Alice Step 2 May be Satisfied by a Patent’s Description and use of Claimed Technology | Sheppard Mullin Richter & Hampton LLP
Allegations in a complaint may be insufficient to raise a factual dispute under Step 2 of Alice when a patent’s specification contradicts those allegations by using the claimed technology in a way that demonstrates a person of ordinary skill in the art would have viewed the technology as routine, conventional, or well-known.
Background[1]
Beteiro sued multiple defendants accusing them of infringing U.S. Patent Nos. 9,965,920, 10,043,341, 10,147,266, and 10,255,755 (the “Asserted Patents”). The Asserted Patents are titled “Apparatus and method for Facilitating Gaming Activity and/or Gambling Activity” and relate to an invention that determines a user’s physical location and whether the “remote gaming activity and/or gambling activity is allowed by the state having jurisdiction” over the user based on the user’s location.
Defendants filed motions to dismiss on the grounds that the Asserted Patents were invalid under 35 U.S.C. § 101 and Alice for failure to claim patent-eligible subject matter.
The district court granted the motions and subsequently denied Beteiro’s motions for reconsideration, and Beteiro timely appealed.
Issues
The primary issues on appeal were:
- Whether the Asserted Patents claimed an abstract idea?
- Whether Beteiro’s complaint raised a genuine dispute as to whether the inclusion of GPS on a mobile phone in 2002 was conventional technology?
Holdings and Reasoning
1. The Asserted Patents’ claims are directed to abstract idea of “exchanging information concerning a bet and allowing or disallowing the bet based on where the user is located.”
The Federal Circuit found the claims to be abstract for several reasons. First, the claims broadly recited generic steps that the Federal Circuit has frequently held as abstract, e.g., “detecting information, generating and transmitting a notification based on the information, receiving a message (bet request), determining (whether the bet is allowed based on location data) and processing information.” Second, the claims were drafted using functional language and contained no specificity as to how the results were to be obtained. Third, the Federal Circuit has found previous claims broadly directed at “providing particularized information to individuals based on locations, to be abstract.” Finally, the Federal Circuit agreed with the district court that the claims were directed at a “fundamental and longstanding economic activity, i.e. an abstract idea” of casinos making sure that patrons were in the correct location before accepting bets.
The Federal Circuit rejected Beteiro’s argument that the claims were tied to an alleged technological improvement. Instead, the Federal Circuit found that the claims involved the “mere use of computers as tools and do not claim any improvement in the computer-related technology itself.”
2. The Asserted Patents’ claims do not supply an inventive concept notwithstanding the allegations in the complaint.
The Federal Circuit found Beteiro’s contention that the complaint raised a dispute as to whether the inclusion of GPS technology on mobile phone was conventional as of 2002 unavailing. First, Beteiro failed to allege any plausible, non-conclusory allegation that the “claimed GPS is anything other than part of a ‘set of generic computer components.’” The specification repeatedly referred to conventional use of GPS in connection with many different types of conventional computers. Second, that only 15 lines of a specification that spans 98 columns of text, undermined Beteiro’s allegations to the contrary, and in addition the specification does not purport to have advanced GPS or mobile device technology in any way. The Federal Circuit found that “[i]n context, this can only plausibly mean that the patent application drafted the specification understanding that a person of ordinary skill in the art knew what GPS was, how to include it on a mobile device, and that using it for the purposes disclosed in the patent was routine, conventional, and well-understood.” The Federal Circuit rejected Beteiro’s argument that a factual issue was raised regarding whether the use of GPS in the gaming/gambling context was conventional. Specifically, the Federal Circuit pointed at what was not taught in the patent, and that the patent’s lack of teaching “reinforces that a person of ordinary skill in the art would have recognized the claims to involve nothing more than conventional, routine, and well-understood use of GPS – no amount of creative pleading could have succeeded in transforming the claims into patent-eligible subject matter.”
The Federal Circuit concluded that the Asserted Patents’ claims “amount to nothing more than the practice of an abstract idea using conventional (even as of 2002) computer equipment, including GPS on a mobile phone.”
FOOTNOTES
[1] Beteiro, LLC v. DraftKings Inc., et al., No. 22-2275 (Fed. Cir. 2024)
