QUESTIONABLE PATENT-ELIGIBILITY OF IOT TECHNOLOGY.

• Author: Chen, Ping-Hsun

ABSTRACT INTRODUCTION I. FEDERAL CIRCUIT CASES CONCERNING IOT-LIKE TECHNOLOGY A. Content Extraction & Transmission LLC v. Wells Fargo Bank, National B. Vehicle Intelligence & Safety LLC v. Mercedes-Benz USA, LLC C. Electric Power Group, LLC v. Alstom S.A. D. TDE Petroleum Data Solutions, Inc., v. AKM Enterprise, Inc. II. IOT TECHNOLOGY AND STEP ONE ANALYSIS OF THE ALICE STANDARD III. IOT TECHNOLOGY AND STEP TWO ANALYSIS OF THE ALICE STANDARD A. Unconventional System with Details B. Unconventional System without Details C. Conventional Use of Existing Devices CONCLUSION Introduction

The Internet of Things ("IoT") is technology connecting any objects that are capable of transmitting data through the Internet. (2) Those objects include a built-in sensor (e.g., a health and fitness sensor, automobile sensor, home and electricity sensor, employee sensor, and smartphone sensor), which can generate data. (3) IoT technology is beyond the Internet. (4) One machine can communicate with another machine without human intervention. (5) IoT technology enables people to monitor or control their homes through their cell phones. (6) IoT is the foundation of a smart world in the future. (7)

There is an architectural aspect of IoT technology. (8) The IoT architecture comprises four layers: applications, common services, network services, and devices. (9) The application layer is the top level programming that implements business applications or operational logic applications. (10) The common service layer provides functions, such as storage and processing, necessary to facilitate IoT applications. (11) The network service layer provides data transport, connectivity, and other service functions. (12) The device layer means devices that upload information and receive commands through the network layer or other gateways. (13)

Although IoT technology may cover "sensing, communications, networking, computing, information processing, and intelligent control technologies," (14) it is still based on Internet technology. (15) Therefore, the patent-eligibility of IoT technology is questionable under Alice Corporation v. CLS Bank International, (16) a decision from the Supreme Court in 2014. (17)

Under Alice, the standard for patent-eligibility is a two-step test. (18) The first step asks "whether the claims at issue are directed to one of those patent-ineligible concepts." (19) If so, then the second step "considers] the elements of each claim both individually and 'as an ordered combination' to determine whether the additional elements 'transform the nature of the claim' into a patent-eligible application." (20) Specifically, the second step searches "for an 'inventive concept'--i.e., an element or combination of elements that is 'sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.'" (21)

In addition, Alice has clarified that "[t]he introduction of a computer into the claims does not alter the analysis at [the second step]." (22) That is, "the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention." (23) It is not enough to make patent-eligible a claim of an abstract idea by "adding the words 'apply it.'" (24) Even if "the use of an abstract idea" in a claim is limited "to a particular technological environment," patent-eligibility cannot be satisfied. (25) Thus, "adding the words 'apply it with a computer'" cannot support patent-eligibility. (26) If the "recitation of a computer amounts to a mere instruction to 'implement]' [sic] an abstract idea 'on ... a computer,'" such recitation cannot work either. (27)

The Alice standard demands a case-by-case approach. (28) Neither the Supreme Court nor the Federal Circuit has defined a "patent-ineligible concept." (29) However, the Federal Circuit has recognized "mathematical algorithms, including those executed on a generic computer" and "fundamental economic and conventional business practices" as abstract ideas. (30) The Federal Circuit case law also suggests that patent-ineligible abstract ideas may be "plainly identifiable and divisible from the generic computer limitations recited by the remainder of the claim." (31)

IoT technology basically has three elements: devices that generate data; communication mechanisms between different devices; and systems or methods for storing and analyzing the data. (32) Based on these characteristics of IoT technology, there have been some cases from the Federal Circuit applying the Alice standard to IoT-like inventions where the disputed claims also have the steps of data-generating, data-transmitting (or communication), and storing or analyzing of data. (33) Those cases provide some requirements an IoT invention must meet to be patent-eligible.

This article will explore whether the Alice standard makes an invention of IoT technology more likely to be patent-ineligible. Part II describes the selection of five Federal Circuit cases by introducing the claims in dispute and the relationship between the patented inventions and IoT technology. Part III analyzes the application of step one of the Alice standard in those five cases and the implications of whether IoT claims are considered directed to an abstract idea. Part IV discusses the application of step two of the Alice standard in those five cases and possible patent-eligible features of IoT claims.

1. Federal Circuit Cases Concerning IoT-Like Technology

   IoT technology relies on devices to detect information and transform the information into data for analysis. (34) Although apparatus or product claims covering IoT devices may be patent-eligible, method claims for using or operating these IoT devices individually or as a system may not be patenteligible. There are five Federal Circuit cases where the inventions involved were not referred to as IoT technology, but the inventions are similar to IoT technology. These cases are briefly introduced in chronological order.

   1. Content Extraction & Transmission LLC v. Wells Fargo Bank, National Ass'n

      In Content Extraction & Transmission LLC v. Wells Fargo Bank, National Ass'n, four patents were allegedly infringed. (35) The representative patent was U.S. Patent No. 5,258,855 ("855 Patent") covering a system of processing information originating from a hard copy document. (36) The invention was software enabling an automated teller machine ("ATM") to scan a check, recognize certain information on the check, and place that information in certain data fields of a memory device. (37) The representative claim of the 855 Patent was claim 1, which recites:

      1. A method of processing information from a diversity of types of hard copy documents, said method comprising the steps of:

      (a) receiving output representing a diversity of types of hard copy documents from an automated digitizing unit and storing information from said diversity of types of hard copy documents into a memory, said information not fixed from one document to the next, said receiving step not preceded by scanning, via said automated digitizing unit, of a separate document containing format requirements;

      (b) recognizing portions of said hard copy documents corresponding to a first data field; and

      (c) storing information from said portions of said hard copy documents corresponding to said first data field into memory locations for said first data field. (38)

      The Federal Circuit held that the disputed claims were patent-ineligible, because "none of [the disputed] claims amount to 'significantly more' than the abstract idea of extracting and storing data from hard copy documents using generic scanning and processing technology." (39)

      The technology in Content Extraction is similar to sensors used in IoT technology. The "automated digitizing unit" in claim 1 of the 855 Patent is actually a scanner that detects a check inserted into an ATM machine. (40) The information on the check is similar to the environmental information a sensor is designed to detect. (41) Thus, Content Extraction can be applied to cases concerning a method claim for using a sensor to collect and analyze data in general.

   2. Vehicle Intelligence & Safety LLC v. Mercedes-Benz USA, LLC

      In Vehicle Intelligence & Safety LLC v. Mercedes-Benz USA, LLC, (42) the disputed patent was U.S. Patent No. 7,394,392 ("392 Patent"). (43) The invention covered a system designed to detect whether an equipment operator is impaired and, if the operator was impaired, then the system would start to control the equipment. (44)

      Claims 8 and 16 of the 392 Patent were representative claims. (45) Claim 8 recited:

      8. A method to screen an equipment operator for impairment, comprising:

      screening an equipment operator by one or more expert systems to detect potential impairment of said equipment operator; selectively testing said equipment operator when said screening of said equipment operator detects potential impairment of said equipment operator; and controlling operation of said equipment if said selective testing of said equipment operator indicates said impairment of said equipment operator, wherein said screening of said equipment operator includes a time-sharing allocation of at least one processor executing at least one expert system. (46)

      Claim 16 recited:

      16. A system to screen an equipment operator, comprising:

      a screening module to screen and selectively test an equipment operator when said screening indicates potential impairment of said equipment operator, wherein said screening module utilizes one or more expert system modules in screening said equipment operator; and a control module to control operation of said equipment if said selective testing of said equipment operator indicates said impairment of said equipment operator, wherein said screening module includes one or more expert system modules that utilize at least a portion of one or more equipment modules selected from the group of...