Customedia Techs., LLC v. Dish Network Corp.

• Decision Date: 06 March 2020
• Docket Number: 2018-2239,2019-1000
• Citation: 951 F.3d 1359
• Parties: CUSTOMEDIA TECHNOLOGIES, LLC, Appellant v. DISH NETWORK CORPORATION, Dish Network LLC, Appellees Customedia Technologies, LLC, Appellant v. Dish Network Corporation, Dish Network LLC, Appellees
• Court: U.S. Court of Appeals — Federal Circuit

951 F.3d 1359

CUSTOMEDIA TECHNOLOGIES, LLC, Appellant

v.DISH NETWORK CORPORATION, Dish Network LLC, Appellees

Customedia Technologies, LLC, Appellant

v.Dish Network Corporation, Dish Network LLC, Appellees

2018-2239

2019-1000

United States Court of Appeals, Federal Circuit.

Decided: March 6, 2020

Raymond William Mort, III, The Mort Law Firm, PLLC, Austin, TX, argued for appellant.

Eliot Damon Williams, Baker Botts LLP, Palo Alto, CA, argued for appellees. Also represented by George Hopkins Guy, III; Ali Dhanani, Michael Hawes, Houston, TX.

Before Prost, Chief Judge, Dyk and Moore, Circuit Judges.

Moore, Circuit Judge.

Customedia Technologies, LLC appeals the Patent Trial and Appeal Board’s final written decisions holding claims 1–6, 8, 17, and 23 of U.S. Patent No. 8,719,090 and claims 1–4, 6–7, 16–19, 23–24, 26–28, 32–36, and 41 of U.S. Patent No. 9,053,494 ineligible under 35 U.S.C. § 101 and finding claims 1 and 5 of the ’090 patent unpatentable under 35 U.S.C. § 102. Because the claims are ineligible under § 101, we affirm the Board’s determinations. We do not reach the Board’s § 102 findings.

BACKGROUND

The ’090 and ’494 patents, which share a specification, disclose comprehensive data management and processing systems. ’090 Patent at 3:3–7, 17–21. According to the specification, these systems comprise a remote Account-Transaction Server (ATS) and a local host Data Management System and Audio/Video Processor Recorder-player (VPR/DMS), e.g., a cable set-top box. Id. at 4:15–19, 21:44–49. Broadcasters and other content providers transmit advertising data via the ATS to a local VPR/DMS. Id. at 31:1–6. The advertising data may then be selectively recorded in programmable storage sections in the VPR/DMS according to a user’s preferences. Id. at 31:3–6, 32:7–21. These storage sections may be "reserved, rented, leased or purchased from end user[s], content providers, broadcasters, cable/satellite distributor, or other data communications companies administering the data products and services." Id. at 31:44–49, 60–64. For example, a cable distributor may provide customers with a cable set-top box with built-in storage sections that may be leased or sold to advertisers. Id. at 31:64–32:4. Claim 1 of the ’090 patent recites:

1. A data delivery system for providing automatic delivery of multimedia data products from one or more multimedia data product providers, the system comprising:

a remote account transaction server for providing multimedia data products to an end user, at least one of the multimedia data products being specifically identified advertising data; and

a programmable local receiver unit for interfacing with the remote account transaction server to receive one or more of the multimedia data products and for processing and automatically recording the multimedia data products, said programmable local receiver unit including at least one individually controlled and reserved advertising data storage section adapted specifically for storing the specifically identified advertising data, said at least one advertising data storage section being monitored and controlled by said remote account transaction server and such that said specifically identified advertising data is delivered by said remote account transaction server and stored in said at least one individually controlled and reserved advertising data storage section.

’090 patent at Claim 1.

Dish Network Corporation and Dish Network LLC (collectively, DISH) petitioned for review of claims 1–8, 17, and 23 of the ’090 patent and claims 1–7, 16–19, 23–28, 32–36, 39, 41, and 43 of the ’494 patent pursuant to the Transitional Program for Covered Business Method Patents (CBM review). Leahy-Smith Am. Invents Act, Pub. L. No. 112-29, § 18(a) 125 Stat. 284, 329–31 (2011) (AIA). The Board instituted CBM review in each case and issued final written decisions holding claims 1–8, 17, and 23 of the ’090 patent and claims 1–4, 6–7, 16–19, 23–24, 26–28, 32–36, and 41 of the ’494 patent ineligible under 35 U.S.C. § 101. In addition to holding the claims ineligible under § 101, the Board found claims 1, 5, and 7 of the ’090 patent unpatentable under 35 U.S.C. § 102 and claim 7 of the ’090 patent unpatentable under 35 U.S.C. § 112. The Board held that DISH failed to prove that alternatively, claims 1–8, 17, and 23 of the ’090 patent are unpatentable under 35 U.S.C. § 103 as obvious over U.S. Patent Nos. 5,774,170 (Hite) and 4,607,346 (Hill). Customedia timely appealed the Board’s determinations under §§ 101 and 102.¹ DISH cross-appealed the Board’s determinations under § 103.² We have jurisdiction under 28 U.S.C. § 1295(a)(4)(A).

DISCUSSION

We review the Board’s legal conclusions de novo and its factual findings for substantial evidence. Samsung Elecs. Co. v. Elm 3DS Innovations, LLC , 925 F.3d 1373, 1380 (Fed. Cir. 2019). Eligibility under 35 U.S.C. § 101 is a question of law, based on underlying facts. SAP Am., Inc. v. InvestPic, LLC , 898 F.3d 1161, 1166 (Fed. Cir. 2018).

Section 101 provides that "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof," may obtain a patent. 35 U.S.C. § 101. The Supreme Court has held that "[l]aws of nature, natural phenomena, and abstract ideas are not patent eligible." Alice Corp. Pty. Ltd. v. CLS Bank Int’l , 573 U.S. 208, 216, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014) (quoting Assoc. for Molecular Pathology v. Myriad Genetics, Inc. , 569 U.S. 576, 589, 133 S.Ct. 2107, 186 L.Ed.2d 124 (2013) ). We follow the Supreme Court’s two-step framework for determining patent-eligibility under § 101. Id. at 217, 134 S.Ct. 2347. First, we determine whether the claims are directed to a "patent-ineligible concept," such as an abstract idea. Id . If so, we "consider 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 Collaborative Servs. v. Prometheus Labs., Inc. , 566 U.S. 66, 78–79, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012) ).

I. Alice Step One

At Alice step one, we must determine whether the claims are directed to an abstract idea. Alice , 573 U.S. at 217, 134 S.Ct. 2347. For example, in Bilski v. Kappos , the Supreme Court held ineligible claims directed to the concept of risk hedging, an abstract idea it described as "a fundamental economic practice long prevalent in our system of commerce." 561 U.S. 593, 611, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010). And in Alice , the Supreme Court made clear that the invocation of a computer does not necessarily transform an abstract idea into a patent-eligible invention. 573 U.S. at 223, 134 S.Ct. 2347. There, the Supreme Court held ineligible claims directed to a method of exchanging financial obligations using a computer system as a third-party intermediary. Id. at 218–21, 134 S.Ct. 2347. The Court explained that the claims were merely implemented "using some unspecified, generic computer" and did not "purport to improve the functioning of the computer itself." Id. at 225–26, 134 S.Ct. 2347. Not infrequently, patentees, like Customedia, latch on to this language from Alice and claim that their claims do "improve the functioning of the computer itself." Here, for instance, Customedia argues that its claims are eligible because they "provide for improvements to the operation and functioning of computer systems." Appellant’s Br. 71, Nos. 18-2239, -2309. We do not agree. The claims at issue here are directed to the abstract idea of using a computer to deliver targeted advertising to a user, not to an improvement in the functioning of a computer.

Claim 1 of the ’090 patent recites a "data delivery system for providing automatic delivery of ... specifically identified advertising data." ’090 patent at Claim 1. The advertising data is received and processed by a "programmable local receiver unit," which includes at least one "individually controlled and reserved advertising data storage section adapted specifically for storing the specifically identified advertising data."³ Id. Customedia argues that by providing a reserved and dedicated section of storage, the claimed invention improves the data delivery system’s ability to store advertising data, transfer data at improved speeds and efficiencies, and prevent system inoperability due to insufficient storage. In short, by dedicating a section of the computer’s memory to advertising data, the claimed invention ensures memory is available for at least some advertising data. This does not, however, improve the functionality of the computer itself. Even if we accept Customedia’s assertions, the claimed invention merely improves the abstract concept of delivering targeted advertising using a computer only as a tool. This is not what the Supreme Court meant by improving the functioning of the computer itself nor is it consistent with our precedent applying this concept.

In Enfish, LLC v. Microsoft Corp. , for example, we held patent eligible claims reciting a self-referential database that improved the way computers stored and retrieved data in memory. 822 F.3d 1327, 1337–39 (Fed. Cir. 2016). We concluded the claims did not invoke a computer merely as a tool, but rather improved the way the computer itself operated and handled data, allowing more efficient launching and adaptation of databases. Id. at 1336–37. We therefore held that the "plain focus of the claims is on an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity." Id. at 1336. As in Enfish , we held patent eligible claims in Visual Memory LLC v. NVIDIA Corp. that were directed to "an improved computer memory system." 867 F.3d 1253, 1259–60 (Fed. Cir. 2017). We noted that the claims "focus[ed] on a ‘specific asserted improvement in computer capabilities,’ " namely the accommodation of...