In Two-Way Media Ltd. v. Comcast Cable Communications, LLC, [2016-2531, 2016-2532] (November 1, 2017), the Federal Circuit affirmed the district court’s determination that the asserted patents were directed to patent ineligible subject matter under 35 U.S.C. § 101.

At issue were claims of U.S. Patent Nos. 5,778,187; 5,983,005; 6,434,622; and 7,266,686 on a “Multicasting Method and Apparatus,” and generally relate to a system for streaming audio/visual data over a communications system like the internet.  The district court denied the patent owner’s request to take judicial notice of materials from prior proceedings relating to the novelty and non-obviousness of the invention, saying that the novelty and nonobviousness of the claims under 35 U.S.C. §§ 102 and 103 does not bear on whether the claims are directed to patent-eligible subject matter under §101.

The district court found that the ‘187 and ’005 patents were directed to the abstract idea of: (1) sending information; (2) directing the sent information; (3) monitoring receipt of the sent information; and (4) accumulating records about receipt of the sent information.  The claims are thus directed to methods of sending and monitoring the delivery of audio/visual information, and did not recite a saving inventive concept under Alice Step 2.  The district court also determined that the ’622 patent was directed to the abstract idea of monitoring the delivery of real-time information to a user or users, and the ’686 patent was directed to the abstract idea of measuring the delivery of real-time information for commercial purposes, and the claims contained no saving inventive concept because although they recited some computer components, they required only ordinary functionality of these components.

Regarding the ’187 and ’005 patents, the Federal Circuit said that under Alice Step 1 the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter.  The Federal Circuit added that claims directed to generalized steps to be performed on a computer using conventional computer activity are not patent eligible.  The Federal Circuit disagreed with Two-Way Media argument that the district court erred by oversimplifying the claim and ignoring claim limitations present in its proposed constructions.  The Federal Circuit said that the claims required the functional results of “converting,” “routing,” “controlling,” “monitoring,” and “accumulating records,” but did not sufficiently describe how to achieve these results in a non-abstract way.  The Federal Circuit further found Two-Way’s constructions merely propose the use of generic computer components to carry out the recited abstract idea.

At Alice Step 2, the Federal Circuit considered the elements of the claim, both individually and as an ordered combination, to assess whether the additional elements transform the nature of the claim into a patent-eligible application of the abstract idea.  Merely reciting the use of a generic computer or adding the words “apply it with a computer” cannot convert a patent-ineligible abstract idea into a patent eligible invention. To save the patent at Step 2, an inventive concept must be evident in the claims, and the Federal Circuit said that Two-Way Media could not overcome that the claim — as opposed to something purportedly described in the specification — is missing an inventive concept.

Regarding the ’622 and ’686 patents, at Step 1 the Federal Circuit rejected Two-Way’s argument that the district court erred by oversimplifying the claims down to merely their preamble and failing to recognize the claims solve technical problems.  The Federal Circuit saw no error here in the district court citing to the preamble in its review of whether the claims are directed to an abstract idea, citing BASCOM and Elec. Power Grp. The Federal Circuit further agreed that the claims suffered from the same infirmities as the claims of the first two patents.

At Step 2, the Federal Circuit agreed with the district court that nothing in these claims requires anything other than conventional computer and network components operating according to their ordinary functions. The Federal Circuit further did not find any inventive concept in the ordered combination of these steps.