Construction Junction: What’s Your Function?

Dealertrack, Inc. v. David L. Huber

Patent litigators who spend their time hooking up words and phrases and clauses should R-E-A-D Dealertrack, Inc. v. David L. Huber. In Dealertrack, a divided panel of the Federal Circuit considered the validity of three patents covering a computer-aided method and system for processing car loan applications. The Dealertrack majority invalidated two of three patents, finding one invalid for indefiniteness and the other for expressing an unpatentable abstract concept. Dealertrack rocks several lessons. One, it teaches litigators more about means-plus-function claims in a computer context. Two, it highlights the differences between patentable processes or systems under 35 U.S.C. § 101a and unpatentable abstract ideas. Three is a Magic Number.

The patents in Dealertrack proposed a method for automating dealer-generated car loans. Prior to the claimed invention, car dealers helping customers find a loan had to send individual applications to every bank where funding was sought. Patent-holder, Dealertrack, proposed automating the process through use of a central processor operating over an electronic network. Under the Dealertrack system, car dealers fill out a single application and then control the order and timing in which versions of that application are sent to the various banks. Dealertrack's infringement suit named operators of competing automotive loan management systems. The district court granted summary judgment on some of the claims at issue and Dealertrack appealed.

On appeal, the Federal Circuit got to the means-plus-function issue after first weighing in on a number of claim construction issues. The involved patent required "central processing means" for implementing certain functions recited in the claim. All the parties agreed that this claim element was a means-plus-function term under 35 U.S.C. § 112(6). The "means" however had two functions: 1) implementing and controlling the credit application processing and routing and 2) tracking pending credit applications. The defendants argued that the patent was invalid because there was no structure disclosed in the specification for performing the second function.

The panel's majority used this argument to revisit applicable tests for evaluating § 112(6) claims in the computer context set forth in Aristocrat Technologies and W.S. Gaming. Those cases generally hold that a disclosure of a general purpose computer is not sufficiently definite to satisfy § 112(6). Instead, the specification must disclose particular algorithms that can be programmed into the general purpose computer, meaning, the algorithms must "implement and control" the recited functions. Here, the majority found the specification did not disclose a specific algorithm for tracking the application. As a result, the majority held the stated claims indefinite and the involved patent invalid. This holding specifically rejected the plaintiff's argument that a more generic routing algorithm - which was disclosed - was sufficiently specific as to encompass both the function of routing and the function of tracking.

Insufficient specificity also led to the majority's second patent invalidity holding. The claims at issue in that patent recited a "computer aided method of managing a credit application" and then listed a series of basic steps to be undertaken. The defendants challenged whether the claim defined patentable subject matter because the claimed computer was not specially programmed, but rather was a general purpose computer operating in an unspecified manner. The majority agreed and noted that the claims were silent as to how the computer aids the recited method, the extent to which the computer aids the recited method, or the significance of the computer to the performance of the method. The court was not unsympathetic to Dealertrack's argument that the method was directed to a particular use in a car loan application process, but ultimately concluded that the fact that the claims were not limited to any particular algorithm rendered the claim no better than an abstract idea or a functional claim, neither of which is allowable under the Supreme Court's test in Bilski. Writing in dissent, Judge Plager, argued courts should avoid invalidating claims under § 101 except as a last resort.

While Dealertrack  likely won't lead to a bill on Capitol Hill, it does animate the connection between patent construction and conjunctions "and," "but" and "or." It is clear that the Federal Circuit wants to tighten up patent practice and claims involving computer processing/systems are particularly susceptible to those efforts. Litigants relying on claims that recite various types of computer systems while using § 112(6) terminology must be sensitive to whether the claimed "means" perform multiple different functions, and then ensure that each function has corresponding structure or risk invalidation for a lack of specificity. Similar specificity is helpful in avoiding a § 101 challenge. Patent holders may be drawn to asserting computer-based claims which broadly recite  functional steps but expose themselves to a § 101 attack unless they can demonstrate that the claim is in some way limited to how the computer achieves the steps or functions. Patent holders need to be particularly leery about arguing that claims are not limited to particular disclosed algorithms, as the Federal Circuit used exactly this argument against Dealertrack on appeal in explaining why the claim was nothing more than an abstract idea. Patent Rock!

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