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U.S. District Court Invalidates Computer Aided Method of Managing a Credit Application under Bilski

Dealertrack, Inc. v. Huber, et al., Doc. No. 06-2335 (C.D. Cal. 2009) [PDF]

Summary. The court granted summary judgment finding the asserted claims directed to a computer aided method of managing a credit application were invalid as failing the machine-or-transformation test from Bilski. The court found the process claims were not tied to a particular machine.

Facts. The plaintiff DealerTrack, Inc. (“DealerTrack”) asserted that defendant’s Finance Express and RouteOne infringed three of DealerTrack’s patents, including U.S. Patent 7,181,427 [Link] (the “‘427 Patent”). The ‘427 patent provides a “computer based credit application processing system [that] provides a graphical user interface, automatic software update downloading, lender to lender routing of credit applications, and integration with in-house finance and insurance systems and third party data entry facilities, among other features.”

Claim 1 of the ‘427 patent provides:

A computer aided method of managing a credit application, the method comprising the steps of:

receiving credit application data from a remote application entry and display device;
 
selectively forwarding the credit application data to remote funding source terminal devices;
 
forwarding funding decision data from at least one of theremote funding source terminal devices to the remote application entry and display device;
 
wherein the selectively forwarding the credit application data step further comprises:
 
sending at least a portion of a credit application to more than one of said remote funding sources substantially at the same time;
 
sending at least a portion of a credit application to more than one of said remote funding sources sequentially until a finding [sic] source returns a positive funding decision;
 
sending . . . a credit application . . . after a predetermined time . . . ; or;
 
sending the credit application from a first remote funding source to a second remote finding [sic] source . . . .

DealerTrack arged that the claims of the ‘427 Patent were tied to a (1) central processor “consisting of a specially programmed computer hardware and database,” a (2) “remote application entry and display device,” and a “remote funding source terminal device.”

Central Processor Not Specially Programmed. The court stated, “The ‘427 Patent does not specify precisely how the computer hardware and database are ‘specially programmed,’ and the claimed central processor is nothing more than a general purpose computer that has been programmed in some unspecified manner.” See Ex Parte Nawathe, No. 2007-3360, 2009 WL 327520, (BPAI Feb. 9, 2009) (rejecting under Section 101 a claim reciting a “computerized method” of inputting and representing XML documents as insufficiently tied to “a particular computer specifically programmed for executing the steps of the claimed method”).

Not Tied to a Particular Machine. In an earlier claim construction order the court found:

  • “remote application entry and display device” included “any device, e.g.,personal computer or dumb terminal, remote from the central processor, for application entry and display.”
  • “terminal device” as “any device, e.g., personal computer or dumb terminal, located at a logical or physical terminus of the system.”

The court has little trouble finding these devices were not particular machines withing the meaning of Bilski after finding that these various “devices” include “any device.”

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Software Patent News for July 7th

Software Patent Bits for July 7th:

  • Start-up Entrepreneurs & CEO’s: If Your Goal is Investment or Acquisition, You are Probably Patenting the Wrong Things [IP Asset Maximizer Blog] –
    “The great majority of patent seekers (including those at otherwise sophisticated large companies) believe that patents are best used to keep others off their ‘technology lawns’.” However, Jackie Hunter asserts that companies should engage in offensive patenting by “putting a patent fence around the big [competitor] company’s technology lawn. . . [This] will reduce or prevent the bigger player’s free movement in its desired business space.” See Jackie’s article for more details on “offensive patenting” strategies.
  • Patent Map [FreePatentsOnline] –
    “FreePatentsOnline has launched a patent map . . . The Google Map mashup is located at www.localpatents.com, where today 3,143,630 patents and patent applications are shown in their respective locales, based on inventor and assignee cities. An assignee is the entity that holds the rights to the patent. “A big reason we now show patents on a map is for job searching,” said Erik Reeves, CEO of Patents Online, the company behind FreePatentsOnline. “You may imagine that where you live, or where you’re moving, is a place with limited innovation. But with a few clicks in a given geographic area you may discover one or more companies inventing new products or services of great relevancy to your job interests. And, to interview armed with knowledge about a company’s intellectual property makes you a much better prepared candidate.”
  • Bilski, Software Patents and Business Method Patents [State of Innovation] –
    “Will the Supreme Court use the In re Bilski 545 F.3d 943, 88 U.S.P.Q.2d 1385 (Fed. Cir. 2008) case to deny patent protection to information age technology? Many observes believe that this case will have major implications for software and business method patents.”
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Software Patent News for July 4th

Software Patent Bits for July 4th:

  • Bilski at the BPAI – What a Mess (Part 1) – [The 271 Patent Blog] –
    "…the process of determining patentable subject matter after Bilski has become a weird, metaphysical endeavor. It has gotten to the point that a given claim may receive 4 different interpretations from 4 different people, and each of them could be arguably correct. In the case of computer-related inventions, the end result of a patentability analysis is rarely supportable with a single, cogent rationale."
  • In Re Bilski Discussion [Intellectual Property Colloquium] –
    "In its . . .decision in In Re Bilski, the Federal Circuit articulates a new test for whether a given innovative process falls within the subject matter of federal patent law. In this audio presentation, Professors Rob Merges and John Duffy join moderator Doug Lichtman to think through what the new test actually means; where it came from; and whether it will actually change the kinds of patents that issue." (Nov. 2008)
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Software Patent News for May 26th

Software Patent News for May 26th:

  • Patent Thickets, Bad Patents, and Costly Patent Litigation [The Volokh Conspiracy] –
    . . .we must be especially cautious in assuming that modern problems are necessarily different from those experienced in yesteryear . . . As Professor Khan has shown, the American patent system excelled precisely because it did what none of these other patent systems [England, Germany, and France] would do: It secured inventions as property rights within an institutional framework governed by the rule of law.
  • Software rankings: Microsoft in 1st, then IBM and Oracle [CNET News] — –
    The R&D focus at IBM has shifted more toward software and services. More than 70 percent of the U.S. patents IBM received in 2008 (IBM's 16th straight year of patent leadership), were for software and services.
  • May 26, 1981: Programmer-Attorney Wins First U.S. Software Patent [Wired.com] – –
    Indian-born Asija had created the program years before, in 1969. He wanted to patent it and visited a few attorneys. But the U.S. Supreme Court had ruled against software patents, and the conventional wisdom was that software would remain not patentable, that it could be protected by copyright. . . . So he personally took on the challenge of getting a patent for his own software, fighting the battle as his own lawyer. He went to law school, learned patent law and passed the bar exam. He filed his application for the Swift-Answer program with the U.S. Patent and Trademarks Office on Dec. 30, 1974.
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Software Patent News for April 2nd

Software Patent Bits for April 2nd:

  • The Patentability of Software and Business Methods after “In re Bilski”- [David R. Heckadon] –
    "On Oct 30, 2008, the U.S. Court of Appeals for the Federal Circuit handed down its highly anticipated decision in In re Bilski, (2007-1130, Fed. Cir. 2008). This case was expected to clarify whether and when business methods and software are patentable. This decision was an “en banc” decision, meaning that it was decided by all 12 judges (rather than the usual three judge panel).

    The case provided the nation’s highest patent court with the opportunity to review the controversial practice of allowing patents on methods of doing business. More broadly, however, the court used the opportunity to determine whether both (non-software) business method patents and software method patents are still allowable. As a result, Bilski was expected to be the one of the most important and far reaching patent law cases of the high technology era. "

  • Few buyers at Ocean Tomo high-tech auction [SFGate] –
    "A patent for a prepaid wireless phone system sold for $1.5 million Friday at an intellectual property auction at the Ritz-Carlton in San Francisco, but the sale was the high point in an otherwise bleak event: Of the 80-odd high-tech patents offered, only six sold and just eight others attracted bids."
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Software Patent News for March 28th

Software Patent News for March 28th:

  • The Death of Business-Method Patents [IEEE Spectrum] –
    “What we really need to know, but lack the tools to reliably assess, is whether software patents help or hinder innovation. If that question is obvious to ask but impossible to answer, then how are we to decide whether to admit a new candidate into the pantheon of patentable subject matter? Perhaps the best place to begin is where the world’s various patent systems tend to agree. One common feature is the focus on what’s made (as opposed to merely thought) by man. Other well-established boundaries include the universal unpatentability of laws of nature, physical phenomena, abstract or disembodied ideas, and pure math. Maybe we should exchange lofty expressions of legal principle for practical standards based on these recognized exclusions. Perhaps if patent claims call for hardware and operations that don’t reduce to “numbers in–crunch numbers–numbers out,” we should consider the subject-matter eligibility bar cleared.”
  • Open-source Firms Urged to Go on Legal Offensive [PC World: Yahoo! Tech] –
    “More open-source companies should be asking the U.S. Patent & Trademark Office to re-examine patents that may pose a threat to them, as a cheaper, sometimes more suitable alternative to waging a patent lawsuit, said Van Lindberg, an attorney with Haynes and Boone LLP, who spoke at Infoworld’s Open Source Business Conference in San Francisco.”
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Software Patent News for March 19th

Software Patent Bits for March 19th:

  • SCRIPTed Conference: Computer Implemented Inventions Workshop [Scripted – UK] –
    This event is the idea of Professor Philip Leith, Queen's University Belfast, and it is organised as part of SCRIPT's "Information Technology Law Foresight Fora. The objective of the event is to bring together a small number of practitioners and policymakers from Europe to discuss the current state of case law and practice with regards to computer implemented inventions (CII). There has been a split between UK and EPO case law, and it is hoped that this workshop will explore some of the issues that led to such state of affairs."
  • Software Patents from Another Angle [IPBusinessEdge] –
    "[Software] is more like a device than it is a movie. The problem, conceptually, with covering software under copyrights and not patents is that copyright protects expression and not functionality. But what's valuable about software is functionality." says Greenberg Traurig co-managing shareholder and IP attorney Heather Meeker.