IP Law Daily, PATENT—D.N.J.: Method for processing price-quote requests described abstract idea, lacked inventiveness, (Jul 2, 2015)

By Thomas Long, J.D.

The claims of a patent for a computerized system for processing requests for quotations between buyers and sellers were ineligible for protection because they were directed toward abstract subject matter and lacked additional “inventive concepts” to render them patent-eligible, the federal district court in Camden, New Jersey, has decided (Source Search Technologies, LLC; Kayak Software Corp., July 1, 2015, Irenas, J.). The patent’s owner could not go forward with an infringement suit against a software company.

Patent-in-suit. Plaintiff Source Search Technologies, LLC (SST) owned U.S. Patent No. 5,758,328 (“the ‘328 patent”), entitled “Computerized Quotation System and Method.” The ’328 patent presents an alternative to prior computerized systems for obtaining quote information from vendors, which utilized cumbersome centralized databases.

Infringement allegations. SST alleged that defendant Kayak Software Corp. infringed claims 12 and 20 of the ’328 patent. Both claims described a method of purchasing goods or services over a data network by communicating a request for a quotation (RFQ) from a potential buyer to a means of filtering the requests. The filter is used to ascertain a set of sellers that are capable of supplying the requested goods or services, obtain price quotes from at least one of those potential sellers, and forward the quotes to the potential buyer. Kayak moved for summary judgment on the ground that the claims were invalid under 35 U.S.C. §101.

Validity under Section 101. Section 101 lists four categories of eligible subject matter: processes, machines, manufactures, and compositions of matter. The U.S. Supreme Court recognizes three exceptions to Section 101’s broad eligibility principles: laws of nature, physical phenomena, and abstract ideas. With respect to the exceptions, courts applied a two-step test. First, courts determined whether the claims at issue are directed to one of the three patent-ineligible categories. Second, if they were, the court determined whether there was “something else” in the claims—that is, an “inventive concept”—that showed that the claims amounted to more than a patent on the ineligible matter itself. The principle that abstract ideas lacking an inventive concept should be ineligible for protect stemmed from a concern of preemption; that is, the concern that a patent might effectively grant a monopoly over an abstract idea and will impede others from innovating in the field.

Abstract idea. SST conceded that the ’328 patent’s claims were directed to the abstract concept of obtaining quotes from selected vendors. This concept fell squarely within the category of fundamental economic practices that had been held to be abstract ideas.

Inventive concept. SST argued, however, that additional inventive concepts rendered the claims eligible for patent protection under Section 101. Kayak contended that the ’328 patent, in bypassing the need for a centralized database and obtaining RFQ information from vendor databases directly, acted no differently from an agent calling up a vendor and asking for the information. The patented invention employed no more than a conventional computer network using generic technology, Kayak asserted, which was not sufficient to transform the abstract idea into a patentable invention.

SST cited only one aspect of claims 12 and 20 that transformed the patent’s abstract idea into a patent-eligible invention. Specifically, SST pointed to how the invention obtained quotes by “acquiring the required and available quote information from the vendor’s product database using predistributed software.” The quoted language was derived from the court’s claim construction order, specifically its construction of the term “obtaining … quotes.” According to the court, the analysis of whether this aspect added an inventive concept depended on the meaning of “predistributed software.”

A patent may be eligible for protection under Section 101 if its claims did not merely recite the performance of a known business practice and apply it to the Internet, but provided a solution that was “necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” According to SST, the method described in claims 12 and 20 added inventive concepts to the underlying abstract method because: (1) the USPTO had distinguished the ’328 patent from prior art references that were similarly directed toward soliciting quotes from vendors using computer technology but that did not use “predistributed software”; and (2) the use of predistributed software solved database maintenance and interface problems particular to computer systems.

Preemption. SST argued that the ’328 patent did not preempt other computerized methods for obtaining quotes from selected vendors. Although SST was correct that the concept of preemption was an important rationale for excluding abstract ideas from protection under Section 101, that did not necessarily mean that a patent will be ineligible only if its claims preclude substantially all of the potential methods of carrying out the abstract idea, the court said. Ideas that did not preempt an entire field were not per se patent-eligible. It would be impossible for courts to know whether and to what extent future innovation might be curtailed. Therefore, the fact that there were other, noninfringing methods of obtaining quotes did not mean that the ’328 patent’s claims automatically satisfied the Section 101 analysis. To be eligible, the limitation distinguishing the ’328 patent’s claims from other inventions had to constitute a specific, unconventional step.

The fact that the USPTO issued the ’328 over prior art was not determinative, the court said. SST conflated the “novelty” requirement of Section 102 with the issue of patent-eligible subject matter under Section 101. The novelty of an element or step in a process was not relevant to the question of whether the subject matter of a claim satisfied the requirements of Section 101. The relevant question was not whether the use of predistributed software was novel, but whether the predistributed software qualified as an inventive concept

Technological solutions. SST argued that the ’328 patent’s claims comprised eligible subject matter because they presented technological solutions to problems specifically arising in the realm of computer networks—specifically, database management and computer interface issues. The court disagreed. The problems described by SST were not created by technology; they would exist in a “brick and mortar” context, as well. Merely improving speed and efficiency by using the Internet or computers did not root a problem and its solution in computer technology. In the court’s view, the ’328 patent was directed to an efficient system and method of obtaining quotes from selected vendors, and this was a business practice that existed prior to the invention of the Internet. The invention covered by the ’328 patent dealt with an issue concerning centralized databases, but SST could not set aside the ultimate direction of the patent, which was a “clearly well-worn business practice,” according to the court.

SST further contended that the ’328 patent solved distinct problems relating to database management and computer interface. By using predistributed software to obtain RFQ information directly from vendor databases, the ’328 patent’s method addressed the difficulties in keeping centralized databases current and in offering an unlimited array of products and services through such a database. However, this solution did not address a computer-centric problem. The database management problem was not unique to the world of computers; it existed in sets of data kept in hard formats as well.

According to SST, the ’328 patent’s process of interacting with vendor databases resolved computer interface issues particular to computer networks. Kayak responded by arguing that the overall function of the claims was analogous to the function of an agent phoning vendor representatives or going through vendor catalogues for quote information related to certain products and services. A computer-centric problem did indeed arise with regard to how the central system interfaced with varied vendor databases, the court said. However, the fact that the claims addressed a computer-centric problem did not mean that the manner in which they addressed the problem constituted an inventive concept.

Neither the ’328 patents’ claims nor specifications provided detail as to how the predistributed software worked to facilitate communication between the central system and vendor databases, thereby eliminating the interface problem. There was no stated structure to the software. Without specific detail as to how the software actually functioned, the mere mention of the use of software did not add the “significantly more” needed to render an abstract idea patentable. Moreover, the court noted, SST’s own expert had stated that the software at issue was “well known” in the industry. SST acknowledged that many types of software could accomplish the task at hand.

Accordingly, as a matter of law, claims 12 and 20 of the ’328 patent failed to add an inventive element, and the claims were not eligible for patent protection under Section 101.

The case is Civil Action No. 11-3388 (JEI/KMW).

Attorneys: Jeffrey I. Kaplan (Kaplan Breyer Schwarz & Ottesen, LLP) for Source Search Technologies, LLC. Rosemary Alito (K&L Gates LLP) for Kayak Software Corp.

Companies: Source Search Technologies, LLC; Kayak Software Corp.

Cases: Patent NewJerseyNews