In their petition for en banc review, Nader and Kamran Asghari-Kamrani ask the Federal Circuit to come together to explain the facts (and the law) of patent eligibility under 35 U.S.C. § 101. In particular, the new petition filed by Antigone Peyton raises two questions:
1. Is the threshold inquiry for patent eligibility under 35 U.S.C. § 101 a pure question of law without underlying factual issues relating to the question of whether the claims transform an abstract idea into a patent eligible application, including whether they are directed to improvements in computer technology or merely describe well-understood, routine, and conventional activities known in the industry (the Alice Step Two inquiry)?
2. Can a district court conclude, when considering a Rule 12(b)(6) motion, that a computer-based invention’s claims directed towards authenticating a user during an electronic transaction with an external entity by way of a central entity—using a digital identity and dynamic code—fail to recite an improvement in authentication technologies implemented on a computer network and merely recite well-understood, routine, and conventional activities without construing the claims or applying the patentee’s proposed construction, considering the patent’s teachings, or considering relevant fact evidence such as expert testimony on the nature of the invention and state of the art, prior art teachings, or industry practices?
The case at issue here stems from the CAFC’s affirmance of the lower court’s Rule 12(b)(6) dismissal — finding that the claims of U.S. Patent No. 8,266,432 are invalid as directed an abstract ideas. The claims here are directed to a user authentication system that uses using a central computer to send a temporary dynamic code to a user and then validate the code when submitted by a third party (who is conducting a transaction with the user).
The patentee argues that the facts would show that its approach is an innovative implementation — but the district court dismissed the case without considering any submitted evidence. The district court issued its decision prior to Berkheimer and Aatrix. However, on appeal, the Federal Circuit affirmed the dismissal without considering the impact of those decisions (R. 36 Judgment without Opinion).
Although the claims expressly and repeatedly require computer intervention, the district court noted that invention would still work for its purpose even without the computer technology. That setup led the court to find the claims directed toward an abstract idea:
The claims are directed to the abstract idea of using a third party and a random, time-sensitive code to confirm the identity of a participant to a transaction. This formulation is admittedly verbose. It is verbose because the patent claims combine two abstract ideas: the use of a third party intermediary to confirm the identity of a participant to a transaction and the use of a temporary code to confirm the identity of a participant to a transaction. It is an obvious combination, and nothing about the combination removes the patent claims from the realm of the abstract.
Intra-Circuit Split: In its brief, the patentee highlights the current intra-circuit split among the Federal Circuit judges on the issue of when facts are relevant and important to the eligibility inquiry.
[The Berkheimer analysis] has been alternatively characterized by some members of the Court as an “unremarkable proposition” that
is consistent with the Court’s precedent, Aatrix, 890 F.3d at 1355 (Moore, J., concurring), and by others as “contrary to that well-established precedent” with “staggering” consequences, id. at 1362, 1365 (Reyna, J., dissenting). Other members of this Court have explicitly suggested that it should wait for help or guidance from Congress or the Supreme Court. Berkheimer (Lourie, J., concurring).
. . . This Court should join the USPTO’s current effort to roll up its sleeves and bring more certainty, predictability, and clarity to the Section 101 analysis.
It is unlikely that the court will take the bait with this case, but we shall see.
Claim 1 below:
1. A method for authenticating a user during an electronic transaction between the user and an external-entity, the method comprising:
receiving electronically a request for a dynamic code for the user by a computer associated with a central-entity during the transaction between the user and the external-entity;
generating by the central-entity during the transaction a dynamic code for the user in response to the request, wherein the dynamic code is valid for a predefined time and becomes invalid after being used;
providing by the computer associated with the central-entity said generated dynamic code to the user during the transaction;
receiving electronically by the central-entity a request for authenticating the user from a computer associated with the external-entity based on a user-specific information and the dynamic code as a digital identity included in the request which said dynamic code was received by the user during the transaction and was provided to the external-entity by the user during the transaction; and
authenticating by the central-entity the user and providing a result of the authenticating to the external-entity during the transaction if the digital identity is valid.