An Early Out Under § 101 Based on Claimed Long-standing Commercial Practices

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Bradley Arant Boult Cummings LLP

Late last week, the U.S. Court of Appeals for the Federal Circuit delivered ShoppersChoice.com the affirmation it ordered in Electronic Communication Technologies, LLC (ECT) v. ShoppersChoice.com, LLC. In doing so, the court supplied accused infringers with a helpful example of what may be appropriate for early dismissal under 35 U.S.C. § 101. In addition, this opinion discusses the ineligibility of claims directed at long-standing commercial practices.

ECT brought suit in the Southern District of Florida alleging that ShoppersChoice’s order and shipping confirmation systems infringed claim 11 of U.S. Patent No. 9,373,261. At a high level, the technology in this case is centered around an automated notification system that provides advance notice to customers about the pickup or delivery of a good or service. More specifically, the single asserted claim reads as follows:

An automated notification system, comprising:

one or more transceivers designed to communicate data;

one or more memories;

one or more processors; and

computer program code stored in the one or more memories and executed by the one or more processors, the computer program code comprising:

code that enables a first party associated with a personal communication device (PCD) to input or select authentication information for use in connection with a subsequent notification communication session involving advance notice of a delivery or pickup of a good or service at a stop location by a mobile thing (MT);

code that causes storage of the authentication information;

code that monitors location or travel information in connection with the MT;

code that causes initiation of the notification communication session to the PCD with the one or more transceivers, in advance of arrival of the MT at the stop location, based at least in part upon the location or travel information associated with the MT;

code that, during the notification communication session, provides the authentication information to the PCD that indicates to the first party that the notification communication session was initiated by an authorized source; and

code that, during the notification communication session, enables the first party to select whether or not to engage in a communication session with a second party having access to particulars of the pickup or delivery.

ShoppersChoice moved for judgment on the pleadings of invalidity under 35 U.S.C. § 101. Without engaging in any claim construction, the district court granted the motion when it held that the single asserted claim is abstract. In fact, while the district court conceded that the claim did include certain features that “add a degree of particularity to the invention,” such as the use of authentication information and the option to communicate with the pickup or delivery representative, it found that the “concept embodied by the invention is only the abstract idea of notifying a party of the travel status of a good or service.”

On appeal, ECT argued that the enhanced security protocols of its delivery notification system rendered the claim eligible under 35 U.S.C. § 101. In an effort to answer the question posed in Step 1 of the Alice/Mayo framework – i.e., are the claims directed to a patent-ineligible concept such as an abstract idea, law of nature, or natural phenomenon – the court first noted that the asserted claim recites a list of equipment – i.e., “one or more transceivers designed to communicate data;” “one or more memories;” “one or more processors;” and computer program code. The code (1) enables a first party to input authentication information; (2) stores the authentication information; (3) monitors the location of a mobile thing; (4) sends notification to the first party in advance of arrival of the mobile thing; (5) sends the authentication information to the first party; and (6) enables the party to select whether or not to communicate with a second party about the status of the mobile thing. Then, the court determined that functions (3) and (4) merely feature a fundamental business practice of letting a customer know in advance of the readiness for pickup or delivery. In short, the court found that the idea of providing advance notification of the pickup or delivery of a mobile thing was a long-standing commercial practice and, as such, abstract. Moreover, the added “security” measures in the claim – i.e., functions (1)-(2) and (5)-(6) – were also deemed to be abstract and amounting “to nothing more than gathering, storing, and transmitting information.” Indeed, the court distinguished the security measures in claim 11 of the ʼ261 patent from the improvements in computer capabilities that were held in previous decisions to be non-abstract under Step 1 of the Alice/Mayo framework.

With a determination under Step 1 that claim 11 is abstract, the court engaged in Step 2 of the Alice/Mayo framework to determine whether the claim contains an “inventive concept” to transform the claimed abstract idea into patent-eligible subject matter. Finding that the features in claim 11 are merely well understood, routine, and require nothing unconventional to apply the abstract idea, the court concluded that the claim was not saved under Step 2. The Federal Circuit reminded ECT (and us) that patent eligibility has nothing to do with the number of words in the claims, but rather focuses on the content therein. Moreover, the court noted that enablement of a claim does not in any way ensure that the claim is subject matter eligible under § 101.

As to ECT’s more creative argument that its good faith request after receiving a Notice of Allowance that the USPTO confirm § 101 eligibility — coupled with the expedited allowance — weighs in favor of eligibility, the Federal Circuit was unimpressed. Unfortunately for ECT, a patentee’s diligence and/or good faith during prosecution does not protect a claim from an Article III patent eligibility review. ECT also failed to convince the appellate panel that the district court erred in finding the asserted claim ineligible without engaging in claim construction. Indeed, without an argument from ECT that any specific term required construction, the court had a hard time buying into ECT’s argument. In fact, as noted by the court, it is appropriate to determine patent ineligibility under § 101 at the pleadings stage where the patentee has provided no proposed construction of any terms or proposed expert testimony that would change the § 101 analysis.

It seems that ECT might have fared better (at least at this early stage) if it had at least attempted to advance a specific and detailed claim construction argument in its opposition to ShoppersChoice’s motion. In fact, a number of denials of § 101 motions to dismiss based on patent eligibility have been based on the determination that claim construction is necessary to resolve the § 101 challenge. Nevertheless, this opinion provides an example of a successful early challenge under § 101 by an accused infringer. Because claim construction and discovery are costly phases of patent litigation, this type of early case-dispositive motion may allow a defendant to exit the suit without a significant financial hit.

As an aside, ShoppersChoice also recently argued (via teleconference) to the appellate court that the district court abused its discretion by not classifying this case as exceptional under 35 U.S.C. § 285 and not awarding attorneys’ fees. ShoppersChoice had three main arguments: (1) ECT improperly attempted to enforce the ’261 patent, which belongs to a family in which three patents have previously been invalidated; (2) ECT could not describe any claimed inventive concept to the district court; and (3) ECT has a prolific history of bringing allegedly nuisance infringement claims against multiple defendants. ECT countered that ShoppersChoice relies on patents that were not in the suit and non-precedential cases (with respect to ECT’s prior litigations). We will have to wait and see what the Federal Circuit decides, but it is not likely that the appellate court will disturb the district court’s order.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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