Is a portable electronic device that allows restaurant menu items to be selected as a customer places an order patent-eligible under § 101?

January 23, 2017

Apple, Inc. et al. v. Ameranth, Inc.

2015-1703 and -1704, Decided: November 29, 2016

Case Summary

 

Is a portable electronic device that allows restaurant menu items to be selected as a customer places an order patent-eligible under § 101? In an appeal from a Covered Business Method review, the Court of Appeals for the Federal Circuit said no—ruling that the invention merely claims the addition of conventional computer components to well-known practices in the restaurant industry.

 

In 2015, Apple and other companies filed petitions for CBM review of Ameranth’s US Patents 6,384,850, 6,871,325 and 6,982,733, all of which share a common specification. The preferred embodiment described in the specifications is a device that can be used by a restaurant server taking orders from a customer; the device replaces a server’s notepad or mental list with a virtual menu in which items are selected and modified as a customer places an order. The specifications describe the hardware elements of the invention as “typical” and the software programming needed as “commonly known.”

 

At the conclusion of the CBM review, the Patent Trial and Appeal Board found most of the challenged claims to be abstract ideas that are ineligible for patent protection under § 101, but found some of the challenged dependent claims to be patent-eligible. Both the patent owner and the CBM petitioners appealed.

 

The Court’s decision covered many different issues, including claim construction, whether the PTAB was correct to institute CBM review, and the ultimate question of eligibility under § 101.

 

Beginning with claim construction, patent owner Ameranth argued that the Board’s CBM and § 101 determinations were “based on a misapprehension of the actually claimed subject matter,” and challenged three specific claim constructions. First, Ameranth argued that the Board was wrong to construe “menu” as “a list of options available to a user displayable on a computer,” because this construction does state that the claimed menus are hierarchical. The Appeals Court disagreed, ruling that Ameranth’s proposed construction would render redundant other claim language saying that the menu is in a “hierarchical tree format.”

 

Next, the patent owner argued that the Board should have found claim preambles reciting “a synchronous communications system” to be limiting,and to require “a central back-office server that communicates data updates to and from multiple client devices.” The Federal Circuit again sided with the PTAB, stating that an artisan of ordinary skill would not have understood the broad term “synchronous communications systems” to include the central back-office server suggested by Ameranth.

 

Ameranth then argued that the term “central processing unit” should be construed as “central server” instead of a “computational and control unit of a computer,” as ruled by the Board. In rejecting the patent owner’s arguments, the Panel noted that the Board’s construction was consistent with the use of the term “central processing unit” in the specifications, which explain that “a typical workstation platform includes hardware such as a central processing unit (‘CPU’), e.g., a Pentium® microprocessor.”

 

Turning next to the decision to classify Ameranth’s patents as CBM patents, the Board first found that the patents meet the “financial product or service” component of the definition of CBM patents, and then found that the patents did not fall within the “technological invention” exception of the definition. Ameranth appealed the Board’s decision only on the ground that their patents fall within the exception for technological inventions, arguing that they recite specific software distinct from the prior art. Although the Court noted that 37 C.F.R. § 42.301(b) (the regulation that defines “technological

inventions”) offers little towards understanding the meaning of the term “technological invention,” it rejected the patent owner’s arguments, saying only that the Board’s determinations are supported by substantial evidence and are neither arbitrary nor capricious.

 

Next, in addressing the claims the PTAB found to be ineligible, the Panel first recited the familiar two-part Alice/Mayo test: (1) the Court must “first determine whether the claims at issue are directed to a patent-ineligible concept;” if they are, then the Court must (2) “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.”

 

Regarding step one of the Alice/Mayo test, the Federal Circuit agreed with the Board’s conclusion that the challenged claims are directed to an abstract idea, because “they do not claim a particular way of programming or designing the software to create menus that have these features, but instead merely claim the resulting systems,” and “are not directed to a specific improvement in the way computers operate.”

 

In arguing that its claims are patent-eligible under step 2 of the Alice/Mayo test, Ameranth identified several claimed features: these include the ability to modify a menu after it is created; the ability to synchronize a newlycreated menu with a separate computing device; the ability to print a modified menu “on any printer directly from the graphical user interface of a hand-held device;” and the ability to make a newly-created menu “applicable to a predetermined type of ordering.” Ameranth also argued that because programming the software to perform various parts of the claimed systems’ functionality was difficult, this also indicates that the claims are not directed to an abstract idea.

 

The Court rejected all of these arguments, agreeing with the Board that the features identified by the patent owner are insignificant post-solution activity, stating that “the degree of difficulty in implementing an abstract idea in this circumstance does not itself render an abstract idea patentable,” and concluding that “the patents can readily be understood as adding conventional computer components to well-known business practices.” Finally, the Panel reversed the Board’s findings that certain of the challenged dependent claims—relating to linking orders to specific customers and to handwriting/voice capture technologies—were patent-eligible.

 

Regarding the dependent claims that require a modified menu to be linked to a specific customer, the Federal Circuit noted that they call for the desired result of associating a customer’s order with that customer, but do not claim any method for achieving that result. Because “a claim that merely describes an ‘effect or result dissociated from any method by which [it] is accomplished’ is not directed to patent-eligible subject matter,” the Panel found these claims to be invalid.

 

 And in ruling the dependent claims directed to handwriting and voice capture to be patent-ineligible, the Court quoted Content Extraction & Transmission LLC v. Wells Fargo Bank for the proposition that appending preexisting technologies onto patent-ineligible independent claims does not make them patentable. 

 

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