Amdocs (Israel) Ltd. v. Openet Telecom, Inc.

Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir. 2016), is a court case in the United States Federal Court System that ended with a panel decision by the Federal Circuit to uphold the patent eligibility of four patents on a system designed to solve an accounting and billing problem faced by network service providers. The district court had held the patents invalid because they were directed to an abstract idea. In the Federal Circuit panel's view the patents were eligible because they contained an "inventive concept"—a combination of elements that was sufficient to ensure that the patents amounted to significantly more than a patent on the ineligible concept itself.

This is one of the few times since the Supreme Court's Alice Corp. v. CLS Bank International decision, 134 S. Ct. 2347 (2014). that the Federal Circuit has held computer software-based patent claims eligible.Joseph Saphia and Bonnie L. Gaudette, Narrowly Drawn Software-Based Patent Claims Directed To Specific, Unconventional Technological Solutions Are Patent-Eligible Under Alice , (Nov. 14, 2016). Other holdings of patent eligibility were McRO, Inc. v. Bandai Namco Games America Inc., 837 F.3d 1299 (Fed. Cir. 2016); BASCOM Global Internet Servs. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016); Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016); and See Amdocs, 2016 U.S. App. LEXIS 19593, at *20–24 and n.7.

Background Amdocs held four patents and sued Openet for infringement. Each patent describes the same system, one that allows network service providers to account for and bill for Internet Protocol (IP) network communications. The system includes network devices; information source modules ("ISMs"); so-called gatherers; a central event manager ("CEM"); a central database; a user interface server; and terminals or "clients."Amdocs (Isr.) Ltd. v. Openet Telecom, Inc., No. 2015-1180, 2016 U.S. App. LEXIS 19593, at *3 (Fed. Cir. Nov. 1, 2016). The patent specification asserts that the invention arrays the components of the system "in a distributed architecture that minimizes the impact on network and system resources," which is accomplished "by collecting and processing data close to its source." That result is the effect of including "distributed data gathering, filtering, and enhancements that enable load distribution," instead of performing those tasks centrally as prior art devices did, and thus "reducing congestion in network bottlenecks, while still allowing data to be accessible from a central location."2016 U.S. App. LEXIS 19593, at *4–*5.

More specifically, the suit involved four related patents—U.S. Patents Nos. 7,631,065 (the '065 patent), 7,412,510 (the '510 patent), 6,947,984 (the '984 patent), and 6,836,797 (the '797 patent). The '065, '984, and '510 patents each stem from the same original patent application and specification; they concern accounting and billing for services in a computer network. The '797 patent developed from an augmented patent application and its specification states that it concerns "data records, and more particularly [] records reflecting various services afforded utilizing a network."

District court ruling

The district court invalidated the patents on the pleadings, holding all four patents invalid under 35 U.S.C. § 101 because they claimed an abstract idea implemented in a non-inventive manner. The court said: A person may have invented an entirely new and useful advance, but if the patent claims sweep too broadly, or only claim the idea that was achieved rather than implementation of the idea, § 101 directs that the patent is invalid. Amdocs's asserted claims recite such conventional operation, in such a general way, that even if the inventor had developed an actual working system, the patent claims could foreclose fields of research beyond the actual invention. Accordingly, all asserted claims are invalid as patent-ineligible.Amdocs (Isr.) Ltd., 56 F. Supp. 3d at 825.

The district court considered each patent separately. It found claim 1 (written in the Beauregard form) of the '065 patent representative of the invention. That claim provides: A computer program product embodied on a computer readable storage medium for processing network account information comprising: computer code for receiving from a first source a first network accounting record; computer code for correlating the first network accounting record with accounting information available from a second source; and computer code for using the accounting information with which the first network accounting record is correlated to enhance the first network accounting record.56 F. Supp. 3d at 819.

The court found that claim 1 was directed to the abstract idea of "the concept of correlating two network accounting records to enhance the first record." This satisfied step one of the Supreme Court's Alice methodology and therefore the district court proceeded to step two—"whether the claim adds enough to the abstract idea to make the claim patent eligible." Because the claim did "not limit the correlation to any specific hardware, nor give any detail regarding how the records are 'correlated' or 'enhanced,' . . . the claim amounts to 'nothing significantly more than an instruction to apply the abstract idea' of correlating two network accounting records 'using some unspecified, generic' computer hardware." That made the claim invalid under the Alice test.56 F. Supp. 3d at 820 (quoting Alice Corp. v. CLS Bank Int'l, 573 U.S. __, 134 S. Ct. 2347, 2360 (2014)).

The court turned to the '510 patent, whose claim 16 was representative: A computer program product stored in a computer readable medium for reporting on a collection of network usage information from a plurality of network devices, comprising: computer code for collecting network communications usage information in real-time from a plurality of network devices at a plurality of layers; computer code for filtering and aggregating the network communications usage information; computer code for completing a plurality of data records from the filtered and aggregated network communications usage information, the plurality of data records corresponding to network usage by a plurality of users; computer code for storing the plurality of data records in a database; computer code for submitting queries to the database utilizing predetermined reports for retrieving information on the collection of the network usage information from the network devices; and computer code for outputting a report based on the queries; wherein resource consumption queries are submitted to the database utilizing the reports for retrieving information on resource consumption in a network; and wherein a resource consumption report is outputted based on the resource consumption queries.56 F. Supp. 3d at 822.

The court held this patent "directed to the abstract idea of using a database to compile and report on network usage information." Proceeding, therefore, to step two of the Alice methodology, the court said that the claim describes a generic computer that "collects, filters, aggregates, and completes network communications information" and then "stores the information in a database, and queries the database to retrieve reports." All of these things were "basic functions" of a computer and a database system. The court held, accordingly: [C]laim 16 is directed to a computer functioning in a conventional way, and a database functioning in a conventional way. The claim does not add any specific implementation beyond the abstract idea that information is collected and stored, and reports are generated. Therefore, the claim is directed to an unpatentable abstract idea.56 F. Supp. 3d at 823.

The district court next considered representative claim 1 of the '797 patent, which states: A method for generating a single record reflecting multiple services for accounting purposes, comprising: (a) identifying a plurality of services carried out over a network; (b) collecting data describing the plurality of services; and (c) generating a single record including the collected data, wherein the single record represents each of the plurality of services; wherein the services include at least two services selected from a group consisting of a hypertext transfer protocol (HTTP) session, an electronic mail session, a multimedia streaming session, a voice over Internet Protocol (IP) session, a data communication session, an instant messaging session, a peer-to-peer network application session, a file transfer protocol (FTP) session, and a telnet session; wherein the data is collected utilizing an enhancement procedure defined utilizing a graphical user interface by: listing a plurality of available functions to be applied in real-time prior to end-user reporting; allowing a user to choose at least one of a plurality of fields, and allowing the user to choose at least one of the listed functions to be applied to the chosen field in real-time prior to end-user reporting.

The court said that "the abstract idea in this claim is to generate a single record reflecting multiple services," and proceeded to step two of the Alice analysis. It found that "the claim is directed to an abstract idea performed using purely conventional computer operations, and is, therefore, invalid under § 101."56 F. Supp. 3d at 824.

Last, the district court considered representative claim 1 of the '984 patent: A method for reporting on the collection of network usage information from a plurality of network devices, comprising: (a) collecting networks communications usage information in real-time from a plurality of network devices at a plurality of layers utilizing multiple gatherers each including a plurality of information source modules each interfacing with one of the network devices and capable of communicating using a protocol specific to the network device coupled thereto, the network devices selected from the group consisting of routers, switches, firewalls, authentication servers, web hosts, proxy servers, netflow servers, databases, mail servers, RADIUS servers, and domain name servers, the gatherers being positioned on a segment of the network on which the network devices coupled thereto are positioned for minimizing an impact of the gatherers on the network; (b) filtering and aggregating the network communications usage information; (c) completing a plurality of data records from the filtered and aggregated network communications usage information, the plurality of data records corresponding to network usage by a plurality of users; (d) storing the plurality of data records in a database; (e) allowing the selection of one of a plurality of reports for reporting purposes; (f) submitting queries to the database utilizing the selected reports for retrieving information on the collection of the network usage information from the network devices; and (g) outputting a report based on the queries.

Here, the abstract idea was "reporting on the collection of network usage information from a plurality of network devices." All of the steps were conventional acts for both generic computers and generic databases, making the claim invalid.56 F. Supp. 3d at 825.

Federal Circuit panel decision

Majority opinion

The Federal Circuit panel majority reversed the district court judgment. It analyzed the judgment by assuming that the claims were directed to an abstract idea, but it found that the claims satisfied step two of the Alice methodology.

The court found it particularly important, indeed crucial, that the components (such as network devices; information source modules; gatherers; a central event manager; a central database; a user interface server; and terminals) of the system: