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Ordinary Observer Conducts Product-by-Product Analysis in View of Prior Art

by | Nov 3, 2022 |

In one of two concurrent opinions concerning the same design patent case, the US Court of Appeals for the Federal Circuit vacated a district court’s entry of a preliminary injunction after concluding that the court had failed to properly consider the accused products separately and in view of the prior art when determining the plaintiffs’ likelihood of success. ABC Corp. I v. P’ship & Unincorporated Ass’ns Identified on Schedule “A”, Case No. 22-1071 (Fed. Cir. Oct. 28, 2022) (Dyk, Taranto, Stoll, JJ.)

Hangzhou Chic Intelligent Technology and Unicorn Global (collectively, the plaintiffs) own four patents claiming designs for handle-less, two-wheeled, motorized, stand-on vehicles commonly referred to as “hoverboards.” Urbanmax, GaodeshangUS, Gyroor-US, Fengchi-US, Jiangyou-US, Gyroshoes and HGSM (collectively, the appellants) sell Gyroor-branded hoverboards. In 2020, the plaintiffs sued the appellants for patent infringement and sought a temporary restraining order and a preliminary injunction. As explained here, the district court granted the preliminary injunction in 2020, but thereafter invited the plaintiffs to file a second motion for a preliminary injunction in light of unsuccessful motions by Fengchi-US, Urbanmax and Gyroor-US to dissolve the 2020 preliminary injunction for lack of notice under Fed. R. Civ. P. 65(a). Heeding the court’s advice, the plaintiffs filed a motion for a second preliminary injunction on August 24, 2021.

The primary issue before the district court concerning the 2021 preliminary injunction was whether the plaintiffs had demonstrated a likelihood of success on the merits that the accused products infringed the plaintiffs’ patents in light of certain prior art hoverboards. The prior art included a hoverboard with an hourglass-shaped body, which was a significant feature of the patented designs and the majority of the accused products. Despite the similarities between the prior art board and the claimed designs, the plaintiffs generally disregarded the prior art in their analysis. After comparing the four accused products as a group to the claimed designs, the plaintiffs’ expert opined that the accused products infringed the asserted patents based in large part on their similar hourglass bodies, in addition to other features.

The appellants’ expert countered that “the attention of the hypothetical ordinary observer will be drawn to those aspects of the claimed design that differ from the prior art,” rather than the hourglass shape, and that the additional ornamental features of the accused products were not substantially similar to the claimed designs. While the district court acknowledged that “resolving this expert dispute will likely require a trial,” it nonetheless concluded that the plaintiffs had demonstrated likelihood of success and entered the preliminary injunction order. The appellants filed a notice of appeal.

On appeal, the Federal Circuit concluded that the lower court had erred in four material respects:

  • Applying the wrong legal standard
  • Failing to conduct the ordinary observer analysis in view of the prior art
  • Failing to apply the ordinary observer analysis on a product-by-product basis
  • Crafting an overbroad injunction.

First, the Federal Circuit took issue with the district court’s entry of a preliminary injunction despite its [...]

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Heads Up: Defendants Deserve Fair Notice of Preliminary Injunctions

by | Nov 3, 2022 |

In one of two concurrent opinions concerning the same design patent case, the US Court of Appeals for the Federal Circuit vacated a district court’s grant of a preliminary injunction and an order extending the preliminary injunction to new defendants for lack of notice under Rule 65(a). ABC Corp. I v. P’ship & Unincorporated Ass’ns Identified on Schedule “A”, Case No. 21-2150 (Fed. Cir. Oct. 28, 2022) (Taranto, Dyk, Stoll, JJ.)

On August 17, 2020, ABC Corporation I and ABC Corporation II (collectively, ABC) brought a design patent infringement action asserting four “hoverboard” design patents against several online merchants. The ABC patents claim designs for handle-less, two-wheeled, motorized, stand-on vehicles commonly referred to as hoverboards. Attached to its original and amended complaints, ABC provided a list of defendants in a Schedule A that was amended throughout the proceedings as new defendants were identified. Gyroor-US was an originally named defendant on Schedule A, but it was not served with the complaint and summons until January 29, 2021.

On November 24, 2020, the district court granted ABC’s November 20, 2020, motion for a preliminary injunction against the defendants then listed on Schedule A, including Gyroor-US, which had not yet been served and was not given notice of the motion under Fed. R. Civ. P. 65(a). On May 24, 2021, the court also granted ABC’s May 6, 2021, motion to amend Schedule A to add GaodeshangUS, Fengchi-US and Urbanmax, binding them to the 2020 preliminary injunction even though they too had not received Rule 65(a) notice and were not served with process until June 25, 2021. GaodeshangUS filed a notice of appeal immediately following the court’s May 24 order. After several unsuccessful motions to vacate the 2020 preliminary injunction for lack of notice, Fengchi-US, Urbanmax and Gyroor-US also filed notices of appeal.

The Federal Circuit first determined that it had jurisdiction to hear the three appeals by GaodeshangUS, Fengchi-US, Urbanmax and Gyroor-US under 28 U.S.C. § 1292(c)(1), which grants the Federal Circuit exclusive jurisdiction of an appeal from an “interlocutory order[] . . . granting, continuing, modifying, refusing or dissolving [an] injunction[], or refusing to dissolve or modify [an] injunction[]” in any case over which the Federal Circuit would have jurisdiction of an appeal under 28 U.S.C. § 1295, such as cases arising under the patent laws. The Court began by considering GaodeshangUS’s May 24, 2021, notice of appeal, which stated that the appeal was from the preliminary injunction “entered in this action on November 24, 2021 [sic],” rather than the May 24, 2021, order. The parties disputed whether GaodeshangUS’s notice of appeal was timely filed within 30 days of the relevant order and whether the May 24 order was appealable as a modification of the 2020 preliminary injunction. The Federal Circuit concluded that GaodeshangUS’s appeal should be interpreted to refer to the May 24 order because it was filed on the same day as the order and “a mistake in designating the judgment appealed from” is not fatal if “the intent to [...]

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Does Not Compute: Faster Processes Aren’t Enough for Subject Matter Eligibility

by | Oct 27, 2022 |

In yet another opinion addressing subject matter eligibility and application of the Supreme Court’s Alice decision, the US Court of Appeals for the Federal Circuit found claims directed to graphical displays and user interfaces subject matter ineligible as directed to abstract ideas. IBM v. Zillow Group, Inc., Case No. 21-2350 (Fed. Cir. Oct. 13, 2022) (Reyna, Hughes, Stoll, JJ.) (Stoll, J., dissenting in part).

IBM sued Zillow for allegedly infringing several patents related to graphical display technology. The district court granted Zillow’s motion for judgment on the pleadings that sought a ruling that two of the asserted patents claimed patent-ineligible subject matter under 35 U.S.C. § 101. IBM appealed.

On appeal, the Federal Circuit applied the Alice two-step analysis to determine whether the claims at issue were directed to a patent-ineligible concept, such as an abstract idea, and if so, whether additional claim elements (considering each element both individually and as an ordered combination) transformed the nature of the claim into a patent-eligible application. As discussed in the Supreme Court Alice and Mayo decisions, the second step is “a search for an ‘inventive concept’—i.e., an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’”

The representative claim of the first patent was directed to a method for coordinated geospatial and list-based mapping, and the method steps recited viewing elements having “geospatial characteristics” in a given viewing area of a map space and displaying a list of the elements in that space. The user then draws a selected area within the map space, having elements that may be inside or outside of the selected area. The elements having the geospatial characteristics within the selection area are selected and those outside the selected area are deselected. The map display and the list are then synchronized and concurrently updated to reflect what has been selected and deselected.

The district court concluded that “the patent was directed to the abstract idea of responding to a user’s selection of a portion of a displayed map by simultaneously updating the map and a co-displayed list of items on the map,” reasoning that the claimed method could be performed manually, for example, by putting a transparent overlay on a printed map, drawing on it with a marker, and then blocking off the “unselected area” of the map and corresponding list items with opaque paper cut to appropriate sizes. To choose a different “selection area,” the user would erase the prior markings, remove the paper and start over. The district court noted that “alterations to hardcopy materials were made or auditioned in this manner” long before computers, and concluded that “[t]he [] patent merely contemplates automation using a computer.”

The Federal Circuit agreed that the claims failed to recite any inventive technology for improving computers as tools and were instead directed to an abstract idea for which computers were invoked merely to limit and coordinate the display of information based [...]

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Establishing Indefiniteness Requires More Than Identifying “Unanswered Questions” Part II

by | Oct 27, 2022 |

Earlier this year, the US Court of Appeals for the Federal Circuit reversed a district court decision for relying on an incorrect standard for indefiniteness. (Nature Simulation Systems Inc. v. Autodesk, Inc). Now, in response to a motion for panel rehearing, the Federal Circuit modified its decision on rehearing deleting language. Nature Simulation Systems Inc. v. Autodesk, Inc., Case No. 20-2257 (Fed. Cir. Oct. 17, 2022) (Lourie, Dyk, Newman JJ.) (Dyk, J., dissenting)

Nature Simulations Systems asserted two patents against Autodesk (one a continuation-in-part of the other), both entitled “Method for Immediate Boolean Operations Using Geometric Facets.” According to the patents, the claimed methods are improvements upon a “Watson” method known in the prior art. The district court concluded that two terms—“searching neighboring triangles of the last triangle pair that holds the last intersection point” and “modified Watson method”—were invalid as indefinite based on “unanswered questions” regarding the scope of the claims posed by Autodesk’s expert. In the first reported decision, the Federal Circuit reversed. The Court held that the “unanswered questions” analysis used an incorrect legal standard, citing the specification as clarifying the scope of the claims and citing case law on deference to US Patent & Trademark Office examiners.

Following rehearing, the Federal Circuit slightly modified its decision in two primary ways but maintained its reversal of the district court’s ruling on indefiniteness.

First, the Federal Circuit added an explanation regarding how the specification answers the questions raised by Autodesk. The Court stated that “the language that the court stated ‘is not contained in the claim language’ is in the specification,” and cited a flowchart and accompanying description in the patent. The Court found fault in Autodesk’s argument because “[t]he claims set forth the metes and bounds of the invention; they are not intended to repeat the detailed operation of the method as described in the specification.”

Second, the Federal Circuit backed away from its previous reliance on deference to the examiner. In its earlier decision, the Court explained that the examiner had issued rejections for indefiniteness but withdrew them after amendments to the claims. The Court then spent a little over a page of the opinion explaining that, as official agency actors experienced in the technology and legal requirements for patentability, patent examiners are entitled to “appropriate deference.” Following rehearing, the Court removed the portion of the opinion addressing examiner deference entirely while maintaining the criticism that the district court gave “no weight to the prosecution history showing the resolution of indefiniteness by adding the designated technologic limitations to the claims.” In support, the Court cited cases holding that claims are construed in light of the specification and file history from the perspective of skilled artisans.

Judge Dyk again dissented, stating that “[t]he fact that a patent examiner introduced the indefinite language does not absolve the claims from the requirements of 35 U.S.C. § 112.” Judge Dyk argued that far from adopting a flawed “unanswered questions” analysis, the district court’s analysis was detailed and [...]

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The Name of the Game Is the Claims, Even if Specification Is Shared

by | Oct 20, 2022 |

Once again addressing the application of Alice, the US Court of Appeals for the Federal Circuit partially reversed a district court’s dismissal of several patents as subject matter ineligible for error in analyzing their claims together because of a shared specification despite different claim features. Weisner v. Google LLC, Case No. 021-2228 (Fed. Cir. Oct. 13, 2022) (Reyna, Hughes, Stoll, JJ.) (Hughes, J., dissenting in part)

Sholem Weisner sued Google for infringement of four related patents describing ways to “digitally record a person’s physical activities” and use the digital record. The patents’ common specification described how individuals and businesses can sign up for a system to exchange information (e.g., “a URL or an electronic business card”), and as they encounter people or businesses that they want recorded in their “leg history,” the URLs or business cards are recorded along with the time and place of the encounters. Google moved to dismiss the suit under Fed. R. Civ. P. 12(b)(6), arguing that the patent claims were directed to ineligible subject matter under 35 U.S.C. § 101, and that Weisner had failed to meet the minimum threshold for plausibly pleading his claim of patent infringement under the Twombly and Iqbal standards (Twiqbal). The district court agreed and granted dismissal under Twiqbal. After holding a hearing on patent ineligibility, the district court also granted dismissal under § 101 but granted Weisner leave to amend his complaint. In his amended complaint, Weisner added infringement allegations, allegations related to patent eligibility and an “Invention Background and System Details Explained” section. Google again moved to dismiss the amended complaint based on both § 101 and Twiqbal, which the district court granted. Weisner timely appealed.

The Federal Circuit applied the Alice two-step analysis to determine whether the claims at issue were directed to a patent-ineligible concept, such as an abstract idea, and if they were, whether the elements of each claim, both individually and as an ordered combination, transformed the nature of the claim into a patent-eligible application. As discussed in the Supreme Court cases Alice and Mayo, the second step is “a search for an ‘inventive concept’—i.e., an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’”

There were four asserted patents in issue. For the first two patents, Weisner attempted to argue that the claims improved “the functioning of the computer itself” or “an existing technology process” by “[1] automatically recording physical interactions and [2] limiting what is recorded to only specific types of interactions that are pre-approved and agreed to by an individual member and a vendor member.” However, the Federal Circuit was unconvinced that this was the type of improvement found in Enfish to bring claims into the realm of inventiveness. Instead, the Court agreed with the district court that, consistent with past precedent, this was no different than travel logs, diaries, journals or calendars used to keep records of a person’s location, and that [...]

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Remote Employees Support Patent Venue

by | Oct 13, 2022 |

In a per curiam opinion, the US Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus seeking to direct the district court to dismiss or transfer the underlying case based on improper venue. In doing so, the Court pointed to remote workers residing in the district to find satisfaction in the venue statute. In re Monolithic Power Systems, Inc., Case No. 22-153 (Fed. Cir. Sept. 30, 2022) (Lourie, Chen, Stark, JJ.) (per curiam) (Lourie, J., dissenting)

Bel Power brought suit in the Western District of Texas alleging that Monolithic infringed Bel Power’s patents by selling power modules used in electronic devices. Monolithic had four remote employees working from home in the district. Monolithic moved to dismiss or transfer to the Northern District of California, arguing that because it was a Delaware corporation without property in the district, venue was not proper under § 1400(b). The district court denied both requests, finding that Monolithic maintained a business presence in the district as contemplated by § 1400(b) by soliciting employment in the district and providing employees with equipment used at or distributed from their homes as part of their employment responsibilities.

In denying the motion to transfer, the district court found that Monolithic had not established that the Northern District of California was clearly more convenient. Monolithic filed for mandamus seeking to overturn either ruling.

The Federal Circuit denied relief. With regard to venue, the Court reasoned that “the district court’s ruling does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.” Instead, the Court credited the factual findings regarding the amount of equipment Monolithic provided to one of its employees in the district for “the sole purpose” of allowing him “to conduct testing and validation as part of his job,” and ruled that post-judgment appeal would be an adequate alternative means for attaining relief. On the issue of transfer (reviewed under regional circuit law), the Court denied for failure to establish a clear abuse of discretion, noting that this “is not a case in which there is only one correct outcome.”

Judge Lourie dissented, arguing that “[m]ost basically, Monolithic lacks a regular and established place of business in the Western District of Texas, as the statute requires in order for it to be sued there.” In his view, “we should not stand back and let the requirements of the statute be eroded by the details of what an employee stores in his or her home.” He noted that judicial efficiency counsels against allowing cases to be tried in venues not permitted by the statute only to be retried in a proper venue. Judge Lourie reasoned that the circumstances relied on by the district court, including job advertisement and storage of product and equipment in the venue, were not meaningfully different from those of Celgene v. Mylan Pharms (Fed. Cir, 2021), where venue was deemed improper. He noted that “[t]he [...]

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For Inherent Anticipation, How Many Is Too Many?

by | Oct 13, 2022 |

The US Court of Appeals for the Federal Circuit affirmed a Patent Trial & Appeal Board (Board) decision that prior art disclosing a class of 957 salts could not inherently anticipate claims to a salt within the class because a skilled artisan could not “at once envisage” every class member. Mylan Pharms. Inc. v. Merck Sharp & Dohme Corp., Case No. 21-2121 (Fed. Cir. Sept. 29, 2022) (Lourie, Reyna, Stoll, JJ.)

In the underlying inter partes review, Mylan alleged that Merck’s patent claims to sitagliptin dihydrogen phosphate (DHP) with 1:1 stoichiometry were anticipated by two similar Merck publications (collectively, Edmondson). Edmondson listed 33 enzyme inhibitors (including sitagliptin) and eight preferred acids for forming salts with the inhibitors. Mylan argued that the 1:1 stoichiometry between sitagliptin and DHP (which was required by the claims) was the only possible result when sitagliptin and phosphate were reacted.

In response, Merck experts declared that Edmondson did not expressly disclose any 1:1 sitagliptin DHP salts. They also declared that non-1:1 sitagliptin phosphate salts existed and had been created using conventional protocols, and that Edmondson encompassed approximately 957 predicted salts of DP-IV inhibitors.

The Board held that Edmondson did not expressly anticipate because it did not literally disclose the 1:1 sitagliptin DHP salt and Mylan could not attempt to fill in the missing claim limitation by arguing that a person of ordinary skill in the art (POSA) could “at once envisage” the “950+” salts. Merck’s evidence convinced the Board that non-1:1 sitagliptin phosphate salts “do exist and can form.”

Mylan tried to circumvent Merck’s antedation of Edmondson by asserting that it disclosed hydrates of 1:1 sitagliptin DHP, which Merck had not synthesized until months after Edmondson was published. The Board rejected this argument, noting that Edmondson only generically referred to hydrates. Since Mylan had not contested Merck’s common ownership of Edmondson’s subject matter, § 103(c)(1) applied and Edmondson became unavailable as an obviousness reference. The remaining claims to specific enantiomers and hydrates of sitagliptin DHP were deemed nonobvious because Mylan had not presented sufficient evidence to show motivation to make or reasonable expectation of success.

On appeal, the Federal Circuit found that substantial evidence supported the Board’s determinations with respect to explicit and inherent anticipation and obviousness. Mylan’s own expert had admitted that nothing in Edmondson directed a POSA to sitagliptin or to any phosphate salt. Edmondson’s disclosure of 957 potential salts was “a far cry” from the facts in the 1962 Court of Customs and Patents Appeals case In re Peterson, where a reference disclosing only 20 compounds was deemed inherently anticipatory. The Federal Circuit rejected Mylan’s antedation argument, noting that if Edmondson did not explicitly disclose 1:1 sitagliptin DHP, it could not disclose any hydrates of that compound either.

Finally, the Federal Circuit agreed with the Board that the claims to specific enantiomers or hydrates of sitagliptin DHP were nonobvious because Mylan had not shown any expected benefit to making the specific enantiomers claimed, the literature and experts for both sides reported many downsides [...]

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Hold That Generic, Please: Supreme Court Grants Emergency Request to Stay Federal Circuit’s Mandate

by | Oct 6, 2022 |

In a rare action by the Supreme Court of the United States, Chief Justice Roberts granted Novartis’s emergency request for a stay of a mandate from the US Court of Appeals for the Federal Circuit, which had found a Novartis patent invalid for lack of adequate written description and would have permitted generic versions of Novartis’s multibillion-dollar blockbuster drug Gilenya to enter the market. For more information on the Federal Circuit’s prior decisions, click here and here. Novartis Pharms. v. HEC Pharm. Co., Misc. Docket 21A272 (Supr. Ct. Sept. 29, 2022) (Roberts, Chief Justice).

Novartis sued HEC and several other generic companies for infringement of a patent directed to methods of treating remitting multiple sclerosis with fingolimod or a fingolimod salt at a daily dose of 0.5 mg without an immediately preceding loading dose. In a split panel decision issued in January 2022 and authored by former Judge O’Malley with current Chief Judge Moore dissenting, the Federal Circuit affirmed the district court’s ruling that the patent was not invalid for insufficient written description of the claimed 0.5 mg daily dose or the no-loading dose negative limitation. HEC petitioned for panel rehearing. Judge O’Malley retired in March 2022, and a new panel granted HEC’s petition. The new panel now included Judge Hughes, who joined with Chief Judge Moore in the majority opinion. Judge Linn (who had joined with now retired Judge O’Malley in the original panel majority) was now the dissenter. The split panel vacated its prior decision and reversed the district court’s judgment. The new majority held that silence cannot support a later-added claim limitation that precludes loading doses. In dissent, Judge Linn argued that the majority applied a heightened written description standard requiring, not only a “reason to exclude,” but also a showing that the negative limitation was “necessarily excluded.”

On September 27, 2022, the Federal Circuit denied Novartis’s motion to stay the mandate pending a forthcoming decision on a petition for certiorari. Novartis filed an emergency application directed to Chief Justice Roberts, and two days later Justice Roberts issued an Order staying issuance of the Federal Circuit mandate (which would have issued on October 4, 2022) and ordered HEC to respond to Novartis’s emergency application.

Practice Note: The Supreme Court is currently considering another petition for certiorari resulting from a divided Federal Circuit decision on the question of whether a patent specification must expressly disclose a claim limitation to satisfy the written description requirement. Juno Therapeutics, Inc. v. Kite Pharma., Inc., Case No. 21-1566.



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Sliced and Diced: PTAB Decision Remanded for Further Analysis

by | Oct 6, 2022 |

In an appeal from a Patent Trial & Appeal Board final written decision, the US Court of Appeals for the Federal Circuit affirmed the Board’s decision to include certain evidence first presented in the petitioner’s Reply but vacated the Board’s obviousness decision for a failure to fully and particularly set out the bases for its decision. Provisur Technologies, Inc. v. Weber, Inc., Case Nos. 21-1942; -1975 (Fed. Cir. Sept. 27, 2022) (Prost, Reyna, Stark, JJ.)

Provisur Technologies owns a patent directed to classifying slices or portions cut from a food product according to an optical image of the slice. The patent explains that certain meat products, such as bacon or cold cuts, are sold in groups of slices according to particular weight requirements. The specification also teaches that the arrangement of the slices according to quality is desirable. The independent claims are directed to an image processing system arranged above a weigh conveyor that is capable of categorizing slices by determining the surface area and fat-to-lean ratios of the slices based on pixel-by-pixel image data.

Weber petitioned for inter partes review of the patent, alleging that the claims were obvious over various prior art references. Provisur, in its Patent Owner Response, disputed Weber’s assertion that the prior art references disclosed the claimed digital imaging receiving device capable of determining a surface area from pixel-by-pixel image data. During deposition of Weber’s expert, Provisur probed the expert’s knowledge of various camera models available as of the priority date. This prompted Weber to introduce a data sheet on redirect showing various models of cameras, including a comparison between those disclosed in the prior art references and those disclosed as exemplary in the patent. Provisur moved to exclude the datasheet, but the Board concluded that the evidence was highly probative and allowable because it was submitted in response to an argument that Provisur advanced in its Patent Owner Response. The Board also found that the independent claims and various dependent claims were invalid as obvious over the references cited by Weber.

Provisur appealed the admission of the datasheet and the Board’s determination on obviousness. Regarding the evidentiary issue, the Federal Circuit found that the Board did not abuse its discretion by considering the datasheet, noting that it was reply evidence responsive to Provisur’s arguments that the prior art did not disclose a digital camera: “Importantly, Weber’s invalidity theories did not change, nor did the reply fill any holes in Weber’s petition.” Furthermore, the Court observed that Provisur had an opportunity to respond both by cross-examining Weber’s expert and in a sur-reply to the Board.

Regarding the Board’s obviousness determination, Provisur argued that the Board erred by failing to explain its rationale for how the prior art combinations specifically taught the claim element of “determining a surface area of the top slice from the [pixel-by-pixel image] data [of a top slice of the stack].” Under the Administrative Procedure Act (APA), the Board must fully and particularly set out the basis upon which it reached its [...]

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Standard Computer Equipment Can Support Inventive Concept under Alice Step 2

by | Oct 6, 2022 |

The US Court of Appeals for the Federal Circuit overturned a district court dismissal of a patent case for errors in analyzing the claims’ patent eligibility under Alice. The Court found that regardless of whether the claimed invention was abstract under step 1, the invention claimed specific improvements rendering it patent eligible under step 2. Cooperative Entertainment, Inc. v. Kollective Technology, Inc., Case No. 21-2167 (Fed. Cir. Sept. 28, 2022) (Moore, C.J.; Lourie, Stark, JJ.)

Cooperative Entertainment sued Kollective Technology for infringement of several claims of Cooperative’s patent directed to structuring a peer-to-peer (P2P) dynamic network for distributing large files. After Kollective filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6) arguing that all of the patent claims were ineligible under 35 U.S.C. § 101, Cooperative filed an amended complaint. Kollective refiled its motion to dismiss, and the district court granted the motion, holding the challenged claims ineligible under § 101. Cooperative appealed.

The patent relates to systems and methods of structuring a P2P dynamic network for distributing large files, specifically videos and video games. The patent specification explains that in prior art systems, video streaming was controlled by content distribution networks (CDNs), with content “distributed directly from the CDN server originating the content.” In contrast, the challenged claims recite methods and systems for a network in which content distribution occurs “outside controlled networks and/or [CDNs]” (emphasis added), and therefore outside a “static network of controlled systems.” Dynamic P2P networks comprising “peer nodes,” which consume the same content contemporaneously, transmit content directly to each other instead of receiving content from the CDN. The claimed P2P networks use “content segmentation” to segment a video file into smaller clips and distribute it piecemeal. Viewers can obtain individual segments as needed, preferably from other viewers. The disclosed segmentation techniques include “CDN address resolution, trace route to CDN and the P2P server manager, dynamic feedback from peers reporting traffic rates between individual peer and its neighbors, round-robin, other server side scheduling/resource allocation techniques, and combinations thereof” (emphasis in original).

The Federal Circuit applied the two-step Alice framework: (1) determining whether the claim is “directed to” a “patent-ineligible concept,” such as an abstract idea, and if it is, (2) examining “the elements of the claim to determine whether it contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Step 2 examines whether the claim elements, individually and as an ordered combination, contain an inventive concept that more than merely implements an abstract idea using “well-understood, routine, [and] conventional activities previously known to the industry.”

Under Alice step 1, the district court had held that the “focus of the [] patent” is the abstract idea of “the preparation and transmission of content to peers through a computer network.” The Federal Circuit disagreed, concluding that regardless of whether the invention could be reduced to an abstract concept, under step 2 the claims contained several alleged inventive concepts that the specification touted as specific improvements in the distribution of data [...]

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