Court: District Court, N.D. California; January 18, 2018; Federal District Court
On March 4, 2014, BrightEdge Technologies, Inc. filed a patent infringement lawsuit against Searchmetrics, GmbH and Searchmetrics, Inc., claiming infringement of five U.S. patents related to search engine optimization (SEO). On October 18, 2017, the defendants filed a motion for judgment on the pleadings, arguing that the asserted patents were not eligible for protection under 35 U.S.C. § 101. The court held a hearing on December 14, 2017, and subsequently granted the defendants' motion.
The legal standard for a motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) requires the court to view all allegations as true and determine if the moving party is entitled to judgment as a matter of law. This standard is similar to that of Rule 12(b)(6). Patent eligibility under § 101 is a legal question that can be decided through such a motion without needing claim construction first.
Plaintiff’s argument that the defendants must demonstrate patent-ineligibility by "clear and convincing" evidence was rejected, as courts have established that there is no requirement for a heightened burden of proof in motions regarding patent eligibility. The court noted that while patents typically enjoy a presumption of validity, no equivalent presumption applies to eligibility under § 101, and the Supreme Court has not applied any presumption of eligibility in its recent § 101 rulings.
The determination under Section 101 involves an analysis of patent claims based solely on their text, making the application of a heightened evidentiary standard unclear. No definitive ruling by the Supreme Court or Federal Circuit post-Alice has established whether a clear and convincing standard is necessary at the motion to dismiss stage regarding patent eligibility. Regardless, the court finds that the defendants have proven invalidity.
Section 101 of the Patent Act defines patentable subject matter as processes, machines, manufactures, or compositions of matter that are new and useful. Exclusions from patent eligibility include laws of nature, natural phenomena, and abstract ideas, as these are fundamental tools of innovation meant to remain available to all. The Supreme Court warns against overly broad interpretations of these exclusions, which could undermine patent law's purpose.
A two-part test determines patent eligibility: first, courts assess if a claim is "directed to" a patent-ineligible abstract idea. If so, they then evaluate whether the claim's elements, considered individually and collectively, transform it into a patent-eligible application of the abstract idea, seeking an "inventive concept" that signifies "significantly more" than the abstract idea itself.
Recent Federal Circuit decisions clarify the Alice test for computer-related technologies. In Enfish, the court stated that it is pertinent to evaluate whether claims improve computer functionality or merely invoke abstract ideas as tools. The "directed to" inquiry acts as a filter based on the overall character of the claims. In In re TLI Communications, the court found claims abstract if they utilize conventional technology without offering an innovative solution to problems inherent in their combination.
Claims detailing specific inventions such as a "new telephone" or "new server" are not considered abstract. In contrast, claims that describe systems and methods in purely functional terms without specific technical details are deemed abstract. The Federal Circuit has refined the Alice inquiry for computer-related claims, emphasizing that the focus should be on whether the claims improve technology or simply invoke generic processes. The analysis requires scrutiny of the claim language itself, as complex specifications cannot make abstract claims patentable. Courts assess whether a claim is directed toward excluded subject matter by evaluating its advancements over prior art and considering similar cases.
Defendants argue that the Asserted Patents address an abstract concept of enhancing marketing effectiveness through data gathering and calculations, failing both steps of the Alice inquiry. They contend that the patents lack an inventive concept that transforms the abstract idea into a patentable application. In response, the Plaintiff contends that the Defendants oversimplify the patents and overlook key limitations indicating an inventive concept. The Plaintiff categorizes the five Asserted Patents into three groups, with the first group consisting of the '706 and '746 Patents, which focus on a channel-centric approach to assess website marketing effectiveness. This approach improves upon the previous website-centric method, which inadequately captured visitor data and search term effectiveness. The Group 1 Patents aim to resolve this data gap by detailing systems and methods for determining shares of voice related to selected search terms across multiple channels and over time.
Plaintiff defines "shares of voice" as a calculated numerical value reflecting an entity's visibility relative to competitors on a network. This value is derived by dividing an entity's aggregate share value by the total aggregate share values of all entities involved. The method for calculating shares of voice, as described in independent claims 1 of the '706 and '746 Patents, involves determining rank positions for search terms, multiplying these by estimated click rates and traffic volumes, and correlating shares of voice across various channels. Claim 1 of the '706 Patent outlines a method for managing references to an entity on a network, focusing on assessing relative performance through data analysis.
However, the Group 1 Patents fail to meet the first step of the Alice test, as they are deemed to cover an abstract idea — the improvement of market performance through data aggregation and analysis. The claimed methods involve longstanding practices of data collection and mathematical evaluation, which existed prior to the digital age, thus lacking the necessary specificity to be patentable. This assessment is supported by precedent cases that found similar methods abstract due to their reliance on conventional data organization techniques without being tied to a specific structure or machine.
The Group 1 Patents lack any new physical or technical improvement, instead describing methods in functional terms related to managing and optimizing web page performance. The specification characterizes the Internet merely as a conduit for an abstract idea of data analysis aimed at enhancing market performance, without presenting new tangible components. The claimed methods can be executed entirely using traditional means like pen and paper. The Federal Circuit has classified such information analysis as abstract ideas, particularly when it involves mental processes or mathematical algorithms. The Court references prior cases where similar patents were invalidated for being directed toward abstract ideas, emphasizing that data collection and analysis do not qualify as patentable improvements unless they result in tangible technological advancements. The Group 1 Patents are classified under this framework as they aim to improve online market share through data aggregation and analysis without any claimed technological improvement. The Court finds support in the PUREPREDICTIVE case, where a patent for predictive analysis was also deemed abstract, reinforcing the notion that the absence of a tangible improvement leads to classification as an abstract idea.
The PUREPREDICTIVE patents included a "computer program product" for predictive analytics, aimed at providing insights into business data through predictive modeling. The court dismissed the defendant's motion under section 101, determining that the patent claims were directed to a mental process and abstract concepts involving mathematical algorithms for analytics. The court highlighted that the methods of collecting and analyzing information did not constitute a patentable idea, as generating new data through "learned functions" was merely a mathematical process. Furthermore, the claims involving a "computer program product" and "computer readable code" were seen as using computers merely as tools, lacking any specific technological improvement compared to the patents in Enfish and McRO, which involved significant advancements in computer technology. The court also referenced FairWarning IP, LLC v. Iatric Systems, where a method for detecting fraud was deemed patent-ineligible as it combined abstract ideas of collecting and analyzing information without improving a technological process. Unlike the improvements recognized in McRO, the rules in FairWarning did not enhance any technological infrastructure but instead automated existing tasks. The court found no supporting cases for the plaintiff’s claims of patentability.
Enfish and McRO are distinguishable due to the lack of a specific technological improvement in the current case. The plaintiff argues that the case of Two-Way Media Ltd. v. Comcast CableCommc'ns, LLC should be viewed differently at step two; however, it actually supports the court's conclusion of an abstract idea at step one. The patents in Two-Way involved a multicasting system for streaming audio/visual data over the Internet, which was designed to improve upon prior unicast systems. Nevertheless, the Federal Circuit found the claimed multicasting system to be directed to an abstract idea, as it merely involved sending, directing, monitoring, and accumulating information without adequately detailing a non-abstract means to achieve these results.
The court emphasized that merely applying an abstract idea to the Internet does not remove it from being considered abstract, as established in prior cases. The suggestion that the Group 1 Patents are patent-eligible due to being Internet-based solutions to unique Internet problems is rejected. The plaintiff's reference to Intellectual Ventures I LLC v. Capital One Bank is flawed, as it overlooks significant distinctions made by the court regarding the specific technological improvements in DDR Holdings. Unlike the hybrid web page solution in DDR, the Group 1 Patents do not provide a comparable technological advancement. The patents address issues related to the Internet but do not offer a specific technological improvement, as the calculations claimed could be performed without a computer. Thus, the mere requirement of using a computer or accessing the Internet does not suffice for eligibility under section 101.
The excerpt critiques the sufficiency of certain patent claims, asserting that attempts to limit the abstract guarantee concept to a specific technological environment are inadequate. Citing relevant case law, it argues that the mere inclusion of terms like "computer instructions" and "computer implementation" does not demonstrate a tangible technological improvement. For example, independent claim 11 of the '706 Patent describes a system for optimizing online references but fails to specify how to configure or execute the generic "computer instructions." Similarly, independent claim 1 of the '746 Patent outlines a method for managing references on a network without detailing a technological advancement, instead reiterating an abstract method. Other claims also lack specificity regarding computer elements. Overall, the claims do not meet the standard for patent eligibility because they do not transform the abstract idea into a concrete invention, as established in the cited case law. The Plaintiff's argument that dependent claims offer specific technical solutions to prior art issues is mentioned but ultimately does not address the fundamental deficiencies identified.
Dependent claims of the patents in question offer various methods for data collection, aggregation, and analysis, but do not elevate these processes to patentable subject matter under Section 101. The claims’ focus on familiar commercial transactions does not render them non-abstract. For example, dependent claim 8 of the '746 Patent outlines methods for determining "share of voice" through different corrections but merely references conventional evaluations of search results over time and across geographic locations. This practice of analyzing market performance based on geography and consumer behavior predates the Internet and is recognized as routine.
Similarly, dependent claims 2-10 of the '706 Patent present conventional methods for data collection and analysis, such as accounting for temporal and geographical variations and conducting keyword frequency analyses. These claims do not provide specific details on how these methods are implemented, resulting in abstract variations that do not constitute a patentable invention.
In moving to the "inventive concept" step of the Alice analysis, the court emphasizes that claims must demonstrate significantly more than a mere abstract idea to be patentable. The plaintiff argues that the Group 1 Patents introduce a channel-centric approach that addresses specific limitations of prior art in assessing website marketing effectiveness. Claim 1 of the '706 Patent is cited as embodying this concept, which includes calculating shares of voice based on rank positions and estimated click rates. However, the court is tasked with determining if these claims meaningfully transform the abstract idea into patentable subject matter, requiring more than standard industry practices.
Determining shares of voice involves correlating search terms to identify relative changes among entities. This process is further refined by analyzing shares of voice across different channels and displaying these changes alongside performance metrics. Claim 1 of the '746 Patent outlines a similar approach but emphasizes its computer-implemented nature. However, these claims do not qualify as patentable subject matter, as they merely describe a conventional method of data collection and analysis using mathematical processes, akin to prior rulings such as Collarity, Inc. and Intellectual Ventures I LLC, which found similar methods lacking an inventive concept.
The plaintiff argues that "shares of voice" represents a notable difference from prior art, yet it is simply a calculated measurement derived from existing technologies. The claims' references to "computer implementation" or "computer instructions" do not add inventiveness, as merely using generic computers does not transform an abstract idea into a patentable invention, as established in Mortgag. Grader Inc. and Two-Way Media Ltd.
The plaintiff fails to present dependent claims that limit the scope of the method, instead providing verbatim claims that lack specificity regarding the processes of ranking search terms or selecting channels. The analysis in Elec. Power Grp. LLC reinforces that the claims do not specify how to perform the functions of gathering, analyzing, and displaying data in a novel manner, relying instead on conventional technology. The Court concludes that the dependent claims do not narrow the scope of the representative claims, which merely reflect variations on the abstract idea of data collection and analysis.
Dependent claims 2-10 of the '706 Patent and claim 8 of the '746 Patent lack an inventive concept, as they only describe methods considering geographic and temporal changes in search results and the past behavior of web visitors. Without additional claim language, their functional nature makes them patent-ineligible, as established in Elec. Power Grp. LLC. The Plaintiff argues that the claimed method is innovative for improving web performance assessment; however, it is acknowledged that web content owners already had access to the cited data sources for analysis. The specification indicates that the claims merely enhance the efficiency of existing information analysis, which does not constitute a novel method. The argument that the claimed method's effectiveness alters its patentability is rejected, as the method is seen as routine market analysis. The Plaintiff's reference to the PTAB's decision not to institute inter partes review does not support an inventive concept, as the PTAB's assessment of anticipation or obviousness under section 102 is distinct from the inventive concept inquiry under section 101. The court concludes that the claims of the Group 1 Patents are invalid under section 101.
The '700 Patent, entitled "Opportunity Identification and Forecasting for Search Engine Optimization," seeks to address limitations in the previous website-centric methods. It highlights the absence of a mechanism to analyze visitor acquisition and subsequent purchasing behavior. The '700 Patent introduces a "correlator" that tracks how visitors arrive at a webpage and their actions thereafter, thus providing a more comprehensive assessment of web traffic and conversions.
The legal document outlines the functionality of a system that analyzes information to identify search terms for investigations and uses probabilistic models to predict conversion increases from optimizing these search terms. Independent claim 1 of the '700 Patent is highlighted as representative, detailing a method for enhancing online references to an entity through non-paid advertisements. The method involves searching for references, scoring them based on search terms, correlating visits to the entity's website with those search terms to determine conversion rates, and forecasting potential conversion increases linked to improved scores.
Independent claim 11 echoes these steps but specifies a non-transitory computer-readable medium designed to execute the operations. The '700 Patent is characterized as addressing the abstract idea of enhancing business performance via data aggregation and analysis, lacking any technological improvement and presenting a functional method. The functions described—evaluating web references, comparing visitor data to purchases, and forecasting market share growth—are categorized under abstract ideas, specifically data gathering and mathematical calculations. The court notes that these functions are merely variations of abstract concepts.
The document also mentions that the correlation function in the '700 Patent relies on a known probabilistic model, which presumes that higher-ranked search results correlate with increased conversions. It states that the generic computer implementation described in the patent does not satisfy the requirements of Section 101 for patentability. Additionally, the plaintiff argues that the defendants overlook specific requirements in dependent claim 4, which involves identifying keywords through crawling search results and conducting frequency analysis.
The '700 Patent lacks clarity on critical processes such as "crawling" and "keyword frequency analysis," similar to issues noted in prior case law. Claim 1 fails to define how terms are chosen, references are scored, conversion values are determined, or the correlation process is executed. The claim also inadequately describes the function of the "correlator." The plaintiff does not provide dependent claims that clarify these functions. Arguments made by the plaintiff regarding an "inventive concept" are unconvincing, as they merely restate independent claim 1 and reference a failed IPR petition without substantial evidence. Consequently, the asserted claims of the '700 Patent are deemed invalid under Section 101.
The '089 and '863 Patents, which share a specification titled "Correlating Web Page Visits and Conversion with External References," aim to address prior art shortcomings through a "correlator" that can determine conversions linked to external references. This capability allows webmasters to assess which external references yield the best conversions, thus optimizing marketing strategies. Independent claim 1 of the '089 Patent, recognized as representative, describes a method for correlating external references to web page entries and resulting conversions, detailing the steps for identifying entry pages, visitors, conversions, and analyzing referral data.
The excerpt outlines a legal analysis regarding the validity of certain patent claims related to a method of analyzing organic search results and their correlation with website conversions. The plaintiff argues that the patent describes a specific process involving three steps: (1) identifying an organic referral through parsing a referral header, (2) requesting and analyzing search results using keywords, and (3) determining the correlation between the rank positions of web pages, conversions, and keywords. However, the court asserts that the claims of the Group 3 Patents are directed to the abstract idea of enhancing market performance through data aggregation and analysis, lacking a specific technological improvement. The court references prior cases to support its conclusion that similar claims have been rejected as abstract ideas, emphasizing that the mere use of a computer does not transform these claims into patentable subject matter. The plaintiff fails to demonstrate how the method's steps impart an inventive concept or provide meaningful specificity. Consequently, the court rules that the asserted claims of the Group 3 Patents are invalid under the Alice test, granting the defendants' motion for judgment. Additionally, the court denies the plaintiff's motion to file a fourth amended complaint, stating that amending the complaint would not resolve the identified deficiencies, especially after granting judgment for the defendants on all claims.
The '770 Patent will share relevant evidence, including documents, facts, witnesses, and expert testimony, with other patents involved in the case. The Plaintiff is instructed to file a new lawsuit if additional patents are to be asserted. The court orders judgment in favor of the Defendants and closes the case. The factual background supporting the court's decision is detailed in Part II of the order. A dispute exists regarding the construction of the term "share of voice"; however, the Defendants do not contest the Plaintiff's construction, and the court finds it unnecessary to resolve this issue at this stage. The court agrees with the Defendants' designation of representative claims, noting that the Plaintiff's identified claims do not significantly differ from those characterized by the Defendants. Even if the claims were not representative, the court's review of the remaining claims did not alter its analysis. The specification discusses the network's role in connecting system components, with a hypothetical scenario illustrating how to determine shares of voice across various search terms and channels. The court denies the Plaintiff's request for judicial notice due to irrelevance, emphasizing that the evidence presented does not pertain to the claims' eligibility. Additionally, the Defendants assert that "conversion" relates to website visitor purchases, a point the Plaintiff does not dispute. The '863 Patent contains one independent claim and is identified as a continuation of the '089 Patent, which describes similar methods for providing information.
