Federal Circuit Holds Two Intellectual Ventures Patents Invalid for Claiming Unpatentable Subject Matter

The Federal Circuit has held two patents, owned by the well-known non-practicing entity Intellectual Ventures, invalid under 35 U.S.C. § 101.  Intellectual Ventures I LLC et al. v. Capital One NA, No.2014-1506 (July 6, 2015).  One of these patents was directed to a budgeting application, and the other was directed to tailoring web pages to individual users, i.e., for advertising purposes.  Almost a year after Alice Corp. v. CLS Bank, a holding that such subject matter is patent-ineligible seems barely newsworthy.

A cursory glance at U.S. 8,083,137 and U.S. 7,603,382 raises flags for even the most casual observer of software patents.  The ‘137 patent was entitled “Administration of Financial Accounts.”  It was very easy work for the court to dismiss the ‘137 patent as directed to the abstract idea of budgeting.

Claim 1 of the ‘382 patent recites “[a] system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user.  The ‘382 patent might have seemed akin to the Internet solution purportedly claimed in the DDR Holdings case.  However, the court explained that “[t]he patent claims here do not address problems unique to the Internet, so DDR has no applicability.” The claims of the ‘382 patent were directed to providing customized advertising (think tailored Sunday newspapers inserts from days of yore), and were thus addressed to an abstract idea without any additional innovation.

Even if barely newsworthy, this case is instructive on two points.  First, in this author’s view, the irreconcilability of DDR Holdings (authored by Judge Chen, who was on the present panel) to every other case that the Federal Circuit has decided is shown in stark relief.  Just as the claims of the ‘382 patent had an analogue in newspaper inserts, the claims at issue in DDR Holdings had an analog in bricks and mortar retail stores.  It is very difficult — I would say impossible — to take the court at face value here or in other cases where it has tried to distinguish DDR Holdings.

Second, business methods patents, of which the ‘137 patent certainly is one, are now routinely held patent-ineligible, as are patents that might more narrowly be categorized as e-commerce or Internet patents, of which the ‘382 patent was one.  Opinions such as this one need not be closely dissected.  Tea leaves need not be divined.  The state of the law is clear.  Patent owners and patent applicants alike must acknowledge the sea change that Alice has wrought, and that the trend toward holdings of patent-ineligibility is not likely to ease, much less be reversed, in the foreseeable future.

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