Federal Circuit Affirms Patent Ineligibility of Farming Data Collection Patents

The U.S. Court of Appeals for the Federal Circuit (CAFC) in a precedential decision today affirmed a district court ruling that five AGI SureTrack agricultural technology patents are directed to patent-ineligible subject matter under 35 U.S.C. § 101. It also vacated the finding of no exceptionality and remanded for further proceedings on whether Farmers Edge is entitled to attorney’s fees under 35 U.S.C. § 285. Circuit Judge Mayer authored the opinion, joined by Chief Judge Moore and Circuit Judge Lourie.

AGI SureTrack claimed before the U.S. District Court for the District of Nebraska that Farmers Edge infringed U.S. Patent Nos. 11,126,937, 10,963,825, 11,164,116, 11,361,261, and 11,507,899. The patents relate to systems that use passive data collection devices attached to farming equipment to capture, process, and share farming data in real time. Claim 1 of the ‘937 patent served as the representative claim, reciting a relay device that connects to farming equipment, receives GPS data, identifies the equipment using stored implement profiles, and records operating events and travel paths in an electronic farm record.

In April 2024, the district court granted summary judgment for Farmers Edge, finding that the asserted claims relied on generic, off-the-shelf computers and sensors to collect data from standard farm equipment. The court concluded that the claims were directed to the abstract idea of collecting, processing, and sharing data, and that their elements did not provide an inventive concept sufficient to establish patent eligibility. The district court also ruled the case was not exceptional under Section 285.

On appeal, AGI argued that its patents claimed a specific and novel solution for collecting and interpreting real-time data from different brands of farm equipment that use incompatible communication protocols. It contended that this interoperability solution relied on an unconventional combination of hardware and software and was narrowly tailored, making the claims patent-eligible rather than an abstract idea.

The Federal Circuit rejected that framing, noting that AGI pointed to nothing in the claim language that referenced any interoperability problem between the brands. Applying the two-step Alice framework, the court concluded the claims were directed to an abstract idea at step one, referencing Mobile Acuity Ltd. v. Blippar Ltd. that “claims reciting generalized steps of collecting, analyzing, and presenting information, using nothing other than the conventional operations of generic computer components, are directed to abstract ideas.” The court was not persuaded that the implement profiles distinguished the claims from the abstract idea, finding those profiles to be simply a collection of data used to decode or interpret other data such that “the claimed method merely adds one abstract concept to another.” AGI’s specification was also “silent as to any specific structural or inventive improvements in computer functionality,” and the claims invoked generic computer components rather than improving the functionality of the computer or network platform itself.

At step two, the court found that the claimed hardware components, including the microprocessor, bus connector, GPS receiver, and memory storage, were generic and used in a conventional manner. Although AGI’s system automated and accelerated data collection and decoding, the court held that merely improving the speed of implementing an abstract idea with a computer does not constitute an inventive concept. The elements disclosed no inventive concept, whether viewed individually or as an ordered combination, and the Federal Circuit affirmed the Section 101 determination accordingly.

On cross-appeal, Farmers Edge argued that the district court should have found the case exceptional under Section 285 and awarded attorney fees. It cited alleged inequitable conduct during patent prosecution, misleading statements about abandoned claims, improper litigation tactics, unsupported eligibility arguments, and violations of protective orders. Farmers Edge also argued that the district court entered its ruling sua sponte without explanation and that the court did not give it an opportunity to be heard.

The CAFC agreed the record was insufficient for meaningful appellate review. While acknowledging it has not always required district courts to explain their reasoning when declining to find a case exceptional, the court held that a district court generally should “provide some indication of the reasoning underlying its decision to provide a basis for meaningful appellate review.” Since the district court’s terse ruling offered no such basis, the CAFC vacated the no exceptionality determination and remanded with instructions to reassess the question after giving both sides adequate opportunity to present argument. It also instructed the court to determine whether attorney’s fees are warranted if the case is found to be exceptional.

AGI separately argued Farmers Edge had forfeited any right to seek fees by failing to file a motion within 14 days of entry of judgment under Federal Rule of Civil Procedure 54(d)(2)(B), but Farmers Edge countered that doing so in good faith was not possible given the district court had already ruled against it on exceptionality. The CAFC resolved the dispute in Farmers Edge’s favor, relying on the Advisory Committee Notes to Rule 54 that a new filing period begins after entry of a new judgment following appellate reversal or remand. It held that a new 14-day period will run once the district court enters judgment on remand.

Ultimately, the CAFC affirmed that the asserted patents are directed to ineligible subject matter, vacated the no exceptionality determination, and remanded for further proceedings. The costs were awarded to Farmers Edge.