August, 1st, 2017

By Natasha Rodriguez

With recent court decisions such as Alice Corp. v. CLS Bank International and subsequent cases regarding patentable subject matter, many practitioners are left questioning where the line is drawn for patent ineligible subject matter. The Court in Alice constructed a two-prong test to determine patent eligible subject matter. Step 1 requires determining whether the claims at issue are directed to patent ineligible concepts such as a law of nature, a natural phenomenon, or an abstract idea. If the claims are directed to patent ineligible subject matter, step 2 requires determining if there is something “significantly more” in the claim to ensure that the claim is not merely covering just the ineligible concept.

Recently, a district court in Texas[1] held that a method for managing server bandwidth allocation is patent eligible subject matter under § 101. The method claim at issue covers transferring data from a first computer to a second computer at two different effective rates. The first computer system throttles transfer of the data to the second computer system where the throttling is based in part on the quantity of data previously transferred to the second computer. The requested data is transmitted in two portions at a first and a second effective rate, where the second effective rate is slower than the first.

The Defendant, AT&T, alleged that the concept of bandwidth allocation is an abstract idea that uses generic computers. More specifically, AT&T alleged that a generic computer is used to implement “the abstract idea of slowing a delivery by delaying a portion of the delivery, based, in part, on past deliveries.”

However, the court agreed with the Plaintiff, Preferential Networks, that the claims are directed to patent eligible subject matter. The claims are directed to network access and bandwidth allocation using specific computers. The data is transferred at two different effective rates, the second effective rate being slower than the first effective rate. The court stated that the claims, viewed as a whole, are “directed to the manner by which data is transmitted between two computer systems—which is not a law of nature, a natural phenomena, or an abstract idea.”

The court noted that of Alice’s two-step analysis, the first step requires viewing the claim in light of an advancement over the prior art to determine whether the claim as a whole is directed to patent ineligible subject matter. Preferential Networks argued that the claimed method improves upon the prior art and is “necessarily rooted in computer technology to overcome problems specifically arising in the realm of computer networks, including the Internet.” Here, AT&T failed to provide any evidence to the contrary.

The court did not proceed to analyze step 2, as step 1 was already satisfied based on the finding of patent eligible subject matter and the improvements to the specific computers used to implement the method.

Practice Tip:

When drafting the specification and the claims, specify the steps performed by the method and any specific structure that will transform the claim into something that is significantly more than an abstract idea.

[1] Preferential Networks IP, LLC v. AT&T Mobility, LLC d/b/a AT&T Mobility et al, 2-16-cv-01374 (TXED July 15, 2017, Order) (Payne, MJ)

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