In an opinion authored by Federal Circuit Senior Judge Bryson, an Eastern District of Texas court has denied a motion for summary judgment that patent claims directed to a method for transmitting encrypted data are ineligible for patent protection under 35 U.S.C. § 101. TQP Development, LLC. v. Intuit, Inc., N0. 2:12-CV-180-WCB (E.D. Texas Feb. 19, 2014).
The claims of United States Patent No. 5,412,730 recited “[a] method for transmitting data comprising a sequence of blocks in encrypted form over a communication link from a transmitter to a receiver.” The defendants argued that the claims were “directed to patent-ineligible subject matter—specifically, an algorithm, a mental process, or an abstract idea," and “would have an intolerably broad preemptive effect.”
Judge Bryson began with a review of applicable Section 101 precedent, naming the usual suspects: Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289 (2012); Bilski v. Kappos, 130 S. Ct. 3218 (2010); Diamond v. Diehr, 450 U.S. 175 (1981); Parker v. Flook, 437 U.S. 584 (1978); Gottschalk v. Benson, 409 U.S. 63 (1972); and, last but not least, CLS Bank International v. Alice Corp., 717 F.3d 1269 (Fed. Cir.) (en banc), cert. granted, 134 S. Ct. 734 (2013). Judge Bryson, who took senior status just before CLS Bank was argued and hence did not participate in that decision, quoted from Judge Lourie's plurality opinion to identify “common themes running through the case law on patent eligibility.”
In general, Judge Bryson discussed concepts with which even a casual student of patent-eligibility law will be familiar: patents should not be allowed to preempt fundamental laws of nature or abstract ideas, and patentability analysis should not be too formalistic. Computer-implemented claims, if they meet the statutory definition of a “process,” should be examined for risk of preempting an abstract idea, and where such risk appeared, the claim should be examined to identify the fundamental concept in the claim, and whether additional limitations sufficiently narrowed the claim.
Judge Bryson found no doubt that the claims here recited a statutory process, and thus were patent-eligible “unless one of the common-law exceptions to section 101 applies.” Accordingly, Judge Bryson turned to the question of whether the ’730 patent claims preempted all use of the abstract algorithm. He found that they did not, because:
the invention as claimed is limited to the use, in an encrypted communication system, of functionally identical pseudo-random number generators to generate the key value used for encryption and decryption. Next, the claimed invention is further limited to the use of characteristics of the transmitted data to trigger key value changes. Finally, the claim does not read on the use of any of a number of predetermined characteristics of the data being communicated, but requires triggering based on a specific predetermined characteristic—the number of blocks of data that are transmitted over the link. Because of that limitation, which provides that “a new one of said key values . . . [is] produced each time a predetermined number of said blocks are transmitted over said link,” the preemptive effect of the claim is very much diminished. The use of any other predetermined characteristic of the data would fall outside the patent’s scope and accordingly would not be preempted.
Here, “the claim is drawn to a very specific method of changing encryption keys,” and was not a “basic tool of scientific and technological work.”
Further, the ’730 patent claim was not an ineligible “mental process,” and in particular was distinguishable from the “method for converting binary-coded decimal numbers into pure binary numbers” held not to recite patentable subject matter in Gottschalk v. Benson. The method here, “except perhaps in its most simplistic form, could not conceivably be performed in the human mind or pencil and paper.”
Likewise, the ’730 patent did not merely recite an abstract idea with “insignificant post-solution activity,” but instead claimed “a method of changing encryption key values that entail[ed] more than” that. The fact that the method could be used in a variety of devices did not make it abstract; various devices “would be required for all but the most fanciful uses of the invention.” Invalidating the claim because it did not require a computer would be overly-formalistic.
Further, the plaintiff had offered factual evidence that the claimed method cannot be performed without machine. Although Section 101 invalidity is a question of law, that question of law can include underlying questions of fact. The question of fact raised by the plaintiff here would be enough to deny summary judgment.
Lastly, Judge Bryson considered the “machine or transformation” test, held to be useful, if not dispositive, in Bilski. Although on the surface this case seemed similar to cases where claims were held patent-eligible under section 101, a close analysis revealed that those other cases all involved business methods, where a claim recited use of a computer “to perform steps that are commonly performed without a computer. This case, in contrast “involves a way of making computer communication itself more effective by making that communication more secure.” Thus, even if “the invention in this case does not result in the physical transformation of matter of the sort involved, for example, in Diamond v. Diehr, 450 U.S. 175 (1981) (method for curing rubber), it involves a specific system for modifying data that has equally concrete and valuable effects in the field of electronic communications.”
Accordingly, the defendants' motion for summary judgment of invalidity under 35 U.S.C. § 101 was denied.