November 1, 2016

The Search for an Abstract Idea Test Continues to Elude; Federal Circuit Goes Old School with Common Law Analysis of Precedent

By Bryan K. Wheelock, Principal

In Amdocs (Israel) Limited v, Openet Telecom, Inc., [2015-1180] the Federal Circuit reversed and remanded the district court’s judgment on the pleadings that U.S. Patent Nos. 7,631,065; 7,412,510; 6,947,984; and 6,836,797 were not directed to patent eligible subject matter under 35 U.S.C. §101.

The patents in suit concerned, inter alia, parts of a system designed to solve an accounting and billing problem faced by network service providers.  The Federal Circuit outlined the Alice/May two step framework, and noted that its cases generally follow the step one/step two Supreme Court format, reserving step two for the more comprehensive analysis in search of the inventive concept.  The Federal Circuit went on to observe that recent cases suggest that there is considerable overlap between step one and step two, and in some situations this analysis could be accomplished without going beyond step one.

The Federal Circuit said that the analysis presumably would be based on a generally-accepted and understood definition of, or test for, what an “abstract idea” encompasses.  The Federal Circuit  conceded that:

a search for a single test or definition in the decided cases concerning §101 from this court, and indeed from the Supreme Court, reveals that at present there is no such single, succinct, usable definition or test.

The Federal Circuit noted that in absence of a definition, the decisional mechanism
courts now apply is to examine earlier cases in which a similar or parallel descriptive nature can be seen— what prior cases were about, and which way they were decided, which the Court identified as the classic approach of common law.

After reviewing some of its precedent, the Federal Circuit found the claims in the ’065 Patent were much closer to those in BASCOM and DDR Holdings than those in Digitech, Content Extraction, and In re TLI Commc’ns. Indeed, even if we were to agree that claim 1 is directed to an ineligible abstract idea under step one, the claim is eligible under step two because it contains a sufficient “inventive concept.”  The Federal Circuit concluded the the claim entails an unconventional technological solution (enhancing data in a distributed fashion) to a technological problem (massive record flows which previously required massive databases).

With respect to the ‘510, ‘984, and ‘797 Patents, the Federal Circuit said these claims were eligible for patenting for reasons similar to those that undergirded the eligibility of the ’065 patent claims.  With respect to the ’984 Patent.