IP Law Daily, PATENT—Fed. Cir.: Two Intellectual Ventures patents were abstract ideas; third was not infringed, (Jul 6, 2015)

By Mark Engstrom, J.D.

A federal district court correctly ruled that two Intellectual Ventures patents were unpatentable abstract ideas and that a third patent was not infringed because the district court had correctly construed the claim term “machine readable instruction form,” the U.S. Court of Appeals for the Federal Circuit has ruled (Intellectual Ventures I, LLC v. Capital One Bank (USA), N.A., July 6, 2015, Dyk, T.). The rulings of the district court was affirmed.

Background

Intellectual Ventures I, LLC, and Intellectual Ventures II, LLC (collectively, “Intellectual Ventures”), sued Capital One Bank (USA), NA; Capital One, NA; and Capital One Financial Corporation (collectively, “Capital One”) for the infringement of seven claims of U.S. Patent No. 8,083,137 (the “budgeting patent”); eleven claims of U.S. Patent No. 7,603,382, (the “webpages patent”); and two claims of U.S. Patent No. 7,260,587 (the “scanning patent”).

The budgeting patent, titled “Administration of Financial Accounts,” claimed methods of tracking and storing information about a user’s purchases and expenses and presenting that information to a user through pre-established and self-imposed spending limits. The webpages patent, titled “Advanced Internet Interface Providing User Display Access of Customized Webpages,” claimed methods and systems for providing customized webpage content to a user as a function of user-specified information and user navigation history. The scanning patent, titled “Method for Organizing Digital Images,” claimed methods for scanning hard-copy images onto a computer in an organized manner.

Following the district court’s construction of the claim term “machine readable instruction form” in the scanning patent, the parties stipulated to non-infringement of the asserted claims of that patent. In addition, the district court found that the asserted claims of the budgeting and webpages patents were: (1) invalid as abstract ideas and (2) invalid as indefinite. Intellectual Ventures appealed.

Patent Eligibility

To determine whether the asserted inventions claimed ineligible subject matter, the court conducted a two-step analysis. First, the court determined whether the claims at issue were directed to a patent-ineligible concept (i.e., a law of nature, a natural phenomenon, or an abstract idea). If they were, the court determined whether the remaining elements, either in isolation or in combination with the non-patent-ineligible elements, were sufficient to transform the nature of the claim into a patent-eligible application—the “inventive concept.”

The budgeting patent. The budgeting patent involved user-selected and pre-set spending limits that were stored in a database; when the spending limits were reached, the user was notified by means of “a device.”

According to the court, the patent claims were directed to an abstract idea: tracking financial transactions to determine whether they exceeded a pre-set spending limit. Although Intellectual Ventures argued that the claims were not directed to an abstract idea, it admitted that budgeting was “undoubtedly” an abstract idea. The claims recited budgeting using a “communication medium” that broadly included the Internet and telephone networks, but that limitation did not render the claims any less abstract.

Further, the claims contained no inventive concept. The recited elements—a database, a user profile, and a communication medium—were all generic computer elements, the court explained. Instructing someone to apply an abstract idea but reciting nothing more than generic computer elements that performed generic computer tasks did not make an abstract idea patent eligible. Ultimately, the budgeting calculations at issue were unpatentable because the calculations could be made using a pencil and paper with a simple notification device.

The webpages patent. The webpages patent involved the customization of webpage content as a function of known user information and navigation data. With respect to the known user information, the court concluded that “providing minimal tailoring” (i.e., providing content that was based on the location of the individual) was an abstract idea. With respect to the navigation data, the court noted that the specification provided an example of tailoring information based on navigation data. More specifically, the specification described the tailoring of a portion of the website’s logo throughout the day. In the court’s view, tailoring information based on the time of day was an abstract concept that was “long-practiced in our society.”

In addition, an inventive concept was not present. Intellectual Ventures argued that claims limited to the “dynamic” presentation of data (i.e., the “real time” customization of a web page based on information about the user) supplied an inventive concept. The court disagreed.

The specification made it clear that the determination of whether the user fell into one category or another (whether the viewer was a “Generation X’er,” for example, or an “older individual”) followed by the presentation of a pre-created advertisement based on the category determination “satisfie[d] the dynamic requirement.”

At oral argument, counsel for Intellectual Ventures admitted that the website could have a series of pre-designed advertisements that would be selected and presented based on the user’s information. Furthermore, patent eligibility was not conferred simply because the website returned a pre-designed ad “more quickly” than a newspaper could send a location-specific insert.

Intellectual Ventures argued that the “interactive interface” was a specific application of the abstract idea that provided an inventive concept. The court disagreed. Nowhere in the “vague and generic descriptions” of the interactive interface did Intellectual Ventures suggest an inventive concept, the court explained. Rather, the “interactive interface” simply described a generic web server with attendant software that provided web pages to, and communicated with, the user’s computer. According to the court, steps that did nothing more than spell out what it meant to “apply it on a computer” could not confer patent eligibility.

Ultimately, the asserted claims of the webpages patent claimed an abstract idea and did not otherwise claim an inventive concept, the court concluded.

Claim construction regarding the scanning patent. The representative claim of the scanning patent provided a method of “automatically organizing digital images” that were obtained from multiple hard copy prints of an image. The first step of the claimed method was the digital scanning of hard copy prints that were grouped into one or more categories, with “each category separated by an associated machine readable instruction form” so a digital file of each image could be obtained, and then digitally associating one or more of the categories in accordance with the associated machine-readable instruction form executed by a computer.

The court noted that the parties disputed whether the “associated machine readable instruction form” had to exist in a hard-copy format and scanned into the computer, along with the hard-copy pictures, or whether an electronic embodiment of the instruction form could satisfy the claim limitation.

The Federal Circuit concluded that the district court had correctly required that the machine-readable instructions be in hardcopy for three reasons: (1) the language of the claim itself suggested that the machine-readable instructions were used to physically separate the hard-copy prints; (2) the specification consistently described the machine-readable instruction form as a hard-copy document and thus “in no way contradict[ed] the plain meaning of the claim language”; (3) the prosecution history suggested that the machine-readable instructions had to be in a hard-copy format.

In light of the claim language, the specification, and the prosecution history, the Federal Circuit decided that a person of ordinary skill in the art would have understood the representative claim of the scanning patent as requiring the machine-readable instruction form to be in a hard-copy format. The district court’s claim construction was therefore correct.

The case is No. 2014-1506

Attorneys: Nickolas Bohl (Feinberg, Day, Alberti & Thompson, LLP) for Intellectual Ventures I, LLC, and Intellectual Ventures II, LLC. Matthew J. Moore (Latham & Watkins LLP) for Capital One Bank USA, N.A.; Capital One Financial Corp.; and Capital One, N.A.

Companies: Intellectual Ventures I and II; Capital One Bank (USA), N.A.; Capital One Financial Corp.; Capital One, N.A.

Cases: Patent FedCirNews