By Michael Borella —
Recipe for a contentious Federal Circuit decision: empanel two
judges who have different understandings of the patent-eligibility of
computer-related inventions, sprinkle in a claim or two that could be viewed as
a pure business method, let simmer. Judge Lourie and Chief Judge Rader are at it again, carrying out their
ongoing dialog that began in CLS Bank Int'l v. Alice Corp and
continued in Ultramercial Inc. v. Hulu LLC. In the former case, they set forth different patentable subject matter
eligibility tests, and in the latter case they found themselves ultimately
agreeing on the disposition of the claims with respect to 35 U.S.C. § 101, if
not the rationale to reach that conclusion. Here, however, they apply disparate reasoning to come to different
conclusions.
On Guidewire's motion for summary judgment, the District Court for the
District of Delaware held all claims of Accenture's U.S. Patent No. 7,013,284
invalid under § 101. The District Court concluded that the patent was "directed to concepts for
organizing data rather than to specific devices or systems, and limiting the
claims to the insurance industry does not specify the claims sufficiently to
allow for their survival." The District Court set forth this holding despite some of the claims being system
claims. Accenture appealed for claims
1-7, the system claims, but not for claims 8-22, similar method claims. Judge Lourie, joined by Judge Reyna, affirmed
the District Court. Chief Judge Rader
dissented.
Claim 1 recites:
A system for generating
tasks to be performed in an insurance organization, the system comprising:
an insurance transaction database
for storing information related to an insurance transaction, the insurance
transaction database comprising a claim folder containing the information
related to the insurance transaction decomposed into a plurality of levels from
the group comprising a policy level, a claim level, a participant level and a
line level, wherein the plurality of levels reflects a policy, the information
related to the insurance transaction, claimants and an insured person in a
structured format;
a task library database for
storing rules for determining tasks to be completed upon an occurrence of an
event;
a client component in
communication with the insurance transaction database configured for providing
information relating to the insurance transaction, said client component
enabling access by an assigned claim handler to a plurality of tasks that
achieve an insurance related goal upon completion; and
a server component in
communication with the client component, the transaction database and the task
library database, the server component including an event processor, a task
engine and a task assistant;
wherein the event processor is
triggered by application events associated with a change in the information,
and sends an event trigger to the task engine; wherein in response to the event
trigger, the task engine identifies rules in the task library database
associated with the event and applies the information to the identified rules
to determine the tasks to be completed, and populates on a task assistant the
determined tasks to be completed, wherein the task assistant transmits the
determined tasks to the client component.
In a nutshell, the claims require four components: an insurance
transaction database, a task library database, a client, and a server. The client accesses the insurance transaction
database to ultimately "achieve an insurance related goal." The server communicates with the client and
the two databases, responds to changes in the information stored in the
database, responsively identifies associated rules in the task library
database, and transmits tasks to be completed to the client.
Notably, the claims as written do not specify whether these
four components are hardware, software, or some combination thereof. Thus, given a literal interpretation, the
claims could read on a pure software system comprising executing processes and
data.
Judge Lourie began his discussion of the relevant law by
referring to the en banc plurality
opinion in CLS Bank, and more
specifically, his own "inventive concept" analysis therein. This analysis requires, for a claim that
encompasses an abstract idea, that one "identify and define whatever
fundamental concept appears wrapped up in the claim so that the subsequent
analytical steps can proceed on a consistent footing," and then evaluate
the balance of the claim "to determine whether it contains 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."
Judge Lourie acknowledged that this analysis was set forth in a
plurality opinion. However, he focused
on the fact that a majority of the en
banc panel agreed that, in CLS Bank,
the method and system claim rose or fell together because "the system
claim essentially implemented the process of the method claim on a general
purpose computer" and that the hardware limitations were not
meaningful. Thus, he appears to believe
that combining the analysis of method and system claims in similar
circumstances has the weight of precedent in the Federal Circuit.
In a procedural twist, Judge Lourie noted that the District Court's judgment against the patent-eligibility of Accenture's method claims
was not under appeal, and therefore was final. Based on this conclusion, and the similarity of the system and method
claims, he further concluded that the system claims must also be patent-ineligible
because "the system claims offer no meaningful limitations beyond the
method claims that have been held patent-ineligible and because, when
considered on their own, under [Mayo
Collaborative Servs. v. Prometheus Labs., Inc.,] and our plurality opinion
in CLS Bank, they fail to pass
muster."
In his substantive analysis of the claims, Judge Lourie
compared the limitations of Accenture's system and method claims "to
determine what limitations overlap, then identify the system claim's additional
limitations." He noted that system
claim 1 did explicitly recite some limitations not in method claim 8, such as
an insurance claim folder, a task library database, a server component, and a
task engine, but that "these software components are all present in the
method claims, albeit without a specific
reference to those components by name." Indeed, these components appear to be defined
functionally in claim 8.
Further, Judge Lourie noted that claim 1 did not recite
specific computer hardware components, and was a mere rewriting of the
limitations of method claim 8 with a preamble indicating that the claim was
directed to a system. Under his
interpretation of CLS Bank and Prometheus, such a claim fails to lift
any abstract idea therein to the level of being patentable subject matter. Further, he wrote that the computer hardware
described in the specification "is merely composed of generic computer
components that would be present in any general purpose computer." Thus,
he implied that, even if generic computer structure were added to claim 1, these
additional limitations would not be meaningful, and the claim would still fail
under § 101.
Judge Lourie continued by addressing the patent-eligibility of
the system claims on their own, regardless of the disposition of the associated
method claims. He found that they fall
short under this analysis as well. Accenture argued that claim 1 "narrows [the idea of generating
tasks for insurance claim processing] through its recitation of . . . an insurance transaction database, a task
library database, a client component, and a server component, which includes an
event processor, a task engine, and a task assistant." Accenture further asserted that the "complexity
and detail of the specification" were evidence that that invention
advanced the field of computer software, and was not merely an abstract
idea.
Applying his "inventive concept" analysis from CLS Bank, Judge Lourie identified the
abstract idea of claim 1 as "generating tasks based on rules to be
completed upon the occurrence of an event." Then, he considered whether the claim recites
any additional substantive limitations to narrow this idea so that the claim
doesn't encompass the full scope of the idea. He found that if even the claim were limited to being applied in a
computing environment in the insurance industry, these restrictions were mere
field of use limitations, and would not prevent the claim from preempting the
abstract idea. Judge Lourie also
rejected Accenture's argument that the complexity disclosed in the
specification was relevant, as this complexity, in Judge Lourie's view, was not
reflected in the claims.
In comparing claim 1 to the claims he found patent-ineligible
in CLS Bank and those he found
patent-eligible in Ultramercial, Judge
Lourie found Accenture's claim 1 similar to those in CLS Bank. Particularly, the
system claim in CLS Bank was also
directed to a general purpose computer adjusting values stored in a "database"
and then generating instructions. On the
other hand, Judge Lourie posited that the claim in Ultramercial contained "additional limitations from the
abstract idea of advertising as currency, such as limiting the transaction to
an Internet website, offering free access conditioned on viewing a sponsor
message, and only applying to a media product." Further, Judge Lourie noted that, in Ultramercial, the Federal Circuit reversed
a pre-answer dismissal, whereas in the present case the Court was considering a
post-claim-construction grant of summary judgment. Thus, the burden on the moving party (in both
cases, the defendant) was greater in Ultramercial.
In dissent, Chief Judge Rader took issue with the majority's
reliance on CLS Bank, as he believes
that that case lacks precedential value. He pointed out that even though eight of the ten judges on the CLS Bank panel held that the method and
system claims in that case rose or fell together, they did not state that all
associated system and method claims must share the same fate. Further, two judges reached this conclusion
merely due to the procedural posture and stipulations of the case.
On the substance of the case, Chief Judge Rader would have
found the system claims patent eligible based on the specific combination of
elements in claim 1. He faulted the
majority for removing these limitations when boiling down the invention to
merely "generating tasks based on rules to be completed upon the
occurrence of an event." Chief
Judge Rader provided several ways in which one could generate such tasks
without infringing Accenture's claims, such as using a different number of
databases or a different database structure. He also suggested that the claim required specific computer components such
that "a human performing the claimed steps through a combination of
physical or mental steps likewise does not infringe."
In comparing this case to CLS
Bank and Ultramercial, can we provide
any practical recommendations to those involved on patent prosecution or
litigation? While the landscape of § 101
remains mired in quicksand, a few solid patches of earth are beginning to
emerge.
1. Procedural
posture matters. It is possible that
Judge Lourie found the claims in Ultramercial
patent-eligible mainly because they were considered on an early motion to
dismiss, and therefore would need to be reviewed in the light most favorable to
the patentee.
2. The Federal Circuit
continues to take a dim view on claims that recite disembodied functionality,
even if couched in the language of a system or device. Despite Chief Judge Rader's belief to the
contrary, in my view Accenture's claim 1 could be performed as a series of
mental or paper-and-pencil calculations. There is common thread throughout Bilski
v. Kappos and Prometheus in the
Supreme Court, as well as RCT v. Microsoft, CLS Bank, Ultramercial, and this case in the Federal Circuit. Notably, claims reciting disembodied
functionality are more likely to be found patent-ineligible, but claims with
limitations (not just a preamble) tying such functionality to physical devices or
components are more likely to be found patent-eligible. Is the machine or transformation test making
a quiet return?
3. In the wake of CLS Bank, some commentators have advocated drafting system and method claims
with varied limitations and breadth, so that they are not lumped together for
the purposes of a § 101 analysis. While
this approach is commendable, it isn't a silver bullet. In this case, the majority deemphasized the
differences between the limitations of the system and method claims. In CLS
Bank, a number of claims across four related patents were lumped together
despite having considerably diverse limitations.
4. Judge Lourie's
inventive concept analysis, which was ultimately derived from Justice Breyer's
opinion in Prometheus, remains
unsettling in its subjectivity. A court
must "identify and define whatever fundamental concept appears wrapped up
in the claim." However, few
guidelines for doing so exist. Thus, two
judges could easily obtain two different variations of such an inventive
concept for the same claim, one leading to the conclusion that the claim meets
the requirements of § 101, the other not. In contrast, Chief Judge Rader advocates consideration of the plain
language of claims, including all recited limitations.
5. Are § 101 appeals to
the Federal Circuit likely to be determined by the luck of your panel
draw? Ending up with Judges Rader and
Newman may result in a more favorable outcome to the patentee than arguing in
front of, as one example, Judges Lourie and Reyna. The existence of such a clear intra-circuit
split, at best, limits the legal certainty of subject matter eligibility on
both philosophical and practical levels.
Accenture
Global Services, GmbH v. Guidewire Software, Inc. (Fed. Cir.
2013)
Panel: Chief Judge Rader and Circuit Judges Lourie and Reyna
Opinion by Chief Judge Rader; dissenting opinion by Circuit Judge Lourie
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