Online Banking Patents Based On “Abstract Ideas” Held Patent Ineligible Under Alice
In Intellectual Ventures I LLC v. Capital One Bank (USA), NA, Appeal No. 2014-1506, the Federal Circuit held that claims directed to (a) storing and transmitting data related to a user’s pre-set spending limit (that is, budgeting), and (b) customizing web page content based on user information and navigation data, were patent-ineligible under 35 U.S.C. § 101.
Intellectual Ventures sued Capital One for patent infringement. The district court found that two of the patents claimed ineligible subject matter under § 101.
On appeal, the Federal Circuit affirmed the ineligibility of the asserted claims after applying the two-step analysis of Alice Corp v. CLS Bank International, 134 S. Ct. 2347 (2014). Regarding the budgeting claims, the Federal Circuit determined that the asserted claims were directed to the abstract idea of: “tracking financial transactions to determine whether they exceed a pre-set spending limit.” The Federal Circuit stated that the abstract idea here was not meaningfully different from the ideas found to be abstract in other cases. Moving to second step of Alice, the Federal Circuit determined that the claims contained no inventive concept because they recited generic computer elements and simply instructed one to “apply” the abstract idea to a computer. Further, the budgeting calculations at issue here are unpatentable because they could be done with pencil and paper.
Regarding the webpage content claims, the Federal Circuit held that the asserted claims were abstract because they were directed to a fundamental practice. For example, customizing information based on known customer data has been long used in advertising inserts for newspapers. Regarding the second step, the Federal Circuit concluded there was no inventive concept in the asserted claims because the “interactive interface” and “dynamic” limitations were generic computer elements, and simply increasing the speed or efficiency of the process through the use of a computer does not confer patent eligibility. The Federal Circuit also distinguished the present case from DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014), holding that, unlike the claims at issue in DDR, IV’s claims do not address problems unique to the Internet.
No Lost Profits on Lost Extraterritorial Sales
In WesternGeco LLC v. ION Geophysical Corp., Appeal No. 2013-1527, the Federal Circuit denied lost-profit damages based on certain overseas activities where the defendant was liable for infringement under 35 USC § 271(f).
WesternGeco sued ION Geophysical for infringing four patents on ocean floor survey technology. The jury found infringement and no invalidity with respect to all of the asserted patents and awarded lost profits and reasonable royalty damages of $93.4 million and $12.5 million, respectively. ION appealed the denial of its post-trial motions, arguing that the district court applied an incorrect standard in granting summary judgment of infringement under 35 U.S.C. § 271(f)(1). In addition, ION argued that WesternGeco lacked standing to sue because it did not own the asserted patents, a position ION had raised for the first time in a post-trial motion to dismiss. WesternGeco conditionally cross-appealed with respect to certain damages issues.
The Federal Circuit affirmed in all respects, but reversed the district court’s award of lost profits resulting from conduct occurring abroad. Regarding the damages award, WesternGeco’s successful lost profits theory was that ION’s sales of infringing devices to WesternGeco’s competitors had caused WesternGeco to lose out on ten lucrative survey contracts that would have generated over $90 million in profits. ION challenged the lost profits award, arguing that WesternGeco could not recover on the lost contracts because they were entered into abroad and involved services rendered outside the jurisdictional reach of patent law. The Federal Circuit agreed with ION, citing Power Integrations, Inc. v. Fairchild Semiconductor International, Inc., 711 F.3d 1348 (Fed. Cir. 2013), which rejected compensation for foreign exploitation of a patented invention. In turn, the Federal Circuit rejected WesternGeco’s argument that Power Integrations applies only to compensation for infringement under §§ 271(a)-(b), clarifying that § 271(f) created a limited exception to the presumption against extraterritoriality, and did not expand the scope of potential recovery. Nevertheless, the Federal Circuit noted that WesternGeco could still recover damages in the form of reasonable royalties, but did not address the question of whether a similar territorial limit would apply to such damages.
Federal Circuit Clarifies Analogous Art Standard In Obviousness Analysis
In Circuit Check Inc. v. QXQ Inc., Appeal No. 2015-1155, the Federal Circuit held that simple techniques within the common knowledge of any layperson are not necessarily analogous art for purposes of obviousness if an inventor would not have looked to these techniques to solve the particular problem at hand.
This appeal arises from a district court’s decision overturning a jury’s unanimous verdict that all asserted patent claims were nonobvious. Circuit Check sued QXQ, alleging QXQ’s products infringed its patents. QXQ argued the patents were invalid for obviousness. QXQ conceded that the stipulated prior art did not disclose one of the claim limitations. But at trial, QXQ argued that other references—on old technologies very different from Circuit Check’s claimed technology—disclosed the missing limitation. Circuit Check argued the disputed art was not analogous. The jury found the asserted claims not invalid for obviousness. After the jury verdict, QXQ filed a motion for JMOL of invalidity for obviousness. The district court granted QXQ’s motion, finding that, although the disputed art was not “technically pertinent” and “had not been used” in the area of Circuit Check’s technology, “any layman” would have understood how to use the techniques in the disputed art.
The Federal Circuit reversed the district court’s JMOL. In reviewing a jury’s obviousness verdict, the Federal Circuit first presumes that the jury resolved the underlying factual disputes in favor of the verdict winner and leaves those presumed findings undisturbed if they are supported by substantial evidence. Then, the Federal Circuit examines the legal conclusion de novo to determine whether it is correct in light of the presumed jury fact findings. The Federal Circuit observed that, by finding the claims nonobvious, the jury presumably found the disputed art was not analogous. The Federal Circuit determined substantial evidence supported the jury’s presumed finding. Prior art is analogous if it is from the same field of endeavor or if it is reasonably pertinent to the particular problem the inventor was trying to solve. In light of the jury instructions, the disputed art was not part of the field of the invention. Therefore, the disputed art could be analogous only if it was reasonably pertinent, that is, if it “logically would have commended itself to an inventor’s attention in considering his problem.” The jury heard testimony that a person of ordinary skill in the art would not have thought about the technologies in the disputed art in considering how to solve the problem in Circuit Check’s patent. The Federal Circuit determined the jury was entitled to weigh this testimony and find the disputed art not analogous. The Federal Circuit remarked: “An alleged infringer should not be able to transform all systems and methods within the common knowledge into analogous prior art simply by stating that anyone would have known of such a system or method. The question is not whether simple concepts . . . are within the knowledge of lay people or even within the knowledge of a person of ordinary skill in the art. Rather, the question is whether an inventor would look to this particular art to solve the particular problem at hand.”
Federal Circuit Vacates Decision Allowing Access To Confidential Documents In Parallel Foreign Actions
In In re POSCO, Appeal No. 2015-112, the Federal Circuit granted a petition for mandamus and remanded the case for the district court to reconsider modification of a protective order permitting cross-production of an opponent’s confidential documents to counsel in parallel foreign litigation.
Nippon Steel sued POSCO for patent infringement and unfair competition in the District of New Jersey. The district court entered a protective order limiting the use of discovered confidential materials “solely for purposes of the prosecution or defense of [the U.S. action].” Nippon Steel sued POSCO in Japan, and POSCO filed a declaratory judgment action in Korea, both regarding alleged trade secret misappropriation. Nippon Steel filed a motion to modify the protective order to allow its U.S. counsel to cross-produce to its foreign counsel in the Japanese and Korean cases certain confidential POSCO materials produced in the U.S. case. The district court granted the motion without addressing the role of 28 U.S.C. § 1782 or the Supreme Court’s decision in Intel Corp. v. Advanced Micro Devices, Inc., 542 U.S. 241 (2004), which considered the framework under § 1782 for assessing whether to authorize discovery for use in foreign proceedings. POSCO filed a request for a writ of mandamus from the Federal Circuit.
The Federal Circuit considered the role of 28 U.S.C. § 1782 and the framework of Intel in the context of the request to modify the protective order. It found that, while “§ 1782 does not directly govern requests to modify a protective order to make material available in a foreign proceeding—as opposed to direct requests for evidentiary material for use in a foreign proceeding,” it “still has a role to play when a party seeks to modify a protective order to use previously discovered documents in a foreign proceeding.” In support, the Federal Circuit recognized that the considerations of parity and comity found relevant in Intel were equally applicable here, and further noted that several district courts had considered the Intel factors in similar cases. Accordingly, the Federal Circuit granted POSCO’s petition and remanded to the district court for reconsideration in view of § 1782 and the Intel framework.
