The US Court of Appeals for the Federal Circuit affirmed a district court’s dismissal of a lawsuit involving two software patents directed toward enhancements to search result displays, finding that both patents claimed subject matter that is ineligible under 35 U.S.C. § 101. IBM v. Zillow Group, Inc., Case No. 22-1861 (Fed. Cir. Jan. 9, 2024) (nonprecedential) (Prost, Hughes, JJ.) (Stoll, J., dissenting).

IBM sued Zillow for infringing five patents. Claims from two of the patents were dismissed. For the remaining three patents, Zillow filed a motion to dismiss, arguing that all three patents were ineligible under § 101. The district court granted Zillow’s motion to dismiss, finding the asserted claims ineligible. IBM appealed.

Only two of the patents were subject to the appeal. The first patent was directed to a graphical user interface that improves search and selection based on user input to produce better results, and the second patent was directed to improvements in how to display search results to users.

IBM raised two arguments on appeal:

• The district court erred in dismissing both patents, because the complaint and IBM’s inventor declaration were enough to show patent eligibility and—at minimum—survive the pleading stage.
• The district court failed to resolve a claim construction dispute over a term in the second patent.

The Federal Circuit began by providing a primer on the Alice two-step process for evaluating patent eligibility. For step one, courts must “determine whether a patent claim is directed to an unpatentable law of nature, natural phenomena, or abstract idea.” When the patent involves software, claims are ineligible where they merely describe a process or system that uses a computer as a tool applied to an otherwise abstract idea. For step two, courts must analyze whether the claims simply describe an abstract method. If the claims instead go further and transform an otherwise abstract idea into something new via an “inventive concept,” then the subject matter may be patentable.

Turning to the appeal, the Federal Circuit first addressed whether IBM’s complaint and inventor declaration should have been enough to establish subject matter eligibility at the pleading stage for either patent. Applying the Alice two-step test, the Court found that they were not and upheld the district court’s dismissal.

For the first patent directed to a graphical user interface, the Federal Circuit agreed with the district court’s conclusion that the patent had three clear indicia of abstractness. First, the process could be done with pen and paper. Second, the claim language was result-oriented. Third, the patent focused on intangible information. The Court also found that the claims did “not disclose any technical improvement” to computer software. Thus, the claims failed at Alice step one. The Court found that IBM fared no better at step two, explaining that IBM’s argument for an inventive process hinged on the inventor declaration, which made no reference to the patent’s actual claim language. The Court explained that “[s]imply including allegations of inventiveness in a complaint, detached from what is claimed or discussed in the patent, does not ensure that the complaint will survive the pleading stage.”

The Federal Circuit also affirmed dismissal of the second patent. Under Alice step one, the claims failed eligibility as being directed to two abstract ideas: showing users a correlation between their search inputs and the search results and presenting those search results in a way tailored to “users’ perusal of prior search results.” The Court agreed with the district court that offering users a more beneficial way to view their search results did not advance computer capabilities. Describing the data input and output from the “proverbial ‘black box,’ but revealing nothing about the inner works of the box itself” is an abstract idea. Nor would the claims survive Alice step two because IBM’s complaint and inventor declaration failed to show an inventive concept to revive the otherwise abstract claims. As with the first patent, “[m]erely alleging inventiveness without tying those allegations to the patent is insufficient to survive a Rule 12 motion.” The inventor declaration added discussion and parameters that were “untethered” to the language of the patent’s specification or claims and thus were characterized by the Court as only conclusory allegations.

Finally, the Federal Circuit addressed IBM’s separate argument that the district court erred by inadequately addressing a claim construction dispute in the second patent. Because Zillow adopted IBM’s proposed construction in its briefings, the Court found that there simply was no dispute about the term. Addressing the dissent’s argument, the majority noted that any legitimate dispute about the term would lead to harmless error only because even IBM’s expanded claim language would not save the patent from being impermissibly abstract.

Judge Stoll dissented only as to the second patent, arguing that IBM had adequately shown a claim construction dispute that may have led to a different result if the district court, the majority and Zillow had fully addressed IBM’s proposed construction, as required by Federal Circuit case law. She found that because the proposed term “plausibly provided” an inventive concept, the claims may have survived Alice, especially at the pleadings stage.

Practice Note: This decision is the latest in a series of decisions involving IBM and Zillow. In its 2022 decision, the Federal Circuit found other patents directed to graphical displays and user interfaces to be subject matter ineligible because they were directed to abstract ideas.