I/P Engine, Inc. v. AOL Inc. (Fed. Cir. 2014)

by McDonnell Boehnen Hulbert & Berghoff LLP

AOLEver since the 2010 Supreme Court opinion in Bilski v. Kappos was handed down, the debate over the scope of patent-eligibility under 35 U.S.C. § 101 has been at times stimulating, complex, comical, and frustrating.  Now it has taken a turn for the disturbing.

I/P Engine sued AOL and several other parties in the United States District Court for the Eastern District of Virginia, alleging infringement of U.S. Patent Nos. 6,314,420 and 6,775,664.  As an example, claim 26 of the '664 patent recites:

A method for obtaining information relevant to a first user comprising:
    searching for information relevant to a query associated with a first user in a plurality of users;
    receiving information found to be relevant to the query by other users;
combining the information found to be relevant to the query by other users with the searched information; and
    content-based filtering the combined information for relevance to at least one of the query and the first user.

After a trial, the verdict was that both patents were infringed, not anticipated, and not obvious.  On appeal, the Federal Circuit panel of Judges Wallach, Mayer, and Chen reversed the District Court on the grounds that the claims were obvious.  Judge Chen dissented from this non-precedential decision.

Where this case gets interesting, however, is Judge Mayer's concurrence.  Neither the majority opinion nor Judge Chen's dissent invoke § 101, but Judge Mayer has a lot to say about that part of the statute.

In Judge Mayer's view, the recent high court Alice v. CLS Bank opinion "made clear that abstract ideas untethered to any significant advance in science and technology are ineligible for patent protection."  He referred to the two-prong CLS Bank test as a "technological arts test for patent-eligibility."  In applying this test, Judge Mayer believes that "advances in non-technological disciplines, such as business, are irrelevant."  Further, he writes that the Supreme Court did not address the "issue of whether [Alice's] claimed intermediated settlement technique represented an innovative method for improving commercial transactions" because these claims were non-technical in nature.

It worthwhile to note at this point that the Supreme Court did not close the door on business method patents.  While three of the nine justices are of the mind that "any claim that merely describes a method of doing business does not qualify as a 'process' under §101," this was not the majority holding.  Instead, as reflected in the USPTO's June 25, 2014 Preliminary Examination Instructions, Alice v. CLS Bank "neither creates a per se excluded category of subject matter, such as software or business methods, nor imposes any special requirements for eligibility of software or business methods."  Also, Congress has explicitly acknowledged the existence of business method patents in the AIA's Covered Business Method review program.

The Supreme Court has adopted the Mayo v. Prometheus patent-eligibility test for all claim types that contains any of the judicial exclusions to § 101.  This test, no doubt, makes it more difficult to obtain some types of business method patents, but falls short of the extreme position that Judge Mayer is taking.

Regardless, Judge Mayer continued to stake out this shaky ground by asserting that "if claims are drawn to the application of principles outside of the scientific realm -- such as principles related to commercial or social interaction -- no amount of specificity can save them from patent ineligibility."  While he acknowledged that in some cases it can be difficult to determine "whether claims are sufficiently 'technological' to warrant patent protection," Judge Mayer's view is that claims can fail the Mayo / CLS Bank test because they are "overly broad."

One would think that it is meaningless to state that claims are too broad without a reference point -- the prior art.  On one hand, Judge Mayer seems to agree, and states that there is "'overlap' between the eligibility analysis under section 101 and the obviousness inquiry under 35 U.S.C. § 103" but "the section 101 inquiry is broader and more essential: it asks whether the claimed subject matter, stripped of any conventional elements, is the kind of 'discovery that the patent laws were intended to protect."  On the other hand, he appears to suggest that the breadth of claims should be "in proportion to the technological dividends they yield."  But how to quantify "breadth" and the extent of these "technological dividends" is left unsaid.

Applying this reasoning to I/P Engine's claims, Judge Mayer found they failed the Mayo / CLS Bank test.  He wrote that "[t]he asserted claims simply describe the well-known and widely-applied concept that it is often helpful to have both content-based and collaborative information about a specific area of interest."  Their alleged use of the Internet to do so is "well-understood and routine."

Judge Mayer concludes his concurrence by opining that the § 101 analysis should precede novelty, non-obviousness, and written description analyses because "[p]atent eligibility issues can often be resolved without lengthy claim construction, and an early determination that the subject matter of asserted claims is patent ineligible can spare both litigants and courts years of needless litigation."

So we have three of nine Supreme Court justices, and at least one Federal Circuit judge, ready to bar business method patents completely.  The math is simple -- patentees are one Federal Circuit judge away from a panel that will likely find any business method claim patent-ineligible, regardless of whether its contribution is novel and non-obvious.  Further, the evidentiary standard for invalidating a patent under § 101 appears to be quite low as well as subjective -- just throw around the words "routine," "conventional," "generic," and "too broad" rather than compare the language of the claims to relevant prior art.

If claims are to be analyzed, as Judge Mayer suggests, under § 101 first, patent-eligibly will take a few more steps toward being a conclusory "I know it when I see it" test.  The well-understood § 103 analysis asks whether the differences between the claimed invention and the prior art would have been obvious to one of ordinary skill in the art.  The Mayo / CLS Bank test, for a claim that incorporates a preexisting algorithm or a longstanding practice, inquires if the claim adds "significantly more" to that algorithm or practice.  The substantive difference between the two is that the § 103 test is grounded using prior art as a reference point for what is known, while the Mayo / CLS Bank test is not.

I/P Engine, Inc. v. AOL Inc. (Fed. Cir. 2014)
Nonprecedential disposition
Panel: Circuit Judges Wallach, Mayer, and Chen
Per curiam opinion; concurring opinion by Circuit Judge Mayer; dissenting opinion by Circuit Judge Chen


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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