In Intellectual Ventures I LLC v. Capitol One Bank (USA), Case No. 2014-1506 (Fed. Cir. July 6, 2015), the Federal Circuit affirmed the Eastern District of Virginia’s holding that the claims of two patents were invalid under Section 101. It is perhaps worth noting that the district court’s decision was made before the Supreme Court’s Alice decision issued, so while the Federal Circuit’s reasoning applies the two-part Mayo test, as dictated by Alice, this is a case in which pre-Alice and post-Alice reasoning arrived at the same result, not a case in which the new standard invalidated a previously-valid patent.

With respect to U.S. Patent No. 8,083,137 (“the ’137 patent”), the courts found claim 5 to be representative:

5. A method comprising:

storing, in a database, a profile keyed to a user identity and containing one or more user-selected categories to track transactions associated with said user identity, wherein individual user-selected categories include a user pre-set limit; and

causing communication, over a communication medium and to a receiving device, of transaction summary data in the database for at least one of the one or more user-selected categories, said transaction summary data containing said at least one user-selected category’s user pre-set limit.

Similarly, for U.S. Patent No. 7,603,382 (“the ’382 patent”), the courts found claim 1 to be representative:

1. A system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user, comprising:

an interactive interface configured to provide dynamic web site navigation data to the user, the interactive interface comprising:

a display depicting portions of the web site visited by the user as a function of the web site navigation data; and

a display depicting portions of the web site visited by the user as a function of the user’s personal characteristics.

The district court found both of the above claims to be “drawn to a mental process – i.e., an abstract idea” without “‘add[ing] enough’ by way of the disclosed applications of these abstract ideas.” The district court was not persuaded by the patentee’s argument that limitations such as “a display” provided concrete implementation details. Instead, the lower court held that “an improvement in the workings of the computer or the transmissibility of data or some other transformation of data into something qualitatively beyond the informational content of the data entered, even though the data might be organized and manipulated to disclosed useful correlations” is needed to “authorize[] the protections of a patent.” That is, the claims at issue store, retrieve, and display data, but don’t actually do anything with the data. In this respect, at least, the claims are unlike those in Diehr, for an improved process resulting from the use of a particular algorithm, and more like those warned against in Diehr, involving “insignificant postsolution activity.”

At the Federal Circuit, the two-part Mayo/Alice test was applied to each of the representative claims. For the claims of the ’137 patent, the Appeals Court found that the claims are directed to the “abstract idea” of “tracking financial transactions to determine whether they exceed a pre-set spending limit (i.e., budgeting).” The Federal Circuit did not cite any references to support the mapping of the claim language to the identified abstract idea, and relied on the patentee’s admission that “budgeting ‘… is an abstract idea’” to consider step 1 of the two-part test to be met.

Once it was determined that the claims were directed to an abstract idea, the only remaining issue was whether “the claims contain” an “inventive concept.” The court found that all recited elements are “generic computer elements,” and thus the claims simply recite “apply[ing] the abstract idea … using some unspecified, generic computer.” Furthermore, “the budgeting calculations at issue here are unpatentable because they ‘could still be made using a pencil and paper’ with a simple notification device.”

With respect to the claims of the ’382 patent, the Appeals Court found the claims to be related to “customizing information based on (1) information known about the user and (2) navigation data.” The court used the example of newspaper inserts based on a recipients address to show that customizing information based on information known about the user is “a fundamental … practice long prevalent in our system …” and thus an abstract idea. Similarly, the court noted that television advertisements have long been shown based on the time of day in which the advertisement is viewed. Since the patentee agreed that “navigation data” encompassed the time of day at which the user viewed the information, the court found the second feature to also be an abstract idea in the form of a fundamental economic practice. The court did not perform an analysis to determine if the combination itself were a fundamental economic practice long prevalent in our system of commerce.

The patentee argued that the claims of the ’382 patent included an “inventive concept that would support patent eligibility” because the claims are directed to a “‘real time’ customiz[ation]” of a “web page based on … information … about the particular viewer,” but the court held that the claims did not recite those features. Accordingly, the claims were found to be directed to an abstract idea “restricted to the Internet, on a generic computer,” which was insufficient to confer patentability.

In holding that the claims were patent-ineligible, the Federal Circuit addressed the patentee’s argument that the claims at issue were similar to the patent-eligible claims in DDR Holdings:

The patent at issue in DDR provided an Internet-based solution to solve a problem unique to the Internet that (1) did not foreclose other ways of solving the problem, and (2) recited a specific series of steps that resulted in a departure from the routine and conventional sequence of events after the click of a hyperlink advertisement. … The patent claims here do not address problems unique to the Internet, so DDR has no applicability.

Thus, the Federal Circuit leaves the door open for Internet-based solutions to modern problems, even while keeping the door firmly shut against computer implementations of fundamental economic practices long prevalent in our system of commerce.