Accenture v. Guidewire CAFC Oral Arguments Written Transcript

 

Judges: Rader, Reyna, Lourie
Guidewire Attorney: Mark Lemley

Accenture Attorney: Mr. Jakes

 

Audio Recording

 

 

Written Transcript


Mr. Jakes

Good morning may it please the Court. We are here this morning on an issue of patent eligible subject matter under Section 101. And in particular whether the computer system in this 284′ patent is merely an abstract idea. The Court has framed the issue..

Chief Judge Rader

What’s that mean?

Mr. Jakes

Ha. Well, your honor I can only tell you what the cases have said in applying whether something is an abstract idea. Namely, it has to be manifest. It has to be quite obvious that its abstract, that its the only reasonable interpretation is that its the invention is directed to a disembodied concept or a fundamental truth.

Chief Judge Rader

But you haven’t told me what’s abstract yet.

Mr. Jakes

I haven’t.

Chief Judge Rader

Just telling me its going to be very abstract. Well that doesn’t help the Court much. What’s very? What’s manifest? What’s all of these things that you suggest.

Mr. Jakes

Ahh. Your honor, I don’t have a defininition of whats abstract. What I can tell you is

Chief Judge Rader

How can we apply the law if we don’t have a standard?

Mr. Jakes

I think at least for this case what you can do is say these claims and this invention is not abstract. Thats the issue in front of us.

Judge Lourie?

You have method claims their which were held not to be patent eligible. You didn’t appeal those.

Mr. Jakes

That’s right.

Judge Lourie?
The systems claims are quite similar. Why haven’t you ???? a waiver???

Mr. Jakes

Your honor two reasons. One is that the claims are not that similar. There is not a one for one correspondence as you see in some cases where its merely a change in the preamble and a change in the verb form. Thats not this case. There are quite a number of differences in the claims. For example, – <ruffling though pages> the ah claim 8 called for an event processor which interacts with an insurance transaction database. Now the claim 1 is different it says the event processor is triggered by application events associated with a change in the information. Thats much more concrete and much more specific. And it describes a software module that is triggered by events. Thats not something a human could do.

Different Male Judge

Why can’t humans do that?

Mr. Jakes

Ahh your honor as far as I know a human can’t be triggered by software and can’t be triggered by an electronic change
in a database.

Male Judge

No but the actions are described int the claims. I mean it seems to me that as a practical matter I am not sure that they can’t be performed entirely in a human’s mind. Basically aren’t you just transferring information from one source to another?

Mr. Jakes

I don’t think thats an accurate characterization. If you look at the claims, it calls for very specific things. Such as, an insurance transactions database. That’s an electronic database. That’s not something a human stores in their head. A task library database - also an electronic database.

Male Judge

No but a filing cabinet can hold a database. Just a steel filing cabinet.

Mr. Jakes

That’s true your honor. But these are, and the Court below recognized they are electronic databases. Now you have to other aspects to that. You have a specific client server architecture, which has a client component. Which could be a personal computer. You have the server component.

Male Judge

Weren’t all these steps done pre-computer anyway? Either manually or intellectually by insurance people?

Mr. Jakes

Your honor, I dont think that really true either. You have as I was saying in the server component you have an event processor, a task processor, a task assistant. These are software modules. And they don’t model strictly the way a human would go about these insurance claim handling. Its a computerized system that takes this information - its structured in a particular way ..

Male Judge

??? do. Don’t computers just calculate.

Mr. Jakes

At times thats true

Male Judge

Don’t they do mental steps faster then we could?

Mr. Jakes

That is one thing that they can do but its not the only thing.

Chief Judge Rader

Can they do it faster? More reliably with more automaticity, with more speed. With ah no chance for human error.

Mr. Jakes

Yes a computer do all of those.

Chief Judge Rader

Are those improvements?

Mr. Jakes

They can be, yes.

Male Judge (Lourie?)

Are you saying that they can do a task function faster, that that’s an improvement? That’s an invention?

Mr. Jakes

It depends on how its done. If its an appliction of a specific way to do that function, yes it could be.

Male Judge (Lourie?)

???? that obvious once the idea of a computer and the knowledge of programming exists.

Mr. Jakes

I don’t think thats true your honor. I believe the computer industry there are some things that are not obvious.
Its not merely mimicking acts.

Chief Judge Rader

But we’d need proof of obviousness wouldn’t we. We’d need some kind of analysis of secondary considerations.
We’d need some kind of analysis of prior art.

Mr. Jakes

That’s right. One of the things about this particular ??app in the program it doesn’t exist in the software industry. Which is a huge industry. And this particular industry is directed to helping an insurance company process their claims better. Its not an insurance - its not like offering insurance which might be an abstract idea.

Chief Judge Rader

If this is abstract is all software abstract.

Mr. Jakes

Well it would come pretty close. I don’t want to be the voice of doom but if this type of patent was held to be unpatentably abstract it gets pretty close to that. We have in the record there… this is fairly exemplary of the type of software patents that are out there. It uses recognized software components, such as a client server architecture. It has some novel components, like an event processor, a task engine, a task assistant.

Male Judge

What is the CLS case do for you?

Mr. Jakes

Well, the CLS case I think does frame the question in a way that is helpful to us saying that the only reasonable interpretation has to be that this is a fundamental truth or a disembodied concept. And I’d say this invention is far from that. I don’t even know what the fundamental truth or disembodied concept would be. Its directed to making claims processing more efficient by generating tasks and then a claims handler can execute.

Male Judge

What does the Bancorp case do to you?

Mr. Jakes

Well the Bancorp case I think is distinguishable. I think is your questions were alluding to before, there the computer was serving as merely a calculator. And in some ways was a little like Flook calculating an alarm limit calculating an asset value. If thats all its doing is doing a calculation.

Male Judge

Didn’t the claims in those cases actually recite a computer? Your claims don’t – if we get a little more basic - your claims don’t recite a computer at all and your specification calls this a software not a computer system thats

Mr. Jakes

The word computer does not appear in the claim. I don’t think there is really any dispute that this is a computer based system. The district court said as much. Guidewire’s briefs have said as much. There is no way that this system operates without a computer. The district court said that the claims folder was an electronic claims folder. The databases are electronic databases. The client the server architecture is something that is found in a computer architecture. The client is for example the PC the server has specific modules task engine the event processor. I don’t really think this has any other application other than to be executed on a computer. Now it’s written in terms of a computer software. in fact there are a hunderd columns description, very detailed description of a complex programming that is required to operate this system and I think that’s also an indication that this is not merely covering an abstract idea this is as I said..

Male Judge

Let’s go back to the claims though because I think that in the situation like ??? looking at the invention is abstract, then we look at the claims. And the claims don’t recite a computer at all. Doesn’t that beg the question well can this be done without a computer?

Mr. Jakes

Your honor I will agree the word computer does not appear

Chief Judge Rader

But there are five machines at least, right.. In terms of a database a library database a server, an event
processor
, and a task engine.

Mr. Jakes

I agree, and those can be nothing but software running on a computer, which is a new machine, and a task engine for example is a new type of machine or an event processor is a new type of machine. It doesn’t say .

Male Judge (I think Judge Reyna?)

??? as a one time, not as a lawyer. And some of these components that you call, I could picture a person sitting there, you’ve got your claims manager, you got your claims processor, you have an individual who devises a to-do list based on a review of a claim. And they all go into a big metal filing cabinet. And you pull it out once in a while, your calendar pops up and says its time to write a report, ??? could review a police report came in

Chief Judge Rader

That’s very good analysis perhaps for obviousness isn’t it. But thats not what we’re talking about, we’re talking about abstractness. If anything that’s making it rather concrete isn’t it?

Mr. Jakes

I think by comparison to what was done by a human this is very concrete and it is an actual machine, it makes the processing more efficient.

Male Judge

If it’s done by a human why can it be an invention it’s just an abstract idea that can be processed in the human mind.

Mr. Jakes

Well I don’t think there is anything in this claim that can be done soley in a human mind and I don’t think there is any dispute about that that. The district court found that this was a computer based system I think Guidewire has said that themselves. I don’t know ho a human is triggered by an event processor.

Chief Judge Rader?

Haha.

Mr. Jakes

This is a computer structure

Male Judge

How about an email?

Chief Judge Rader

Haha.

Mr. Jakes

Well, that’s not really the same thing and that’s not what the claims called for. These are software modules running on a machine and I think that the specification ???? make that very clear.

Chief Judge Rader

Hasn’t Guidewire admitted that this is a computerized system?

Mr. Jakes

They have in their briefs yes. And the district court so found. So we have a component based system that I think clearly passes under any definition of abstractness. I don’t even think its close to the line. We have a real industry, this is a technological improvement in software industry. It passes the machine test,

Chief Judge Rader

Ha.

Mr. Jakes

It is a machine, ah I think the CLS Bank case one of the things that it does say is that a computer is a machine running software. I know that doesn’t answer the question but ah the district Judge said that it didn’t pass the machine test. And I think that’s where the district court at least was lead astray. The district court was also told that Alappat had been abrogated and that the concept of software being run on a computer was no longer patent eligible. I think that’s wrong and what this case is at the heart.

If there are no more questions I will save the rest of my time.

Chief Judge Rader

Thank you. Mr. Lemley

If this is abstract, is software eligible for patenting?

Mr. Lemley

Yes your honor. Software

Chief Judge Rader

Tell me why other software claims would not be ineligible if this is not ineligible.

Mr. Lemley

Simply your honor the patent claims here as interpreted in claims construction are not limited to any particular piece of software. While there are a bunch of things that Mr. Jakes pointed to in the claim language that look like they might seem like machines, in every case when you look a the claim construction

Chief Judge Rader

Insurance database, library databaseserverevent processor

Mr. Lemley

Event processor

Chief Judge Rader

?? extension ??

Mr. Lemley

Absolutely. So event processor is defined in the claim construction as a feature that announces an event to the task engineTask engine is defined in claim construction as a feature that generates the tasks that need to be performed. So to with task librarytask assistantThese are not machines, these aren’t even software these are functions. Alright? Now, Mr. Jakes has four patent applications - four patents that came out of the same basic application – some of those patents have very narrow and specific algorithmic

Chief Judge Rader

??? you said that its a computerized system. There is no question that its a machine and there is machines that are under way if this is ineligible why isn’t all software ineligible?

Mr. Lemley

Your honor.

Chief Judge Rader

This is more specific than most software claims I’ve seen.

Mr. Lemley

Your honor with respect I think that’s not correct.

Chief Judge Rader

Why isn’t it correct?

Mr. Lemley

Because the way they have construed the claims the things which appear in the claim language to be ahh specific machines performing specific things in fact turn out to be high level functions. Ah

Chief Judge Rader

Which is what software does it converts a machine into something that functions and its the functions that are protected under patent law. Have you read our cases?

Mr. Lemley

Yes I have your honor.

Chief Judge Rader

The copyright end of the law will protect all the expressions of the stuff you are attacking. The functions are what we protect in patent law

Mr. Lemley

The, the

Chief Judge Rader

So it’s well defined and it’s clearly a computerized system as you say.

Mr. Lemley

No your honor, the

Chief Judge Rader

Why not?

Mr. Lemley

Because the functions themselves are not machines. The only machine actually recited in the patent claims

Chief Judge Rader

But you admit that it’s computerized

Mr. Lemley

client server . Absolutely. There is a client and a server system and the question for this court is does taking a high level abstract idea and putting it in a comp- general purpose computer

Chief Judge Rader

What’s abstract about this idea?

Mr. Lemley

The idea your honor is the idea of organizing insurance files in a computer and updating them as claim events occur. As Judge Reyna suggested, insurance agents have been doing this without out a computer for 100 years

Chief Judge Rader

That’s prior art, that’s a good obviousness analysis. What’s abstract about it?

Mr. Lemley

The concept itself

Chief Judge Rader

very concrete, we’re dealing with an industry, in concrete functional steps

Mr. Lemley

Your honor

Chief Judge Rader

Where’s the abstractness?

Mr. Lemley

Your honor if you look at the claims there are no functional steps. They are claiming the concept of doing this in terms of functional steps but you will look in vain to find the actual steps that are being performed in some particular order. Had Mr. Jakes been defending a paten claim that actually was directed to one of the computer programs in the specification, we would have a very different case. And I wouldn’t be arguing here that this was unpatentable subject matter. But this claim as interpreted by these claim constructions is not in fact so limited. The only hardware limitations are a client and a server. And so the question for this court is, does taking an abstract idea - the method claims have already been rejected as abstract..

Chief Judge Rader

What’s the abstract idea.

Mr. Lemley

The abstract idea is organizing insurance files and updating them as claim events occur.

Chief Judge Rader

Why is that abstract? That’s business, that’s concrete. Dealing with real claims and people needing compensation because of injury. That’s very abstract.

Mr. Lemley

Your honor it is abstract in precisely the way that Bilski was abstract. That is, that invention to was a very specific business concept applied in a real world environment involving coal contracts. Nonetheless the Supreme Court said this is an abstract idea because you’re not claiming a particular machine that does it, you’re not claiming a particular implementation. You’reclaiming the idea itself.

Male Judge

Does the method claim - the method claim recites abstract ideasmental steps, is that right?

Mr. Lemley

Yes your honor.

Male Judge

And are these the same things that are

Mr. Lemley

Yes your honor. And the only differences -

Male Judge

done by the system?

Mr. Lemley

Absolutely. They’re done by the client server system and so the question for this court is does adding in a computer or in a client server system to an unpatentable method claim make it patentable? And I think

Male Judge

Is a filing – Is a filing cabinet in the corner tangible?

Mr. Lemley

Tangible
 - absolutely. The idea of prefacing claims using that filing cabinet patentable ? Absolutely not. Its an abstract idea.

If you have a specific real world implementation then it could be patentable. But this is not that case.

Male Judge

Why shouldn’t we hold that this is sufficiently different from the method claim and send it back for 103 analysis since it appears that all the claims one carries out used to be carried out before their were computers.

Mr. Lemley

Well I think precisely for that reason your honor there is no point to do so. In Bancorp decided just two weeks ago this court found system and method claims directed to a computer implemented invention for managing a life insurance policy to be invalid for lack of patentable subject matter. And this court said that the district court had correctly treated the asserted system and medium claims as no different from the asserted method claims for patent eligibility purposes while reiterating that the form of claims shouldn’t trump basic issues of patentability. That was the argument that constituted three quarters of Accenture’s brief. System claims are different. Add in a computer or in a client server system and your out of all of this method claims. That argument is no longer available and is foreclosed by Bancorp. And I think Bancorp also says one other thing which is of
importance; which is as the court put it, the computer in that case merely permits one to manage a stable value protected life insurance policy more efficiently than one could mentally using a computer to accelerate an ineligible mental process does not make that process patent eligible. And as your questions to Accenture’s suggestion that’s precisely what’s going on here. The computer does it faster maybe the computer does it better but the mere fact that you’ve taken an idea, which was implemented in the offline world and put it in a general purpose computer doesn’t make it patentable.

Chief Judge Rader

So software - so software is therefore ineligible. Thats what it does. It reduces a variety of real world steps down to miniature pluses and minuses and does them with automaticity, speed, reliability, that no human can achieve. That’s the software industry. Therefore they’re all ineligible because they’re doing something that was done before.

Mr. Lemley

No your honor. If the

Chief Judge Rader

You have to do something that was never done before or their not eligible.

Mr. Lemley

You have to do it in a particular way and if your patent claim is limited to that particular way, your honor, then you can have a patent.

Chief Judge Rader

They do. That’s what the software does.

Mr. Lemley

Your honor

Chief Judge Rader

Faster, better, more reliably, and without error.

Mr. Lemley

If the patent claim were in fact limited to a particular implementation of the idea it might be patentable. Here the claim as construed

Chief Judge Rader

It is. Its got an insurance database, a library database, a server, its going through -I think- five steps of components triggered by application events sending triggers to the task engine and back and forth – what is abstract here?

Mr. Lemley

The abstract comes in the definition of the claims in the claims construction

Chief Judge Rader

What is abstract?

Mr. Lemley

At Accenture’s request… What is abstract is a hard question and I would agree with Mr. Jakes there is not a clear definition.

Chief Judge Rader

So you want us to apply this just based on your word. You don’t have a standard ??? guess?

Mr. Lemley

No your honor. What I have is a series of cases from this court and the Supreme Court which apply the abstract ideas concept. If I were to generalize it I would say you can’t have a patent on the idea alone not limited to particular implementations. This court has tried various formulations to narrow that down. We have a machine-or-transformation test. It’s quite clear I think that …

Male Judge

Describe for us how this invention is is an idea alone and does not let us know how to implement that idea specifically in a specific
manner.

Mr. Lemley

Certainly your honor. The idea is update claim information for insurance agents. There are various steps associated with it even though it’s a system claim. But when you look at the way those terms are construed how do they do it. They do it with an event processor. Well what’s an event processor? An event processor is merely a feature that announces an event to the task engine. Not a particular feature. Not a particular event. Any event, any feature that serves that purpose is within the scope of their claims.

Male Judge

Your point is that its too broad.

Mr. Lemley

Absolutely your honor. And I think that’s precisely

Male Judge

That’s a 112 issue.

Mr. Lemley

Well your honor I think under Bilsky and Mayo its not only a 112 issue. There is in fact a 112 issue here, a different one, which I would like to get to in a moment. But I do think it is important to recognize that under the Supreme Court’s precedent and under this court’s precedent in Bancorp, in Cybersource, in Dealertrack, and in Fort Propertiesmerely attaching a computer to an idea is not sufficient. A specific

Male Judge

??You think this is a disguising??? of the claim comparable to ???

Mr. Lemley

Absolutely your honor. Because the things other than the terms client and server which are a general purpose computer system there going to be present in any computer environment, the only things that look like they might be machines, at Accenture’s urging we construed not to have any machine or specific software component at all. They were any feature that performs this function. Any feature that stores the rules. Any feature that displays the list of tasks.

Male Judge

Are you saying the only time the involvement of a computer in a claim like this is ?? matter is if it dealt with something non-obvious which had not been done before?

Mr. Lemley

Or that it was limited to a specific new implementation in software.

Chief Judge Rader

You want to do that without looking at any prior art or any secondary considerations. You aren’t looking that you just want to say “you court – you guess” this looks to me like somethat that’s ????

Mr. Lemley

Your honor in fact as we have indicated we don’t need to get to 103 there are plenty of circumstances, plenty of reasons to think that this is invalid under 102 as well. And we’ve presented that evidence to the court. But I think under the .. But I think even if that were not true, under the Supreme Court’s abstract ideas  ???

Chief Judge Rader

Maybe we should go back and have them look at 102 and 103.

Mr. Lemley

Your honor I think there is no reason to send it back. The evidence is quite clear and specific. It would be pointless

Male Judge

The district court doesn’t think so. The district court you gave them thousands of documents and you didn’t really point them in
the right direction.

Mr. Lemley

The district court did say that your honor although the district court asked us to refile simply identifying element-by-element… Accenture can’t point to any element not present in the prior art system. The relevant documentation which is before this court consists of eighteen pages. There’s testimony from the guy who invented riskmaster and there’s the riskmaster manual and those are all you need to actually evaluate it.

I would like to spend a little bit of time your honor on the Section 112 issue, the indefiniteness issue. The district court’s grant of summary judgement can be affirmed on an alternate ground decided in the same opinion. The critical language in claim 1 the only independent claim is invalid as indefinite because it recites an open markush group and such language is by definition meaningless. The language in question covers information “decomposed into a plurality of levels from the group comprising a policy level, a claim level, a participant level, and a line level.

The question here is what plurality and comprising mean. Fortunately they’re the two most commonly defined terms in patent law.

Male Judge

?? the levels, ??? the claim

Mr. Lemley

Well. No your honor. Well that’s the question. If you take seriously the words “decomposed into a plurality of levels from the group comprising these four, all you need is one or more of two things from anything in the universe including but not limited to those four levels.

Now Accenture, originally in its claim construction took exactly that position. It said this means one or more and that’s all Ineed. Then, the district court said oh it means two or more from this list of four and that’s all you need. And then onreconsideration the district court said at Accenture’s new found urging – well we need all four and only those four. I suggest that that’s not what the language of the claim says. I suggest that that’s not what the language of the claim says. I suggest that what the language of the claim says is you need a plurality, two or more, that’s pretty clearly a patent law term of interest, from a… selected from a group comprising – from a group comprising – and comprising Ithink has a pretty clear meaning, these but not just these but anything else as well and then it lists four examples. And the problem with that definition and the reason that open markush groups are not allowed, is that I could pick anything out of the world, a box sonata, the average airspeed velocity of a swallow in flight and put them in the list and they would fit within the definition of comprising. They don’t have to be limited to those four things. And so the words are literally meaningless.

Male Judge

I think your examples weaken your argument

Mr. Lemley

Haha. Fair enough your honor. But I think its .. but I think it’s worth noting that the language here is precisely the language that the examiner found to be allowable. Alright, the examiner rejected the argument .. rejected the claim. This language was added and then the examiner said that is the reason for allowance. And its also worth noting that in the other parallel applications on the same specification with the same prosecutor, the same or similar language was rejected by the examiner and the applicant said you’re right it is indefinite and changed it. Here it wasn’t caught.

Chief Judge Rader

Back to the claim. Where does the processor run?

Mr. Lemley

I’m sorry your honor?

Chief Judge Rader

Where does the processor run?

Mr. Lemley

Your honor it can run either on the server side or the client side of a system.

Chief Judge Rader

And where does the triggering occur

The triggering your honor occurs in the .. let me get the claim language here so I have it specifically. The event processor is triggered by application events associated with a change in information and sends an event trigger to the task engine. It does not specify whether its client side or server side in that particular point.

Chief Judge Rader

Thank you.

Mr. Lemley

Than you your honor.

Chief Judge Rader

Mr. Jakes

Mr. Jakes

The district court’s claim construction did recite the various elements like the event processor as a feature that performs a function. Its a feature of a computer system. There is nothing wrong with that. There’s nothing wrong with high level functions. There’s nothing wrong with claim broadly as long as the prior art and specifications allow it. That is not patent eligibility.

Male Judge

Counsel, I would like to direct your attention to the patent at column 103 page ?a?74 where we have the definition of a task assistant, and it goes on it says the task assistant is the cornerstone of a claim professional’s working environment. It provides diary functions. And then it goes on and talks about how it its execution of best practices, and then it says a task system is a source of automated assistance. A mechanism for making claims, a diary application to keep track, a historical tracking tool. So its telling me what it is but it doesn’t tell me how it does it. And especially when I get down to this particular paragraph that says within the task assistant claim profesionals have ultimate control to determine. But then it ends by saying – this supports
a vision of the claims professional as knowledge. Isn’t a vision abstract?

Mr. Jakes

Ha. Your honor if you just focus on that and the task assistant and those words you might say something like that. But the task assistant is a particular piece of software that is described here in fairly broad terms as to what it does. But the functionality is completely described there.

Male Judge

It describes it very broadly what it is.

Mr. Jakes

Yeah.

Male Judge

But does it really tell us what it does?

Mr. Jakes

Well I think in describing what functions it performs it does describe what it does. And when you are talking about software what it does and what it is are basically the same thing.

Male Judge

How about how it does the actual application

Mr. Jakes

If that’s within the skill of the art of a person who could program it then this is enabling and we don’t need to describe any more than
that.

The method claim here .. There’s not any waiver. There are significant differences between the method claim and claim 1 that we have appealed. We did that to streamline the case. We thought claim 1 was our best issue and if we are somehow going to be held that that is abstract and that spills over to our main claim we’d have to appeal every claim in every case and I don’t think that’s what intended here.

Male Judge

I commend the idea of simplification.

Mr. Jakes

Well. We did pick what we thought was our best claim. On the markush claim. It’s not a markush group. That’s simply it. It uses the word comprisingMarkush group is closed. These are not functionally equivalent alternatives. All four are required. Guidewire has set up this syllogy that its Markush therefore by being open its invalid. The first part is wrong its not a markush group to start with.

Thank you.

Chief Judge Rader

Thank you Mr. Jakes.

© 2009-2013 Alta Financial & Insurance Services, LLC