Another Acacia Patent Bites the Dust at the Federal Circuit

Another Acacia Patent Bites the Dust at the Federal Circuit Jason Doiy Mark Lemley

The U.S. Court of Appeals for the Federal Circuit invalidated an Acacia Research Corporation patent on Friday, handing a win to a big group of retailers and digital camera companies represented by Mark Lemley of Durie Tangri. Lemley may have had an assist from the U.S. Supreme Court’s recent decision in Alice Corporation v. CLS Bank International, which urged the Federal Circuit to take a narrower view of what ideas are eligible for patent protection.

In a 13-page ruling that repeatedly cites Alice Corp., the Federal Circuit affirmed a prior ruling that Acacia subsidiary Digitech Image Technologies can’t assert a patent relating to digital image processing technology. The court concluded that the Digitech patent covers two distinct concepts—a set of data and a method for using it—and that neither concept is patent eligible subject matter.

In plain English, Digitech’s patent covers the idea of tagging digital images with information about the camera’s qualities. As the blog PatentlyO has noted, Polaroid Corporation first obtained the patent in 2000. Acacia acquired the patent on the secondary market in 2012, and a Saudi investment company has a security interest in it. Acacia argues that the patent represents an important advancement in digital image processing.

Soon after acquiring the patent, Acacia went on a litigation spree in U.S. district court in Los Angeles. Digitech asserted the patent against more than 30 companies that make or sell digital cameras, including Toshiba Corporation, Ricoh Company, Newegg.com Inc. and Buy.com Inc. Digitech is represented by Collins, Edmonds, Pogorzelski, Schlather & Tower.

The defendants quickly moved to dismiss, arguing that Digitech’s patent doesn’t pass muster under Section 101 of the Patent Act. Section 101 states that there are four categories of patent eligible subject matter: processes, machines, manufactured items and compositions of matter. Courts have long held that even if an invention falls into one of those four categories, it’s still invalid if it’s too abstract. According to the defendants, Digitech is trying to patent data, or information, which isn’t one of the four eligible categories. And to the extent Digitech is also claiming a process of garnering digital photo data, that process is too abstract, they argued.

U.S. District Judge Otis Wright II agreed with the defendants and tossed the case in September 2013. The Federal Circuit held oral argument in April. Lemley made the case for all the defendants, squaring off against John Edmonds of Collins Edmonds.

Some judges on the Federal Circuit have been reluctant to invalidate patents based on Section 101, arguing that Congress intended it to be a loose filter. But you wouldn’t know it from Friday’s ruling.

Judge Jimmie Reyna wrote on behalf of the panel that most of Digitech’s patent claims relate to data, and that “data in its ethereal, non-physical form is simply information that does not fall under any of the categories of eligible subject matter under Section 101.” The remaining claim in the patent, known as a method claim, covers “an abstract idea because it describes a process of organizing information through mathematical correlations and is not tied to a specific structure or machine,” Reyna wrote.

Section 101 made a star turn at the Supreme Court in Alice Corp., giving the justices an opportunity to clarify some of the Federal Circuit’s muddiest precedent on patentability. In that case, the high court invalidated Alice’s software patent related to financial trading, ruling that it simply took an age-old idea and added a computer. The decision was one of five during the past term in which the Supreme Court effectively chided the Federal Circuit for being too kind to patent owners, and it was a clear signal to the Federal Circuit to revisit its Section 101 framework.

That said, it’s possible that the Federal Circuit would have reached the same result in the Digitech case even if it didn’t get slapped down in Alice Corp.. Back in March, before the Supreme Court case was decided, the Federal Circuit invalidated a different Acacia patent on Section 101 grounds. Durie Tangri handled the oral argument for the defendants in that case as well.

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