Koninklijke KPN N.V. (KPN) sued Gemalto M2M GmbH (Gemalto) and several other parties in the District of Delaware for infringement of its U.S. Patent No. 6,212,662.  The defendants moved for dismissal under Rule 12(c), contending that the asserted claims lacked subject matter eligibility.  The District Court judge granted the motion.  KPN appealed.

The Invention

The '662 patent involves checksums, which are calculations performed over blocks of data that result in a short (e.g., 16, 32, or 64 bit) code.  These calculations may be a simple exclusive or operation, a more complicated cyclic redundancy check, or a hash function.  Virtually all data transmitted on a network, wired or wireless, is accompanied by a checksum.  In most cases, the transmitter calculates the checksum, appends the code to the blocks of data to be sent, and then sends the block and code.  The receiver calculates its own version of the checksum over the blocks of data.  If this matches the transmitted code, then the receiver can be reasonably assured that the blocks of data were not corrupted (e.g., due to random noise) during the transmission.  But checksums are not perfect, and occasionally a corrupt block can produce the same code as if it were error free.

The inventors of the '662 patent observed that checksums often fail in the presence of certain types of systematic errors -- non-random errors that repeat from block to block.  For instance, "[i]f a fixed [checksum] generating function produced defective check data for a transmission that was corrupted with a given systematic error (e.g., first and fourth bit is erroneous in every data transmission), that fixed generating function would likely continue to produce the same defective check data every time that systematic error appeared."  In these cases, the systematic error will not be detected by the checksum.

The '662 patent involves "var[ying] the way check data is generated from time to time so that the same defective check data does not continue to be produced for the same type of persistent systematic error."  This variability dramatically decreases the probability that a receiver will not detect repetitive errors after validating the checksum.  One of the ways that the generation of check data can be varied is "through permutation, which interchanges the bit position in a data block."

The Claims

Of the claims invalidated, only 2, 3, and 4 were under appeal.  Claim 2 depends from claim 1, and claims 3 and 4 depend from 2, so all are shown below.

1.  A device for producing error checking based on original data provided in blocks with each block having plural bits in a particular ordered sequence, comprising:
    a generating device configured to generate check data; and
    a varying device configured to vary original data prior to supplying said original data to the generating device as varied data;
    wherein said varying device includes a per-mutating device configured to perform a permutation of bit position relative to said particular ordered sequence for at least some of the bits in each of said blocks making up said original data without reordering any blocks of original data.

2.  The device according to claim 1, wherein the varying device is further configured to modify the permutation in time.

3.  The device according to claim 2, wherein the varying is further configured to modify the per-mutation based on the original data.

4.  The device according to claim 3, wherein the permutating device includes a table in which subsequent permutations are stored.

The Patent-Eligibility Test

The two-part test from Alice Corp. v. CLS Bank Int'l is used to determine whether claims are eligible for patenting under 35 U.S.C. § 101.  One must first decide whether the claim at hand involves a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But, elements or combinations of elements that are well-understood, routine, and conventional will not lift the claim over the § 101 hurdle.  While this inquiry is generally carried out as a matter of law, factual issues can come into play when determining whether something is well-understood, routine, and conventional.

The District Court Proceedings

The District Court found the claims to be directed to an abstract idea at step one of Alice because "they do not say how data is re-ordered, how to use reordered data, how to generate additional data, how to use additional data, or even that any data is transmitted," and for the dependent claims, "they do not say how the permutations are modified in time or modified based on the data."  The claims failed at step two of Alice, according to the District Court, because the "purported inventive concept was not captured in the claims."

The Federal Circuit Decision

On review, the Federal Circuit reversed the District Court.  Explaining the Alice framework, the Court wrote that "[i]n cases involving software innovations, [the step one] inquiry often turns on whether the claims focus on the specific asserted improvement in computer capabilities or, instead, on a process that qualifies as an abstract idea for which computers are invoked merely as a tool."  The Court further noted that "[s]ince Alice, we have found software inventions to be patent-eligible where they have made non-abstract improvements to existing technological processes and computer technology."  Moreover, these improvements must be specific -- "[a]n improved result, without more stated in the claim, is not enough to confer eligibility to an otherwise abstract idea . . . [t]o be patent-eligible, the claims must recite a specific means or method that solves a problem in an existing technological process."

With respect to claims 2-4, the Court found them patent-eligible "because they are directed to a non-abstract improvement in an existing technological process . . . [b]y requiring that the permutation applied to original data be modified in time, claim 2 . . . recites a specific implementation of varying the way check data is generated that improves the ability of prior art error detection systems to detect systematic errors."  This results in "a new way of generating check data that enables the detection of persistent systematic errors in data transmissions that prior art systems were previously not equipped to detect."

The defendants argued that the claims were abstract because they "fail to recite a last application step that uses the generated check data to actually perform error detection," and thus lacked a concrete application.  The Court took a different view, stating that "[a] claim that is directed to improving the functionality of one tool (e.g., error checking device) that is part of an existing system (e.g., data transmission error detection system) does not necessarily need to recite how that tool is applied in the overall system (e.g., perform error detection) in order to constitute a technological improvement that is patent-eligible."  Further, "the more relevant inquiry is whether the claims in this patent focus on a specific means or method that improves the relevant technology or are instead directed to a result or effect that itself is the abstract idea and merely invoke processes and machinery."  Notably, the claimed modification of the permutation in time was a "specific solution for accomplishing [the] goal—i.e., by varying the way check data is generated by modifying the permutation applied to different data blocks."

The Court went on to distinguish the present claims over those found ineligible in Digitech Image Technologies, LLC v. Electronics for Imaging, Inc., RecogniCorp, LLC v. Nintendo Co., Two-Way Media Ltd. v. Comcast Cable Communications, LLC, and Intellectual Ventures I LLC v. Capital One Financial Corp.  The critical point for the Court was that "[w]hile the patents in these cases may have claimed an improved result in a technical field, the claims failed to recite a specific enough solution to make the asserted technological improvement concrete."  In contrast, claims 2-4 "specifically recite how this permutation is used (i.e., modifying the permutation applied to different data blocks), and this specific implementation is a key insight to enabling prior art error detection systems to catch previously undetectable systematic errors."

As a consequence, the claims are not abstract under step one of Alice, step two was not considered, and the Federal Circuit reversed the District Court.  The moral of this story is that a claim specifically reciting a particular technical improvement over the prior art, where the improvement is described as such in the specification, is better equipped to survive a § 101 challenge than a claim lacking either of these qualities.  Of course, the amount detail in the claimed technical improvement required to reach this level of specificity remains an open question.

Koninklijke KPN N.V. v. Gemalto M2M GmbH (Fed. Cir. 2019)
Panel: Circuit Judges Dyk, Chen, and Stoll
Opinion by Circuit Judge Chen