Takeaway: Questions on preemption are inherent in and resolved by the Board’s § 101 analysis; thus, while preemption may signal subject matter that is not patent eligible, the absence of complete preemption does not demonstrate patent eligibility.

In its Final Written Decision, the Board found claims 1-7 of the ‘214 patent to be unpatentable. The ‘214 patent “relates to an affiliate manipulation system that permits consumers, Internet Service Providers (ISPs), search engines, and intermediaries to maximize affiliate program participation in transactions by or through them.”

The Board addressed the patentability of the claims under 35 U.S.C. § 101. In the first step of the Alice analysis, “we must determine whether the claims at issue are directed to a patent-ineligible concept, such as an abstract idea.” Petitioner emphasizes that “the disclosed system is simply a way to capture commissions for sales leads by replacing the affiliate ID of the entity that generated the sales lead with an affiliate ID chosen by an intermediary.” Patent Owner, on the other hand, argues that the claims “are not directed to an abstract idea, and thus are patentable” and are not directed to a generic internet business practice, but rather are “drawn to such a specific computer-implemented method that transforms data in this specific way (thereby changing the normal operation of the Internet so that a preferred affiliate rather than another is given credit for a referral).”

The Board noted, however, that “[a]n abstract idea does not become nonabstract by limiting the invention to a particular field of use or technological environment such as the Internet.” Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1366 (Fed. Cir. 2015) (citations omitted). And “the fundamental issue at hand, allocating commissions, can be performed by humans, or with the aid of pencil and paper.” See, e.g., Mortgage Grader, Inc. v. First Choice Loan Servs., 811 F.3d 1314, 1324 (Fed. Cir. 2016). Thus, the Board saw “little difference between replacing one character set with another character set to denote the recipient of a commission and the type of fundamental economic practices considered to be abstract ideas in Alice Corp. and Bilski.” The record established that the concept of commissions, as well as the practice of allocating commissions, “existed long before the internet.”

The Board was “unpersuaded by Patent Owner’s reliance on the outcome in Diehr,” which “involved use of a well-known mathematical equation to solve a technological problem (curing rubber) in conventional industry practice.” See Versata Dev. Grp. v. SAP Am. Inc.,793 F.3d 1306, 1332-33 (Fed. Cir. 2015). Here, in contrast, “the problem purportedly addressed by the ʼ214 patent, the allocation of commissions, is a business need, not a technological problem” and the “steps recited in the ’214 patent claims disclose few technological details, but rather focus on conventional computers performing the steps of receiving, delivering, and communicating data, none of which represent technological advances.” Moreover, “Patent Owner’s argument overlooks the distinction made in DDR Holdings between technical solutions and claims reciting ‘commonplace business methods,’ such as commission allocation.” Unlike the claims in DDR Holdings, “there is nothing in Patent Owner’s claims that makes them ‘Internet-centric’” and the “mere reference in the claims to an automated system or method having a first computer, a second computer, and an intermediary computer does not suffice.” The claims “are not rooted in computer technology to solve a problem specifically arising in some aspect of computer technology.” Verasta, 793 F.3d at 1334.

In the second step of the Alice analysis, the Board is required to “consider the elements of the claim and determine whether there is an ‘element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’’” The Board found unavailing Patent Owner’s argument “that the claims are meaningfully limited because they recite steps performed by an intermediate computer.” The Board was “not convinced that reciting a standard computer performing a standard computer operation imposes meaningful limitations on the abstract idea” and “that the disclosures regarding the technical details of the ‘intermediary computer’ are sparse, and do not make the intermediary computer specialized.”

Lastly, the Board addressed “Patent Owner’s argument that the patents should stand under § 101 because there is no preemption”:

As the Federal Circuit recently explained in Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015), “questions on preemption are inherent in and resolved by the § 101 analysis.” Thus, “[w]hile preemption may signal patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.”Id. Accordingly, the issue of preemption is “resolved” by our analysis and resolution of the § 101 issues, and Patent Owner’s separate argument based on the asserted absence of preemption is unavailing.

The Board found all challenged claims patent ineligible, including dependent claims 2-6 that “do not add any limitations that would transform the claims into patent-eligible subject matter because “[w]ell-understood, routine, conventional activity does not add significantly more to the abstract idea.”

VigLink, Inc. v. Linkgine, Inc., CBM2014-00184

Paper 44: Final Written Decision

Dated: March 16, 2016

Patent: 7,818,214 B2

Before: Kevin F. Turner, Phillip J. Kauffman, and Kristina M. Kalan

Written by: Kalan

Related proceedings: CBM2014-00185; Linkgine, Inc. v. VigLink, Inc., No. 14-570 (E.D. Va.).