Internet Patents Corporation v. Active Network, Inc.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

      INTERNET PATENTS CORPORATION,
           f/k/a Insweb Corporation,
                Plaintiff-Appellant

                           v.

     ACTIVE NETWORK, INC., THE GENERAL
   AUTOMOBILE INSURANCE SERVICES, INC.,
 d/b/a The General, Permanent General Assurance
       Corporation, PERMANENT GENERAL
      ASSURANCE CORPORATION OF OHIO,
       QUINSTREET, INC., TREE.COM, INC.
                Defendants-Appellees
              ______________________

      2014-1048, 2014-1061, 2014-1062, 2014-1063
               ______________________

   Appeals from the United States District Court for the
Northern District of California in Nos. 3:12-cv-05036-
JSW, 3:12-cv-05035-JSW, 3:12-cv-06506-JSW, 3:12-cv-
06505-JSW, Judge Jeffrey S. White.
                ______________________

                Decided: June 23, 2015
                ______________________

    JOSEPH GRECO, Beck, Ross, Bismonte & Finley, LLP,
San Jose, CA, argued for plaintiff-appellant. Also repre-
sented by JUSTIN BECK, KIMBERLY ZAPATA.
2       INTERNET PATENTS CORPORATION   v. ACTIVE NETWORK, INC.



    MATTHEW D. MURPHEY, Troutman Sanders LLP, Ir-
vine, CA, argued for defendant-appellee Active Network,
Inc. Also represented by MEGHAN CANTY SHERRILL.

     JOHN FRANCIS TRIGGS, Patterson Intellectual Property
Law, P.C., Nashville, TN, argued for defendants-appellees
The General Automobile Insurance Services, Inc., Perma-
nent General Assurance Corporation of Ohio, Quinstreet,
Inc.    Defendants-appellees The General Automobile
Insurance Services, Inc., Permanent General Assurance
Corporation of Ohio also represented by RYAN D. LEVY.
Defendant-appellee Quinstreet, Inc., represented by
THOMAS F. FITZPATRICK, ANDY H. CHAN, Pepper Hamilton
LLP, Redwood City, CA.

   STEPHEN S. KORNICZKY, Sheppard, Mullin, Richter &
Hampton LLP, San Diego, CA, argued for defendant-
appellee Tree.com, Inc. Also represented by EDWARD V.
ANDERSON, DEEPALI BRAHMBHATT, MICHAEL MURPHY.
                ______________________

    Before NEWMAN, MOORE, and REYNA, Circuit Judges.
NEWMAN, Circuit Judge.
    Internet Patents Corporation (IPC) appeals the judg-
ments of the United States District Court for the North-
ern District of California, dismissing the complaints in
four related actions for infringement of U.S Patent No.
7,707,505 (the ’505 Patent) on the ground of patent ineli-
gibility under 35 U.S.C. §101. 1
   IPC had filed suits for infringement of the ’505 Patent
against The General Automobile Insurance Services, Inc.



    1   Internet Patents Corp. v. Gen. Auto. Ins. Servs.,
Inc., 29 F. Supp. 3d 1264 (N.D. Cal. 2013) (“Dist. Ct.
Op.”).
INTERNET PATENTS CORPORATION   v. ACTIVE NETWORK, INC.   3



(“The General”); Active Network, Inc. (“Active”); Tree.com,
Inc. (“Tree.com”); and QuinStreet, Inc. (“QuinStreet”).
The district court, applying 35 U.S.C. §101, held the ’505
Patent invalid for failure to meet the eligibility require-
ments of patentable subject matter. IPC appealed, and
while the appeal was pending, the Supreme Court decided
Alice Corp. v. CLS Bank International, 134 S. Ct. 2347
(2014). We requested, and received, supplemental brief-
ing addressing the relevance of Alice to this case. We now
affirm the judgment of the district court.
                      BACKGROUND
    As the district court stated, the ’505 Patent claims
“the use of a conventional web browser Back and Forward
navigational functionalities without data loss in an online
application consisting of dynamically generated web
pages.” Dist. Ct. Op. at 1269. The court described the
’505 Patent subject matter as “retaining information lost
in the navigation of online forms,” id., and deemed this to
be an abstract concept and thus ineligible for patenting:
   The Court finds that by setting out the abstract
   idea of a known technological challenge without
   setting out any specific disclosures, the Patent
   “added no elements or combination of elements,
   sometimes referred to as the inventive concept,
   sufficient to ensure that the patent in practice
   amounts to significantly more than a patent upon
   the natural law [or the abstract idea].”
Id. (alteration in original) (quoting Mayo Collaborative
Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1294
(2012)).
   Claim 1 is the broadest claim:
       1. A method of providing an intelligent user
   interface to an online application comprising the
   steps of:
4   INTERNET PATENTS CORPORATION    v. ACTIVE NETWORK, INC.



    furnishing a plurality of icons on a web page dis-
        played to a user of a web browser, wherein
        each of said icons is a hyperlink to a dynami-
        cally generated online application form set,
        and wherein said web browser comprises Back
        and Forward navigation functionalities;
    displaying said dynamically generated online ap-
        plication form set in response to the activation
        of said hyperlink, wherein said dynamically
        generated online application form set com-
        prises a state determined by at least one user
        input; and
    maintaining said state upon the activation of an-
       other of said icons, wherein said maintaining
       allows use of said Back and Forward naviga-
       tion functionalities without loss of said state.
A principal issue is whether the additional limitations in
other claims of the ’505 Patent rescue this method from
ineligible abstraction. IPC argues that the invention is
not an abstract idea, but a tangible and useful improve-
ment over prior computer-implemented methods of enter-
ing information into online application forms.        The
specification states:
    In contrast to the prior art, the present system, in
    all its embodiments, maintains virtual application
    information, relative dependencies, and infor-
    mation context obtained and/or derived from each
    pane accessed by the user/applicant.
’505 Patent, col. 9 ll. 60-66. IPC states that the specified
limitations remove the claims from abstraction, citing the
“maintaining state” limitation, the furnishing of icons as
separate hyperlinks to an online application, and using
the Back and Forward buttons without losing data previ-
ously entered in the application form. IPC states that its
INTERNET PATENTS CORPORATION      v. ACTIVE NETWORK, INC.   5



method is a technical advance over the prior art, referring
to the Court’s guidance in Alice.
    The district court held that the several claimed steps
did not add an inventive concept, including the “maintain-
ing state” limitation on which IPC focuses on appeal.
                        DISCUSSION
                              I
    Section 101 defines patent eligible subject matter as
“any new and useful process, machine, manufacture, or
composition of matter, or any new and useful improve-
ment thereof.” Precedent has long established that eligi-
ble subject matter does not include laws of nature,
natural phenomena, and abstract ideas. Other than as so
limited, the patent system is described as available to
“anything under the sun that is made by man.” Diamond
v. Chakrabarty, 447 U.S. 303, 309 (1980) (quoting S. Rep.
No. 1979, 82d Cong., 2d Sess., 5 (1952); H.R. Rep. No.
1923, 82d Cong., 2d Sess., 6 (1952)). Yet the technologies
of recent decades have challenged the understandings of a
simpler past.
     Recently, the courts have focused on the patent eligi-
bility of “abstract ideas,” for precision has been elusive in
defining an all-purpose boundary between the abstract
and the concrete, leaving innovators and competitors
uncertain as to their legal rights. The present framework
starts with the case of Bilski v. Kappos, 561 U.S. 593
(2010), where the Court held that the generally known
idea of hedging commodities is not rescued from “abstrac-
tion” through the use of computer technology.
    In Mayo, supra, the Court introduced the “inventive
concept” protocol to probe the categories of laws of nature,
natural phenomena, and abstract ideas. The Court set
forth a two-step methodology for determining patent-
eligible subject matter. “First, we determine whether the
claims at issue are directed to one of those patent-
6    INTERNET PATENTS CORPORATION    v. ACTIVE NETWORK, INC.



ineligible concepts.” Alice, 134 S. Ct. at 2355. If so, the
court then considers the elements of each claim “both
individually and ‘as an ordered combination’ to determine
whether the additional elements ‘transform the nature of
the claim’ into a patent-eligible application.” Id. (quoting
Mayo, 132 S. Ct. at 1298, 1297).
    The Court described this second step as “a search for
an ‘inventive concept’—i.e., an element or combination of
elements that is ‘sufficient to ensure that the patent in
practice amounts to significantly more than a patent upon
the [ineligible] concept itself.’” Alice, 134 S. Ct. at 2355
(alteration in original) (quoting Mayo, 132 S. Ct. at 1294).
By “consider[ing] all claim elements, both individually
and in combination, [this methodology] is consistent with
the general rule that patent claims ‘must be considered as
a whole.’” Alice, 134 S. Ct. at 2355 n.3 (quoting Diamond
v. Diehr, 450 U.S. 175, 188 (1981)).
    Under step one of Mayo/Alice, the claims are consid-
ered in their entirety to ascertain whether their character
as a whole is directed to excluded subject matter. Howev-
er, this determination alone does not render the subject
matter ineligible. In Mayo, the excluded subject matter
was a law of nature, “namely, relationships between
concentrations of certain metabolites in the blood and the
likelihood that a dosage of a thiopurine drug will prove
ineffective or cause harm.” 132 S. Ct. at 1296. The Court
distilled this ineligible concept from the claims as a whole,
and found no inventive concept in routine application of
this law of nature.
    In Alice, the Court found that the claims were di-
rected to the abstract idea of intermediated settlement,
and that no claim elements, alone or in combination,
provided the inventive concept of patent-eligible subject
matter. 134 S. Ct. at 2356. The Court held that the
known practice of reducing financial risk by passing funds
through a “third-party intermediary” did not lose its
INTERNET PATENTS CORPORATION   v. ACTIVE NETWORK, INC.    7



character as an abstract idea. Although computer capa-
bility achieved financial activity of a scope not previously
available, no inventive concept was found in the claims,
for the “computer functions are ‘well-understood, routine,
conventional activities’ previously known to the industry.”
Id. at 2359 (quoting Mayo, 132 S. Ct. at 1294).
    The two-step analytic protocol introduced in Mayo di-
rects attention to whether the claim contains an “in-
ventive concept.” Determination of what is an inventive
concept favors inquiries analogous to those undertaken
for determination of patentable invention, for a known
idea, or one that is routine and conventional, is not in-
ventive in patent terms, as the Court found in Bilski,
Mayo, and Alice. For Bilski and Alice, the conventional
idea was based on the use of computers to conduct known
forms of financial transactions. For Mayo, the Court held
that metabolism of the drug thiopurine is a law of nature,
and that instructing physicians to administer the drug
according to its presence in the blood “at most add[s] a
suggestion that he should take those [natural] laws into
account when treating his patient.” 132 S. Ct. at 1298; id.
at 1297 (“The relation is a consequence of the ways in
which thiopurine compounds are metabolized by the
body—entirely natural processes. And so a patent that
simply describes that relation sets forth a natural law.”).
    Other precedent illustrates that pragmatic analysis of
§101 is facilitated by considerations analogous to those of
§§102 and 103 as applied to the particular case. The
courts have recognized that it is not always easy to de-
termine the boundary between abstraction and patent-
eligible subject matter. Recent precedent illustrates this
boundary in a variety of factual circumstances. E.g.,
CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366,
1375 (Fed. Cir. 2011) (claims linked only to a general
purpose computer preempted the abstract concept of
detecting credit-card fraud based on past transactions);
Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333-34 (Fed.
8   INTERNET PATENTS CORPORATION    v. ACTIVE NETWORK, INC.



Cir. 2012) (“computer aided” mental process claims,
unlimited in scope, preempted the idea of “selectively
forwarding” credit data); Accenture Global Servs., GmbH
v. Guidewire Software, Inc., 728 F.3d 1336, 1344-45 (Fed.
Cir. 2013) (claims that implemented the abstract idea of
generating tasks based on rules on the occurrence of an
event, held ineligible because they preempted all practical
uses of the abstract concept); Digitech Image Techs., LLC
v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir.
2014) (claims to a general process for combining two data
sets into a device profile were “‘so abstract and sweeping’
as to cover any and all uses of a device profile” (quoting
Gottschalk v. Benson, 409 U.S. 63, 68 (1972))).
    Precedent illustrates not only the variety of concepts
that have been challenged under section 101, but the
variety of details that may be included in the specification
and the variety of limitations that may be included in the
claims. Courts have found guidance in deciding whether
the allegedly abstract idea (or other excluded category) is
indeed known, conventional, and routine, or contains an
inventive concept, by drawing on the rules of patentabil-
ity. In Alice, the Court elaborated that, for a perceived
abstract idea, if the claim “contains an ‘inventive concept’
sufficient to ‘transform’ the claimed abstract idea into a
patent-eligible application,” 134 S. Ct. at 2357 (quoting
Mayo, 132 S. Ct. at 1294, 1298), then the claims pass the
test of eligibility under section 101.
                             II
    The district court applied these principles to the IPC
claims. The court determined that the ’505 Patent
claimed “the use of a conventional web browser Back and
Forward navigational functionalities without data loss in
an online application consisting of dynamically generated
web pages.” Dist. Ct. Op. at 1269. The district court
described “retaining information lost in the navigation of
online forms” as an ineligible abstract idea. Id. IPC
INTERNET PATENTS CORPORATION    v. ACTIVE NETWORK, INC.    9



argues that the “maintaining state” element of the claim
comes directly from the patent specification:
    In contrast to the prior art, the present system, in
    all its embodiments, maintains virtual application
    information, relative dependencies, and infor-
    mation context obtained and/or derived from each
    pane accessed by the user/applicant. This state
    maintenance enables use of standard browser
    Back and Forward button functions without loss
    of data and without losing the user's “place” in the
    application process.
’505 Patent col. 9 ll. 60-66.
    In Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of
Can., 687 F.3d 1266, 1273 (Fed. Cir. 2012), the court
observed that “claim construction is not an inviolable
prerequisite to a validity determination under § 101.”
However, the threshold of §101 must be crossed; an event
often dependent on the scope and meaning of the claims.
    Applying the guidance of Bilski, Mayo, and Alice to
the present appeal, we start by ascertaining the basic
character of the subject matter, and then whether there is
an “inventive concept” in a claim drawn to some level of
abstraction. Bancorp, 687 F.3d at 1273-74 (“[T]he deter-
mination of patent eligibility requires a full understand-
ing of the basic character of the claimed subject matter.”)
For the ’505 Patent, the end result of “maintaining the
state” is described as the innovation over the prior art,
and the essential, “most important aspect”:
    The most important aspect of the user interface of
    the present invention is not that it has tabs or
    that it enables a certain amount of non-sequential
    (non-linear) access to the various form sets within
    a virtual application, but that it maintains data
    state across all panes.
10   INTERNET PATENTS CORPORATION   v. ACTIVE NETWORK, INC.



Col. 9 ll. 45-49. IPC stresses the unconventionality of the
claim elements of maintaining the state, furnishing icons
on a web page with a browser having Back and Forward
navigation functions, and displaying an online application
form. IPC Supp. Br. at 9-10.
     We agree with the district court that the character of
the claimed invention is an abstract idea: the idea of
retaining information in the navigation of online forms.
Mayo notes the insufficiency of “well-understood, routine,
conventional activities previously known” to found an
“inventive concept.” 132 S. Ct. at 1298. The ’505 Patent
specification refers to the “browser Back and Forward
button functionality” as “conventional.” Col. 3 ll. 5-10.
The specification also refers to the Back and Forward
functionality as “well-known” and “common,” e.g., “Fur-
thermore, the common convenience of the ‘Back’ and
‘Forward’ buttons (provided in all well-known Internet
browsers) generally does not function properly when
filling in online forms.” Col. 2 ll. 37-40.
     The specification also states that the use of internet
web pages for users to fill out online applications was
brought about by “[t]he increasing popularity of the
Internet and the World Wide Web,” and describes these
online application systems as generating information to
the user based on information inputted by the user. Col.
1 ll. 40-60. As the district court observed, claim 1 con-
tains no restriction on how the result is accomplished.
The mechanism for maintaining the state is not described,
although this is stated to be the essential innovation. The
court concluded that the claim is directed to the idea
itself—the abstract idea of avoiding loss of data. IPC’s
proposed interpretation of “maintaining state” describes
the effect or result dissociated from any method by which
maintaining the state is accomplished upon the activation
of an icon. Thus we affirm that claim 1 is not directed to
patent-eligible subject matter.
INTERNET PATENTS CORPORATION       v. ACTIVE NETWORK, INC.   11



                             III
    Independent claims 9 and 17 are identical to claim 1
except that their preambles state “[a] computer system for
providing an intelligent user interface to an online appli-
cation, comprising computer instructions for” (claim 9)
and “[a] computer-readable storage medium, comprising
computer instructions for” (claim 17). The statement that
the method is performed by computer does not satisfy the
test of “inventive concept.” Alice, 134 S. Ct. at 2360.
    Claims 2 and 10 depend from claims 1 and 9, respec-
tively, and recite identical limitations. They read:
    2[/10]. The method[/computer system] of claim
    1[/9], wherein said displaying said dynamically
    generated online application form set comprises
    combining information from a template file and
    either a database or a conditional merge file or
    both to form said dynamically generated online
    application form set.
Claims 7, 15, and 23 depend from claims 1, 9, and 17,
respectively, and recite identical limitations. They read:
    7[/15/23].     The      method[/computer        sys-
    tem/computer-readable storage medium] of claim
    1[/9/17], wherein said web page comprises quasi-
    static elements distinct from said dynamically
    generated online application form set, wherein
    said displaying said dynamically generated online
    application form set in response to the activation
    of said hyperlink affects the display of said quasi-
    static elements.
The additional limitations of these dependent claims do
not add an inventive concept, for they represent merely
generic data collection steps or siting the ineligible con-
cept in a particular technological environment. See Alice,
134 S. Ct. at 2357 (explaining that “‘[s]imply appending
conventional steps, specified at a high level of generality,’
12   INTERNET PATENTS CORPORATION    v. ACTIVE NETWORK, INC.



was not ‘enough’ to supply an ‘inventive concept’” (empha-
sis in original) (quoting Mayo, 132 S. Ct. at 1300, 1297,
1294)); id. at 2358 (“limiting the use of an abstract idea ‘to
a particular technological environment’” is “not enough for
patent eligibility” (quoting Bilski, 561 U.S. at 610-11);
CyberSource, 654 F.3d at 1370 (“mere [data-gathering]
step[s] cannot make an otherwise nonstatutory claim
statutory”) (alterations in original) (quoting In re Grams,
888 F.2d 835, 840 (Fed. Cir. 1989)).
    The motion to dismiss addressed the dependent
claims, arguing that they do not contain any limitations
that make them patent-eligible. We have considered the
arguments and conclude that the criteria of “inventive
concept” are not met as to the dependent claims.
                        CONCLUSION
    We affirm the district court’s ruling that the claims of
the ’505 Patent are directed to ineligible subject matter.
The judgment of invalidity of the ’505 Patent claims in
terms of section 101 is affirmed.
                        AFFIRMED