In order for claims to be found patent-eligible under 35 U.S.C. § 101, the claim elements as a whole should recite more than generic and functional hardware. Improving an abstract concept using a computer only as a tool is insufficient for finding claim language patent eligible that otherwise would be patent-ineligible.

The United States Court of Appeals for the Federal Circuit recently ruled on a Patent Trial and Appeal Board (Board) Covered Business Method (CBM) Decision, affirming the Board’s holding that certain challenged claims of Customedia Technology’s patents are unpatentable as directed to the abstract idea of delivering targeted advertising using a computer. See Customedia Techs., LLC v. Dish Network Corp., 2018-2239, 2020 U.S. App. LEXIS 7005 (Fed. Cir. Mar. 6, 2020) (Before Prost, Chief Judge, Dyk and Moore, Circuit Judges) (Opinion for the Court, Prost, Chief Judge).

Customedia Technologies LLC (Customedia) owns U.S. Patent No. 8,719,090 (the ’090 patent) and U.S. Patent No. 9,053,494 (the ’494 patent), both sharing a specification and directed to “comprehensive data management and processing systems.” Claim 1 of the ’090 patent is representative of the claims at issue on appeal:

A data delivery system for providing automatic delivery of multimedia data products from one or more multimedia data product providers, the system comprising:

a remote account transaction server for providing multimedia data products to an end user, at least one of the multimedia data products being specifically identified advertising data; and a programmable local receiver unit for interfacing with the remote account transaction server to receive one or more of the multimedia data products, said programmable local receiver unit including at least one individually controlled and reserved advertising data storage section adapted specifically for storing the specifically identified advertising data, said at least one advertising data storage section being monitored and controlled by said remote account transaction server and such that said specifically identified advertising data is delivered by said remote account transaction server and stored in said at least one individually controlled and reserved advertising data storage section.

This case arises from a challenge of Customedia’s patents by Dish Network Corporation and Dish Network LLC (collectively “Dish”), in which Dish petitioned for review of certain claims of the ’090 patent and the ’494 patent under the Transitional Program for Covered Business Method Patents (CBM review). The Board instituted CBM review of both patents and found certain claims of the ’090 and ’494 patents ineligible under 35 U.S.C. § 101 and § 102. Customedia timely appealed the Board’s decision with respect to the §§ 101 and 102 rejections.

On appeal, the Federal Circuit reviewed the Board’s legal conclusions de novo and its factual findings for substantial evidence. Section 101 provides that “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof,” may obtain a patent. 35 U.S.C. § 101. In Alice Corp. Pty. Ltd. V. CLS Bank Int’l, the Supreme Court provided a two-step framework for determining patent eligibility under § 101. 573 U.S. 208, 216 (2014). Specifically, the Court held that “[l]aws of nature, natural phenomena, and abstract ideas are not patent eligible.” Id. at 217. According to the Supreme Court in Alice, first, the court must determine whether the claims are directed to a “patent-ineligible concept,” such as an abstract idea. Id. If so, the court “consider[s] the elements of each claim both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application.” Id. (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 78–79 (2012)).

Here, the Federal Circuit considered Customedia’s argument that the claims are patentable under § 101 because the claims “provide for improvements to the operation and functioning of computer systems.” Customedia argued that providing a reserved and dedicated section of storage, as in the claims, improves the data delivery system’s ability to store advertising data, transfers data at improved speeds, and prevents system inoperability due to insufficient storage. However, the Federal Circuit did not find this sufficient for finding an improvement to the functionality of the computer itself. Instead, the court held that “the claimed invention merely improves the abstract concept of delivering targeted advertising using a computer only as a tool.” (Emphasis added).

The Federal Circuit compared the claims in the instant case to cases instructive on the § 101 determination, finding that the instant claims were more similar to claims which are rejected under § 101 for “improving a fundamental practice or abstract process by invoking a computer merely as a tool.” In its holding, the Federal Circuit highlights that the § 101 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.’” Finjan, Inc. v. Blue Coat System, Inc., 879 F.3d 1299, 1303 (Fed. Cir. 2018) (quoting Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335–36 (Fed. Cir. 2016)). Ultimately, the Federal Circuit found that the instant claims were directed to a patent-ineligible concept at Alice step one and continued the analysis under the Alice framework to ask whether the elements of the claims were sufficient to “transform the nature of the claim” into a patent-eligible application. Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 78–79 (2012).

Under Alice step two, the Federal Circuit found that the claims recited only generic computer components, and therefore the claim elements were insufficient under Alice step two to “transform the nature of the claim[s]” into patent-eligible subject matter. The Federal Circuit’s analysis partly relied on the patent specification’s recital of generic hardware components, finding that “such generic and functional hardware is insufficient to render eligible claims directed to an abstract idea.” Accordingly, the Federal Circuit affirmed the Board’s finding with respect to the unpatentability of certain claims of ’090 and ’494 patents under 35 U.S.C. § 101.

Because the Federal Circuit upheld the Board’s decision with respect to § 101, the Federal Circuit did not reach the § 102 issues in the appeal.