“Importantly, the claims do not simply recite, without more, the mere desired result of catching previously undetectable systematic errors, but rather recite a specific solution for accomplishing that goal.” – Federal Circuit Opinion

The U.S. Court of Appeals for the Federal Circuit (CAFC), in an opinion authored by Judge Chen, on Friday November 15 reversed a ruling of the District Court for the District of Delaware holding Koninklijke KPN N.V.’s (KPN’s) U.S. Patent No. 6,212,662 (the ‘662 patent) ineligible under Section 101. The patent covers a method that varies “check data” to reduce systematic errors in electronic transmissions.

KPN sued Gemalto M2M GMBH (Gemalto) in the district court and Gemalto moved under Rule 12(c) for a judgment on the pleadings, arguing that claims 1-4 of the ‘662 patent were ineligible under 35 U.S.C § 101, which the district court granted. KPN appealed on claims 2-4, stating that they present “a non-abstract improvement in the functionality of an existing technological process and not simply an abstract idea of manipulating data.”

The ‘662 Patent’s Solution

Many data transmission systems generate algorithms to condense transmitted codes into packets called “check data.” Upon receiving the transmission, another packet of check data is created. These two packets of check data allow the receiving system to scan both short-hand versions of the code to ensure there weren’t any errors in transmission. If the check data doesn’t match, then the system can infer whether an error occurred during the transmission of the data.

Occasionally, corrupted data can produce the same check data block as the original, allowing errors to be transmitted without detection. This renders the check data ineffective for that block of code because the receiving system won’t know of the error. According to patent ‘662, “[t]he problem of defective check data is aggravated for a particular type of persistent error, i.e., ‘systematic error,’ that repeats across data blocks in the same way.” Claims 2-4 of the ‘662 patent seek to solve the systematic error problem by adding in a time-based permutation function that occasionally changes the algorithm for writing the check data codes. This function reportedly improves on prior art because it reduces the likelihood of spreading the aforementioned systematic errors. All four claims of the ‘662 patent incorporate independent claim 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 permutating 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.

The device according to claim 1, wherein the varying device is further configured to modify the permutation in time. The device according to claim 2, wherein the varying is further configured to modify the permutation based on the original data. The device according to claim 3, wherein the permutating device includes a table in which subsequent permutations are stored.

District Court: It’s Abstract

The district court granted Appellee’s judgment for motion on the pleadings stating that all four claims were ineligible under Section 101. They turned to the two-step analysis provided in Alice Corp. v. CLS Bank and determined that all claims of the ‘662 patent were ineligible because they outlined only an abstract concept and not a tangible improvement on prior art.

At the outset, the district court determined the claims pointed only to the “abstract idea of reordering data and generating additional data” akin to that of data manipulation claims found in Two-Way Media Ltd. The district court reasoned that the patent’s claims were abstract because they did not provide a specific process for reorganizing, utilizing, or transmitting the new check data.

The district court also concluded that the claims were ineligible under the second step of Alice because KPN failed to outline the inventive concepts in the claims.

‘Specific Implementation’ Saves the Day

On appeal, the CAFC turned to the patent eligibility test in Alice. In step one of the framework, the CAFC examined precedent set in Finjan, Inc. v. Blue Coat System, Inc. to determine whether the claims of patent ‘662 amount to a patent-eligible software invention or merely an abstract process. The opinion in Finjan asserted that “[a]n improved result, without more stated in the claim, is not enough to confer eligibility to an otherwise abstract idea.” The Court in Finjan found “the claimed method was directed to a ‘non-abstract improvement’ over the prior art because it employed ‘a new kind of file that enable[d] a computer security system to do things it could not do before.’” In the present case, the CAFC similarly concluded that, “by requiring that the permutation applied to original data be modified ‘in time,’ claim 2, which is incorporated into all appealed claims, 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.”

Addressing Appellee’s Arguments

Gemalto argued that the claims were still ineligible because there was not a final claim to actually perform the proposed error detection. The CAFC disagreed, reasoning that the patent did not need to necessarily provide an application for the tool to still be patent-eligible. According to Electric Power Group, LLC v. Alstom S.A., “the focus of the claims [wa]s not on such an improvement in computers as tools, but on certain independently abstract ideas that use computers as tools[.]” The Court continued:

Importantly, the claims do not simply recite, without more, the mere desired result of catching previously undetectable systematic errors, but rather recite a specific solution for accomplishing that goal—i.e., by varying the way check data is generated by modifying the permutation applied to different data blocks.

Gemalto did not dispute that the time-based permutations were a technological improvement, but instead argued that the improvement was not adequately captured in the claims because the claims do not bridge the gap between the permutated data and the newly generated check data. The CAFC disagreed on the grounds that claim 1 describes a “varying device” that varies the original data before sending it to the “generating device” to create check data. For this process to occur, the data needs to be permutated before it can be generated as new check data. “Thus, contrary to Appellees’ proposed reading, claim 1 logically requires that original data be varied by permutation before being supplied to the generating device as ‘varied data’,” wrote the Court.

Even if the claims did reasonably align, Gemalto contended that the claims still were not patent-eligible because no technological benefit is described by performing a permutation on the original data before generating check data. The CAFC insisted that this is firstly unnecessary for patent eligibility, and secondly, satisfied anyway. Specifically, the Court said: “A review of the specification makes clear that modifying the permutation in time provides the technological benefit of preventing non-detection of repetitive errors, just like other variable generating functions.”

Finally, Gemalto said that KPN’s claims were similar to other data manipulation claims, such as those seen in Digitech Image Technologies, LLC v. Electronics for Imaging, Inc. Digitech, however, lacked a specific claim that asserted the improvement in the image processing, said the CAFC. Because the ‘662 patent states the solution in check data generation present in the prior art, the CAFC did not find the opinion of Digitech persuasive.

Rare Reversal

Because the claims surpassed the threshold for an abstract idea presented in the first step of Alice, the CAFC did not proceed to the second step. The Court held that claims 2-4 of the patent were sufficiently descriptive to outline a technological improvement, and accordingly reversed the district court’s decision.

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