Federal Circuit Affirms Ineligibility of Background Check Patent Claims

“The Federal Circuit pointed to the specification’s language that described the invention as ‘automat[ing] the majority of the tasks of a common pre-employment background investigation’ as proof that Mendel itself acknowledged ‘such tasks were routine prior to the date of the invention.’”

The U.S. Court of Appeals for the Federal Circuit (CAFC) today affirmed the Eastern District of Texas district court’s decision for the City of Anna, Texas (“the City”), that claims for a software system that manages pre-employment background investigations were patent ineligible. The decision was precedential and authored by Judge Cunningham.

Miller Mendel, Inc. owns U.S. Patent No. 10,043,188, titled “Background Investigation Management Service.” Mendel sued the City, alleging infringement of “at least Claims 1, 5, and 15” of the patent via the City police department’s use of the Guardian Alliance Technologies (“GAT”) software platform. The district court granted the City’s request for judgment on the pleadings under Rule 12 (c) that the claims are ineligible under Section 101 and denied Mendel’s motion for reconsideration. However, the court clarified that its Rule 12(c) decision only invalidated claims 1, 5, and 15, rather than all of the claims. The district court also denied the City’s motion for attorneys’ fees.

On appeal, Mendel argued that the district court erred in relying on parts of the City’s Rule 12 (c) motion that were outside of the pleadings. Specifically, the City relied on a declaration that was not part of the pleadings. The CAFC said in its discussion on this point that “the district court explained that the declaration was not relevant to its analysis because it neither relied on it for its § 101 analysis nor would it have altered its conclusions,” and thus said it was not convinced reversal was required. The opinion noted that the district court only referred to the section of the City’s brief that cited the declaration in summarizing the arguments and did not refer to it in its patent eligibility analysis. And regardless, said the CAFC, any error there might have been by not explicitly excluding the declaration was harmless.

Eligibility

As to eligibility, the CAFC said that the claim language and specification both confirm the invention “is directed to the abstract idea of performing a background check.” While Mendel argued that “the method of claim 1 cannot be directed to an abstract idea because certain limitations, such as the transmitting hyperlinks via email steps and generating a suggested reference list steps, cannot be done in the mind or by pen and paper,” the CAFC was not persuaded. The opinion said:

“‘[T]he inability for the human mind to perform each claim step does not alone confer patentability.’ FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1098 (Fed. Cir. 2016). Moreover, requiring the use of a computer alone does not change the focus of a claim directed towards an abstract idea into one directed towards ‘a specific improvement to computer functionality.’”

As to Alice step two, the CAFC said there is no inventive concept shown, despite Mendel’s argument that there was no evidence to show that “‘transmitting an applicant hyperlink to an applicant e-mail address’ and ‘generating a suggested reference list of one or more law enforcement agencies based on an applicant residential address’ were well-understood, routine, and conventional in the industry.” The Federal Circuit pointed to the specification’s language that described the invention as “automat[ing] the majority of the tasks of a common pre-employment background investigation” as proof that Mendel itself acknowledged “such tasks were routine prior to the date of the invention.”

Cross-Appeal

As to the City’s cross-appeal, the CAFC confirmed the district court’s holding that it had no jurisdiction over claims other than 1, 5 and 15 because Mendel had narrowed the asserted claims in its response to the 12(c) motion. “Because Miller Mendel narrowed the scope of claims at issue to claims 1, 5, and 15 and both parties knew which claims were at issue before the court ruled on the motion for judgment on the pleadings, the district court had no jurisdiction over the unasserted claims in the ’188 patent,” said the opinion.

The City also argued that the district court erred by giving weight to “the absence of litigation misconduct” in its decision not to find the case exceptional and to grant attorneys’ fees. The CAFC rejected this argument, as well as the City’s contention that the district court should have given more weight to Mendel’s “exceptionally weak” invalidity position. The CAFC explained:

“Under the specific facts of this case, the district court acted within its discretion in finding that ‘Miller Mendel was entitled to believe that the ’188 Patent was valid after it was examined and allowed by the USPTO’ and thereafter exercise its patent rights.”

The CAFC also rejected the City’s argument that Mendel unduly pressured customers of the allegedly infringing software and that it “misrepresented the status and events in the various litigations to the industry.”

Eileen McDermott
Eileen McDermott is the Editor-in-Chief of IPWatchdog.com. Eileen is a veteran IP and legal journalist, and no stranger to the intellectual property world, having held editorial and managerial positions at […see more]

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