Court Opinion

ID: 4190036
Source: CourtListenerOpinion
Date Created: 2017-07-27 15:01:39.26098+00
Date Added: 2024-06-11T14:39:33.335779
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

        AUDATEX NORTH AMERICA, INC.,
                  Appellant

                           v.

        MITCHELL INTERNATIONAL, INC.,
                    Appellee
             ______________________

                 2016-1913, 2016-1914
                ______________________

   Appeals from the United States Patent and Trade-
mark Office, Patent Trial and Appeal Board in Nos.
CBM2014-00171, CBM2014-00173.
               ______________________

                Decided: July 27, 2017
                ______________________

   BEN J. YORKS, Irell & Manella LLP, Newport Beach,
CA, argued for appellant. Also represented by DAVID C.
MCPHIE; BENJAMIN HABER, Los Angeles, CA.

   JASON C. WHITE, Morgan, Lewis & Bockius LLP,
Chicago, IL, argued for appellee. Also represented by
NICHOLAS A. RESTAURI; DION MICHAEL BREGMAN, AHREN
CHRISTIAN HSU-HOFFMAN, Palo Alto, CA; THOMAS M.
PETERSON, San Francisco, CA.
                ______________________
2 AUDATEX NORTH AMERICA, INC. v. MITCHELL INTERNATIONAL,
                                                    INC.

        Before PROST, Chief Judge, O’MALLEY and CHEN,
                        Circuit Judges.
PROST, Chief Judge.
    Audatex North America, Inc. appeals from two cov-
ered business method (“CBM”) review proceedings, Case
Nos. CBM2014-00171 and -00173. In those proceedings,
the Patent Trial and Appeal Board (“Board”) held all
claims patent ineligible under 35 U.S.C. § 101 and invalid
as obvious under 35 U.S.C. § 103. We affirm.
                              I
     These appeals involve U.S. Patent Nos. 7,912,740
(“’740 patent”) and 8,468,038 (“’038 patent”). The ’038
patent is a continuation of the ’740 patent. Entitled
“system and method for processing work products for
vehicles via the world wide web,” these patents relate to
systems for entering data associated with an insurance
claim for damaged vehicles. ’740 patent col. 1 ll. 8–10; ’038
patent col. 1 ll. 18–21. The systems process these data
into a valuation report transmitted via the Internet,
allowing insurance claims adjusters to access a vehicle
valuation database more readily. E.g., ’740 patent col. 1
ll. 10–11, 48–51.
    Upon instituting both CBM proceedings, the Board
held all claims ineligible under § 101 and invalid as
obvious under § 103. Audatex filed a motion to amend,
cancelling claims 1–29 of the ’740 patent and proposing
substitute claims 30–58. It similarly moved to amend the
’038 patent, cancelling claims 1–31 and proposing substi-
tute claims 32–62. 1 Claims 37 and 40 of the ’740 patent

    1   This opinion refers to substitute claims 30–58 of
the ’740 patent and substitute claims 32–62 of the ’038
patent collectively as “the proposed claims.”
AUDATEX NORTH AMERICA, INC.   v. MITCHELL INTERNATIONAL, 3
INC.

are representative. Appellant’s Opening Br. 16 (“Audatex
Br.”). 2 Claim 37 directly depends from independent claim
30. We reproduce both claims below (underlined text
indicates additions from original claims 1 and 8, respec-
tively):
   30. A method for obtaining an automobile insur-
       ance claim valuation report of a damaged ve-
       hicle in association with the processing of an
       insurance claim, comprising:
   transmitting a uniform resource locator over an
       electronic communication network from a cli-
       ent computer;
   connecting with a web site that corresponds to the
      uniform resource locator, the web site pro-
      vides a plurality of web pages that allows an
      operator to input data relating to an insur-
      ance claim for the damaged vehicle, the in-
      surance claim being a request to recover
      market value or repair cost in association
      with an insurance policy;
   entering data relating to the insurance claim;

   2    At oral argument, Audatex maintained that the
’740 and ’038 patents do not stand or fall together under
§ 101. Yet Audatex provided very little, if any, analysis
specific to the ’038 patent. Having reviewed its opening
and reply briefs, we identified only a single sentence
under its Argument heading where it provided separate
treatment for this patent under § 101. See Audatex
Br. 38–39 (discussing how elements recited in claim 41
purportedly affect the step-one analysis). This isolated
argument neither affects our analysis under § 101, nor
our conclusion regarding the representative nature of
claims 37 and 40.
4 AUDATEX NORTH AMERICA, INC. v. MITCHELL INTERNATIONAL,
                                                    INC.

    providing a parts list and calculated estimate da-
        ta through the web site; processing the en-
        tered data to generate a valuation report for
        the damaged vehicle, the valuation report
        provides a market value for the damaged ve-
        hicle, before the damaged vehicle was dam-
        aged, based on factors including mileage,
        condition, and geographic location; and,
    transmitting the valuation report to the client
        computer over the electronic communication
        network through the web site.
    37. The method of claim 30, further comprising
        transmitting the valuation report from a val-
        uation server to a web server before transmit-
        ting the valuation report to the client
        computer, the valuation report being generat-
        ed by the valuation server with a database of
        vehicle values that is called by a first active
        server page, the parts list and calculated es-
        timate data being provided by a program
        called by a second active server page.
J.A. 330–31.
    According to Audatex, the substituted claims solve
problems associated with utilizing data from constantly
changing databases for multiple customers through the
use of Active Server Page (“ASP”) files. Audatex Br. 7;
’740 patent col. 2 ll. 30–45. Claim 37, for example, em-
ploys two such ASP files: the first for calling a database of
vehicle values; the second to call a program for providing
vehicle parts lists and calculated estimate data. J.A. 331.
These ASP calls allow the valuation server to generate
valuation reports that adjusters use for their calculations.
’740 patent col. 2 ll. 42–45. The proposed claims thus
describe methods and systems for obtaining automobile
insurance claim valuation reports by combining calls to
multiple databases that provide customized insurance
AUDATEX NORTH AMERICA, INC.   v. MITCHELL INTERNATIONAL, 5
INC.

estimate tools for insurance adjusters based on their
specific needs.
    After considering these amendments, the Board main-
tained its ineligibility and obviousness grounds for the
proposed claims. J.A. 1–43 (’740 patent); J.A. 44–85 (’038
patent). Audatex appeals on both grounds. We have
jurisdiction under 28 U.S.C. § 1295(a)(4)(A).
                              II
    On appeal, Audatex asks the court to reverse the
Board and hold that the proposed claims recite eligible
subject matter and are non-obviousness in light of the
prior art of record. We turn first to patent eligibility.
    Patent eligibility under 35 U.S.C. § 101 is an issue of
law reviewed de novo. Accenture Glob. Servs., GmbH v.
Guidewire Software, Inc., 728 F.3d 1336, 1340–41 (Fed.
Cir. 2013). To determine patent eligibility, we apply a
two-step process under Alice Corp. Party v. CLS Bank
International, 134 S. Ct. 2347, 2355 (2014). See also
Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d
1253, 1257 (Fed. Cir. 2016) (referring to step one as the
“abstract idea” step and step two as the “inventive con-
cept” step).
    At the outset, we reject an evidentiary concern Au-
datex raises regarding the Board’s application of the
burden of proof for its amended claims. Audatex Br. 31–
32. Specifically, it contends that the Board improperly
shifted the burden to Audatex to prove the eligibility and
patentability of the proposed claims. Id. at 31. We con-
clude that the proposed claims recite patent-ineligible
subject matter regardless of who bears that burden for the
reasons that follow. 3

   3   Audatex does not appear to dispute that under a
de novo review, assignment of the burden of proof likely
6 AUDATEX NORTH AMERICA, INC. v. MITCHELL INTERNATIONAL,
                                                    INC.

                             A
     Turning to step one, Audatex argues that the pro-
posed claims are not abstract, but rather directed to
specific improvements of computer-related technology.
Specifically, it compares the claims to those we analyzed
in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed.
Cir. 2016), and argues that the Board “vast[ly] oversimpli-
fi[ed] the proposed claims despite our cautioning against
such characterizations. Audatex Br. 38. For example, it
contends that claim 40 of the ’740 patent provides “a very
specific way of generating a valuation report, including a
special-purpose valuation server that processes the data
and generates the valuation report with a database of
vehicles values.” Id. It emphasizes that the system em-
ploys a first ASP to call this database and requires a

bears little relevance to our § 101 analysis here. Oral
Argument 9:29–55, http://oralarguments.cafc.uscourts.
gov/mp3/2016-1913.mp3. Immediately pivoting from the
burden issue, Audatex alternatively argued that the
Board erred because it did not specifically address substi-
tute claims 37 and 40 of the ’740 patent under § 101. Id.
at 9:56–10:09. We disagree. In its motion to amend and
related reply brief, Audatex did not provide the Board
with separate/specific patent-eligibility arguments for
these claims. J.A. 323–28, 403–05. Rather, it set forth
arguments applicable to the ’740 patent more generally.
See, e.g., J.A. 328 (“The substitute claims for the ’740
patent are quite different from the claim[s] in Flook.”);
J.A. 403 (“[T]he substitute claims . . . improve the func-
tioning of the prior art systems.”). In addition to providing
a detailed patent-eligibility analysis for original claims 1–
29, the Board considered these arguments in light of the
newly amended claims, but determined that those
amendments did not affect its analysis or conclusions.
Oral Argument 10:10–40; J.A. 14–23, 33–35.
AUDATEX NORTH AMERICA, INC.   v. MITCHELL INTERNATIONAL, 7
INC.

second ASP to call the parts lists and calculated estimate
data. Id. It concludes that these features, “combined with
other elements such as an electronic network, a client
computer, and a web server that allows for the input of
data relating to an insurance claim and transmission of a
valuation report,” render the claims non-abstract. Id. It
further argues that the proposed claims provide several
specific improvements over the prior art. See, e.g., id. at
40 (“Audatex figured out how to combine aspects of multi-
ple prior art systems (such as obtaining a repair cost and
a market valuation) into a single integrated architecture
for simplifying the process of creating a vehicle valuation
report.”).
    We conclude that the proposed claims are directed to
the abstract idea of “providing a vehicle valuation through
the collection and use of vehicle information.” Here, the
proposed claims recite nothing more than the collection of
information to generate a valuation report for a damaged
vehicle with the aid of well-known technology. They are
neither directed to an improvement in computer function-
ality, nor provide a specific improvement in the way
computers operate. Cf. Enfish, 822 F.3d at 1336–37.
Rather, they embody an abstract idea that merely uses a
computer and generic components as tools to collect these
data and generate reports. This is insufficient under step
one. See Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d
1350, 1354 (Fed. Cir. 2016); In re TLI Commc’ns LLC
Patent Litig., 823 F.3d 607, 612 (Fed. Cir. 2016) (stating
that claims “directed to the use of conventional or generic
technology in a nascent but well-known environment” are
not eligible under step one).
                              B
    Regarding step two, Audatex argues that the proposed
claims meet the inventive-concept test for two reasons:
“First, they improve the technological infrastructure that
is used to generate valuation reports. Second, the pro-
8 AUDATEX NORTH AMERICA, INC. v. MITCHELL INTERNATIONAL,
                                                    INC.

posed claims, when considered as a whole, consist of more
than just conventional activities.” Audatex Br. 42–43.
Again, we disagree.
    Here, the proposed claims neither improve the techno-
logical infrastructure nor provide solutions to challenges
particular to the Internet. Rather, they add computer
functionality and recite use of the Internet to increase the
speed and efficiency of an abstract process. This is not
enough. See Intellectual Ventures I LLC v. Capital One
Bank (USA), 792 F.3d 1363, 1370 (Fed. Cir. 2015)
(“[M]erely adding computer functionality to increase the
speed or efficiency of the process does not confer patent
eligibility on an otherwise abstract idea.”); Ultramercial,
Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014)
(“[T]he use of the Internet is not sufficient to save other-
wise abstract claims from ineligibility under § 101.”).
Further, the proposed claims merely recite a host of
generic computer components. For example, claim 37,
which incorporates claim 30, recites: “a web site,” “web
pages,” “a client computer,” “an electronic communication
network,” “a database,” “a web server,” and “a valuation
server.” J.A. 330–31.
    In addition to these indisputably conventional fea-
tures, Audatex relies heavily throughout its briefing on
the two ASPs recited in claims 37 and 40. But Audatex
itself concedes that it did not invent ASPs, Audatex Br. 7–
8, and the claims do not recite them in a manner that
produces “a result that overrides the routine and conven-
tional” use of these known features. DDR Holdings, LLC
v. Hotels.com, L.P., 773 F.3d 1245, 1258 (Fed. Cir. 2014).
When viewed as an ordered combination, the proposed
claims recite no more than the sort of “perfectly conven-
tional” generic computer components employed in a
customary manner that we have held insufficient to
transform the abstract idea into a patent-eligible inven-
tion. Intellectual Ventures I LLC v. Symantec Corp., 838
AUDATEX NORTH AMERICA, INC.   v. MITCHELL INTERNATIONAL, 9
INC.

F.3d 1307, 1321 (Fed. Cir. 2016). We thus conclude that
the proposed claims fail step two as well.
    We have considered Audatex’s remaining arguments
but find them unpersuasive. Accordingly, we conclude
that the proposed claims recite patent-ineligible subject
matter under § 101. Having reached this conclusion, we
need not reach the obviousness grounds of Audatex’s
appeal.

                      CONCLUSION
    For the foregoing reasons, we conclude that the pro-
posed claims are ineligible under § 101 and affirm the
Board.
                      AFFIRMED