Two-Way Media brought an action against Comcast in the District of Delaware, claiming infringement of U.S. Patent Nos. 5,778,187, 5,983,005, 6,434,622, and 7,266,686.  The District Court dismissed the case on the pleadings, finding that all of the claims were ineligible under 35 U.S.C. § 101.  Two-Way Media appealed, and the Federal Circuit affirmed.

The Supreme Court's Alice Corp. v. CLS Bank Int'l case set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101.  One must first decide whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But generic computer implementation of an otherwise abstract process does not qualify as "significantly more."  On the other hand, a claimed improvement to a computer or technological process is typically patent-eligible.

The Claimed Inventions

The four patents-in-suit share a substantially common specification, and are directed to transmission of multimedia information over a network such as the Internet.  Claim 1 of the '187 patent was deemed representative of all claims of the '187 and '005 patents.  It recites:

A method for transmitting message packets over a communications network comprising the steps of:
    converting a plurality of streams of audio and/or visual information into a plurality of streams of addressed digital packets complying with the specifications of a network communication protocol,
    for each stream, routing such stream to one or more users,
    controlling the routing of the stream of packets in response to selection signals received from the users, and
    monitoring the reception of packets by the users and accumulating records that indicate which streams of packets were received by which users, wherein at least one stream of packets comprises an audio and/or visual selection and the records that are accumulated indicate the time that a user starts receiving the audio and/or visual selection and the time that the user stops receiving the audio and/or visual selection.

Claim 29, representative of the '622 patent, recites:

A method for forwarding real-time information to one or more users having access to a communications network comprising:
    processing one or more streams of audio or visual information into one or more streams of packets for forwarding over the communications network, wherein at least one stream of packets comprises audio or video information,
    forwarding the digital packets to the users in response to information selection signals received from the users,
    verifying the operational status of the users' access to the communications network during delivery of the real-time information, and
    updating a database with indications of: (i) which streams of packets were received by which users, (ii) the time when delivery of each stream to each user commenced, and (iii) the time when delivery of each stream to each user terminated.

Claim 30, representative of the '686 patent, recites:

A method for metering real-time streaming media for commercial purposes, said method comprising:
    selecting an intermediate server from multiple intermediate servers;
    forwarding at least one copy of a real-time media stream from said intermediate server toward a user device;
    detecting a termination of said forwarding;
    after said termination, determining an extent of said real-time media stream forwarded toward said user device; and
    logging said extent for commercial purposes.

The patents describe a problem related to transmission of packet data on the Internet.  Most of these transmissions are point-to-point, otherwise known as unicast.  In other words, there is one transmitting device and one receiving device.  Such mechanisms work well for certain types of communication, such as email or web transactions, but are inefficient for the distribution of multimedia, such as live video or audio streams, to many recipients.  There is no way for one device on the Internet to transmit a message addressed to all others.  And this limitation is by design -- such broadcasts would rapidly overwhelm the capacity of the Internet as a whole.

Internet multicasting, however, allows so-called multicast groups to be defined, and recipient devices may join these groups.  The transmitting device then sends a single copy of the packets through a series of one or more multicasting routers, each of which replicates the incoming stream of packets into two or more streams as needed to reach the recipient devices in the group.  When multicasting is functioning properly, a single transmission can reach multiple recipient devices without using significantly more network capacity that is absolutely needed.

According to the Court:

The patents describe the invention as an improved scalable architecture for delivering real-time information.  Embedded in the architecture is a control mechanism that provides for the management and administration of users who are to receive real-time information.

In this system, the Primary Servers and Media Servers are interconnected by the internet.  The Control Servers connect users with Media Servers using a series of message exchanges.  The patents also describe monitoring network conditions and generating records about the real-time streams.

Notably, the claims do not specifically mention multicasting.

District Court Proceedings

The District Court applied the Alice test first to claim 1 of the '187 patent.  It concluded that, under part one:

The '187 and '005 patents are directed to the abstract idea of (1) sending information, (2) directing the sent information, (3) monitoring receipt of the sent information, and (4) accumulating records about receipt of the sent information.  The claims are thus directed to methods of sending and monitoring the delivery of audio/visual information.

Under part two, the District Court found no evidence that the claims actually recite the architecture described in the patents' specification.  Accordingly, the District Court found that the claims did not include significantly more than this abstract idea, and therefore the'187 and '005 patents were ineligible under § 101.

Regarding the remaining patents, the District Court found that "the '622 patent was directed to the abstract idea of monitoring the delivery of real-time information to a user or users, and the '686 patent was directed to the abstract idea of measuring the delivery of real-time information for commercial purposes."  Further, the additional elements in the representative claims were only generic computer components being used for their ordinary functionality.  As a result, these two patents were also found ineligible under § 101.

Federal Circuit Review

The Court began its analysis of the District Court decision by noting that, under part one of Alice, the claims should be considered as a whole.  Nonetheless, the Court wrote that "[w]e look to whether the claims in the patent focus on a specific means or method, or are instead directed to a result or effect that itself is the abstract idea and merely invokes generic processes and machinery."

Addressing claim 1 of the '187 patent, the Court criticized its "result-based functional language."  Particularly, "[t]he claim requires the functional results of converting, routing, controlling, monitoring, and accumulating records, but does not sufficiently describe how to achieve these results in a non-abstract way."  Making an analogy to the claims found ineligible in the Court's Electric Power Group decision from last year, "claim 1 manipulates data but fails to do so in a non-abstract way."

Even when presented with claim constructions proposed by Two-Way Media, the Court found that they did not "indicate how the claims are directed to a scalable network architecture that itself leads to an improvement in the functioning of the system."  Thus, the claim was deemed abstract.

Regarding the part two analysis, the Court took issue with the apparent disparity between what the claim actually recited and the improvements that Two-Way Media alleged that it provided.  The Court asserted that "[t]he main problem that Two-Way Media cannot overcome is that the claim—as opposed to something purportedly described in the specification—is missing an inventive concept."  Thus, even if the specification described an inventive concept in the disclosed architecture, this architecture was not claimed.  For instance:

Two-Way Media asserts that the claim solves various technical problems, including excessive loads on a source server, network congestion, unwelcome variations in delivery times, scalability of networks, and lack of precise recordkeeping.  But claim 1 here only uses generic functional language to achieve these purported solutions . . . .  Nothing in the claims or their constructions, including the use of intermediate computers requires anything other than conventional computer and network components operating according to their ordinary functions.

The Court also found no inventive concept in the ordered combination of claim 1's limitations.  Instead, "[t]he claim uses a conventional ordering of steps—first processing the data, then routing it, controlling it, and monitoring its reception—with conventional technology to achieve its desired result."

Consequently, the Federal Circuit agreed with the District Court that the '187 and '005 patents were ineligible.

Turning to the '622 and '686 patents, Two-Way Media complained that the District Court had "erred by oversimplifying the claims down to merely their preamble and failing to recognize the claims solve technical problems."  But the Court found no problem with citing to a preamble as the distillation of a claim.  Under prong one of Alice, according to the Court, it is appropriate to determine the "focus" of the claim.  Regardless, the Court rapidly dismissed Two-Way Media's arguments, concluding that "the claims here—directed to monitoring the delivery of real-time information to user(s) or measuring such delivery for commercial purposes—are similar to other concepts found to be abstract."

With respect to part two of Alice, the Court found the claims lacking for the same reasons as claim 1 -- "nothing in these claims requires anything other than conventional computer and network components operating according to their ordinary functions."  Therefore, the '622 and '686 patents were also found ineligible.

Analysis

At first blush, it may seem as if this case is in tension with Enfish v. Microsoft.  In Enfish, the claims at issue recited a self-referential database, and the Court looked to the specification to determine whether this invention engendered a technical improvement.  Notably, the Court wrote in Enfish:

The specification also teaches that the self-referential table functions differently than conventional database structures.  According to the specification, traditional databases, such as those that follow the relational model and those that follow the object oriented model, are inferior to the claimed invention.  While the structural requirements of current databases require a programmer to predefine a structure and subsequent data entry must conform to that structure, the database of the present invention does not require a programmer to preconfigure a structure to which a user must adapt data entry.  Moreover, our conclusion that the claims are directed to an improvement of an existing technology is bolstered by the specification's teachings that the claimed invention achieves other benefits over conventional databases, such as increased flexibility, faster search times, and smaller memory requirements.

Thus, one may refer to the specification in order to determine the improvements provided by the claims.  In contrast, Two-Way Media asked the Court to look to the specification to further flesh out the details of the invention that were not actually claimed.  This distinction should be appreciated before sounding the alarm regarding the Federal Circuit's § 101 consistency (or lack thereof).

Having said that, the Federal Circuit certainly can be schizophrenic when applying § 101.  Different panels have reviewed claims at different levels of detail under part one of Alice.  These panels have also varied with respect to part two, with some looking to the specification for guidance while others mostly ignoring it.  As a result, it is still very difficult to predict whether any given set of claims will be found patent-eligible.

So the Federal Circuit can be criticized for failing to provide a consistent interpretation of the Alice test.  But this case exhibits less inconsistency with prior cases than meets the eye.

Two-Way Media Ltd. v. Comcast Cable Communications, LLC (Fed. Cir. 2017)
Panel: Circuit Judges Lourie, Reyna, and Hughes
Opinion by Circuit Judge Reyna