had that been the case, the court commented, “no claim drawn to a digital device would survive § 101.” The court stated that the important question was “whether the claimed ‘manipulation of binary data’ [was] merely a computerized implementation of an abstract concept.” The court further stated that, “[t]he law does not support a rule that the presence or absence of ‘concrete or material objects’ defines the boundary between eligible and ineligible subject matter.

The court held that the ’210 Patent was not directed to an abstract idea. The court found that claim 1 of the ’210 Patent was directed to a specific set of operations (‘allocating a second address’ and ‘performing address translation’), which were confined to a particular context (two different telephone number based devices in two different networks using two different addresses, connected by a gateway).” Under step two of the Alice test, the court stated that even if claim 1 of the ’210 Patent were directed to an abstract idea, “claim 1 is implemented in the context of a non-generic computer system, and ‘improve[ed] the functioning of the computer itself.’”

The ‘561 Patent related to a method of protecting a computer network while transmitting and receiving IP packets. The defendant argued that “classifying packets based on their channel” was an abstract idea. However, the court disagreed, holding that the ‘561 patent “attempts to ‘overcome a problem specifically arising in the realm of computer networks.’” The court further noted that claim 12 of the ‘561 Patent “recit[ed] a specific type of data structure unique to a specific class of computer networks (‘Internet protocol packets formatted in accordance with a real-time Internet protocol’), requir[ed] that the packets be associated with one of three types of network channels, and requir[ed] that the packets be applied to a different firewall component depending on packet type.”

Similar to the ’210 Patent, under step two of the Alice test, the court held that even if the ‘561 Patent were directed to an abstract idea, the language of claim 12 recited “significantly more,” rendering it not patent ineligible.

In Motio, Inc. v. BSP Software LLC (E.D. Tex. Jan. 4, 2016), the court denied a motion seeking to invalidate U.S. Patent No. 8,285,676 (the “‘676 Patent”) comprising a method of automatic “version control” in a business intelligence system. The court agreed with the defendant that, maintaining versions of electronic documents, or “version control,” was an abstract idea. However, under step two of the Alice test the court held that claim 1 of the ‘676 Patent amounted to significantly more than maintaining versions of electronic documents.

The court noted that claim 1 of the patent required an “automated agent that interfaces with the business intelligence system to provide automated version control to the business intelligence artifact” and noted that the claims “describe[ed] an invention that serves as an addition to a business intelligence system rather than claiming a monopoly on all version control systems.” The court agreed with the plaintiff that “the invention [did] not simply use a computer to automate what was done previously, but rather improv[ed] upon what was previously done with computers, solving a computer specific problem.” The court stated that, at the very least, “the ‘678 Patent disclos[ed] a particular solution for the problem of providing a particular form of version control to a business intelligence system that [did] not provide native, automatic version control.”