On Wednesday, August 15th, the Court of Appeals for the Federal Circuit issued a precedential decision in BSG Tech LLC v. BuySeasons, Inc. which upheld a decision by the district court to invalidate patent claims owned by BSG Tech as patent-ineligible under 35 U.S.C. § 101. The Federal Circuit panel of Circuit Judges Jimmie Reyna, Evan Wallach and Todd Hughes found that the district court correctly determined that patent claim asserted by BSG Tech were invalid as abstract ideas lacking any inventive step under the Alice/Mayo framework.
There are three patents-in-suit at issue in this appeal:
- U.S. Patent No. 6035294, titled Wide Access Databases and Database Systems. Issued in March 2000, it claims a method of storing marketplace information for multiple types of items in a database in a way that provides for a generic database that can effectively handle multiple types of products having multiple parameters.
- U.S. Patent No. 6243699, titled Systems and Methods of Indexing and Retrieving Data. Issued in June 2001, it claims a method of indexing and retrieving data being posted by a plurality of users to a wide area network that involves providing users with a mechanism for posting data as parametized items, providing users with listings of previously used parameters and previously used values for use in posting data, providing users with summary comparison usage information corresponding to the previously used parameters and values, and then providing subsequent users with the previously used listings and corresponding summary comparison usage information for use in searching for an item of interest.
- U.S. Patent No. 6195652, titled Self-Evolving Database and Method of Using the Same. Issued in February 2001, it claims a method of storing marketplace information for multiple types of items in a database having a structure in a way that provides a generic databasing system which can be utilized for specialty indices in a cost-effective manner.
BSG Tech asserted these patents against BuySeasons in a complaint for patent infringement filed in the Eastern District of Texas in May 2016. BSG Tech alleged that BuySeasons had infringed upon the patents by providing a website with a index for costume items which allows users to post data as parametized items and also provides information based on previous parameters and values enabling users to search the costume database. In July 2016, BuySeasons filed a motion to dismiss based on a failure to state a claim, arguing that the patents-in-suit were invalid under the Alice/Mayo standard. In March 2017, U.S. District Judge Robert Schroeder issued an order granting BuySeasons’ motion to dismiss , but only after converting the motion to dismiss into a motion for summary judgment. Schroeder determined that the patent claims were directed at ineligible subject matter.
On appeal, the Federal Circuit panel reviewed de novo the patentability of the asserted claims by applying the two-step test created by the U.S. Supreme Court under the Alice/Mayo framework. In the first step, the panel agreed with Judge Schroeder that the asserted claims are “directed to the abstract idea of considering historical usage information while inputting data.” BSG Tech offered thdree arguments as to why the patent claims from the ‘699 patent were not directed to an abstract idea: first, the claims require a specific database structure; second, the claims require users to specifically consider “summary comparison usage information” rather than historical usage information; and finally, that the claims focus on non-abstract improvements in database functionality. The Federal Circuit, however, determined that the recited database structure provided a generic environment in which the claimed method was performed, that the term “summary comparison usage information” was very broad and that the benefits of the invention were not improvements to database functionality but rather “flow from performing an abstract idea in conjunction with a well-known database structure.” The appellate court determined that this analysis applied with equal force to asserted claims of the ‘294 patent.
BSG Tech’s appeal notes that asserted claim 9 of the ‘652 patent is directed at database systems, not the method claims asserted from the ‘699 and ‘294 patents. Claim 9 includes a limitation regarding users adding additional parameters without modifying the database’s predefined structure. The Federal Circuit, however, found that this limitation did not teach away from an abstract idea as it didn’t constitute an improvement in database functionality.
In the second step of the Alice/Mayo analysis, the Federal Circuit cited to its recent decision in Berkheimer v. HP Inc. to note that it was improper for a court to find claims ineligible under Section 101 on summary judgment when there was a genuine issue of material fact. Notwithstanding, the CAFC determined this case was different because the only allegedly unconventional feature of BSG Tech’s claims was the requirement that users are guided by summary comparison usage information, which was simply a restatement of the abstract idea identified under the first step of Alice/Mayo (frequently referred to as Step 2A). BSG argued that an inventive concept was supplied through the requirement of a specific database structure that doesn’t preempt consideration of historical usage information while inputting data into other types of databases, but the Federal Circuit found such structures to be well-understood and conventional.
Join the Discussion
15 comments so far.
LazyCubicleMonkeyAugust 22, 2018 10:14 pm
If someone asked a (quality) software developer to implement a system with requirements outlined those in the patents, I wonder how many of them would come up with a solution that would infringe on those patents? And how many of them would end up using research that would be based on these patents? (As a software developer, I have some guesses to both of those questions…)
So how does this promote the progress of useful arts and sciences for the public?
AnonAugust 20, 2018 12:48 pm
You want to say that I have not kept up by reaching back before the Act of 1952…
That’s just not very compelling.
Paul ColeAugust 20, 2018 07:30 am
In one of my published articles I have traced the new function or result requirement to a UK decision of 1803 quoted with approval in argument in the Hopper Boy litigation before the Supreme Court in the 1820’s.
It seems that you have not ketp up with recent developments in patent law.
AnonAugust 18, 2018 05:13 pm
“This remains as true now as when Justice Jackson wrote it in 1950.”
Only if you want to pretend that Congress did not pass the Act of 1952.
Night WriterAugust 18, 2018 12:41 pm
All of that is witch talk. Just garbage. We have 102/103/112. Use prior art of 112 to reject the claim or STFU. Saying things like a claim is not “attractive” or that an old element needs to be used for new function is witch law. Just total garbage to people of science.
Paul ColeAugust 18, 2018 02:19 am
A claim is likely to be good if it produces a transformative result of a technical character, falling within the “useful arts”. The inventions here are at best on the borderline and the claims on their face do not seem attractive.
“A patent for a combination which only unites old elements with no change in their respective functions, such as is presented here, obviously withdraws what already is known into the field of its monopoly and diminishes the resources available to skillful men.”
This remains as true now as when Justice Jackson wrote it in 1950. The converse, that if there is a change in function or a new result, then inventive character is likely to be present, underpins the technical problem test in Europe and from a personal point of view has helped me professionally since I first read these words in the 1970’s.
If you read the claim language and new function or result is not foreseeable from that language, there is every likelihood that you have a bad claim before you. Many of the claims that have given rise to such controversy in the US exuberantly fail this test. for example the Alice claims which were not even considered worth pursuing before the EPO.
There are bad CAFC decisions left uncorrected, notably Ariosa and Recognicorp. But there are many more foreseeably bad claims which should have been kept away from the courts and whose attempted enforcement has led only to trouble.
AnonAugust 17, 2018 04:50 pm
In asking for transformation, are you under the impression that “Machine or Transformation” is anything except a clue?
Claims need not not bore you – such feelings are simply inappropriate.
Jianqing WuAugust 17, 2018 03:15 pm
I always believe that 101 doctrinal enforcement is unnecessary and can have unforeseeable impacts on the patent system. Those decisions discussed in this article as I understand are arguably fall in the borderline between patentable subjects and so-called unpatentable subjects.
The worst consequential effects of those 101 decisions is they have turned examiners into robots programmed to enter rejection in office actions to computer art inventions. If you have a claim that uses database, they will reject. In the technology center 2100, all they are doing now is rejecting. Given the very high chance of patent invalidation, a good number of examiners do not know where is the line, but they can bet that rejection is the “right” thing to do. Now, for many examiners, creating a database table, creating web pages, encrypting data….. have become mental steps even though they are essential limitations of inventive steps. Since 101 analysis does not need knowledge, nor evidence, a good number of examiners actually can use a different standard: if something they can be performed by using their imagination, they will reject. I will collect such office actions to be stored in igoosa database after those cases are closed. However, I know that assistant examiners and even some primary examiners have no choices, they do whatever they are required to do by the office policy which is based upon confusing and conflicting court rulings.
I hope readers to bring my attention to more cases that I can collect. I want to collect extreme cases. I collect them so the public can search and find them. I am also collecting names of those who have done the most in destroying the patent system.
Another line of cases I am collecting is rulings that reflect grossly unfair approach of judges to frustrating constitution-promised rewards. One example is judge’s ruling that an oven baking bread at 420 F does not infringe a claim “a method of baking bread [to] 420 F.” Every person of sound mind knows what is the problem here.
CAFC problems cannot be fixed easily.
anonyAugust 17, 2018 02:36 pm
“But the relevant inquiry is not whether the claimed invention as a whole is unconventional or non-routine.” BSG slip op 15.
This is in direct contrast to Diamond v. Diehr, which states “In determining the eligibility of respondents’ claimed process for patent protection under § 101, their claims must be considered as a whole. It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis.” Diamond v. Diehr 450 US 175, 188 (1981).
Judge Hughes goes on to state “After identifying an ineligible concept at step one, we ask at step two ‘[w]hat else is there in the claims before us?’ Mayo, 566 U.S. at 78.” BSG slip op 15.
So instead of splitting the claim up into old elements and new elements, which would violate Diamond v. Diehr, the claim is split up into abstract idea elements and non-abstract idea elements (i.e., everything else that is not part of the abstract idea). But this creates the exact same issue addressed in Diehr and mentioned in Alice. Specifically, the claim as a whole and the elements as an ordered combination are not being considered. Rather, Judge Hughes in BSG is only considering the abstract idea elements at the Alice step 1 analysis, and then only considering the non-abstract idea elements at the Alice step 2 analysis. At no point does Judge Hughes consider the claims as a whole (as required by Diamond v. Diehr) or the elements as an ordered combination (as required by Alice). Rather, Judge Hughes sets up a first straw man (the abstract idea), states that it is not eligible, then sets up a second straw man (the non abstract idea elements) and states that it doesn’t save the first straw man, all the while the claims as a whole and the elements as an ordered combination remain unaddressed.
The problem with this type of jurisprudence is that instead of the words of the claims speaking for themselves as to eligibility, the eligibility of the claim is at the mercy of the creativity of the examiner and the judge for setting the boundary on the abstract idea elements and the non abstract idea elements. A boundary which the courts have steadfastly refused to define. Thus, instead of laws and rules defining eligible subject matter, eligible subject matter is at the whim and fancy of judges and examiners.
Paul ColeAugust 17, 2018 11:20 am
I have briefly scanned the claims quoted in the decision and, to my sorrow, they are boring. Where is the newly discovered transformative result here?
Night WriterAugust 16, 2018 12:47 pm
The problem is we have the Google appointed judges chipping away at patent rights. I hope everyone realizes that the extent to which the judges appointed by Obama control the CAFC and they are some real ignorant judicial activists. The entire panel here was appointed by Google. (Not to mention Taranto the destroyer of patents.)
We to be real people. We need to get the CAFC dissolved. Everyone knows that is stacked with unethical judges that were appointed for their virulent dislike of patents, ignorance of science, and willingness to perform acts of judicial activism against the patent laws. (Probably an in-house Google attorney just smile at me writing down their check list for new appointments.)
BemusedAugust 16, 2018 10:46 am
Reyna, Wallach and Huges were on the panel? The same Jimmy Reyna that doesn’t understand the difference between a web page and a web server (See Parallel Networks v IBM)?
Clearly, Reyna must understand relational databases much better than he understands web pages.
I wouldn’t want Reyna adjudicating my parking ticket, much less my patent. And don’t get me started on Wallach…
BAugust 16, 2018 10:21 am
Yes, and the panel completely skipped over the advance in the technology issue in step 2. Many CAFC opinions only address the advance in the computer and overlook the advance in the technology.
Reyna addressed the advance in the technology in McRO, but recently . . .
Joachim MartilloAugust 16, 2018 09:24 am
I commented on this decision elsewhere.
Unfortunately, IPWatchdog has no mechanism to include images.
AnonAugust 16, 2018 07:33 am
Let’s see if the distinction between the judicial branch and the executive branch is ignored in regards to the different versions of “Official Notice.”
Note as well, the (continuing – even if unspoken) application of Common Law law writing going on with the Constitution-directed (supposedly) limited power (to the Legislative Branch) of writing the statutory law that is patent law.
My bet is that we will continue to see the intrusion of the tool of Common Law law writing into the Executive Branch.