1. Contour IP v. GoPro: Federal Circuit Offers Insight into Alice’s Step One Analysis.
In Contour IP v. GoPro, the Federal Circuit reversed a summary judgment order invalidating two of Contour IP’s patents directed to portable point-of-view (POV) video cameras as patent ineligible under 35 U.S.C. § 101. The district court had granted summary judgment in favor of GoPro, determining that Contour IP’s patents were patent ineligible. The Federal Circuit reversed, holding that the claims were not directed to an abstract idea under Step One of the Supreme Court’s Alice framework.
Under Alice Step One, the Federal Circuit held that the claims of Contour IP’s patents recited specific technical means that improved the relevant technology. The Federal Circuit found that the patents addressed a problem where the operator of a remote camera cannot see what the camera is capturing (e.g., a skier’s helmet mounted camera). Specifically, the Federal Circuit found that the patents provided a technical solution through their requirement that the “claimed POV camera processor be configured to record low and high-quality data streams in parallel, followed by the low-quality data stream’s wireless transfer to a remote device,” so that “a user can remotely view and adjust the desired recording in real time, with the elimination of bandwidth limitations on wireless data transfer.” The claims, thus, did not recite an abstract idea because they “require a specific, technological means—parallel data stream recording with the low-quality recording wirelessly transferred to a remote device—that in turn provide a technological improvement to the real time viewing capabilities of a POV camera’s recordings on a remote device.”
In reversing the district court, the Federal Circuit rejected the district court’s characterization of the claims as directed to the abstract idea of “creating and transmitting video (at two different resolutions) and adjusting the video’s settings remotely” because such characterization was at an impermissibly high level of generality that failed to account for the claimed parallel recording of two data streams and transmission of the lower quality recording to a remote device.
For clients considering challenging a patent under Section 101, this decision underscores the importance of articulating the abstract idea at Step One of the Alice framework in a manner that properly accounts for what is recited in the claims and explaining how the claims do not recite a specific technical means of improving the relevant technology.
2. ParkerVision v. Qualcomm: Collateral Estoppel Requires a Traditional Claim Construction Analysis.
In ParkerVision v. Qualcomm, the Federal Circuit reversed a district court’s grant of summary judgment of non-infringement based on collateral estoppel. The district court previously granted summary judgment of non-infringement in favor of Qualcomm based on its determination that ParkerVision’s patent claims asserted in the present case are materially the same as the patent claims that were the basis of non-infringement in an earlier 2011 action between the parties. The Federal Circuit reversed, holding that the district court failed to assess claim scope by conducting a traditional claim construction analysis based principally on the intrinsic evidence. Rather than analyze the intrinsic evidence, the district court relied on extrinsic evidence in the form of opinions from Qualcomm’s experts, which it incorrectly concluded were unrebutted.
The Federal Circuit held that the district court erred by ignoring relevant intrinsic evidence and instead “turning directly to the extrinsic evidence” to determine whether the claims in the two cases had materially the same scope. As a result, the Federal Circuit remanded the case to the district court to determine the scope of the claims in the later action using a proper claim construction analysis and then to determine whether the scope is materially different from the claims in the earlier action.
For clients considering whether to assert collateral estoppel based on an issue decided for related patents in an earlier action, this opinion confirms that determining whether patent claims are materially similar requires a traditional claim construction analysis that considers the intrinsic evidence.
3. CloudofChange v. NCR: Divided Infringement of System Claim Asks Whether the Accused Infringer Puts the Entire Claimed System to Use and Receives the Benefit (i.e., the Recited Purpose or Result) of That Use.
In CloudofChange v. NCR, the Federal Circuit vacated a jury verdict and reversed a district court’s denial of judgment as a matter of law of no direct infringement where CloudofChange’s infringement theory was that NCR controlled and benefited from each component recited in the claimed system and thus “used” the system under the Federal Circuit’s Centillion precedent.
CloudofChange accused NCR of directly infringing claims directed to a web-based point-of-sale (POS) system that requires two entities: (1) a vendor that provides remote servers that host web server software; and (2) a subscriber that possesses POS terminals that access and repeatedly interact with the web server software. It was undisputed that NCR did not provide all the necessary components of the accused system. In the accused system, NCR provides a web-based POS solution, which is used by retail merchants (i.e., NCR’s customers) to perform retail transactions. NCR’s merchants download the web-based POS software from an app store onto a POS terminal, such as a tablet, and use and customize it to perform retail functions such as executing sales transactions.
On divided infringement, the Federal Circuit agreed with the district court that NCR did not directly infringe because NCR’s merchants (not NCR) use the accused system. Although NCR owns the back-office operations, it does not put the accused system into service because it is the NCR’s customers—the retail merchants—that put the system into service by providing their own hardware (e.g., a tablet), initiate a demand for service, and benefit from the backend providing that service. Moreover, the Federal Circuit found that whether some benefits flow to NCR, such as subscription fees, product improvements, etc., was not the proper analysis because the proper inquiry must focus on whether “a party uses the entire system by putting it into use and receiving the benefit (i.e., the recited purpose or result) of that use.” Instead, NCR’s merchants initiated use of the service and benefit from POS builder software at the web server to build or edit their POS terminals.
The Federal Circuit also disagreed with the district court’s conclusion that NCR was vicariously liable for its merchants’ actions. NCR did not direct or control the merchants’ use of the entire claimed system, but at most directed and controlled one part of the claimed system by contractually requiring customers to provide Internet access. Instead, the merchants—on their own accord—download the NCR application, subscribe to the system, and put the system into use by initiating action on the terminals that causes the software to modify the POS terminals.
For patentees, this case highlights the challenges presented in proving direct infringement of system claims that require activity by two or more entities. For accused infringers, this case underscores the advantage of structuring product offerings in a way that maximizes beneficial use and direct control over the system by individual users or customers, thereby reducing the risk of direct infringement liability.