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In <a href="http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/15-1180.Opinion.10-28-2016.1.PDF">Amdocs v. Openet Telecom</a>, the Federal Circuit reversed a district court ruling that the claims of several patents were invalid under 35 USC § 101.[1] Judge Plager authored the opinion for the court, and he was joined by Judge Newman. Judge Reyna authored a lengthy dissent objecting to the overall approach taken by the majority. This decision is notable because it includes claims very close to the line of eligibility and a strong reliance on claim construction, and because the majority and dissent offer quite different analytical approaches to section 101. The majority suggests a common law, analogy-driven approach, but the dissent seeks to put sharper focus on the Alice two-part abstract idea test. [2]

The following representative claim was the focus of the court’s analysis:
1. A computer program product embodied on a computer-readable storage medium for processing network accounting information comprising:
computer code for receiving from a first source a first network accounting record;
computer code for correlating the first network accounting record with accounting information available from a second source; and
computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.
(Claim 1 of <a href="https://www.google.com/patents/US7631065?dq=US+Patent+No.+7,631,065&amp;hl=en&amp;sa=X&amp;ved=0ahUKEwjsjLWn3ojQAhXjrlQKHe7-Aa8Q6AEIHDAA">U.S. Patent No. 7,631,065</a>)

It’s fair to say that claims reciting this level of functionality have not fared well since Alice. The district court concluded that the claim was directed to the abstract idea of “correlating two network accounting records to enhance the first record,” implemented using nothing but generic technology with no other inventive concept. The Federal Circuit majority, however, saw an inventive concept in “an unconventional technological solution” involving generic components that “operate in an unconventional manner to achieve an improvement in computer functionality.” In particular, the majority drew on a claim construction of the phrase “to enhance” as meaning “to apply a number of field enhancements in a distributed fashion.”

A unique aspect of this case is that the Federal Circuit had previously construed the claims in connection with a prior appeal (Amdocs I) and thus was able to consider patent eligibility based on a record that was more complete than in most cases. For example, in Amdocs I, the court construed “enhance” as being dependent upon the invention’s distributed architecture and as meaning “to apply a number of field enhancements in a distributed fashion.” The court also noted how the district court explained that “[i]n this context, ‘distributed’ means that the network usage records are processed close to their sources before being transmitted to a centralized manager.” The court further approved of the district court’s “reading the ‘in a distributed fashion’ and the ‘close to the source’ of network information requirements into the term ‘enhance.’”[3]

To date, only a handful of Federal Circuit decisions have upheld the validity of patents challenged on patent-eligibility grounds. These include DDR Holdings, Enfish, Bascom Global and McRO. The majority opinion in the present case takes a different approach. Instead of closely adhering to the two-part test of Alice, the majority opinion works by analogy from precedents. In contrast, the dissent would not only apply Alice but also attempts to provide some nuances, especially to the first step, and the concept of a claim being “directed to” an abstract idea.[4]

The dissent objected to the lack of “structure” in the claims, and complained that the majority’s vague reasoning relied too heavily on the specification and not enough on the claims. The dissent pointed out that claim 1 recites a software product embodied on a storage medium, but it provides no structural limitations of either the physical medium or the digital software. The dissent argued that all software products are stored on a physical storage medium and claim 1 recites no limitations concerning that physical structure. Likewise, the dissent argued, “claim 1 discusses only very broad, high-level functionality rather than details about how exactly that functionality is implemented, providing no information about the structure of the software. … Claim 1 is therefore not directed to any specific structure, whether physical or digital.”[5]

To my mind, the most immediate takeaway is that the court remains highly divided on how to apply the Alice test. The result of any patent-eligibility case at the Federal Circuit will be highly panel-dependent.

Moreover, I believe that a solution to the Alice problem is to employ structural claim limitations. For example, machine code algorithms and data structures are structural elements that can be utilized for this purpose.[6]

[1] The patents-in-suit were U.S. patents, Nos. 7,631,065; 7,412,510; 6,947,984; and 6,836,797.

[2] See Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014).

[3] See majority opinion at 22.

[4] Judge Reyna suggests that part 1 has to ascertain what the claimed invention is—a goal, or a way of reaching that goal. Thus, claims that recite the way of reaching the goal are patent eligible. If a part 2 analysis is necessary, we should look to see whether the abstract idea is limited in a way other than the ways courts have held inadequate, which Judge Reyna calls “illusory limitations” (limitations that don’t actually narrow the claim) and “contextual limitations” (field-of-use limits). See dissenting opinion at 12.

[5] See dissenting opinion at 14.

[6] See <a href="https://www.bakerlaw.com/files/uploads/Documents/News/Articles/INTELLECTUAL%20PROPERTY/2016/Stein-Law360-02-09-2016.pdf">How Structural Claim Limitations Can Save Software Patents</a>.

Amdocs Highlights Panel Dependency of §101 Decisions at Federal Circuit