By Jason Rantanen
Dealertrack v. Huber (Fed. Cir. 2012) Download 09-1566
Panel: Linn (author), Plager (concurring in part and dissenting in part), and Dyk
The Federal Circuit's opinion in Dealertrack adds to the evolving law on subject matter patentablility of computer-related inventions. It should be read in connection with two other recent decisions in this area, Ultramercial v. Hulu, 657 F.3d 1323 (Fed. Cir. 2011) and CyberSource Corp. v. Retail Decisions, 654 F.3d 1366 (Fed. Cir. 2011).
At issue was the subject matter patentability of claims 1, 3, and 4 of Patent No. 7,181,427. Claim 1 is representative:
1. A computer aided method of managing a credit application, the method comprising the steps of:
[A] receiving credit application data from a remote application entry and display device;
[B] selectively forwarding the credit application data to remote funding source terminal devices;
[C] forwarding funding decision data from at least one of the remote funding source terminal devices to the remote application entry and display device;
[D] wherein the selectively forwarding the credit application data step further comprises:
[D1] sending at least a portion of a credit application to more than one of said remote funding sources substantially at the same time;
[D2] sending at least a portion of a credit application to more than one ofsaid remote funding sources sequen-tially until a finding [sic, funding] source returns a positive funding decision;
[D3] sending at least a portion of a credit application to a first one of said remote funding sources, and then, after a predetermined time, sending to at least one other remote funding source, until one of the finding [sic, funding] sources returns a positive funding deci-sion or until all funding sources have been exhausted; or,
[D4] sending the credit application from a first remote funding source to a second remote finding [sic, funding] source if the first funding source de-clines to approve the credit application.
On appeal, the CAFC agreed with the district court that these claims are "directed to an abstract idea preemptive of a fundamental concept or idea that would foreclose innovation in this area," and thus are invalid under 35 U.S.C. §101. In its simplest form, the court reasoned, the claimed process explains the basic concept of processing information through a clearinghouse. "Neither Dealertrack nor any other entity is entitled to wholly preempt the clearinghouse concept." Slip Op. at 35.
Nor was the link to a computer sufficient to limit the claims to an application of the idea. "The claims are silent as to how a computer aids the method, the extent to which a computer aids the method, or the significance of a computer to the performance of the method. The undefined phrase "computer aided" is no less abstract than the idea of a clearinghouse itself." Slip Op. at 35. "Simply adding a computer aided limitation to a claim covering an abstract concept, without more, is insufficient to render the claim patent eligible." Id. at 36. In essence, the claimed process was akin to the unpatentable binary-coded decimal to pure binary conversion in Gottschalk v. Benson, 409 U.S. 63 (1972), and covered a clearinghouse process "using any existing or future-devised machinery."
This opinion completes a trio of recent opinions dealing with the patentability of computer-related inventions, the others being Ultramercial and CyberSource. In Ultramercial, authored by Chief Judge Rader and joined by Judges Lourie and O'Malley, the court concluded that a process for monetizing copyrighted products using a computer fell on the patentable side of the abstract ideas versus patentable application divide. Reaching the opposite result on the issue of abstractness, the CyberSource panel of Judges Bryson, Dyk (author) and Prost concluded that a method of verifying a credit card transatction over the Internet constituted an unpatentable process. In Dealertrack, the court drew upon the reasoning in CyberSource while distinguishing Ultramercial.
The court also addressed issues of claim construction and indefiniteness. Particularly noteworthy was the court's conclusion that "i.e.:" in the context of a patent-in-suit could not be read definitionally. Slip Op. 17-20.
Towards a more efficient judicial process: Writing in partial dissent, Judge Plager disagreed with the majority's decision to address subject matter patentability:
[A]s a matter of efficient judicial process I object to and dissent from that part of hte opinion regarding the '427 patent and its validity under §101, the section of the Patent Act that describes what is patentable subject matter. I believe that this court should exercise its inherent power to control the processes of litigation, Chamberes v. NASCO, Inc., 501 U.S. 32, 43 (1991), and insist that litigants, and trial courts, initially address patent invalidity issues in infringement suits in terms of the defenses provided in the statute: "conditions of patentability," specifically §§102 and 103, and in addition §§112 and 251, and not foray into the jurisprudential morass of §101 unless absolutely necessary.
Judge Plager appears to be thinking in the same direction as suggested by Professors Crouch and Merges in their recent article Operating Efficiently Post-Bilski by Ordering Patent Doctrine Decision-Making, 25 Berkeley Tech. L.J. 1673 (2010), in which they proposed that "the § 101 issue of Bilski be considered only when doing so is absolutely necessary to determine the validity of a claim or claims in a patent. We believe any claim that can be invalidated under one of the less controversial and less complex requirements for patentability—§§ 102, 103, and 112, for instance—ought to be disposed of without considering subject matter patentability. In other words, the Bilski issue should be avoided wherever it is not strictly necessary."