Federal Circuit No. 2014-1506, July 6, 2015

In Intellectual Ventures I, the Federal Circuit applied the two-step test of Alice v. CLS Bank (i) to a method of budgeting (U.S. Patent No. 8,083,137 (‘137 patent)) and (ii) to a system for customized webpage (U.S. Patent No. 7,603,382 (‘382 patent)).  With respect to both patents, the Federal Circuit ruled that the claimed invention was not directed to patentable subject matter.  Also, with respect to U.S. Patent No. 7,260,587 (‘587 patent), the Federal Circuit affirmed the district court’s claim construction of the term “associated machine readable instruction form” as must be in a hard-copy format and scanned into the computer along with the hard-copy pictures.

Regarding the ‘137 patent, the Federal Circuit applied the Alice two step analysis as follows.  In the first step, the Federal Circuit concluded that tracking financial transactions to determine whether they exceed a pre-set spending limit (i.e., budgeting) is an abstract idea.  Next, in the second step, the Federal Circuit found that the claimed invention recited no inventive concept.  In particular, the Federal Circuit noted that a database, a user profile, and a communication medium are all generic computer elements and simply applying an abstract idea to a generic computer does not transform an abstract idea to a patentable subject matter.

Regarding the ‘382 patent, the Federal Circuit similarly applied the Alice two step analysis.  First, the Federal Circuit determined the breadth of the claims in order to determine whether the claims extend to cover a “fundamental … practice long prevalent in our system …”  For instance, the Federal Circuit interpreted (i) “an interactive interface” as a generic computer element such as a web server/software combination for providing webpages; (ii) a display portion “as a function of the web site navigation data” as tailoring a portion of a website’s logo based on the time of day; and (iii) a display portion “as a function of the user’s personal characteristics” as tailoring content based on the viewer’s location or address.

Second, after determining the breadth of the claimed elements, the Federal Circuit reasoned that providing different newspaper inserts based upon the location of the individual and tailoring information (i.e., an advertisement) based on the time of day are “fundamental … practice[s] long prevalent in our system …”

Next, in the step two analysis, the Federal Circuit concluded that merely adding computer functionality to increase the speed or efficiency of the process does not confer patent eligibility on an otherwise abstract idea.  In particular, the Federal Circuit noted that a web site capable of returning a pre-designed advertisement more quickly than a newspaper is not enough to be considered as “significantly more.”  Further, the Federal Circuit reminded that steps that do nothing more than spell out what it means to “apply it on a computer” cannot confer patent eligibility and that 35 U.S.C. § 101 analysis cannot turn on the draftsman’s art.

Regarding ‘587 patent, the Federal Circuit concluded that the district court was correct in requiring “machine readable instructions” to be in hardcopy based on the combination of (i) the claim language itself, (ii) the description in the specification, and (iii) the prosecution history.

Accordingly, the Federal Circuit affirmed the district court’s ruling with respect to the claims of the ‘137, ‘382 and ‘587 patents.