Customer Value Not Just Limited to the 20 Year Patent Term.

by Dennis Crouch

cxLoyalty, Inc. v. Maritz (Fed. Cir. 2021)

Maritz is in the business of designing employee incentive plans and other reward programs.  The company’s U.S. Patent No. 7,134,087 claims a computer system for using “award points” to purchase goods at a regular store by using a “shadow credit card.”  cxLoyalty is a competitor — focusing primarily on customer loyalty. Their creepy motto: “we increase customer lifetime value.”  At least they’re not focused on true zombies.

Maritz sued cxLoyalty for infringement back in 2018.  In response, the defendant filed a petition for covered-business-method review (CBM) and argued that the claims lack patent eligibility. The PTAB offered a split result:

  • Claims 1-15 ineligible;
  • Substitute claims 16-23 eligible.

On appeal, the Federal Circuit has reversed — finding that none of the claims recite patent eligible subject matter under 35 U.S.C. 101 and Alice.

The claims each occupy 3+ pages of text, but basically spell out the “computerized system” as shown below in Figure 2.  The original claim 1 was written at roughly the same level of generality used in the figure below.  The substituted claim added several limitations: requiring a “program database”; requiring the GUI to use an “internet connection”; and formatting the information from the vendor so that it can be used by the GUI system.  For the PTAB, those changes were sufficient to surpass the eligibility threshold. On appeal, however, the Federal Circuit disagreed. 

In its analysis, the PTAB found all the claims directed to the abstract idea of facilitating a commercial transaction — “a fundamental economic practice long prevalent in commerce.” Quoting Alice.  However, according to the PTAB, the substitute claims included an additional concept under the USPTO’s 2019 Revised Patent Subject Matter Eligibility Guidance, 84 Fed. Reg. 50 (Jan. 7, 2019).

The eligibility guidance is generally seen as Former Dir. Iancu’s attempt to limit ongoing damage to patent applicants based upon expansive readings of Alice & Mayo. However, it was (and is) apparent that the guidance does not closely follow binding Federal Circuit caselaw but rather takes several opportunities to favor a conclusion of patent eligibility.

On appeal, the court first noted that the eligibility guidance “is not, itself, the law” and  “does not carry the force of law.” Further, the court explained that Federal Circuit caselaw controls PTAB judgments on eligibility — not the PTO guidance.

On appeal here, the Federal Circuit concluded that the claims are ineligible — and, in particular, that the claims fail Alice Step Two.

Maritz attempts to distinguish claim 16 at both steps one and two on the basis of its added requirement that the GUI “is able to convert vendor-related information into information formatted for the GUI, which GUI-formatted information may then be provided to the claimed participants.”

Maritz argues that the added limitation constitutes a technological solution to a technological problem. However, Maritz does not contend that the claimed invention improves the use of computers as a tool by reciting a new way for computers to conduct format conversion. Nor do the claims provide any guidance as to how this purported function is achieved. Thus, claim 16 does not claim a patent-eligible technological solution to a technological problem.

At the trial, Maritz presented unrebutted expert testimony that the information conversion was not “well-understood, routine, or conventional.”  On appeal, the Federal Circuit gave no weight to that conclusory testimony and rather found that the testimony did not actually present anything to support the conclusion other than an argument that the invention as a whole was novel.  “But, as explained previously, our cases are clear that a patent claim is not eligible under § 101 merely because it recites novel subject matter.”

 

48 thoughts on “Customer Value Not Just Limited to the 20 Year Patent Term.

  1. 9

    In reading the 2019 Edmund Morris biography “Edison” I was reminded of the endless patent blog comment complaints that the patent system has recently become so unfair to inventors because of various new legal reasons. On page 3oo it is noted that [more than 12o years ago] Thomas Edison “sympathized with any inventor who could not afford to fight for protection: ‘His certificate of protection is merely a certificate to the poor house.’ ”
    [This was after about 12 years of very expensive patent litigation to finally win his (by then universally used lightbulbs) main patent suit. Not even counting the additional time required to collect damages. Even though the patent suit was paid for by the large corporation that owned those patents, in which by then he was only a minority stockholder.]

  2. 8

    “The eligibility guidance is generally seen as Former Dir. Iancu’s attempt to limit ongoing damage to patent applicants based upon expansive readings of Alice & Mayo.”

    It really shouldn’t be seen as such because it just kicks the damage down the road for later when the applicant goes to enforce their patent. In that context, we should reflect on what group benefits the most from Iancu’s eligibility guidance. Hmm.

    1. 8.1

      Re: The PTO 101 Guidelines “kicks the damage down the road for later when the applicant goes to enforce their patent…what group benefits the most?”
      OK, but for a true cost-benefit analysis one should ask what percentage of patents that are allowed under the Guidelines but would not likely pass muster at the Fed. Cir. are sued on? Is it much greater than the very small percentage of patents that ever get sued on in general? [Perhaps, if the allowed claims are broadly functional and business related?]

    2. 8.2

      At least one group that immediately benefits are the Examiners.

      Maybe Random can pipe up and explain why.

      1. 8.2.1

        At least one group that immediately benefits are the Examiners.

        We never got time to do a judicial exception analysis to begin with, but even if we had, what do you think goes on in the office? Do you think I had a 30 minute slot in my day to think about judicial exceptions and now I just use it to grab a coffee? We have X time to think about an application. If you give us X+ or X- minus time, or tell us to think about more or less issues, we just think about whatever issues we’re told to for the amount of time before writing up our best conclusion. I assure you, it makes absolutely no difference to me if I spend time thinking about application A’s judicial exception question or I reach into a stack that is essentially infinitely large and start thinking about application B’s obviousness question. It might matter to you or your client, though.

        I suspect Ben’s point was that it benefits the prosecutors and the PTO leadership. The prosecutors get an allowance they wouldn’t otherwise be entitled to and the leadership is not faced with the unenviable task of fitting the square peg of non-lawyer examiners into the round hole of judicial exception jurisprudence analysis.

        There’s worse things the office could do than “kick the can down the road” on this issue. You can’t get water from a stone – there’s no mechanism where the office as currently configured could get it “right” on judicial exceptions so it’s nice that they are upfront in their lack of desire to try.

        1. 8.2.1.1

          I laugh at your immediate response falling back to your internal metric of time.

          1. 8.2.1.1.1

            Monkey , Dance ! $$$$

            1. 8.2.1.1.1.1

              Now up to 8 separate threads in your game-playing attempt to sneak in a ‘last word.’

              All the while ign0r ing what I have put to you: it is NOT merely a ‘last word,’ but a last word and the best word.

              Your latest meme certainly does not qualify for that.

              1. 8.2.1.1.1.1.1

                Yes ! Get the last and best word!!

                Please$$$$. ! [what a maroon]

                1. Speaking about “can’t help it“…:

                  100% of your posts this year are TO or ABOUT me.
                  0% of your posts provide anything meaningful about the particualr topic of patent law or discussions thereof on the current 11 active threads that you are playing your game.

                  What does that TELL about you?

                  How many questions will you choose to ig n0re?

        2. 8.2.1.2

          ” You can’t get water from a stone ”

          link to i.redd.it

          If you leave it out in the rain you can.

          But yes, the people that benefit most will be lawlyers, as usual, and then applicants (at least temporarily).

    3. 8.3

      What’s wrong about the head of the PTO wanting to framework an objective standard for 101? CAFC could have adopted the framework right in this case and made it law. But I guess twass not to be – back to the ‘know it when i see it queen of hearts standard.

    4. 8.4

      The attitude of the UK Patent Office , at least up until 1978 when the EPC took over, was that an inventor ought, in cases of doubt, not to be deprived by the administrators at the PTO of their judicial “day in court”. Novelty and clarity were examined strictly, but obviousness was off the agenda, seen as fit only for resolution in disputed (inter Partes) proceedings.

      Is it not like that these days, at the USPTO, for eligibility?

      1. 8.4.1

        No, it is not.

        Nor has it ever been, given that here in our Sovereign, an applicant pays (not for time) for prosecution under the complete set of laws.

        Part and parcel – by the way – of why we have both an existence and a level of that existence of the presumption of validity.

        I know that this is not unknown to you (as you have expressed your opinion on that presumption of validity), although I do permit that you simply have never understood these things.

  3. 7

    “There is no claim in any patent or patent application that we can’t wipe out.”

    “There is no innovation in any field that we can’t cripple.”

    — CAFC (aka The Patent Gods)

    1. 7.1

      I see your quote and raise you an actual one:

      “The only valid patent is one that has not yet appeared before us”
      – US Supreme Court

  4. 6

    Look, the thing is there is absolutely no way to make sense of something like this:

    The Board also determined that “Petitioner has shown
    persuasively that claim 1 does not recite any element or
    combination of elements that would transform the claim
    into a patent-eligible application of the alleged abstract
    idea.”

    That makes no sense in terms of modern patent law in terms of enablement and definiteness. There is no way to make sense of that. Nor is there anyway to make sense of “abstract idea” and then having the CAFC or the Board string together some giant combination of the elements of the claim. An “abstract idea” is by every definition I have ever seen before Alice means something that is not enabled. Something like build a machine that works faster with fewer parts. That is an abstract idea.

    1. 6.1

      And below is the only part of the opinion that matters:

      Because representative claim 1 is directed to transfers of information relating to a longstanding commercial practice, the claim is directed to an abstract idea. See, e.g., Alice, 573 U.S. at 219–20; Bilski v. Kappos, 561 U.S. 593, 611 (2010); see also Elec. Commc’n Techs., LLC v. ShoppersChoice.com, LLC, 958 F.3

      1. 6.1.1

        B-b-but “directed to” is not defined…

        /s

    2. 6.2

      IMHO the Star Trek transporter – is an abstract idea – because it is not enabled.

  5. 5

    It is crazy the people we have making these decisions for our innovation future.

    Prost is a woman that received her appointment as a political favor for her work on Capitol Hill. No science training. None.

    Hughes. An Obama appointment that was selected by Silicon Valley firms as a person willing to “get those patents under control.” No science training.

    Lourie. A very old man that is trained in biology a long, long time ago. He believes like Stevens that our processing is performed in the spirit world. He has absolutely no idea what he is talking about when it comes to information processing. He needs to retire and stop trying to burn down the patent system.

    1. 5.1

      Absolute disgrace to our country that this group of people is entrusted with understanding innovation, science, and the law.

      None of them are qualified to be sitting on the CAFC.

    2. 5.2

      When I was in law school I printed out all the patent cases that were relevant from all the U.S.A. and some from England. I read them all.

      Somewhere I remember reading that an “abstract idea” exception was to handle claims like build a machine that uses fewer parts and performs the same function.

      I wish I could find that reference. I know it predates all this 101 nonsense from the Scotus and the CAFC.

      I think it is actually somewhere in English law before we adopted the Constitution.

  6. 4

    In its analysis, the PTAB found all the claims directed to the abstract idea of facilitating a commercial transaction — “a fundamental economic practice long prevalent in commerce.” Quoting Alice.
    Facilitating a commercial transaction? The term “facilitating” when applied to “commercial transaction” encompasses an exceptionally broad category of activities. I guess that means methodologies of using bar codes (or QR codes) are not patent eligible. I guess that any point of sale devices (scanners, registers, etc.) are also not patent eligible. ATM machines do not appear to be patent eligible then. Mobile phones (as are general purpose computers) are extensively used to facilitate commercial transactions so perhaps they are not patent eligible. Automobile and other vehicles are used to transport goods so they also facilitate commercial transactions. Television and radio are used to transmit advertising so they also facilitate commercial transactions. Wouldn’t inventions involving these not be directed to patent eligible subject matter. Wouldn’t an improved technology for storing goods for transport (i.e., so as to prevent breakage) also facilitate commercial transactions.

    I can all but guarantee that there will be future Federal Circuit decisions that will describe the “holding” of cxLoyalty v. Maritz as facilitating a commercial transaction is patent ineligible, and that such decisions will involve invalidating some of the other technologies I described immediately above. The Federal Circuit has steadily increasing the scope of what is considered patent ineligible subject matter using this very technique. They’ll create some principal (e.g., “the collection, analysis, and display of available information” from Electric Power Group) that will have many caveats in the decision. However, in a follow up decision, they’ll cite the general principal without the caveats thereby broadening what was once a cabined decision.

    Representative claim 13 of the DDR Holdings patent recites:
    13. An e-commerce outsourcing system comprising:
    a) a data store including a look and feel description associated with a host web page having a link correlated with a commerce object; and
    b) a computer processor coupled to the data store and in communication through the Internet with the host web page and programmed, upon receiving an indication that the link has been activated by a visitor computer in Internet
    communication with the host web page, to serve a composite web page to the visitor computer wit[h] a look and feel based on the look and feel
    description in the data store and with content based on the commerce object associated wit[h] the link.

    Is that not also facilitating a commercial transaction? Does anybody think that a panel of Prost, Dyk, and Mayer would deem these claims to be patent eligible?

    In Ancora Technologies, the Federal Circuit determined that “[a] method of restricting software operation within a license for use with a computer” was patent eligible. Is that not facilitating a commercial transaction?

    The problem with the Federal Circuit’s jurisprudence is that it is hopeless irreconcilable. There are so many dispositive factors (completely divorced form the text of 35 USC 101) from which the Federal Circuit can pick and choose in determining whether the claim is patent ineligible, that patent eligibility is panel dependent and merely based merely upon the individual judge’s pre-dispositions towards the technology. In short, patent eligibility at the Federal Circuit is little more than a sniff test followed by post hoc citations to case law to support a preordained conclusion.

    Getting back to the USPTO’s guidelines, if the US Patent Office, with all of its institutional expertise, cannot present guidelines that accurately reflect the case law, then how can mere patent attorneys, district court judges, examiners, the Board or inventors know what is patent eligible or not? The simplest approach these days is to deem everything patent ineligible, and one is rarely wrong (at the Federal Circuit) employing that approach.

    1. 4.1

      The blame here is directly traceable to the dissent dressed as concurrence of Justice Stevens in Bilski when he attempted to outright ignore (and thus rewrite) Congress’s words on business methods, and de facto make ALL business methods to fall outside of patent eligibility.

      It is now over a decade that this point has been made.

    2. 4.2

      From another thread, in a message to non-attorney George, I provided a link that had a much earlier George providing a message to this country.

      It was the very first such message, as it was the very first one of the very first president.

      I added two particular notes of emphasis. The reason for the first highlight should be abundantly clear.

      “Washington’s State of the Union was a mere 1,096 words, yet he devoted this passage to patents:

      The advancement of agriculture, commerce, and manufactures by all proper means will not, I trust, need recommendation; but I can not forbear intimating to you the expediency of giving effectual encouragement as well to the introduction of new and useful inventions from abroad as to the exertions of skill and genius in producing them at home, and of facilitating the intercourse between the distant parts of our country by a due attention to the post-office and post-roads.

      The second emphasis is a bit more subtle and nuanced, but no less important.

      Those who have studied innovation, innovation protection, and the history of our country will recognize my words. “Promote”was never meant in a singular sense of a linear or even non-linear “improvement” in that which was to be patented. It was meant in the innovation-cross-fertilization sense of simply being known and shared, adding something different to the warehouse of knowledge.

      Both of these items that I have emphasized have sadly fallen prey to the onslaught of anti-protection propaganda.

      (And THAT, dear Professor is most assuredly in another article. Several, as a matter of fact. But no less important to THIS article)

  7. 3

    Re the decision quote: “Maritz presented unrebutted expert testimony that the information conversion was not “well-understood, routine, or conventional.” [and not IDd in the claims] [So was that information conversion described or 112 enabled in a specification example ?]

  8. 2

    Dennis, the title of this article bears no relationship to the content therein. The issues discussed seem to be eligibility under Alice, but the title seems to be directed to whether “customer value” extends beyond the life of a patent. Am I missing something?

    1. 2.1

      Maybe you read a different article?

  9. 1

    This article is atrocious, and misses (badly) the plain fact that the Supreme Court started the Gordian Knot and the CAFC (and other judicial and semi-judicial) entities followed suit by adding to that Gordian Knot.

    To pretend – as this article does – that all decisions provide a clear answer in line with this panel’s decision is a slap in the face to the reality in which we actually exist.

    I am truly appalled that this type of “oh, it’s so clear” rhetoric is not only still being spouted, but that the judicial re-writing of the statutory text is treated as if this were proper.

    1. 1.1

      The only ““oh, it’s so clear” rhetoric”, if any, is in the Fed. Cir. decision quotations, not anything actually said, or appropriate to say, in the “article” itself.

    2. 1.2

      I think you may have read a different article.

      1. 1.2.1

        Pretty sure that the following is in this article:

        The eligibility guidance is generally seen as Former Dir. Iancu’s attempt to limit ongoing damage to patent applicants based upon expansive readings of Alice & Mayo. However, it was (and is) apparent that the guidance does not closely follow binding Federal Circuit caselaw but rather takes several opportunities to favor a conclusion of patent eligibility.

        To state that the guidance does not closely follow binding precedent is shall we say not telling the whole truth.

        1. 1.2.1.1

          That is a statement of factual reality. The Fed. Cir. has twice said it is not bound by Iancu’s PTO “Guidelines,” and it does not follow them and applies its own case law. If you are arguing that this PTO “guidance does .. closely follow binding precedent” I have yet to read of anyone outside of its authors objectively agreeing with that.

          1. 1.2.1.1.1

            Fact checkers have weighed in Paul and your statement is mostly false.

            The proper context requires reference to the Gordian Knot (and bonus points for noting that leaders of all three branches have recognized that Gordian Knot).

          2. 1.2.1.1.2

            If you are arguing…

            I am arguing that the statement — on its own — that it does not is FALSE.

            It happens to be equally as false as a statement — on its own — that it does.

            The context that is missing — and that is necessary — is that binding precedent is a Gordian Knot of contradiction.

        2. 1.2.1.2

          One of the proposals is to give the PTO rule making authority, then their precedent would —oddly–become binding.

          1. 1.2.1.2.1

            This sounds like a really fun way to bait SCOTUS into taking a case.

            Though they’d probably just destroy the agency interpretation and leave the problem in limbo.

      2. 1.2.2

        I think he may live on a different planet.

        1. 1.2.2.1

          Ah, one of my lovely admirers (who has never gotten the better of any dialogue on the merits)…

          Your current opinion carries your typical veracity.

          1. 1.2.2.1.1

            “Ah, one of my lovely admirers (who has never gotten the better of any dialogue on the merits)…”

            Confirmed, you definitely live on a different planet.

            1. 1.2.2.1.1.1

              Perhaps. My planet is known as Earth. What is your planet?

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