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Federal Circuit Serves a Slice of Victory to Apple and Domino's Pizza



Last week, in Apple, Inc. v. Ameranth, Inc., the U.S. Court of Appeals for the Federal Circuit delivered a victory for Apple, Inc. and Domino's Pizza, LLC in their patent war with Internet-based solutions provider Ameranth, Inc. over online ordering patents. The Federal Circuit affirmed in part and reversed in part four Patent Trial and Appeal Board (PTAB) decisions in three Covered Business Method (CBM) reviews because Ameranth's patents are unpatentable under 35 U.S.C. Section 101.

The PTAB decisions addressed the subject matter eligibility of certain claims of three of Ameranth's patents, U.S. Patent No. 6,384,850 (the '850 patent), U.S. Patent No. 6,871,325 (the '325 patent), and U.S. Patent No. 6,982,733 (the '733 patent). The court provided a summary of the three restaurant menu patents:

The patent specifications disclose a first menu that has categories and items, and software that can generate a second menu from that first menu by allowing categories and items to be selected.

The patents describe a preferred embodiment of the invention for use in the restaurant industry. In that embodiment, a menu consists of categories such as appetizers and entrees, items such as chicken Caesar salad, modifiers such as dressing, and sub-modifiers such as Italian and bleu cheese.

The menu can be configured on a desktop computer and then downloaded onto a handheld device. The menu may be displayed to a user and then another menu may be generated in response to and comprised of the selections made.

Apple and Agilysys, Inc., a provider of hospitality software and solutions for hotels, resorts and restaurants, along with other companies, petitioned for CBM review of Ameranth's patents. The PTAB found that each patent met the statutory definition of "covered business method patent, and instituted CBM reviews. In its final decisions, the PTAB found certain claims in each of the patents unpatentable under Section 101. The PTAB also found that Apple, joined by Domino's Pizza, had not met their burden of showing that several claims of the '733 patent were unpatentable.

Ameranth appealed to the Federal Circuit, arguing that (1) the PTAB misconstrued the claims, (2) the patents are not CBM patents, and (3) the PTAB erred in its Section 101 analysis for these claims. Apple followed suit, arguing on appeal that the relevant dependent claims of the '733 "cover well-known, conventional concepts that do not confer patent eligibility." Interestingly, the Director of the United States Patent and Trademark Office intervened. She argued that the Federal Circuit lacked jurisdiction to review the PTAB's decision that the patents are CBM patents. The court disagreed, stating that it had jurisdiction under 28 U.S.C. Section 1295(a)(4)(A).

The court affirmed first the PTAB's constructions of the claims' terms. Then, it agreed with the PTAB that the patents were CBM patents because the patents met the “financial product or service" component of the definition of CBM patents. The court was not persuaded by Ameranth's plea that the patents fell within the exception for technological inventions.

As to patentability, relying on Alice, the court employed the two-step Section 101 analysis, and affirmed the PTAB's determinations that the claims are unpatentable. Under the first step, the court determined that the claims in the patents are directed to an abstract idea. In the court's view, the claims are not directed to a specific improvement in the way computers operate; instead, they are directed to certain functionality, the ability to generate menus with certain features.

In the second step, the court affirmed the PTAB's finding that the elements of the patent's claims—both individually and when combined—did not support the invention having an "inventive concept." Those elements did not transform the claimed abstract idea into a patent-eligible application of the abstract idea. Put simply, the court wrote, the patents can readily be understood as adding conventional computer components to well-known business practices.

The PTAB, however, fell short of a unanimous affirmation because the court had one more dish to serve. The court reversed the PTAB's finding confirming the patentability of certain dependent claims that involved linking orders to specific customers and handwriting and voice capture technologies. The court wrote that the claims are "a classic example of manual tasks that cannot be rendered patent eligible merely by performing them with a computer." The court concluded that all the challenged claims of Ameranth's patents are unpatentable under Section 101.

Once again, in this post-Alice world, it gets "curiouser and curiouser" what lies ahead.

For a summary of Alice, read Alice Corporation’s Business Method Patents are Held Patent Ineligible Under 35 U.S.C. 101, and for an update on another recent Apple patent victory, read The Federal Circuit Reinstates an Apple Victory and Reestablishes the Limits of the Court’s Fact-Finding Function.

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