Data Transaction Claim Not Patent Eligible - Cyberfone Systems, LLC v. CNN Interactive, Inc., et al.

by McDermott Will & Emery
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The U.S. Court of Appeals for the Federal Circuit, in a ruling designated as non-precedential, affirmed the district court finding that a claimed method involved an “abstract idea” and was therefore not patent eligible.  Cyberfone Systems, LLC v. CNN Interactive, Inc., et al., Case Nos. 12-1673, -1679 (Fed. Cir., Feb. 26, 2014) (Dyk, J.) (non-precedential).

After Cyberfone sued 81 defendants alleging infringement of its Patent No. 8,019,060, several moved for summary judgment that the patent was directed to patent ineligible subject matter under § 101.  The representative claim reads as follows:

A method, comprising:

obtaining data transaction information entered on a telephone from a single transmission from said telephone;

forming a plurality of different exploded data transactions for the single transmission, said plurality of different exploded data transaction[s] indicative of a single data transaction, each of said exploded data transactions having different data that is intended for a different destination that is included as part of the exploded data transactions, and each of said exploded data transactions formed based on said data transaction information from said single transmission, so that different data  from the single data transmission is separated and sent to different destinations; and

sending said different exploded data transactions over a channel to said different destinations, all based on said data transaction information entered in said single transmission.

After the district court found that the claimed subject matter was “nothing more than a disembodied concept of data sorting and storage” and granted summary judgment of invalidity under § 101, Cyberfone appealed.

Cyberfone argued that the claimed subject matter was not an abstract idea because a human, unaided by devices, could not perform the steps recited in the claim.  The Federal Circuit, after reminding us that the “category of patent-ineligible abstract ideas is not limited to methods that can be performed in the human mind” went onto consider whether the claim includes “additional substantive limitations … [that] narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.”

On this issue Cyberfone argued that the claim was “sufficiently limited by the machinery it requires and transformations it effects.”  However, the Federal Circuit explained that for “a machine to impose a meaningful limit … it must play a significant part in permitting the claimed method to be performed.”  If a claim “simply [implements] an abstract concept on a computer, without meaningful limitations to that concept, does not transform a patent-ineligible claim into a patent eligible one.”

In this case, the Federal Circuit explained that the recited telephone only acts as a device to obtain data and “adds nothing of significance to the claimed abstract idea.”  The Court also rejected Cyberfone’s assertion that the claim recitation of sending exploded data transactions over a channel “requires an additional specific machine,” noting the absence of any particular machine that is required to perform the function of the recited channel.

Finally, the Federal Circuit rejected the contention that the claims were sufficiently limited by the transformation that results from the claimed “exploding” of data transactions.  As the Court explained, the asserted “transformation” was simply “the mere collection and organization of data” which is “insufficient to meet the transformation prong of the [machine or transformation] test.”  Rather, as the Court explained, the claim stipulation “merely makes the originally gathered information accessible to different destinations without changing the content or its classification.”

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