Producing "digital labels" is Patent Eligible under § 101

On February 6, 2016, the U.S. District Court for the Eastern District of Texas (Marshall Division) issued a decision in a case captioned Gonzalez v. Infostream Group, Inc. (Case No. 2:14-cv-906-JRG-RSP).

The patent friendly Eastern District Court in Texas denied a Motion for Summary Judgment of Invalidity and found that the asserted patents are patent eligible under 35 U.S.C. § 101.  The decision is lacking somewhat with factual support for how these patents are subject matter eligible, and the outcome shows some of the randomness in application of the test for determining patent eligibility.

The Asserted Patents

The asserted patents include U.S. Patent No. 7,873,665 (the '665 patent) entitled "Method for Digitally Labeling Websites" and U.S. Patent No. 7,558,807 (the '807 patent) entitled "Host Website for Digitally Labeled Websites and Method".

Claim 1 of the '665 patent recites:

1.  A method for multi-parameter digital labelling of Internet Websites, comprising:
    gathering of unambiguous, multi-parameter qualitative data concerning a single or a plurality of at least one of an Internet website, an Internet posting, their substantive contents, and their owner or creator;
    sourcing, from the owner or creator of said website or Internet posting, each said item of qualitative data referring to said website, said internet posting, or its substantive contents or its owner or creator;
    producing a plurality of digital labels for each said website or internet posting, wherein each digital label uniquely refers to and represents a particular item of qualitative information;
    wherein producing of digital labels further comprises encoding of the qualitative data in any digital form;
    domiciling of these multi-parameter digital labels on at least one of the same computer, the same computer network, and on several computers linked to each other;
    manipulation of the said multi-parameter digital labels comprising generation of a list of at least one of websites and Internet postings that match parameters stipulated  by an entity conducting a search and represented in the digital labels according to at least one of the presence of, the absence of, the numerical or other value contained in, the numerical or other value not contained in, any one, all, and any configuration of the labels that have reference to one or more websites or Internet postings; and
    making available the effective use of these multi-parameter digital labels and the means for their manipulation, to the general public through the Internet.

The District Court summarized the '665 patent as describing a method for making digital labels including two primary steps of (1) gathering "unambiguous, multi-parameter qualitative data" on websites or Internet postings and their owners from the owners; and (2) producing "digital labels" for the websites and postings where each "digital label" represents "a particular item of qualitative information" about the website, posting, or owner.  The claim then states that the "plurality of digital labels" are "produc[ed]" by "encoding" and are "domicil[ed]" on a computer or network.  The "domiciled" "labels" can be "manipulated," by generating a list of websites or postings that have labels that represent the "parameters stipulated by an entity conducting a search" or that do not have labels that are excluded by the parameters ('665 patent, col. 23 ll. 27–12).

The '665 patent helps identify websites.  For publishers, the issue is how to get one's website noticed in an increasingly crowded field; for web surfers, the issue is how to find what's out there.  As discussed above, subscribers label their websites and the labels are digitized.  A "label" is something which identifies contents, or provides information about the subscriber or his website.

Claim 1 of the '807 patent recites:

1.  A host website apparatus for listing subscribers comprising:
    a computer system,
    said computer system includes a digital label database for providing to a listing subscriber digital labels representing different specific qualities and a subscriber database for storing a listing of subscribers' digital labels;
    said computer system being configured to respond to a subscriber's request for listing and guiding the subscriber via the Host Website display to enter information pertaining to the subscriber and converting the information to digital labels by accessing said digital label database and storing the subscriber's digital labels in said subscriber database; and
    said computer system further configured to enable users to search said subscriber database for subscriber digital labels identifying subscriber qualities.

Here, the District Court summarized claim 1 of the '807 patent as describing a website, and referred to parameters of the claim.

The Defendant contended that the '665 patent and the '807 patent are invalid under 35 U.S.C. § 101 because they claim the abstract idea of using labels to facilitate searches, and this constitutes an abstract idea because Gonzalez told the Patent Office that his invention was to label websites using a digital form of the labels that were already well-known on physical items.  The Defendant pointed to the summary of the invention in the applications and contended that it shows that the invention described is the abstract idea of using labels as a way to organize websites by category to make them easier to find, because it shows that it is the same idea that is used in library-card catalogs:  using labels to organize books by category so they are easier to find.

Section 101 Analysis

The District Court followed the Supreme Court's two-step test for distinguishing patents that claim patent ineligible laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts.  The first step requires a court to determine if the claims are directed to a law of nature, natural phenomenon, or abstract idea.  If not, the claims pass muster under § 101.  A court applies the second step only if it finds in the first step that the claims are directed to a law of nature, natural phenomenon, or abstract idea.  The second step requires the court to determine if the elements of the claim individually, or as an ordered combination, "transform the nature of the claim" into a patent-eligible application.  Step two has been described as a search for an "inventive concept".

Step One

The District Court found that claim 1 of the '665 patent is not directed to an "abstract idea".  The District Court reasoned that claim 1 recites steps for "gathering" one type of data and "producing" a "label," and while "gathering" data may describe an abstract idea, "producing" a "label" based on that gathered data does not describe an abstract idea.  The District Court construed "label" to mean "something symbolic of unambiguous qualitative data about an item, its maker, or its owner."  Thus, processing gathered data to "produce" "something symbolic" does not describe an abstract idea because that process is a specific and concrete implementation of data storage.  Similarly, using "labels" serves a concrete and specific way of conducting data storage and search.

The District Court also found that claim 1 of the '807 patent is not directed to an "abstract idea."  Here, the District Court reasoned that claim 1 recites a computer system configured to use "digital labels."  The system obtains "digital labels" by "responding" to a subscriber request and "guiding" the subscriber to provide the information that is used to create the "digital labels."  While the "responding" limitation may describe somewhat of an abstract idea of reacting to information from a source, the "guiding" limitation describes a more specific and concrete way of processing information.  The District Court noted that "[m]any ways of gathering information exist besides obtaining it by 'guiding' a subscriber," presumably using a preemption argument in favor of a patentee, which may be the first time ever in a § 101 analysis.

Step Two

Because the District Court found that the claims are not directed to abstract ideas, the claims are patent-eligible under § 101, and the District Court did not need to reach step two.

But, to round out the analysis, the District Court noted that the claims, when read as whole, disclose an "inventive concept."  The District Court reasoned that claim 1 of the '807 patent describes a computer system that allows for data to be more easily searched and the specification implies that the invention "improve[s] the functioning of the computer [system] itself".  The District Court went further to state that even though the claims recite generic physical limitations such as "computer system," "database," and "Website," in combination with "labels" these components improve the computer system so that it can address the Internet-centric problem of "surfers" being unable find information through word-match searches.

In this case, the District Court's reasoning is not well-founded based on the facts of the case.  It seems that the best support to find these claims patent eligible under 35 U.S.C. § 101 is that the claims use any potentially abstract idea in a manner designed to solve a technological problem and such that the use is necessarily rooted in computer technology.  The District Court placed large emphasis on "digital labels" being encoded in a digital form as saving the claims from patent ineligibility.  Although the District Court did not explicitly mention preemption, or lack thereof for the patent claims, as a reason for finding the claims patent eligible, the language given by the Court that many ways for doing this exist besides what is claimed sounds a lot like a preemption argument.  And preemption arguments have been routinely shot down by courts, at least as a stand-alone test for eligibility.

The cataloging of websites described by these patents would appear to be an abstract idea, however, the patent friendly Eastern District of Texas declined to rule them out.

Report and Recommendation by U.S. Magistrate Judge Roy S. Payne