Audatex North America, Inc. v. Mitchell International, Inc.
703 F. App'x 986
Fed. Cir.2017Background
- Audatex appealed Board CBM decisions invalidating substitute claims in U.S. Patents 7,912,740 and 8,468,038, which claim web-based systems for generating automobile insurance valuation reports.
- The substitute claims (claims 30–58 of ’740; 32–62 of ’038) describe using conventional web components and two Active Server Pages (ASPs): one to call a vehicle-values database and another to call a parts/estimate program, producing valuation reports to a client over the Internet.
- The Board held the proposed claims patent-ineligible under 35 U.S.C. § 101 and obvious under § 103; Audatex moved to amend and argued the amendments rendered the claims patent-eligible and nonobvious.
- The Federal Circuit reviewed eligibility de novo under the two-step Alice framework and addressed Audatex’s arguments about burden of proof and whether the amendments meaningfully changed the § 101 analysis.
- The court concluded the claims were directed to the abstract idea of collecting vehicle information to generate a valuation report and that the recited Internet/computer components (including ASPs) were conventional and did not supply an inventive concept.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Patent eligibility under § 101 | Audatex: claims are non-abstract; recite specific computer improvements (special-purpose valuation server, two ASPs) improving technological infrastructure | Board: claims use generic computer/web components to implement an abstract idea; amendments do not change analysis | Held: Claims are directed to an abstract idea and fail Alice step two; ineligible under § 101 |
| Whether ASPs/claimed combination supply inventive concept | Audatex: ASPs and claimed architecture produce a specific, unconventional result for handling changing databases and multi-customer needs | Board: ASPs are conventional and used in routine manner; combination is ordinary and generic | Held: ASPs and components are conventional; ordered combination does not supply inventive concept |
| Burden of proof on amended claims | Audatex: Board shifted burden to patentee to prove eligibility/patentability of substitute claims | Board: (and court) analysis unnecessary to resolve burden allocation because claims are ineligible on the merits | Held: Court rejects burden-shift objection as moot — claims ineligible regardless |
| Need to reach obviousness under § 103 | Audatex: appealed both § 101 and § 103 rejections | Board: Board invalidated claims as obvious too but court may resolve § 101 first | Held: Court affirms § 101 rejection and declines to address § 103 because § 101 disposition is dispositive |
Key Cases Cited
- Enfish v. Microsoft, 822 F.3d 1327 (Fed. Cir.) (claims improving computer functionality can be non-abstract)
- Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) (two-step framework for § 101)
- Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253 (Fed. Cir.) (Alice step-one characterization guidance)
- Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir.) (collecting data and generating reports is an abstract idea)
- In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607 (Fed. Cir.) (use of conventional technology in a known environment is ineligible)
- DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir.) (claims can be eligible when they produce a result that overrides routine conventional Internet use)
- Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363 (Fed. Cir.) (adding computer functionality for speed/efficiency insufficient for eligibility)
- Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709 (Fed. Cir.) (use of the Internet alone does not render an abstract idea patent-eligible)