By Zack Needles, From New Jersey Law Journal

The parties in a New Jersey federal suit over whether a travel search engine infringes a patent for quote-generating software are wrestling with a relatively new question in intellectual property law: When is a technology’s function too abstract to patent?

Plaintiff Source Search Technologies (SST) sued Kayak Software Corporation, which owns the travel search website Kayak.com, in the U.S. District Court for the District of New Jersey, alleging it is infringing SST’s ‘328 patent for “a method and system that allows a central computer to filter requests for quotes, and to interface to various vendor computers to obtain and forward such quotes to potential buyers of goods and services,” according to the amended complaint filed in 2013.

Last December, Kayak filed a motion for summary judgment arguing that SST was merely attempting to patent “the age-old abstract idea of purchasing goods or services by obtaining quotes from selected vendors using conventional computer features arranged in a conventional computer system architecture.”

But on April 22, SST’s attorney, Jeffrey I. Kaplan of Kaplan Breyer Schwarz & Ottesen in Matawan, sent a letter to U.S. District Judge Joseph Irenas of the District of New Jersey alerting him to the U.S. District Court for the District of Delaware’s April 15 decision in Messaging Gateway Solutions v. Amdocs, Inc.

In Messaging Gateway, U.S. District Judge Richard G. Andrews ruled that software designed to allow short message service (SMS) text messages to be sent to an Internet server was not too abstract to be patent-eligible under 35 U.S. Code §101.

The defendant had argued that the plaintiff was attempting to patent the abstract idea of sending a message to an address. But the court found that the technology was patentable because it is designed to solve the specific problem of how to allow a mobile device to communicate with an Internet server.

“If one looks at almost any patent from far enough away, it could arguably claim an abstract idea,” Andrews said. “For example, Alexander Graham Bell’s patent could be said to claim the abstract idea of oral communication. But his invention was not the concept of oral communication itself; it was a technological innovation that allowed a type of oral communication between people who could otherwise not communicate in that way.”

Andrews relied on the U.S. Court of Appeals for the Federal Circuit’s 2014 ruling in DDR Holdings v. Hotels.com, which said ideas that “solved a problem specific to the realm of computer networks in a way that was rooted in computer technology” were patent-eligible.

DDR Holdings was the first time the Federal Circuit addressed the issue of technological inventions’ patent eligibility since the U.S. Supreme Court’s June 2014 ruling in Alice Corporation Pty. Ltd. v. CLS Bank International.

In Alice, the Supreme Court found that a company’s computer-implemented financial trading system was too abstract to be eligible for patent protection because at its core it was simply an escrow service.

Jonathan David, partner at Westfield intellectual property firm Lerner David Littenberg Krumholz & Mentlik, who is not involved in the Kayak case, said the Alice decision made clear that arguing a technology patent’s invalidity under Section 101 because it relates to an abstract idea is “a very valid challenge to certain patents.”

Now, David said, district courts are applying the Alice framework on a case-by-case basis.

“The district courts are really heeding the directive of the Supreme Court in Alice that they should invalidate patents under Section 101 if they feel that it’s an abstract idea implemented through generic hardware and software,” David said. “Instead of just wavering and holding off, they’re actually making that hard decision with the comfort of the Supreme Court’s decision in Alice.”

David said many post-Alice district court opinions have invalidated patents in the face of Section 101 challenges, but that trend could change as the tactic becomes increasingly popular.

“What you’re starting to see is everyone is trying a Section 101 challenge because it’s very en vogue,” David said.

Kaplan said in his April 22 letter that SST’s claims are directed to solutions for “database management and computer interface problems specific to the realm of computer networks.”

In an April 27 letter to Irenas, Kaplan also pointed to the U.S. District Court for the Northern District of California’s April 20 ruling in Mobile-Plan-It v. Facebook, which similarly relied on the reasoning of DDR Holdings to find that technology that allows meeting attendees to send messages to each other through electronic “proxy” mailboxes without disclosing their primary email addresses is patent-eligible because it “relates to characteristics of email communications, and to particular issues arising among conference attendees.”

But Kayak’s attorney, Rosemary Alito of K&L Gates in Newark, said in an April 28 letter that the claims at issue in DDR Holdings and Mobile-Plan-It “are nothing like SST’s claims, which are broad and simply not limited to the alleged ‘database management and computer interface problems’ that SST now touts in its letters.” (Alito is the chair of the Law Journal’s Editorial Board.)

In the letter, Alito called SST’s citation of those cases “misleading” because the company ignored other rulings involving claims “strikingly similar” to the ones at issue in the Kayak case.

Alito cited two recent District of Delaware rulings—The Money Suite Co. v. 21st Century Insurance and Financial Services Inc., from January, and Tenon & Groove v. Plusgrade S.E.C., from March—as involving claims more in line with SST’s.

Alito said in the letter that the Money Suite case “is particularly analogous and instructive” because it involved quote-generating technology and the court there found DDR Holdings inapplicable.

“The generation of price quotes for financial products is undeniably a pre-Internet concept,” the Money Suite court said. “Thus, DDR Holdings is readily distinguishable from the case at bar.”

Alito’s letter said the majority of case law on the subject of technology’s patent eligibility favors Kayak’s position.

“Courts are issuing almost daily new Section 101 decisions, building a body of case law that increasingly favors granting Kayak’s pending 101 motion,” Alito said in the letter. “In fact, among the post-Alice summary judgment decisions we have been able to locate, over 70 percent of them have ruled at least one claim invalid under Section 101.”

Kaplan responded in an April 28 letter, saying, “Kayak does not cite to any case involving a situation in which the problem to be solved was unique to the computer world and did not exist in the manual world.”

“While Kayak is certainly correct that the number of cases in defendants’ favor on the issue since Alice is far greater than the number of cases in plaintiffs’ favor, this court’s task is, of course, to apply the law correctly to the present facts, not to count which party won the issue more often in past cases without reviewing the facts,” Kaplan said.

Alito declined to comment.

Kaplan said it will likely still be a few years before the impact of the Alice ruling on patent infringement cases is fully realized.

“What’s more important than Alice itself is how [its effect] plays out in the Federal Circuit,” he said.

For more on this story go to: http://www.njlawjournal.com/id=1202725110502/Kayakcom-Suit-Sheds-Light-on-Emerging-IP-Issue#ixzz3Yt51TtnO