Two recent District Court decisions show examples of "weak" claims, which in the past would likely be found invalid as lacking novelty or being obvious, but today are struck down as being unpatentable under § 101.  The cases illustrate the need for software or computer-implemented claims to explicitly recite novel structural components or specific details for how functions are performed.

Listingbook, LLC v. Market Leader, Inc.

On November 13, 2015, the U.S. District Court for the Middle District of North Carolina issued an opinion in the case Listingbook, LLC v. Market Leader, Inc. that held claims ineligible for patent protection under § 101.  Listingbook's U.S. Patent No. 7,454,355 describes a method and system where real estate agents use computers to log onto a website and create individual client accounts containing information about each client.  After logging into their accounts, clients can view properties found by the agent, tag properties for future reference, and if authorized, conduct their own searches of the real estate information database.  The clients' online activity is monitored and recorded in the system.

Claim 1 reads as follows:

    A computer-implemented method of providing client-accessed real estate information to a real estate professional associated with a first client and a second client, and for providing professional-accessed real estate information to the first client and the second client, the method comprising:
    connecting to a database of real estate information;
    providing the professional with access to the real estate information;
    storing a first account for the first client and a second account for the second client, the first account and the second account being authorized by the professional;
    providing the first client with access to the first account and providing the second client with access to the second account;
    providing the first client, when accessing the first account, with access to the real estate information;
    providing the second client, when accessing the second account, with access to the real estate information;
    monitoring actions of the professional while the professional is accessing the real estate information;
    monitoring actions of the first client while the first client is accessing the first account;
    monitoring actions of the second client while the second client is accessing the second account;
    generating and storing professional-accessed real estate information for the first client and the second client in response to the actions of the professional as the professional reviews the real estate information;
    generating and storing first client-accessed real estate information in response to the actions of the first client;
    generating and storing second client-accessed real estate information in response to the actions of the second client;
    providing at least some of the first client-accessed real estate information and at least some of the second client-accessed real estate information to the professional, thereby providing the professional with knowledge of the actions of the first client and the actions of the second client; and
    providing at least some of the professional-accessed real estate information for the first client to the first client and at least some of the professional-accessed real estate information for the second client to the second client, thereby providing the first client and the second client with knowledge of the actions of the real estate professional.

The patent also includes a CRM independent claim and a system independent claim with a server and communications circuit, and each of these independent claims recite the steps of method claim 1.

The District Court first discussed recent uncertainty about whether a presumption of validity and standard of proof apply in cases challenging patent-eligibility under § 101.  If so, Market Leader must show, by clear and convincing evidence, that none of the asserted claims meet the statutory requirements of 35 U.S.C. § 101.  If not, Market Leader has a lower standard.  The uncertainty arises because there is a question whether burdens of proof apply only to questions of fact, and whether a claim is directed to patentable subject matter is a question of law.  There does not seem to be a controlling Supreme Court or Federal Circuit decision on this matter, and the District Court here applied both the presumption and the standard of proof in this case.  As seen, however, even using the higher standard did not help the patent claims.

Using the two-step framework set forth by the U.S. Supreme Court's decision in Alice v. CLS Bank, the District Court first found the claims to be directed to an abstract idea.  The District Court found that Claim 1 describes a computerized version of a "conventional interaction".

The District Court noted that Listingbook's patent specification confirms that real estate agents "conventionally" connect to a database of real estate information "to locate properties of interest for their clients," and contact each client to determine whether the client is interested in any of the resulting properties and whether the client has found any properties of interest from other sources, such as print advertisements or the Internet.  Through this interaction, the agent and clients have exchanged information and collaborated in the real estate search process.  The District Court found that Listingbook's invention simply places the interaction online, and the fact that Listingbook's method is performed online -- rather than in an office, over the phone, or through email -- does not change the Court's conclusion that Claim 1 is directed to an abstract idea.

Turning to the second step of the Alice framework, the question becomes whether the claims at issue contain an "inventive concept" that transforms the abstract idea into a patent-eligible application of that idea.  Here, a generic computer is the only machine needed to perform the method of Claim 1, and "adding a computer to otherwise conventional steps does not make an invention patent-eligible."

The District Court thus found that the claims at issue in Listingbook's patent are directed to an abstract idea and lack an inventive concept to render the claims patent-eligible under § 101 of the Patent Act.

The claims here recite no novel features and really do just implement basic Real Estate agent functions over the internet.  The patent has a priority date of April 27, 2000, but that is still not quite early enough to pre-date the computerized multiple listing services (MLS) of the 1970's.  The claims here simply recite features that are too vague and lack details to provide an inventive concept, which now-a-days leads to being found invalid under § 101.  When the claims are too vague, they are more easily considered to be directed to an abstract idea.

Stanacard v. Rubard

On November 18, 2015, the U.S. District Court for the Southern District of New York issued an opinion in the case Stanacard v. Rubard, LLC that also held claims ineligible for patent protection under § 101.

Stanacard's patent in this case (U.S. Patent No. 7,346,156) is for an invention on a method for routing a long distance call.  Claim 1 of the Patent is a method claim, requiring as follows:

    A method comprising:
    detecting an identity of a caller;
    receiving an assigned incoming telephone number;
    identifying a recipient associated with the assigned incoming telephone number and the identity;
    connecting the caller and the recipient;
    wherein said caller has a plurality of assigned incoming telephone numbers to choose from, at least one of said plurality of assigned incoming telephone numbers being associated with said recipient,
    wherein each assigned incoming telephone number is associated with multiple recipient telephone numbers, a particular telephone number of a recipient being determined solely by a particular assigned incoming telephone number used by a particular identified caller and without input of further data by said caller, whereby said caller is not required to be within a particular network for making calls.

The District Court characterized the system as follows:  a telephone service provider or prepaid calling service assigns to its customer (the "end user") a unique ten digit telephone number, which the caller can dial from his personal telephone (whether a land line or a cellular device) in order to reach a designated recipient.  The caller associates that number ("the assigned incoming telephone number") with a particular, specified recipient (the "recipient telephone number").  When the customer dials those ten digits - no more - from his personal telephone, he is connected to the person whose number he has previously designated as the "recipient telephone number," without the need to enter a PIN or any additional information, including a country or city code.

The District Court also provided an illustrative example:  suppose I am the end user.  My service provider assigns me the number 555-222-1234; I tell the service provider that, when I dial those digits, I want to be connected to my best friend (the recipient), who lives in Ohio, and whose telephone number is 614-555-1213.  When I dial the assigned incoming telephone number (555-222-1234) from my personal telephone number (987-654-3210) -- which number is recognized via some unclaimed but well known device like Caller ID -- the call is forwarded directly to my best friend's home telephone number (614-555-1213).  I need not input any additional information in order to get the call routed to its intended recipient.  The invention only works when the end user dials the assigned incoming telephone number from his own telephone.

But because a particular incoming number must correlate with a particular recipient, a service provider can assign the same incoming telephone number (555-222-1234) to thousands of different customers -- each of whom can specify a different person who should receive a call if he dials those ten digits from his phone.

The District Court commented that the claim is directed to a well-known activity that is almost as old as telephony itself -- making a long distance telephone call.  The District Court noted that what plaintiff did was figure out a way to make such a call more cheaply, by dialing a ten digit local number and nothing more.  He combined two activities that have long been performed, by humans and by machines -- caller ID and call forwarding -- such that the recipient of a local call (area code plus seven digit number) uses some type of caller ID to recognize who the incoming caller is, and then forwards the incoming call to its intended recipient by associating the assigned incoming telephone number with a particular recipient's telephone number.  Importantly, the District Court commented that "Neither caller ID nor the method by which the call actually gets forwarded to its intended recipient (over what telephone network, using what switching facilities) is claimed."  No physical aspect of this process is claimed.  What is claimed is the idea of dialing only ten digits, at which point some unspecified intermediary will identify both the caller and the intended recipient of the call and connect them.

The District Court reiterated a number of times that the claims do not recite any sort of physical structure and lack details for how the functions are performed.  Using the two-part test, the District Court first found that the claims are directed to an abstract idea of connecting two people via long distance telephony through the medium of using caller ID and call forwarding when a local number is dialed, rather than to a "process," "machine," "manufacture", or "composition of matter."  Applying the second part of the test, the District Court found that the patent does not "specify" how "claim elements" interact to achieve a "desired result which overrides conventional practice," and thus, include no inventive concept that would save the claim.

Interestingly, here, the District Court hinted several times that had the claims recited some physical components and details for how the components function in a way different from conventional practice, then the claims would likely satisfy § 101.  The concept described in the patent appears to be novel, but the claims were drafted in a way that left them too vague and lacking detail.

Also, an interesting side-note to consider for § 101 analysis is whether courts should consider some type or form of "secondary considerations" during the second step of the two-prong test (i.e., when determining whether the patent claims recite any inventive concept).  In this case, the plaintiffs' expert testified that the system disclosed by the patent completely changed the calling paradigm of prepaid telecommunications by, among other things, eliminating the PIN entry as a prerequisite to placing an international telephone call and thereby solving - creatively - the major handicap of every calling card.  Further, observing that persons (including plaintiff's expert) had been trying to design a less expensive and more convenient method of placing international telephone calls for "many years," the expert further testified that, "[t]he idea behind the '156 patent -- combining the customer's telephone number and the dialed local access number into a unique 20-digit combination is elegant, simple, beautiful but by no means obvious; none of us working in this field came up with the method set forth in the '156 patent, and not for the lack of trying."  Lastly, the expert also testified that, "[t]he method disclosed by the '156 patent made an immediate and loud splash in the market place of prepaid telecommunications and garnered a market share away from others."  The District Court noted that such evidence of secondary considerations creates a genuine issue of fact about whether the patent is or is not "obvious" within the meaning of the patent laws, 35 U.S.C. § 103.  But, as to § 101, the District Court gave such evidence no weight.

It is curious from a patentee's perspective that claims are found to be unpatentable under § 101 if they are directed to abstract ideas AND ALSO lack inventive concept, but evidence to support inventive concept including secondary considerations has no weight for the § 101 analysis.  Because the § 101 analysis is so intertwined with novelty and obviousness components, it would seem that the secondary considerations should come into play as well.