Sensormatic Electronics, LLC v. Wyze Labs, Inc. (Fed. Cir. 2021)

McDonnell Boehnen Hulbert & Berghoff LLP

McDonnell Boehnen Hulbert & Berghoff LLP

Sensormatic asserted U.S. Patents 7,730,534, 7,936,370, 7,954,129, 8,208,019, and 8,610,772 against Wyze in the District of Delaware, alleging infringement.  Wyze moved the District Court to dismiss under Rule 12(c), on the grounds that the claims are directed to ineligible subject matter.  The motion was granted.  Sensormatic appealed.

In Alice v. CLS Bank, the Supreme Court set forth a two-part test to determine whether claims are directed to patent-eligible subject matter 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.

Last year, the Federal Circuit provided a major clue as to how to think about patent eligibility in practice.  In Dropbox Inc. v. Synchronoss Techs. Inc. the Court wrote that "an inventive concept exists when a claim recites a specific, discrete implementation of the abstract idea where the particular arrangement of elements is a technical improvement over the prior art."  This suggests that in order for a claim that is otherwise directed to an abstract idea to be successful under § 101, it should have three qualities:  specificity, a technical solution that it provides, and some degree of novelty.  More particularly, there should be a nexus between these three factors -- specificity, technical character, and novelty should appear in the same claim element or at least be explicitly linked in some fashion in the recitation of the claim.

Claim 14 of the '129 patent was deemed representative:

A surveillance system for wireless communication between components comprising:
    a base system including at least two wireless input capture devices (ICDs), the ICDs having at least one sensor and at least one input component for detecting and recording inputs, a processor, a memory, a transmitter/receiver, all constructed and configured in electronic connection;
    wherein the ICDs are operable for direct wireless cross-communication with each other without requiring interaction with a remote server computer for operation; and
    wherein the ICDs are operable for direct wireless communication with a remote viewing device operable by an authorized user.

Here we have one of those cases where the Court's main concern appears to be a lack of specificity in the claims, which the Court describes as "abstractness".  As claims go, this one is mostly outcome-oriented, in that it recites what the inventors want the invention to do rather than how it achieves this goal.  In past cases, this factor alone has been used to establish that a claim can be abstract regardless of whether it recites physical components.

Applying the Alice test, the District Court "court concluded that the claims are directed to the abstract ideas of wireless communication and remote surveillance, and determined that none of the claim limitations take the claims beyond those abstract ideas."  Further, the District Court opined, "the claims do not recite an inventive concept sufficient to transform them into patent-eligible subject matter because they merely describe implementing abstract ideas using well-known, generic computer components and functionalities."  Thus, the claims were found ineligible.

The Federal Circuit agreed.  But first it attempted to shed a little bit of light on the scope of the legal concept of "abstractness".  The Court stated:

As patent eligibility case law has developed, the Supreme Court has had opportunities to declare that claims to a machine are de facto eligible.  In fact, the statute pro-vides that "[w]hoever invents or discovered any new and useful . . . machine . . . may obtain a patent therefore," subject to other patentability requirements set forth in Title 35 of the United States Code.  But the law has not developed that way.  Instead, the Court has noted that the machine-or-transformation test is a "useful and important clue" for determining patent eligibility, but that not all claims drafted as machine or system claims are patent-eligible.  In Alice, the Court confirmed that recitation of a tangible system, "(in § 101 terms, a 'machine')," does not end the eligibility inquiry.  What matters, according to the Court, is the reality behind the machine or system language, whether or not it simply clothes abstract concepts.  The district court correctly followed that precedent in determining that the patents asserted here claim ineligible subject matter.

In other words, an invention that is a concrete and tangible machine, and claimed as such, can be found to be "abstract" if the claimed subject matter is otherwise abstract.  While this makes sense to a point, it ultimately requires that the finder of fact (or of law -- patent eligibility is a strange amalgam of both) decide whether certain claim elements can be ignored for purposes of the § 101 inquiry.  Putting a power this subjective in the hands of even a federal judge, much less an examiner or a PTAB judge, can be problematic.

Indeed, the Court's statement quoted above may be in response to the recent case of Yu v. Apple, a controversial split decision that found a digital camera with a particular hardware arrangement performing particular functions to be ineligible.  While the Court may have made this statement for explanatory reasons, it is likely to be taken as a warning shot.  Whatever the Court is trying to say, patentees are likely to hear, "All Your Devices Belong to Us!"  This is a reminder that the term "abstract" is not meant to be taken literally, and any statutory category of claims can be abstract (even if you can drop it on your foot).

In any event, Sensormatic argued before the Federal Circuit that:

[T]he claims are directed to three non-abstract improvements in surveil-lance technology: (1) a configuration of ICDs (surveillance sensors) that communicate with each other, which improves wireless range and removes the need for a central server; (2) dual encoding of input data, which improves use of bandwidth and device compatibility; and (3) prioritization of ICD input data through distributed detection of trigger events, which improves storage and retention of significant input data.

Wyze pointed out that the dual encoding and trigger events were not actually claimed, and in the alternative were abstract as well.

The Court largely agreed with Wyze, noting that "the broad concept of communicating information wirelessly, without more, is an abstract idea."  The Court further wrote:

First, although Sensormatic argues that its claims are directed to a specific configuration of ICDs, Sensormatic fails to identify any particular non-abstract configuration.  Second, dual encoding is itself abstract.  The concept of encoding or decoding image data is abstract, even if for the purpose of transmitting files to devices with less memory or bandwidth or by transcoding data into multiple formats.  Third, prioritization of ICD input data through detection of trigger events is an aspect of the abstract idea of remote surveillance as well as drawn to the abstract idea of classifying and organizing images.  Accordingly, we conclude that the claims are directed to an abstract idea at Alice step one.

Moving on to part two of Alice, Sensormatic asserted that the claimed invention would "distribute functions previously carried out at a server computer to a cluster of interconnected ICDs, thereby eliminating the need for software and extending the system's range."  Wyze countered, and the Court agreed, that "Sensormatic fails to explain how any combination of elements provides an inventive concept," either in its briefs or at oral argument.  Since "[p]roviding generic devices that communicate with each other . . . is a conventional application of an abstract idea, the Court found that the claim also failed under part two, and therefore is ineligible.

Sensormatic Electronics, LLC v. Wyze Labs, Inc. (Fed. Cir. 2021)
Panel: Circuit Judges Newman, Lourie, and Dyk
Opinion by Circuit Judge Lourie

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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