Post-CLS case on 35 U.S.C. 101, Accenture Global Services, GMBH and Accenture LLP v. Guidewire Software, Inc., Federal Circuit 2013

Accenture Global Services, GmbH and Accenture, LLP (“Accenture”) appealed from the grant of summary judgment by the United States District Court for the District of Delaware holding that all claims of U.S. Patent 7,013,284 are invalid under 35 U.S.C. § 101.

The ‘284 software patent describes a computer program for handling insurance-related tasks.

The software patent discloses various software components, including a “data component that stores, retrieves and manipulates data” and a client component that “transmits and receives data to/from the data component.” The client component also includes a business component that “serves as a data cache and includes logic for manipulating the data.”  There is also a controller component to handle program events and an adapter component to interface with a data repository.

The specification contains detailed descriptions of the various software components, including many of the functions those components utilize and how those components interact.

Claim 1 is a claim to a software system for generating tasks to be performed in an insurance organization and 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.

 Claim 8 claims a software method for generating tasks to be performed in an insurance organization and recites:
       An automated method for generating tasks to be performed in an insurance organization, the method comprising: 

       transmitting information related to an insurance transaction;
       determining characteristics of the information related to the insurance transaction; 

       applying the characteristics of the information related to the insurance transaction to rules to determine a task to be completed, wherein an event processor interacts with an insurance transaction database containing information related to an 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; 

       transmitting the determined task to a task assistant accessible by an assigned claim handler, wherein said client component displays the determined task; 

       allowing an authorized user to edit and perform the determined task and to update the information related to the insurance transaction in accordance with the determined task;

       storing the updated information related to the insurance transaction; and

       generating a historical record of the completed task.

The Federal Circuit found many similarities between the apparatus claim and method claim and noted that both claim 1 and claim 8 disclose aspects of “generating tasks to be performed in an insurance organization.”  They also noted that claim 1 and claim 8 further include many of the same software components.  

The Federal Circuit stated that they recently evaluated 35 U.S.C. § 101 and its application to computer software in CLS Bank Int’l v. Alice Corp., 717 F.3d 1269 (Fed. Cir. 2013) (en banc). The plurality opinion in CLS Bank identified a two-step process, derived from the Supreme Court’s decision in Mayo Collaborative Servs. v. Prometheus Labs., Inc., ___ U.S. ___, 132 S. Ct. 1289 (2012), for analyzing patent eligibility under § 101. First, the court must identify “whether the claimed invention fits within one of the four statutory classes set out in § 101.”  Second, one must assess whether any of the judicially recognized exceptions to subject-matter eligibility apply, including whether the claims are to patent-ineligible abstract ideas.

In the case of abstractness of a software patent, the court must determine whether the claim poses “any risk of preempting an abstract idea.”  To do so the court must first “identify and define whatever fundamental concept appears wrapped up in the claim.”  Then, proceeding with the preemption analysis, the balance of the claim is evaluated to determine whether “additional substantive limitations . . . narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.”

The Federal Circuit then stated that although CLS Bank issued as a plurality opinion, in that case a majority of the court held that system claims that closely track method claims and are grounded by the same meaningful limitations will generally rise and fall together.  

The district court in this case held that the method claims of the ’284 software patent are invalid under § 101. That judgment was not appealed by Accenture.  That may have been a big mistake.

The Federal Circuit stated that because the ’284 software patent’s method claims were found to be patent ineligible, they should first compare the substantive limitations of the method claim and the system claim to see if the system claim offers a “meaningful limitation” to the abstract method claim, which has already been adjudicated to be patent-ineligible.  CLS Bank, 717 F.3d at 1291.

Under this analysis, the court compares the two claims to determine what limitations overlap, then identify the system claim’s additional
limitations. Essentially, the court must determine whether the system claim offers meaningful limitations “beyond generally linking ‘the use of the [method] to a particular technological environment.’” Id. (quoting Bilski, 130 S. Ct. at 3230).  

The court went on to say that the ’284 software patent’s system claim 1 includes virtually the same limitations and many of the same software components as the patent-ineligible method claims. Both claims are for “generating tasks to be performed in an insurance organization.”

Accenture only points to system claim 1’s inclusion of an insurance claim folder, a task library database, a server component, and a task engine in attempting to show that the system claim is meaningfully different from the ’284 patent’s method claims. However, according to the Federal Circuit, these software components are all present in the method claims, albeit without a specific reference to those components by name.

The Federal Circuit stated that even the specification of the ’284 patent makes little distinction between the system and method claims.

According to the Federal Circuit, because the system claim and method claim contain only “minor differences in terminology [but] require performance of the same basic process,” they should rise or fall together.

Accenture reasonably argued that system claim 1 of the software patent remains patent-eligible even after CLS Bank. It contended that the claim is patent-eligible because the ’284 patent implements the general idea of generating tasks for insurance claim processing, but narrows it through its recitation of a combination of computer components including 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 argued that the complexity and detail of the specification demonstrate that the patent is an advance in computer software and not simply a claim to an abstract idea. Additionally, Accenture pointed to the recently-issued decision in Ultramercial as support for the patent-eligibility of system claim 1.

Guidewire responded that system claim 1 of the software patent sets forth the same steps and recites all the same elements as method claim 8 and requires no specific hardware or any particular algorithm.

The Federal Circuit finally concluded that the system claims of the ’284 software patent were patent-ineligible both because Accenture was unable to point to any substantial limitations that separate them from the similar, patent-ineligible method claim and
because, under the two-part test of CLS Bank, the system claim does not, on its own, provide substantial limitations to the claim’s patent-ineligible abstract idea.  

Judge Rader dissented.  I agree with his dissent.  He noted that prior to granting en banc review in CLS Bank, the Federal Circuit commented: “no one understands what makes an idea abstract.”  After CLS Bank, nothing has changed.  Opinions spend page after page revisiting cases and those of the Supreme Court, and still we continue to disagree vigorously over what is or is not patentable subject matter.

Indeed, deciding what makes an idea “abstract” is “reminiscent of the oenologists trying to describe a new wine.”

I couldn’t agree more.

Post-Bilski case on Beauregard claims, CyberSource v. Retail Decisions, Federal Circuit 2011 (Software Patents)

The Federal Circuit reviewed an appeal by CyberSource Corporation from a decision of the District Court for the Northern District of California. The district court had granted summary judgment of invalidity of claims 2 and 3 of U.S. Patent No. 6,029,154 (“’154 patent”) under 35 U.S.C. § 101 for failure to recite patent-eligible subject matter. The patent relates to a method and system for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet.

The Federal Circuit refused to hold that all Beauregard claims are necessarily statutory. Instead, they treated a Beauregard claims as a process claim and then applied the machine-or-transformation test.

Claim 3, after reexamination, reads:

3. A method for verifying the validity of a credit card transaction over the Internet comprising the steps of:

a) obtaining information about other transactions that have utilized an Internet address that is identified with the credit card transaction;

b) constructing a map of credit card numbers based upon the other transactions and;

c) utilizing the map of credit card numbers to determine if the credit card transaction is valid.

Claim 2, after reexamination, is a Beauregard claim and reads:

2. A computer readable medium containing program instructions for detecting fraud in a credit card transaction between a consumer and a merchant over the Internet, wherein execution of the program instructions by one or more processors of a computer system causes the one or more processors to carry out the steps of:

a) obtaining credit card information relating to the transactions from the consumer; and

b) verifying the credit card information based upon values of plurality of parameters, in combination with information that identifies the consumer, and that may provide an indication whether the credit card transaction is fraudulent,

wherein each value among the plurality of parameters is weighted in the verifying step according to an importance, as determined by the merchant, of that value to the credit card transaction, so as to provide the merchant with a quantifiable indication of whether the credit card transaction is fraudulent,

wherein execution of the program instructions by one or more processors of a computer system causes that one or more processors to carry out the further steps of;

[a] obtaining information about other transactions that have utilized an

Internet address that is identified with the credit card transaction;

[b] constructing a map of credit card numbers based upon the other transactions; and

[c] utilizing the map of credit card numbers to determine if the credit card transaction is valid.

The Federal Circuit first considered claim 3. The Federal circuit noted that CyberSource acknowledged that the “Internet address” recited in step (a) of claim 3 “may be, for example, an Internet protocol (IP) address or an e-mail address for the particular credit card transaction.” The Federal Circuit noted that CyberSource further concedes that the “map of credit card numbers” recited in step (b) can be as simple as a list of credit card transactions relating to a particular IP address. Finally, the Federal Circuit noted that step (c) does not limit claim 3 to any specific fraud detection formula or mathematical algorithm, but rather broadly purports to encompass any means of “utilizing the map of credit card numbers to determine if the credit card transaction is valid.”

The district court found that claim 3 fails to meet either prong of the machine-or-transformation test. The Federal Circuit agreed and agreed with the district court that the method of claim 3 simply requires one to “obtain and compare intangible data pertinent to business risks.” The mere collection and organization of data regarding credit card numbers and Internet addresses is insufficient to meet the transformation prong of the test, and the plain language of claim 3 does not require the method to be performed by a particular machine, or even a machine at all.

The Supreme Court affirmed the invalidity of Bilski’s claims. The Supreme Court declined to generally invalidate software patents and instead held that the Federal Circuit’s Machine-or-Transformation test is not the exclusive test to determining if a method is statutory.

The Federal Circuit then went on to claim 2, the Beauregard claim. A Beauregard claim, named after In re Beauregard, 53 F.3d 1583 (Fed. Cir. 1995), is a claim to a computer readable medium (e.g., a disk, hard drive, or other data storage device) containing program instructions for a computer to perform a particular process.

The Federal Circuit stated that regardless of what statutory category a claim’s language is crafted to literally invoke, we look to the underlying invention for patent-eligibility purposes. Here, it is clear that the invention underlying both claims 2 and 3 is a method for detecting credit card fraud, not a manufacture for storing computer-readable information. This case is thus similar to In re Abele, 684 F.2d 902 (CCPA 1982).

The Federal Circuit went on to say that in the present case, CyberSource had not met its burden to demonstrate that claim 2 is “truly drawn to a specific” computer readable medium, rather than to the underlying method of credit card fraud detection.

The Federal Circuit acknowledged that, after Abele, they have held that, as a general matter, programming a general purpose computer to perform an algorithm “creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software.” In re Alappat, 33 F.3d 1526, 1545 (Fed. Cir. 1994). But stated that they have never suggested that simply reciting the use of a computer to execute an algorithm that can be performed entirely in the human mind falls within the Alappat rule. Thus, despite its Beauregard claim format, under Abele, we treat claim 2 as a process claim for patent-eligibility purposes.

The Federal Circuit stated that one could mentally perform the fraud detection method that underlies both claims 2 and 3 of the ’154 patent, as the method consists of only the general approach of obtaining information about credit card transactions utilizing an Internet address and then using that information in some undefined manner to determine if the credit card transaction is valid. Because claims 2 and 3 attempt to capture unpatentable mental processes (i.e., abstract ideas), they are invalid under § 101.

The Federal Circuit affirmed the district court holding.

The Federal Circuit decision can be found here:

www.cafc.uscourts.gov/images/stories/opinions-orders/09-1358.pdf

Post-Bilski Case, RCT v. Microsoft Corp.(Software Patents)

This case is significant because the Federal Circuit took a broad view of patent eligible subject matter in a post-Bilski case. This case involved patents related to digital image. Some of the claims didn’t outright specify hardware items.

In this case, Research Corporation Technologies, Inc. (“RCT”) initiated an action against Microsoft Corporation (“Microsoft”), alleging infringement of six related patents: U.S. Patent Nos. 5,111,310; 5,341,228; 5,477,305; 5,543,941; 5,708,518 (“’518 patent”); and 5,726,772. The United States District Court for the District of Arizona held that certain claims of the ’310 and ’228 patents were invalid under 35 U.S.C. § 101.

RCT’s six patents relate to digital image halftoning. Digital images are, in fact, thousands of pixels arranged in arrays of rows and columns. Each pixel in a black-and- white image contains information about the gray level of the image at that particular position. A black-and-white image can have 256 shades of gray. A gray level 1 repre- sents black and a gray level 256 represents white, with intervening numbers representing various shades of gray. For color images, a computer creates separate color- specific arrays of pixels, one array for each primary color. A color-specific array has pixels containing information about the shade level of that color at that particular position.

Digital images often show shades of gray and even a spectrum of colors. Nonetheless, computer displays and printers can only use a limited number of primary colors to display these digital images. Halftoning bridges this gap by simulating a continuous tone image through the use of dots. Halftoning techniques allow computers to present many shades and color tones with a limited number of pixel colors. These techniques place the dots of primary colors in a formation that gives the viewer the illusion of many more shades of gray or varying colors.

Asserted claims 1 and 2 of the ‘310 patent recited:
1. A method for the halftoning of gray scale images by utilizing a pixel-by-pixel comparison of the image against a blue noise mask in which the blue noise mask is comprised of a random non-deterministic, non-white noise single valued function which is designed to produce visually pleasing dot profiles when thresholded at any level of said gray scale images.

2. The method of claim 1, wherein said blue noise mask is used to halftone a color image.

Note that no computer or computer hardware was specified in these claims.

The Federal Circuit noted that the Patent Act of 1952 sets forth the categories of subject matter eligible for patent protection:

Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title.
35 U.S.C. § 101. The Federal Circuit noted that section 101 emphasizes that “any” subject matter in the four independent categories and “any” improvement in that subject matter qualify for protection. The Supreme Court recently reemphasized the significance of these broad statutory categories with the broadening double “any” exhortation as well. Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010).

The Federal Circuit also noted that the section 101 patent-eligibility inquiry is only a threshold test. The Supreme Court recently emphasized this statutory framework and faulted the Federal Circuit’s “machine or transformation” test for eligibility as nonstatutory. In refocusing the eligibility inquiry on the statute, the Supreme Court advised that section 101 eligibility should not become a substitute for a patentability analysis related to prior art, adequate disclosure, or the other conditions and requirements of Title 35. In other words, section 101 does not permit a court to reject subject matter categorically because it finds that a claim is not worthy of a patent.

The Federal Circuit went on to state that, with that guidance, the court also will not presume to define “abstract” beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act. In that context, the Federal Circuit perceived nothing abstract in the subject matter of the processes claimed in the ’310 and ’228 patents. The ’310 and ’228 patents claim methods (statutory “processes”) for rendering a halftone image of a digital image by comparing, pixel by pixel, the digital image against a blue noise mask.

The invention presents functional and palpable applications in the field of computer technology. These inventions address “a need in the art for a method of and apparatus for the halftone rendering of gray scale images in which a digital data processor is utilized in a simple and precise manner to accomplish the halftone rendering.” The fact that some claims in the ’310 and ’228 patents require a “high contrast film,” “a film printer,” “a memory,” and “printer and display devices” also confirm this court’s holding that the invention is not abstract. Indeed, this court notes that inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.

The Federal Circuit also observed that the claimed methods incorporate algorithms and formulas that control the masks and halftoning. These algorithms and formulas, even though admittedly a significant part of the claimed combination, did not bring this invention even close to abstractness that would override the statutory categories and context.

In view of this decision, it seems that few software-based inventions will be considered to be too abstract for the Federal Circuit, even if some claims do not specifically recite hardware.