Yet Another Case For The Physical and Virtual Links Test
On September 5, 2013, the Federal Circuit decided Accenture v. Guidewire. A 2-1 majority affirmed the district court’s judgment holding that all claims of U.S. Patent 7,013,284 (the “’284 patent”) are invalid under 35 U.S.C § 101 as reciting patent-ineligible subject matter.
The patent contained two independent claims – a system claim and a method claim – both related to generating and organizing insurance-related risks. Both claims included an insurance transaction database containing a policy level, a claim level, a participant level, and a line level. Both required a client component for allowing an assigned claim handler to access tasks, an event processor, and a task assistant for scheduling and monitoring those tasks.
Building on the Federal Circuit’s plurality en banc decision in CLS Bank and the majority decision in Ultramercial, the majority in Accenture were in agreement to use the analytical tools provided by the Supreme Court in Bilski and Prometheus to first identify the abstract principle and its scope and then determine whether the recited steps that manipulate the abstract principle preempt the abstract principle. (“In the case of abstractness, the court must determine whether the claim poses “any risk of preempting an abstract idea.” Id. To do so the court must first “identify and define whatever fundamental concept appears wrapped up in the claim.” Id.; see also Ultramercial, 2013 WL 3111303, at *18 (Lourie, J., concurring) (same). Then, proceeding with the preemption analysis, the balance of the claim is evaluated to determine whether “additional substantive limitations . . . narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself.” CLS Bank, 717 F.3d at 1282 (citing Mayo, 132 S. Ct. at 1300; Bilski, 130 S. Ct. at 3231; Diamond v. Diehr, 450 U.S. at 187.”) Accenture Op., at 8
The court found the abstract idea at the heart of system claim in the ’284 patent to be “generating tasks [based on] rules . . . to be completed upon the occurrence of an event.” Ibid., at 15. Although criticized for its choice of words “heart of system” in its analysis, the court likely meant nothing more by this phrase other than to “identify and define whatever fundamental concept appears wrapped up in the claim,” Id., citing Mayo, Bilski, and Diehr. This is consistent with the Supreme Court precedent and appears to be the real message of the phrase finding the abstract idea at the heart of the system – to wit, the need to identify the abstract concept in order to do the preemption analysis.
Once the abstract concept was identified and discounted from the § 101 analysis, the court found the balance of the claim to amount to no more than a database of tasks, a means to allow a client to access those tasks, and a set of rules that are applied to that task on a given event. Ibid, at 16. As the court explained, these limitations do not provide sufficient additional features or limit the abstract concept in a meaningful way. Id. Once these limitations were discounted from the claims as insignificant extra solution activity, all that remained was the abstract principle, which is not enough.
The court rebuffed the arguments of Accenture that complexity and detail of the specification demonstrate the patent to be an advance in computer software and not simply a claim to an abstract idea. Ibid, at 14. This tactic of importing limitations from the specification nowhere to be found in the claims was advocated more recently by the Ultramercial court to support software patentablilty. As we pointed out in our Ultramercial blog, the court’s extensive use of detailed description in recent § 101 cases to import limitations nowhere to be found in the claims, solely for the purpose of saving the patent, is a disturbing trend that in time will or should end. It appears that the Accenture court has properly rejected that tactic, for now.
Practice Pointer: Avoid Cherry Picking Claims For Appeal
The Accenture decision also raises a question about the wisdom of cherry picking claims for appeal. Accenture did just that when it appealed the system claims but not the method claims, apparently hoping to put some distance between the system and the method. The effect was just the opposite when the majority took this as an admission that like elements of the system claims are also ineligible subject matter. Once those elements were stripped from the body of the claim, all that remained were limitations that the court held to be not meaningful. (“Indeed, in this case “[t]he system claims are [akin] to stating the abstract idea [of the method claim] . . . and adding the words: ‘apply it’ on a computer.” CLS Bank, 717 F.3d at 1291 (plurality opinion) (citing Mayo, 132 S. Ct. at 1294). Because the system claim and method claim contain only “minor differences in terminology but require performance of the same basic process,” id. at 1291, they should rise or fall together.”) Ibid, at 13. The practice pointer thus may be to forego cherry picking claims to appeal or assume the risk of negative inferences.
A Yardstick Without a Measure
So in the aftermath of Accenture, what yardstick has the Federal Circuit provided patent practitioners to measure whether subject matter is patent eligible under § 101? There is the inquiry of whether “a claim, as a whole, includes meaningful limitations restricting it to an application, rather than merely an abstract idea,” as the court in Accenture explained without providing much guidance on what makes a limitation “meaningful.” Ibid, at 9. There is the “complex programming” test apparently applied by the majority in Ultramercial in finding software limitations to be § 101 meaningful. Ultramercial, 722 F.3d 1335 (2013), at 1350. This after pointing to other criteria the courts have found useful in making this determination. (“A claim is meaningfully limited if it requires a particular machine implementing a process or a particular transformation of matter.” “A claim also will be limited meaningfully when, in addition to the abstract idea, the claim recites added limitations which are essential to the invention.” Id., at 1347.) If the words of the Dissent in Accenture are also to be considered, there are the queries of whether “the claims offer “significantly more than the purported abstract idea,” and “meaningfully limit the claims’ scope,” and further “whether someone can “generate tasks based on rules to be completed upon the occurrence of an event in a number of ways without infringing the claims,” as explained by Chief Judge Rader, Dissent Op., at 4; a significant departure from the “complex programming” test apparently applied as the yardstick in the Ultramercial opinion he authored.
Making The Case for A Physical and Virtual Links Test
Neither these nor the other yardsticks provided by the Federal Circuit (e.g., “functional and palpable” test propounded by the court in Research Corp.) provide any clear, cogent, and convincing analysis for defining what makes a limitation meaningful or for that matter meaningless. As a result, the decision of the court in Accenture leaves the patent community no more informed on where to draw the boundary line within which a claim is patentable and outside of which it preempts the abstract idea than they were before Accenture was decided.
In our view, the circular reasoning advanced by the Accenture court is not why the claims are not meaningful. Rather, they are not meaningful for a very important reason not mentioned by the court, namely that not one of the limitations provides a “physical” or “virtual” link to something physical or tangible, that is to say, to something real. In Ultramercial, where software claims were found to have meaningful limitations, the claims recited a step of “receiving” from a content provider “media products.” Media products are digital representations of physical or tangible things, e.g., a video stream that has captured the depictions and/or movements of real people, things, etc. – tangible things. The Ultramercial claims recited the “manipulation” of this representation of physical or tangible things by the recitation “receiv[es]” in this example. In Accenture, there was no manipulation of anything real. Just like in CLS Bank, the patents failed because the software only manipulated abstract things, to wit, insurance-related risks.
The recitation of a physical or virtual link to something real provides a compelling explanation missing from the Federal Circuit’s decision of why the claims in Accenture do not recite a meaningful application of an abstract idea which does not preempt the abstract idea itself. For more, read the Physical and Virtual Links Test. If anything, Accenture stands as another case in support of the Physical and Virtual Links test.
About The Juhasz Burge PC Firm
The Juhasz Burge PC Firm is a patent and intellectual property (IP) protection, counseling, licensing and litigation firm. Combining deep patent/IP experience, broad capabilities across a wide spectrum of industries and technologies, and extensive expertise in strategic counseling, Juhasz Burge PC collaborates with clients to help them better see, understand and realize the potential strategic value from their patents and intellectual property.
Paul R. Juhasz has written extensively on patent-ineligible subject matter, including the Bilski patent decision and including amicus briefs filed before the U.S. Supreme Court in Mayo and Myriad; as well as before the Federal Circuit in CLS Bank.
The Firm appreciates the input of Chris Frerking, Of Counsel to the Firm, to this blog.