Federal Circuit Says People.ai Patent Claims Cover Long-Prevalent Recordkeeping Practices

On April 7, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a ruling in People.ai, Inc. v. Clari Inc. affirming a judgment on the pleadings that nixed patent infringement claims asserted by People.ai in the Northern District of California. The Federal Circuit’s opinion, authored by Circuit Judge Tiffany Cunningham, agreed with the district court that People.ai’s patent claims to recordkeeping management systems were directed to abstract ideas that are unpatentable under 35 U.S.C. § 101 because they claimed no more than steps that do not differ from long-prevalent manual practices in recordkeeping management.

Judge Alsup: Patent Claims Cover Long-Performed Commercial Practices

In the Northern California district court, the judgment on the pleadings entered by U.S. District Judge William H. Alsup found that all seven of the patents asserted by People.ai in the infringement lawsuit were directed to unpatentable subject matter under Section 101. People.ai had appealed that ruling with respect to three of its patents: U.S. Patent No. 10922345, Systems and Methods for Filtering Electronic Activities by Parsing Current and Historical Electronic Activities; U.S. Patent No. 10565229, Systems and Methods for Matching Electronic Activities Directly to Record Objects of Systems of Record; and U.S. Patent No. 10657129, Systems and Methods for Matching Electronic Activities to Record Objects of Systems of Record with Node Profiles.

These patents claim techniques for automating the management of systems of records within customer relationship management (CRM) systems and other enterprise-level systems, addressing issues that can arise from manual data entry. More specifically, the claims cover methods and systems for linking electronic activities, such as emails or phone calls, to record objects within systems of record that track customer information and salesperson communications.

In Judge Alsup’s ruling, these and other People.ai patents were invalid as they recited common commercial practices long performed by humans, including activities prototypical of corporate salespersons. After finding that People.ai’s patent claims were directed to unpatentable subject matter under the first step of the Alice/Mayo Section 101 validity framework, Judge Alsup further found that the asserted claims lacked an inventive concept at step two of Alice/Mayo.

Benefits of Automation Do Not Render Patent Claims Any Less Abstract

Reviewing the claims of the ‘345 patent de novo, as is the Ninth Circuit’s standard of review for a judgment on the pleadings, the Federal Circuit found that claims 11 and 18 appealed by People.ai were directed to the abstract idea of “restricting certain data from further analysis based on various sets of generic rules.” As the Federal Circuit noted, the data filtration method in claim 11 of the ‘345 patent operates under three types of filtering rules: a keyword policy identifying electronic activities using a keyword; a regex pattern policy identifying electronic activities using a character string matching a regex pattern; and a logic-based policy identifying electronic activities according to participants in the activity. The Federal Circuit ruled that salespeople have long applied each of these types of filtering policies during the course of corporate business. “For example, the ‘logic-based policy’ would be used by a salesperson choosing not to send e-mails from his or her spouse to a CRM,” Judge Cunningham wrote.

Tracing its own recent case law on Section 101 patent validity, the Federal Circuit noted that its 2016 ruling in Intellectual Ventures I LLC v. Symantec Corp. was particularly relevant to People.ai’s appeal. In Symantec, the Federal Circuit found patent claims covering methods of filtering emails to remove spam emails and prevent virus transmissions via email to be directed to an unpatentable abstract idea. In that case, the Federal Circuit likened the claimed technology to the long-prevalent practice of filtering unwanted envelopes from paper mail deliveries based on characteristics of the discarded mail.

“Like Symantec, it was a long prevalent practice for salespeople receiving correspondence to set aside certain correspondence based on its characteristics and to file or further process other correspondence, as called for by the claims of the ’345 patent… That the claimed automation leads to expected improvements in speed, accuracy, and completeness is laudable, but as we explained in University of Florida Research Foundation, the inherent benefits of automation ‘do[] not render it any less abstract.’”

People.ai had argued on appeal that the ‘345 patent’s claims were distinguishable from those invalidated in Symantec as its rules-based approach to filtering was fundamentally different from the subjective manual approaches humans have traditionally used. However, unlike patent claims upheld by the Federal Circuit in McRO v. Bandai Namco Games America (2016) and Finjan v. Blue Coat Systems (2018), the steps claimed by People.ai’s patents did not improve the underlying functionality of the computer performing the steps. In further contrast to McRO, People.ai’s patent claims did not claim a method different from those traditionally used long before the application of computer technology. “After weeding out the steps not required by the claims,” the Federal Circuit found that only three steps remained: determining senders and recipients of communication; selecting rules-based filtering policies depending on sender and recipient accounts; and applying the policies to assess whether the communication should be logged as relevant to particular sales opportunities.

No Inventive Concept in Remote Storage or Matching Policies

At step two of Alice/Mayo, the Federal Circuit determined that the claims of the ‘345 patent lacked an inventive concept. “Our conclusion is confirmed by People.ai’s identification of the purported benefit of the asserted claims— avoiding the pitfalls of manual data entry by using a computer,” Judge Cunningham wrote. While People.ai argued that claim 18’s “node profiles” was a unique feature not replicated by brick-and-mortar mailrooms, the Federal Circuit instead found that the claimed architecture, as construed by the district court, was not functionally different than an electronic rolodex or filing cabinet used to store business correspondence and other records.

Unlike patent claims upheld at step two by the Federal Circuit in cases like BASCOM Global Internet Services v. AT&T Mobility (2016), in which patent claims directed to the abstract idea of filtering Internet content contained the inventive concept of installing a customizable filtering tool remote from end-users, People.ai’s patent claims “mirror the manual process performed in corporate mailrooms long before the ’345 patent’s proposed automation, and the cited benefits are only those expected of any automation.”

The Federal Circuit’s decision dealt swiftly with People.ai’s arguments regarding the ‘229 and ‘129 patents, both of which contain claims similar to the ‘345 patent. People.ai contended that the ‘229 patent claims data storage on a local processor outside of the CRM, but even assuming that such storage was required by the claims, the Federal Circuit held that the underlying idea claimed by the ‘229 patent is still abstract no matter where the associations are stored. Finally, matching policies claimed in the ‘129 patent have long been used by corporate mailrooms to organize correspondence by sender and recipient, the Federal Circuit found