Before Dyk, Chen, and Stoll. Appeal from the District of Delaware.
Summary: Claims directed to improving the functionality of one tool that is part of a system do not necessarily need to recite how that tool is applied in the overall system in order to constitute a technological improvement that is patent eligible.
Plaintiff-Appellant Koninklijke KPN N.V. (KPN) owns a patent generally directed to a device for error-checking data. Claim 1 requires a “varying device” that includes a “permutating device.” The permutating device is used to manipulate the data position (bit position) relative to an ordered sequence. Dependent claims add a limitation that the varying device is configured to “modify the permutation in time.” KPN sued a variety of defendants in the District of Delaware. In a decision on the pleadings, the district court held all claims of the patent ineligible as directed to an abstract idea without an inventive concept. In step one of the analysis, the district court held the claims were directed to the abstract idea of reordering data. In step two, the court concluded that any inventive concept disclosed in the specification was not captured in the claims. KPN appealed the decision only for claims 2-4.
The Federal Circuit reversed. The Court found claims 2-4 were directed to a non-abstract improvement to an existing technological process (error checking in data transmissions) based on the requirement that the original data be modified “in time.” The Court explained this was a specific implementation of the way data is generated that improves the prior art error detection systems, and analogized the case to Finjan, Inc. v. Blue Coat System, Inc., 879 F. 3d 1299 (Fed. Cir. 2018). The Court rejected Appellees’ argument that the claims were abstract because they did not recite a step of actually using the generated data to perform improved error correction. Instead, the Court held the “more relevant inquiry” is whether the claims included an improvement, and concluded these claims did because the “in time” limitation was a specific solution to the problem of error correction. The Court distinguished several prior cases related to data processing on the basis that the claims in those patent ineligible cases were so general as to be a mere abstract idea implemented on a computer, and not a specific functional advance. Because Appellees did not dispute the “in time” limitation was an improvement over an existing process, and the claimed “in time” limitation was the key to the disclosed invention, the Court held the appealed claims patent eligible.