In Dealertrack, Inc. v. Huber et al., CV 06-2335 AG (C. D. Calif. July 7, 2009), the patent at issue, U.S. Patent No. 7,181,427 (the ‘427 patent), is directed toward an automated credit application system. Dealertrack at 2. The independent claim at issue, claim 1, recites a “computer aided method” of managing a credit application. The method consists of steps of receiving credit application data and forwarding the application and subsequent funding decisions to remote devices. Id. at 2. The only issue in the case was the validity of the claims under 35 U.S.C. § 101.
Since Dealertrack did not argue the “transformation” prong of the test outlined in In re Bilski, 545 F. 943 (Fed. Cir. 2008) (en banc), the court considered only the “particular machine” prong of the Bilski test – whether the claimed process was tied to a particular machine. Dealertrack at 5. However, the Bilski decision provided no guidance as to the nature of the “particular machine”, leaving such consideration to future cases. Id. at 5 (citing In re Bilski, 545 F. 943, 962 (Fed. Cir. 2008)). The court therefore turned to several recent non-precedential decisions from the Board of Patent Appeals and Interferences, which held that general purpose computers were not “particular machines”. In Ex Parte Gutta, which was decided before Bilski, the Board held that a process claim “for use in a recommender” was not tied to a particular machine because the body of the claim recited a mathematical algorithm and the only recitation of a machine in the claim was an intended use clause in the preamble. Ex Parte Gutta, 84 USPQ.2d 1536 (B.P.A.I. 2007). In Ex Parte Nawathe, the Board found that a claim to a “computerized method” was not tied to a particular machine because the specification discussed only a general-purpose computer. Ex Parte Nawathe, No. 2007-3360 (B.P.A.I. Feb. 9, 2009). Finally, in Ex Parte Cornea-Hasegan, the Board held that a method including steps performed by a “processor” recited merely a general purpose computer.
In light of these Board decisions, the district court found that the ‘427 patent’s claims were not tied to a particular machine. Although the claims referred to a remote application entry and display device and remote funding source terminal devices, the specification did not indicate how these devices were to be programmed. Furthermore, during claim construction, the district court interpreted the terms as indicating any device, including a dumb terminal. Since the devices did not require special programming, and the specification provided no guidance as to the nature of the devices, the district court found that the method was not tied to a particular machine. The court accordingly ruled that the claims at issue, not being tied to a particular machine or transforming an article into a different state or thing, were invalid under 35 U.S.C. § 101.
Significance for Patent Applicants and Owners
While this case is on appeal, Dealertrack gives further evidence as to the confused state of computer software based inventions due to the Federal Circuit’s en banc opinion In re Bilski, 545 F. 943 (Fed. Cir. 2008). While the Federal Circuit expressly limited its decision to methods, the United States Patent and Trademark Office and the District Courts are taking opposite approaches as to whether In re Bilski should be extended to all forms of machines and apparatuses to effectively render software unpatentable in any form. Until the Supreme Court renders its decision In re Bilski, applicants will be unable to determine whether their software-based inventions can be patented, and exactly how much detail needs to included in an application in order to transform the computer into the type of “particular machine” which the District Court in Dealertrack found was required for purposes of determining patent-eligible subject matter under 35 U.S.C. §101.