Is It or Isn't It? Patent Eligibility Takes Yet Another Turn In Amdocs Case
An interesting case came out of the Federal Circuit in Amdocs (Israel) Limited v. Openet Telecom, Inc., No. 2015-1180, 2016 WL 6440387 (Fed. Cir. Nov. 1, 2016) in which the Court reversed the district court’s granting of Openet’s motion for judgment on the pleadings on the basis that the patents were not directed to patent eligible subject matter under § 101. This is significant not for the result but for how the Court arrived at its conclusion. The majority and dissenting opinions offer several important insights: (1) the Court is struggling to find the proper “decisional mechanism” for deciding whether a software patent is directed to patent ineligible subject matter; (2) members of the Court continue to suggest borrowing from other sections of the Patent Act to analyze Section 101; and (3) claim construction can be very effective at staving off dismissal based on patent eligibility.
The Amdocs Decision
Two-part test called into doubt
The Court began with an examination of eligible and ineligible claims of a similar nature from past cases and concluded that “the claims are much closer to those in BASCOM and DDR Holdings than those in Digitech, Content Extraction, and In re TLI Commc’ns.” Although the Supreme Court in Mayo and Alice explicitly laid out a two-step framework for determining patent eligibility, the Court in Amdocs departed from a two-step analysis, eschewing explicit findings as to either step one or step two1. Indeed, the Court neither looked at whether the claims were directed to an abstract idea (step one) nor whether the claims contained any inventive concepts (step two).
Rather than follow a framework based on comparing claim language, the Court opted for a patent-agnostic framework that merely “examine[s] earlier cases in which a similar or parallel descriptive nature can be seen—what prior cases were about, and which way they were decided.” When the two-step test already lends to arbitrary patent eligibility determinations, practitioners seeking to preserve patent eligibility should insist that the court examine their patent(s) on a claim-by-claim, indeed limitation-by-limitation, basis rather than the more generic case-by-case basis suggested by the Court in Amdocs.
Section 101 lacks clear guidance
Earlier this year, the Federal Circuit in BASCOM disapproved of a district court’s mixing of Section 101 patent eligibility analysis with Section 103 obviousness analysis: “The district court’s analysis in this case, however, looks similar to an obviousness analysis under 35 U.S.C. § 103, except lacking an explanation of a reason to combine the limitations as claimed.” Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016).
In Amdocs, however, noting (correctly) that Alice left open the question of what makes an idea abstract, Judge Reyna, in his dissent, suggested that when a claim merely recites a desired goal without “structural or procedural means for achieving that goal,” then the claim recites an abstract idea. (Dissent at 6-7.) Stated differently, if “the claim recites specific structure or function for accomplishing the desired goal in a particular way, the claim is more likely directed to a means than to the underlying abstract goal.” (Id. at 8.) However, as the majority pointed out, Judge Reyna’s reliance on patent eligibility being dependent on the claims reciting sufficient structure largely borrows from the means-plus-function test, which is codified at 35 U.S.C. § 112 ¶ 6 (now § 112(f))2. (See Amdocs at 11.)
The Court, in Amdocs and decisions past, continues to look to other tests to inform patent eligibility determinations. While it may be true “that pragmatic analysis of § 101 is facilitated by considerations analogous to those of §§ 102 and 103,” Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1347 (Fed. Cir. 2015), there is a real danger that the patent eligibility test may serve as an end-run around the more rigorous patentability tests for Sections 102, 103 and 112. Practitioners seeking to avoid pretextual patent ineligibility determinations that are actually based on novelty, obviousness, enablement, or written description arguments should advocate for clear boundary-setting such that patent eligibility retains its own independent analysis.
Claim construction is more than just a tool for postponing patent eligibility
Normally, step two of the framework for determining patent eligibility involves determining whether the claims contain an inventive concept – either individually or as a whole. See Alice, 134 S. Ct. at 2355. However, through claim construction, the Court in Amdocs, as it did in McRO, incorporated the specification’s description of the prior art as a means to show that the patent’s claims were unconventional. (See Amdocs at 22; see also McRO, at 837 F.3d at 1313.) Claim construction, therefore, is not only critical for establishing the meaning of disputed terms, but also for introducing evidence, or at least arguing, that a claim limitation(s) provides an inventive concept because it demonstrates that the claims were not well-understood, routine or conventional – that is, claim construction can bridge the “how” between the claims and what they purport to accomplish.
The Amdocs decision establishes that a clear framework for determining software patent eligibility remains elusive, leaving the patent community in uncertainty. Amdocs nevertheless makes a few things clear. First, not only should patent practitioners be prepared to address the patent’s claims in detail, they should be prepared to distinguish, or analogize depending on the situation, the claims from those in key decisions, including Enfish, BASCOM and DDR Holdings, on the one hand, and Digitech, Content Extraction, and In re TLI Commc’ns, on the other. Second, borrowing from the tests for other sections of the Patent Act for Section 101 arguments can be helpful, so long as the same procedural safeguards for those tests are also applied to Section 101; otherwise, litigants may simply use patent eligibility to circumvent stricter tests – such as for obviousness. Lastly, for those in litigation, claim construction can be helpful for a patentee to fortify the patent claims against a Section 101 patent eligibility challenge. For those drafting or prosecuting a patent application, consider whether the specification contains enough support to rebut an argument that the claims are nothing more than well-understood, routine or conventional material.
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1. However, the Court’s findings that the claims are “unconventional” can arguably be traced back to step one. See, e.g., Enfish; McRO.↩
2. Despite disagreeing with Judge Reyna’s suggestion, the majority nevertheless frequently discussed the structure of the claims in the Amdocs patent as a proxy for specificity. (See, e.g., Amdocs at 24.)↩