Lessons on Patent Subject Matter Eligibility from Dropbox v. Synchronoss

Since the Supreme Court decided Alice Corporation Pty. Ltd. v. CLS Bank International et al. on June 19, 2014, the number of patent application rejections by the U.S. Patent and Trademark Office (USPTO), the number of cases in the courts, and the uncertainty about whether an issued patent will hold up in court over an inquiry into patent subject matter eligibility under 35 U.S.C. §101 have all increased. Dropbox, Inc., Orcinus Holdings, LLC, v. Synchronoss Technologies, Inc., decided June 19, 2020, is a relevant recent (albeit nonprecedential) ruling by the United States Court of Appeals for the Federal Circuit that serves as a useful case study on what worked and went well and what didn’t for both plaintiff and defendant in a Section 101 case. At issue was the eligibility of Dropbox patents U.S. 6,178,505, U.S. 6,058,399 and U.S. 7,567,541.

Inventiveness vs. Sufficiency of Factual Allegations

The CAFC affirmed the district court’s decision, agreeing “that the patents claim abstract ideas, and that the claims provide no inventive concept transforming the abstract idea into patentable subject matter.” This decision is in the context of Dropbox alleging Synchronoss infringed three patents held by Dropbox, and Synchronoss moving “to dismiss the claims, arguing the patents are invalid due to ineligibility under 35 U.S.C. §101.” Defendant’s move to dismiss the claims worked well for them and did not work well for plaintiff, but why? The CAFC decision hints that the ruling is based on “an issue common to all three patents: the sufficiency of Dropbox’s factual allegations of the patents’ inventiveness.” A subtlety here is that the decision may not have hinged on the actual inventiveness (or not) of the relevant patents, but rather on the sufficiency of plaintiff’s factual allegations regarding inventiveness.

What Worked, What Didn’t

The ‘505 Patent

The district court found the ‘505 patent generally related to data security and directed to “providing only as much authentication and encryption security as is required for a given user, a given path through the network [to a given information resource], and a given [information] resource.” For the ‘505 patent claim 1, the district court had what may appear to be contradictory findings: 1) “the claim does not provide any limits that curb how the apparatus performs these functions” and 2) the claim lacks inventive concept because it claims generic elements in “purely functional terms” to “implement the abstract idea.” If the generic elements are described in functional terms, i.e., functional claiming limitations, does this not establish limits that curb how an apparatus performs these functions? Generally speaking, if functional claiming were to be disallowed because it does not establish such limits, would that not entirely eliminate functional claiming as being indefinite under 35 U.S.C. §112? Attacking functional terms in claims worked well for the defendant, as the CAFC agreed “Both claim 1 and claim 8 are directed to abstract ideas.”

For claims 1 and 8, the CAFC considered the focus of the claimed advance over the prior art, and the claim’s character as a whole, relative to excluded subject matter. The CAFC determined “the specification largely treats the ‘access filter’ as a black box” and gave an example of the specification in the’ 505 Patent describing the access filter as “a set of software and hardware components in the computer system which checks all requests from outside the internal network for information stored inside the internal network and only sends a request on into the internal network if it is from a source [] that has the right to access the information”. Functional descriptions are common in specifications of software and computer-based patents, and here the CAFC found this amounts merely to a black box, “not a ‘specific technique’ for improving a computer, but a change in the abstraction providing the fundamental principles for access filters.” Articulating how the claims provide an advance over the prior art appears to have been problematic for plaintiff, or at least was found insufficient by the CAFC. Attacking functional description in the specification worked well for the defendant.

Considering the argument that the’505 patent solves a technological problem, the CAFC found the assertion insufficient because, “The patent has to describe how to solve the problem in a manner that encompasses something more than the ‘principal in the abstract.’”  The solution must be evident from the claims. Keeping arguments focused on the abstract idea worked well for defendant and managed to overcome the assertion that the claims solve a technological problem.

Considering opposing arguments that the’505 claims recite inventive concept and the district court’s findings that claim 1 “recites conventional elements in a purely functional manner, without implementation detail even in the specification”, the CAFC found that the claims “may well provide a more ‘economically secure way to transmit data to a user over a network” but that the problem ‘arises from the manner in which the patent claims the ‘inventive concept.’”  The claims were found to not withstand the requirement for a specific, discrete implementation of the abstract idea, but instead were found to “recite the application of an abstract idea using conventional and well-understood techniques specified in broad, functional language. But we have held that the abstract idea to which a claim is directed cannot supply the inventive concept…”  Arguing that what plaintiff views as the inventive concept resides solely in the abstract idea, with the other claim elements being conventional and well-understood and using well-understood techniques, worked well for defendant to overcome arguments that the inventive concept resides in the claims (as a whole) and shows a technical improvement or solves a technological problem.

The ’399 Patent

The district court found the’399 patent “directed to combining the user interface of an interactive connection, like a website, with a file upload connection, such as an FTP connection”, which at first glance may seem sufficiently technological, but then “found claim 1 ‘simple’ and directed to ‘the abstract idea of exchanging data using a computer’”. Claim 1 elements were found described in only “very broad, functional terms”. A “synchronizer” limitation was found to recite only “the process of identifying the data exchanged… an abstract idea involving the recognition of data.” The CAFC agreed, and found, despite Dropbox alleging the district court ignored the importance of the specifically disclosed synchronization process, that “Whatever result the patent attributes to the synchronizer and session ID matters little because the ‘399 patent claims its improvements in an abstract manner. The CAFC would prefer to see the patent actually claim the technological solution, in order to claim a technological solution to a technological problem. Perhaps puzzlingly, the CAFC found, “neither a single session ID associating between the two connections nor a synchronizer synchronizing the operation amount to a non-abstract improvement – that is, a technological solution.”  To an outsider, these elements, functions and operation may have the appearance of technology and thus a technological solution or technological improvement, but that is not how the court ruled.

Arguing that the specifics of whatever technology and technological elements are in the claim are known and broadly, functionally described, i.e., routine and conventional technology, so as to push the solution back to the abstract idea, worked well for defendant.

The ‘541 Patent

The district court found the ’541 patent directed to “uploading and downloading data from a [mobile device, such as a cell phone, PDA, or iPod] to a server by way of a mobile network”, which again at first glance may appear to be technological in essence. But the CAFC agreed with the district court that the claim 1 was “abstract because it recited essentially the same process as a person manually transferring data from one mobile device to another, with the person herself acting as the ‘server.’” Perhaps puzzlingly, the CAFC appears not to have noticed that a mobile device is technological, so even if a person is transferring data from one mobile device to another, this would be a technological process involving two technological devices, thus not an abstract idea, but that issue was apparently not raised by plaintiff.

The district court found “the patent fails to provide specific explanations or technical details describing how it improves the functionality of the generic components” and, the elements in an ordered combination “were arranged in a conventional manner”. Perhaps the district court was looking for a Jepson style claim, in which the improvement is explicitly described as such?  But Jepson-type claims have fallen out of favor, and this court finding appears to say plaintiff did not make sufficiently compelling, or the court did find convincing, the plaintiff arguments about specific explanations or technical details and how those improve the functionality of the components. One wonders if plaintiff could have explained that the ordered combination is more than just the arrangement of the elements, it is the functions of the elements, the arrangements of the elements, the connections of the elements, and the overall limitations in the claim as a whole, and that those limitations of the claim as a whole, including those functions of those technological elements as a whole, were not shown to be “conventional”, and what would’ve been the effect of making such an argument.

Considering the plaintiff’s argument that the “’541 patent’s data structure allows the data to be formatted in a way that makes data transfer reliable and efficient”, the CAFC found “no data structures – much less any inventive data structures – are evident in the claims” and this did not satisfy the requirements that “an inventive concept must be evident in the claims.” The CAFC also found that the patent specification teaches the data structure may be defined by a mobile device manufacturer and created by known methods in the art such as XML or HTML. One wonders if plaintiff could have better explained, using technological language, how and why the formatting in the specific technological devices makes data transfer of these technological devices reliable and efficient, and thereby prevailed over the opposing argument that the claims are directed to an abstract idea. Could plaintiff have argued it is not the generic data structure itself that is being represented as inventive concept, rather it is the use of and manipulation of data by this technological device, perhaps with an implicit data structure, that is evidence of inventive concept?

Rejecting plaintiff’s arguments that “it pled sufficient factual allegations of an inventive concept to defeat a motion to dismiss”, the district court held that the complaints failed to allege “fact questions that cannot be resolved on a Rule 12 motion” and presented “no specific factual allegations or references to the [patent] specification[s] – which might disclose that the invention is an improvement over the prior art…” Also, “the purported improvements over the prior art have not been captured in the claim language.” These legal findings present a strong hint as to what did not go well for plaintiff, in terms of the content of the complaint. The CAFC found, “The allegations claim that each of the patents solves given technological problems, but never provide more support than a conclusory statement…” And, “These sorts of conclusory pleadings are insufficient to survive a motion to dismiss.”

Top Factors Favoring Dismissal of Patent Claims as Ineligible Under 101            

• Argue functional terms in the claim do not establish limits that curb how an apparatus performs functions and thus the claim does not have inventive concept.
• Argue functional description in the specification does not provide a specific technique for improving a computer, but merely a change in the abstraction providing the fundamental principles for a known component, thus a change in the abstract idea but not sufficient to show inventive concept.
• Focus arguments on the abstract idea, make everything in the claim that might show inventive concept appear to relate primarily to and reside in the abstract idea, then argue that the claim therefore does not show a solution to a technological problem nor a technical improvement.
• Argue that a person can perform the activities recited in the claim, thus whatever technological elements are present in the claim do not act to transform the claim from an abstract idea into a claim directed to a technological device that is eligible subject matter.
• Argue that the claims don’t explain how they improve the functionality of generic components.
• When arguing inventive concept is not evident in the claims, take advantage of any opposing argument that can be cast as an abstract idea separated from the technology.

Top Factors Favoring Eligibility of Patent Claims Under 101

• When arguing patent claims have inventiveness, sufficient factual allegations must be present to have weight.
• When arguing claims provide an advance over prior art and thus show inventive concept, articulate what the advance is and how the claims provide such an advance over the prior art.
• When arguing claims solve a technological problem, focus on the technology and articulate the technological problem in terms of the technology, not the abstract idea.
• When arguing inventive concept is shown in the claims as a whole, present facts to show the inventive concept is tied to the technology, a technological problem and/or a technical improvement, and do not reside in the abstract idea alone.
• When arguing the claims show a technological improvement, provide specific explanations and technical details describing how the claims improve the functionality of otherwise generic improvements.
• Faced with an opposing argument that the elements in the claim are arranged in a conventional manner, it may help to argue that the arrangements of the elements, and functions of those elements, in the claim as a whole, is technological and is not shown to be “conventional”.
• It may help to explain, using technological language, not only what the processes and functions are, but also how and why the processes and functions in the specific technological device(s) make the technological improvement. Do this in both the claim language and the arguments.
• Faced with an opposing argument that some software component, e.g., a database, is abstract in nature, it may help to argue with specific technological language that it is the way that the technological device manipulates data and solves the technological problem in this technological device that shows inventive concept.
• When arguing inventive concept to defeat a motion to dismiss, it will likely help to present specific factual allegations and references to the patent specification that show how the invention is an improvement over the prior art and show how improvements are captured in the claim language.
• Provide factual support for each allegation.