Data Transmission And Storage Invention Held Not Patent Eligible; Telephone Not Specialized Machine

Background

In Cyberfone Systems, LLC v. CNN Interactive Group, Inc.,1 the Federal Circuit held a telephone/transaction entry device used to enter transaction data into databases was ineligible subject matter for a patent. The Federal Circuit explained that the claimed device merely used the well-known concept of collecting information in classified form, then separating and transmitting that information according to its classification. The Federal Circuit also reasoned that the claimed process of sending exploded data transactions over a channel was insufficient to meet the transformation prong of the patent eligibility test, and the claimed telephone that obtained data only when in an unclaimed mode of operation and which could be a range of different machines was not considered a particular machine.

Cyberfone Systems, LLC ("Cyberfone") was the assignee of U.S. Patent No. 8,019,060 ("the '060 patent"). The '060 patent related to methods and a system for capturing and storing data. In September 2011, Cyberfone sued eighty-one defendants, alleging, inter alia, infringement of the '060 patent. In May 2012, multiple defendants moved for summary judgment on the ground that the '060 patent claimed unpatentable subject matter under 35 U.S.C. § 101.2

Representative claim 1 asserted:

1. A method, comprising:

   obtaining data transaction information entered on a telephone from a single transmission from said telephone;

   forming a plurality of different exploded data transactions for the single transmission, said plurality of different exploded data transaction[s] indicative of a single data transaction, each of said exploded data transactions having different data that is intended for a different destination that is included as part of the exploded data transactions, and each of said exploded data transactions formed based on said data transaction information from said single transmission, so that different data from the single data transmission is separated and sent to different destinations; and

   sending said different exploded data transactions over a channel to said different destinations, all based on said data transaction information entered in said single transmission.3

   Thus, the method steps required obtaining data, "exploding" the data, i.e., separating it into component parts, and sending those parts to different destinations. The district court found that the subject matter of the '060 patent was "nothing more than a disembodied concept of data sorting and storage" and granted summary judgment of invalidity under 35 U.S.C. § 101.4

   The Federal Circuit's Decision

   On appeal, the Federal Circuit affirmed. The Federal Circuit noted that the Supreme Court has offered guidance on patentable subject matter, including the establishment of a bar on patenting "laws of nature, natural phenomena, and abstract ideas."5 The Supreme Court has also...