Prism Tech v. T-Mobile USA (Supreme Court 2017) [Prism Technologies Petition]
The district court sided with the patentee – Prism Tech’s – finding the user-authentication claims eligible under section 101. Important for the petition here, the district court relied upon substantial expert testimony as well as other documentary evidence in concluding that the claims were enforceable.
Ordinarily, a district court’s factual findings are reviewed with deference on appeal — even when those factual findings are subsidiary to an ultimate question of law. See, Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015) (In claim construction, appellate court must give deference to a district court’s subsidiary factual findings); Mintz v. Dietz & Watson, Inc., 679 F.3d 1372 (Fed. Cir. 2012) (a district court factual findings underlying an obviousness determination are given deference on appeal); Alfred E. Mann Found. for Sci.Research v. Cochlear Corp., 841 F.3d 1334, 1341 (Fed. Cir. 2016) (a district court’s factual findings underlying an regarding indefiniteness finding must be given deference on appeal).
On appeal here, however, the Federal Circuit rejected the lower court’s determinations without giving any deference to the underlying factual determinations — instead the appellate court here reviewed all eligibility issues de novo, including subsidiary findings of fact. Note here, that this is the same approach taken by the Federal Circuit in claim construction prior to being reversed by the Supreme Court in Teva.
An element of the Supreme Court’s Teva decisions stems from R. 52(a)(6) of the Federal Rules of Civil Procedure which appears quite clear:
Findings of fact, whether based on oral or other evidence, must not be set aside unless clearly erroneous, and the reviewing court must give due regard to the trial court’s opportunity to judge the witnesses’ credibility.
Of course, even in Teva, the Supreme Court did not truly follow R.52 — holding there that seemingly factual determinations based upon intrinsic evidence (such as prosecution history statements) rather then extrinsic evidence need not be given deference.
Prism has now petitioned the Supreme Court for review with the following simple question:
Whether a district court’s factual findings in support of its holding that claims are directed to patent eligible subject matter may be reviewed de novo, as the Federal Circuit requires (and as the panel did in this case), or only for clear error, as Rule 52(a) and corollary Supreme Court precedent require.
The petition also tells the interesting story regarding Prism’s parallel $30 million jury verdict against Sprint. Sprint did not challenge the patents on eligibility grounds and ended up losing in a decision confirmed on appeal by the Federal Circuit. However, after the Federal Circuit decided the T-Mobile case, the district court flipped its decision ruling on a post-appeal motion that Sprint should be granted relief from judgment under Fed. R. Civ. P. 60(b). According to the petition, a major problem with that decision is that the court applied it (without independent analysis) to prevent enforcement of claims not-at-issue in the T-Mobile case.
The major problem with Prism’s case is the patents themselves and the high level of generality used by the claims. Asserted claim 1 of U.S. Patent No. 8,127,345 is a method for controlling access to protected resources over an IP network. The network setup includes an authentication server; an access server; and a client computer. The method then has several steps:
- Request: The client computer sends an access-request to the access server along with identity data about the client computer.
- Authentication: The access server then forwards the identity data to an authentication server; and the authentication server authenticates the identity (and stores the identity data in the authentication server)
- Authorization: The authentication server then authorizes the client computer to receive at least some of the requested resources
- Permission: The authentication server then permits access to the resources.
The Federal Circuit found that these steps “are directed to the abstract idea of ‘providing restricted access to resources,'” and that the claim does not include any further concrete innovations that would transform it to a patent eligible claim. On that ultimate question, I don’t see the Supreme Court ruling any differently.
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Claim 1 is reproduced below.
1. A method for controlling access, by at least one authentication server, to protected computer resources provided via an Internet Protocol network, the method comprising:
receiving, at the at least one authentication server from at least one access server, identity data associated with at least one client computer device, the identity data forwarded to the at least one access server from the at least one client computer device with a request from the at least one client computer device for the protected computer resources;
authenticating, by the at least one authentication server, the identity data received from the at least one access server, the identity data being stored in the at least one authentication server;
authorizing, by the at least one authentication server, the at least one client computer device to receive at least a portion of the protected computer resources requested by the at least one client computer device, based on data associated with the requested protected computer resources stored in at least one database associated with the at least one authentication server; and
permitting access, by the at least one authentication server, to the at least the portion of the protected computer resources upon successfully authenticating the identity data and upon successfully authorizing the at least one client computer device.