Uniloc USA, Inc. v. Adp, LLC ( 2019 )

NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
UNILOC USA, INC., UNILOC LUXEMBOURG S.A.,
UNILOC 2017 LLC,
Plaintiffs-Appellants
v.
ADP, LLC,
Defendant
BIG FISH GAMES, INC.,
Defendants-Appellees
______________________
2018-1132, 2018-1346
______________________
Appeals from the United States District Court for the
Eastern District of Texas in Nos. 2:16-cv-00741-RWS, 2:16-
cv-00858-RWS, Judge Robert Schroeder, III.
--------------------------------------------------
UNILOC USA, INC., UNILOC LUXEMBOURG S.A.,
UNILOC 2017 LLC,
Plaintiffs-Appellants
v.
BITDEFENDER, INC., KASPERSKY LAB, INC.,
Defendants-Appellees
2 UNILOC USA, INC. v. ADP, LLC
______________________
2018-1448
______________________
Appeal from the United States District Court for the
Eastern District of Texas in Nos. 2:16-cv-00393-RWS, 2:16-
cv-00394-RWS, 2:16-cv-00871-RWS, Judge Robert
Schroeder, III.
______________________
Decided: May 24, 2019
______________________
JAMES J. FOSTER, Prince Lobel Tye LLP, Boston, MA,
argued for plaintiffs-appellants. Also represented by PAUL
J. HAYES, AARON JACOBS.
DOUGLAS FRED STEWART, Bracewell LLP, Seattle, WA,
argued for defendant-appellee Big Fish Games, Inc. Also
represented by DAVID JOHN BALL, New York, NY.
MENG XI, Susman Godfrey LLP, Los Angeles, CA, ar-
gued for defendant-appellee Bitdefender, Inc. Also repre-
sented by OLEG ELKHUNOVICH, KALPANA SRINIVASAN;
SHAWN DANIEL BLACKBURN, Houston, TX.
CASEY ALLEN KNISER, Patterson Thuente Pedersen,
PA, Minneapolis, MN, for defendant-appellee Kaspersky
Lab, Inc. Also represented by ERIC H. CHADWICK.
______________________
Before PROST, Chief Judge, LINN and MOORE, Circuit
Judges.
LINN, Circuit Judge.
Uniloc USA, Inc. and Uniloc Luxembourg S.A. appeal
the dismissal by the District Court for the Eastern District
UNILOC USA, INC. v. ADP, LLC 3
of Texas of their complaints of infringement of U.S. Patents
No. 7,069,293 (“’293 patent”), No. 6,324,578 (“’578 patent”),
No. 6,510,466 (“’466 patent”) and No. 6,728,766 (“’766 pa-
tent”) in related cases against Appellees ADP, LLC;
Kaspersky Lab, Inc.; Big Fish Games, Inc.; and Bitde-
fender, Inc. See Uniloc USA, Inc. v. AVG Techs. USA, Inc.
(“AVG Decision”), No. 2:16-cv-00393 (E.D. Tex. Mar. 28,
2017) (dismissing, inter alia, claims against AVG,
Kaspersky, and BitDefender); Uniloc USA, Inc. v. ADP,
LLC (“ADP Decision”), No. 2:16-cv-00741 (E.D. Tex. Sep.
28, 2017) (dismissing claims against ADP and Big Fish).
Appellants also appeal the district court’s denial of Uniloc
and ADP’s joint motion to vacate the ADP decision with re-
spect to ADP only. Uniloc USA, Inc. v. ADP, LLC (“Vacatur
Order”), No. 2:16-cv-741 (E.D. Tex. Nov. 20, 2017).
We reverse and remand the district court’s dismissal
based on patent ineligibility of the invention claimed in the
’293 and ’578 patents, and affirm the district court’s dis-
missal with respect to the ’466 and ’766 patents. We re-
verse and remand the district court’s order denying
vacatur. Because we write for the parties, we rely on the
district court’s exposition of the facts of the case.
I. Standing and Jurisdiction
A. Uniloc 2017 Assignment
Uniloc USA and Uniloc Luxembourg filed notices of ap-
peal in Uniloc USA, Inc. v. Big Fish Games, Inc. on October
27, 2017, and in Uniloc USA, Inc. v. Bitdefender LLC and
Uniloc USA, Inc. v. Kaspersky Lab, Inc. on January 17,
2018. On May 3, 2018, Uniloc USA and Uniloc Luxem-
bourg transferred all their rights in and to the patents-in-
suit to Uniloc 2017. During oral argument on March 7,
2019, and via letter on March 11, 2019, Uniloc USA and
Uniloc Luxembourg moved to substitute Uniloc 2017 as the
party in interest, or, in the alternative, to join Uniloc 2017.
Appellees opposed.
4 UNILOC USA, INC. v. ADP, LLC
When Uniloc USA and Uniloc Luxembourg filed the no-
tices of appeal that set our jurisdiction in these cases, they
were indisputably the owners of the patents-in-suit. The
transfer of the patent rights to Uniloc 2017 did not divest
this court of jurisdiction or the ability to substitute or join
a successor-in-interest. See, e.g., Minn. Min. & Mfg. Co. v.
Eco Chem, Inc., 757 F.2d 1256, 1262 (Fed. Cir. 1985) (quot-
ing Jones v. Village of Proctorville, Ohio, 303 F.2d 311, 313
(6th Cir. 1962)) (substitution of a corporate successor-in-
interest “did not defeat the Court’s jurisdiction once that
jurisdiction has been invoked properly by” the original
party); TOC Retail, Inc. v. Gulf Coast Oil Co. of Miss., Inc.,
No. 97-30969, 1999 WL 197149, at *12 (5th Cir. Mar. 25,
1999) (unpublished) (explaining that Fed. R. App. P. Rule
43(b) is based on Fed. R. Civ. P. 25, and “permits” the court
to order substitution of parties “when there has been a
transfer of interest”); Orexigen Therapeutics, Inc. v. Actavis
Labs. FL, Inc., No. 2018-1221, slip op at *2 (Fed. Cir. Sep.
19, 2018) (citing Beghin-Say Int’l v. Rasmussen, 733 F.2d
1568, 1569 (Fed. Cir. 1984)) (“[T]his court has previously
granted motions to substitute under Rule 43(b) when a
party has acquired the patents during an appeal.”). See
also Fed. R. App. P. 43(a) Advisory Committee Notes (cit-
ing Fed. R. Civ. P. 25(a)) (“The first three sentences de-
scribe a procedure similar to the rule on substitution in
civil actions in the district court”); 6 Moore’s Federal Prac-
tice Civil § 25.30 (noting that Rule 25 is intended “to allow
an action to continue unabated when an interest in a law-
suit changes hands, without initiating an entirely new
suit”); 7A Wright & Miller, Fed. Practice & Proc. § 1958
(noting that under Fed. R. Civ. P. 25, “[t]he court, if it sees
fit, may allow the transferee [of an interest] to be substi-
tuted for the transferor” where an interest is transferred
during the pendency of an action); Minn. Min. & Mfg., 757
F.2d at 1263 (quoting In re Covington Grain Co., 638 F.2d
1362, 1364 (5th Cir. 1981)) (“Rule 25(c) is not designed to
create new relationships among parties to a suit but is
UNILOC USA, INC. v. ADP, LLC 5
designed to allow the [original] action to continue unabated
when an interest in the lawsuit changes hands.”).
Although there is no Rule in the Federal Rules of Ap-
pellate Procedure allowing joinder, the Supreme Court, the
Fifth Circuit, and this court have allowed appellate joinder
under Federal Rule of Civil Procedure 21 governing mis-
joinder and nonjoinder. Mullaney v. Anderson, 342 U.S.
415, 417 (1952) (allowing joinder where it “merely puts the
principal, the real party in interest, in the position of his
avowed agent,” “it can in no wise embarrass the defend-
ant,” and where earlier joinder would not have “in any way
affected the course of the litigation”); Newman-Green, Inc.
v. Alfonzo-Larrain, 490 U.S. 826, 833 (1989) (discussing
Mullaney and the appellate courts’ joinder powers); Banks
Next friend of W.B. v. St. James Parish School Bd., No. 16-
31052, 2018 WL 6584305, at *4 (5th Cir. Dec. 12, 2018)
(recognizing that a “court can sua sponte determine that a
required party is missing, and it can add that party to the
case” under Fed. R. Civ. P. 21); Mentor H/S, Inc. v. Medical
Device Alliance, Inc., 244 F.3d 1365, 1373 (Fed. Cir. 2001)
(noting that appellate joinder may be available where it
“would not prejudice the defendants”).
Appellees argue that they would be prejudiced by Ap-
pellants’ approximately ten-month delay in filing the mo-
tion to join or substitute, and in failing to attach the full
Asset Purchase Agreement among the Uniloc entities.
We conclude that joinder of Uniloc 2017 is in order. We
find no merit in Appellees’ assertion that the transfer of
rights to Uniloc 2017, the delay in informing the court, or
the failure to attach the Asset Purchase Agreement preju-
dices Appellees or provides any “tactical advantage” to
Uniloc. Joining Uniloc 2017 does not affect Appellees’ po-
tential claims against Uniloc USA and Uniloc Luxembourg.
An earlier motion filed immediately after the transfer (and
after the notice of appeal) would not have changed the
course of the litigation. Uniloc 2017 has not requested
6 UNILOC USA, INC. v. ADP, LLC
additional time to file separate merits briefs or to take any
additional measures to accommodate Uniloc 2017 as a sep-
arate party. 1 Judicial efficiency—both with respect to this
case and the several other disputes pending at the Court
involving the Uniloc entities and at least some of the Ap-
pellees—strongly supports joinder here. See Mullaney, 342
U.S. at 417 (in the circumstances of that case, noting that
failure to join a party on appeal would “require the new
plaintiffs to start over in the District Court [and] would en-
tail needless waste and runs counter to effective judicial
administration”). Moreover, joining Uniloc 2017 retains
Uniloc USA and Uniloc Luxembourg as parties in this case
and addresses Appellees’ concern that Uniloc 2017 may not
have accepted Uniloc USA and Uniloc Luxembourg's liabil-
ities along with the transfer of rights in the Asset Purchase
Agreement.
Uniloc’s motion to join Uniloc 2017 is granted and the
caption is amended accordingly. 2
B. Uniloc USA, Inc. and Uniloc Luxembourg S.A.’s
Alleged Breach of the IBM Agreement
By motion dated February 19, 2019, Appellees Bitde-
fender, Big Fish Games, Inc. and Kaspersky Lab, Inc. (col-
lectively, “Movants”) argue that Uniloc lost standing with
respect to Movants when Uniloc failed to indemnify ADP
after IBM licensed ADP on October 20, 2017.
According to Movants, Uniloc’s failure to indemnify
ADP automatically triggered Section 2.1(e) in the 2016
Uniloc-IBM Agreement, which gave IBM the right to
1 Counsel for Uniloc USA and Uniloc Luxembourg
stated at oral argument that he also represents Uniloc
2017.
2 Hereinafter, we use “Uniloc” to refer to the Uniloc
entity with the rights in the patent at the time being dis-
cussed.
UNILOC USA, INC. v. ADP, LLC 7
“license . . . without notice or accounting” to “third parties
involved in any activities related to or arising from defense,
enforcement or licensing under any Assigned Patent.” Mo-
vants contend that Uniloc thus could no longer wholly ex-
clude Appellees from practicing the patents, and that
Uniloc thus lacked constitutional standing under WiAV So-
lutions LLC v. Motorola, Inc., 631 F.3d 1257 (Fed. Cir.
2010). Relying on Moore v. Consolidated Edison Co. of NY,
409 F.3d 506, 509 (2d Cir. 2005), Movants argue that be-
cause constitutional standing was lost, we must dismiss
the appeal.
Movants’ argument is predicated on the existence of a
breach of the 2016 Uniloc-IBM Agreement. But Movants
have not shown that IBM, which is not a party to this liti-
gation, considers Uniloc to be in breach or has asserted a
right to sublicense and release Movants from liability re-
lating to the patents-at-issue. Only ADP and Movants here
have asserted a breach of the 2016 Uniloc-IBM Agreement.
But neither ADP nor Movants are parties to the Agree-
ment.
Movants cite no other basis from which to assert a
breach of the indemnification provision on behalf of IBM so
as to activate the reversionary interest on which they base
their jurisdictional argument. For example, they do not as-
sert that they are intended beneficiaries of the contract.
See Restatement (2d) of Contracts § 302 (defining intended
and incidental beneficiaries) and Comment e (“[U]nless the
third person is an intended beneficiary as here defined, no
duty to him is created.”); U.C.C. § 3-301 (defining “[p]erson
entitled to enforce’ an instrument” as “(i) the holder of the
instrument, (ii) a nonholder in possession of the instru-
ment who has the rights of a holder, or (iii) [in circum-
stances of a lost, destroyed or stolen instrument, or where
the instrument was accepted by mistake]”). The breach of
a contract potentially involves disputes of materiality, po-
tential opportunities to cure, and available remedies, all of
which are consummate contract issues to be resolved
8 UNILOC USA, INC. v. ADP, LLC
between the parties. See, e.g., Restatement (2d) of Contract
§§ 225 (effects of the non-occurrence of a condition); 229
(excuse of a condition to avoid forfeiture); 241 (circum-
stances significant in determining whether a failure is ma-
terial); 242 (circumstances significant in determining when
remaining duties are discharged); 246 (effect of acceptance
as excusing the non-occurrence of a condition). Movants
have not pointed to any case where a non-beneficiary third
party has asserted a breach of a contract that successfully
triggered remedial provisions in the contract.
For the foregoing reasons, Movants motion to dismiss
based on a loss of standing is denied.
C. Vacatur of the ADP Decision
Uniloc argues that the district court abused its discre-
tion when it denied Uniloc’s motion to vacate the ADP judg-
ment. Uniloc argues that unless the ADP judgment is
vacated, third parties may argue that it creates issue pre-
clusion. Uniloc contends this is unfair because it was de-
nied the right to appeal the ADP judgment by the mooting
of the Uniloc-ADP dispute. Appellees do not dispute that
there is no longer a live dispute between Uniloc and ADP,
but argue that mootness occurred due to Uniloc’s actions,
making vacatur inappropriate.
Vacatur due to mootness is an equitable remedy. “The
principal condition to which we have looked [in deciding
whether vacatur is appropriate] is whether the party seek-
ing relief from the judgment below caused the mootness by
voluntary action.” U.S. Bancorp Mortg. Co. v. Bonner Mall
P'ship, 513 U.S. 18, 24 (1994). See also United States v.
Munsingwear, 340 U.S. 36, 39–40 (1950) (noting the “es-
tablished practice of the Court in dealing with a civil case
from a court in the federal system which has become moot
while on its way here or pending our decision on the merits
is to reverse or vacate the judgment below and remand
with a direction to dismiss” when “review [of a judgment]
was prevented through happenstance”). Where “mootness
UNILOC USA, INC. v. ADP, LLC 9
occurred prior to the rendering of final judgment. . . vaca-
tur and dismissal is automatic,” because mootness ordinar-
ily undermines jurisdiction, and, under Fifth Circuit law,
“we cannot leave undisturbed a decision that lacked juris-
diction.” Goldin v. Bartholow, 166 F.3d 710, 718 (5th Cir.
1999).
We need not decide when the mootness here occurred.
If it occurred, as Uniloc contends, on September 27, 2018,
when Uniloc agreed to amend the Agreement with IBM to
give IBM the right to license ADP, then the case was ren-
dered moot prior to the district court’s decision (and judg-
ment). If, on the other hand, the case was rendered moot
when IBM licensed ADP on October 20, 2018 or later, then
IBM and ADP—not Uniloc, the party seeking relief from
the judgement—were the actors responsible for the moot-
ness. In either event, review by Uniloc of the judgment
against it was “prevented through happenstance.” U.S.
Bancorp, 513 U.S. at 23 (quoting Munsingwear, 340 U.S.
at 40 and Karcher v. May, 484 U.S. 72, 82 (1987)). Under
the particular circumstances of this case, vacatur was in
order and should have been granted as to ADP.
We therefore reverse the district court’s Order denying
Uniloc’s and ADP’s joint motion to vacate the ADP Decision
and remand with instructions to vacate the ADP Decision
as to ADP only.
II. Patent Eligibility
We next turn to the substantive issue of patent eligibil-
ity with respect to each of the patents-in-suit.
“Eligibility under 35 U.S.C. § 101 is a question of law,
based on underlying facts.” SAP Am., Inc. v. InvestPic,
LLC, 898 F.3d 1161, 1163 (Fed. Cir. 2018). We analyze el-
igibility under the two-step Alice framework. Alice Corp.
v. CLS Bank Int’l, 573 U.S. 208, 217 (2014). In step one,
we must “determine whether the claims at issue are di-
rected to a patent-ineligible concept.” Id. at 218. Under
10 UNILOC USA, INC. v. ADP, LLC
this inquiry, we evaluate “the focus of the claimed advance
over the prior art” to determine if the character of the claim
as a whole, considered in light of the specification, is di-
rected to excluded subject matter. Intellectual Ventures I
LLC v. Capital One Fin. Corp., 850 F.3d 1332, 1338 (Fed.
Cir. 2017) (quoting Affinity Labs of Tex., LLC v. DIRECTV,
LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016)); Enfish, LLC v.
Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016).
In step two, we “consider the elements of each claim
both individually and ‘as an ordered combination’ to deter-
mine whether the additional elements ‘transform the na-
ture of the claim’ into a patent eligible application.” Alice,
573 U.S. at 218 (quoting Mayo Collaborative Servs. v. Pro-
metheus Labs., Inc., 566 U.S. 66, 78–79 (2012)). Step two
“looks more precisely at what the claim elements add” to
determine if “they identify an inventive concept in the ap-
plication of the ineligible matter to which . . . the claim is
directed.” SAP, 898 F.3d at 1167 (internal quotation marks
omitted). The abstract idea itself cannot supply the in-
ventive concept, “no matter how groundbreaking the ad-
vance.” Id. at 1171.
A. ’293 Patent
Uniloc argues that the ’293 patent claims are directed
to an “improvement over then-existing methods for central-
ized distribution of software” by allowing applications to be
installed on client computers “from a single point for an en-
tire managed network environment.” ’293 patent, col. 3, ll.
34–39. Uniloc argues that the ’293 patent claims are di-
rected to a particular way to achieve this advance by “pre-
paring a file packet associated with the application
program and including a segment configured to initiate
registration operations for the application program at the
target on-demand server; and distributing the file packet
to the target on-demand server to make the application
program available for use by a user at a client.” Id. at
col. 21, ll. 31–37 (Claim 1).
UNILOC USA, INC. v. ADP, LLC 11
Appellees argue that the claims are directed to the ab-
stract idea of centralized distribution of software. Accord-
ing to Appellees, the file packet is not a specific way to
accomplish the result because the specification shows that
file packets performed an “inherent function[]” in existing
off-the-shelf software products. Appellees’ Br. at 36 (citing
’293 patent, col. 17, ll. 38). Appellees argue that the ’293
patent claims are not directed to an improvement in net-
work functionality, but rather merely provide centralized
distribution of software by using conventional computer
components as tools.
We agree with Uniloc that the claims of the ’293 patent
are directed to the use of file packets with segments config-
ured to initiate centralized registration of an application
from an application server, and that this is not an abstract
idea. It is true, as Appellees argue, that the goal of the
claims is functional: to allow centralized distribution of
software. See, e.g., ’293 patent, Abstract (“[S]oftware dis-
tribution and installation may be provided from a single
network management server.”); id. at col. 3, ll. 43–46 (“[I]t
is an object of the present invention to provide methods,
systems and computer program products for centralized
management of application programs on a computer net-
work.”). But the patent claims a particular improvement
in how this is done—i.e. by use of a file packet to enable the
further functionality of initiating on-demand registration
of the application. This is the clear “focus” of the claims
and the asserted advance described in the specification.
See id. at col. 4, ll. 14–26; col. 5, ll. 33–58; col. 17, l. 55 – col.
20, l. 64.
There is nothing in the record to suggest that such net-
work architecture was so conventional as to exclude that
architectural limitation in framing what the claims are “di-
rected to.” The district court erred in discounting this key
focus of the claims in part because of a misreading of the
specification’s description of the management approach
provided by Tivoli Systems, Inc. and referred to as the
12 UNILOC USA, INC. v. ADP, LLC
Tivoli Management Environment (“TME”). The district
court reasoned that the invention claimed in the ’293 pa-
tent is not directed to an improvement in the computer or
network functionality because it uses “off-the shelf compo-
nents,” “includes only generic activities of servers,” and
“does not amount to more than a routine activity of com-
mercial network management software as described by the
specification itself.” ADP Decision at 14 (citing, inter alia,
’293 patent, col. 17, ll. 20–54). The cited description in the
specification, however, merely describes the implementa-
tion of the claimed invention using the TME. It does not
indicate that the TME itself previously used the claimed
file packets, nor does it support the Board’s conclusion that
the use of file packets was conventional. See ’293 patent,
col. 17, ll. 27–31 (“[T]he invention will be described with
respect to its application and implementation using a spe-
cific network management approach provided by Tivoli
Systems Inc. referred to as the Tivoli Management Envi-
ronment.”). The district court failed to appreciate that the
specification was describing the enhanced functionality
provided to the prior art TME system by the use of the
claimed file packets. It is undisputed that the addition of
the file packet limitation during prosecution was the heart
of the patent’s allowance. 3 See J. App’x at 751 (examiner’s
reasons for allowance). As noted, supra, the relevant ques-
tion for purposes of step one is what is “the focus of the
3 Uniloc argues that Appellants have waived their
right to rely on the prosecution history by not raising it be-
low. We disagree. There is no dispute that Uniloc main-
tained in the district court that the file packet was a focus
of its invention. The prosecution history is part of the in-
trinsic record of the patent and is a “matter[] of public rec-
ord.” Data Engine Techs. LLC. V. Google LLC, 906 F.3d
999, 1008 n. 2 (Fed. Cir. 2018). It is thus subject to judicial
notice and may be considered in our de novo review of the
district court’s eligibility analysis. Id.
UNILOC USA, INC. v. ADP, LLC 13
claimed advance over the prior art.” Intellectual Ventures
I, 850 F.3d at 1338. Here, that focus is on the use of the
file packet configured to initiate registration of an applica-
tion from an application server. This is not an abstract
idea, but a particular improvement in the functioning of
prior art application distribution networks. See Finjan,
Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1305 (Fed. Cir.
2018) (“Here, the claims recite more than a mere result.
Instead, they recite specific steps—generating a security
profile that identifies suspicious code and linking it to a
downloadable—that accomplish the desired result.”);
McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d
1299, 1314 (Fed. Cir. 2016) (“We therefore look to whether
the claims in these patents focus on a specific means or
method that improves the relevant technology or are in-
stead directed to a result or effect that itself is the abstract
idea and merely invoke generic processes and machin-
ery.”).
Because the claims in the ’293 patent are not directed
to an abstract idea, we need not proceed to Alice step two.
We reverse the district court’s dismissal with respect to the
’293 patent claims and remand for further proceedings con-
sistent with this opinion.
B. ’578 Patent
Claim 1 4 of the ’578 patent recites a network providing
for the acquisition of both a “user set of the plurality of
4 The district court considered Claim 1 of the ’578 pa-
tent as representative. Without explanation, Uniloc on ap-
peal focuses on Claim 6. Because Uniloc has not shown
that it objected to the district court’s consideration of Claim
1 as representative of the claims of the ’578 patent, and
does not explain why we should focus instead on Claim 6,
we continue to analyze all the asserted claims in the ’578
patent based on Claim 1.
14 UNILOC USA, INC. v. ADP, LLC
configurable preferences” and an “administrator set of the
plurality of configurable preferences.” The claim requires
distribution of an application launcher program to the
user, and the specification explains that the administrator
preferences are stored on the server. ’578 patent, col. 3,
ll.55–61. This positioning of the components allows the ap-
plication to launch in “respons[e] to a request from one of
the plurality of authorized users” pursuant to both sets of
preferences. In other words, it allows for on-demand in-
stallation of two-tier customized applications.
We agree with Uniloc that this is not just a functional
claim using conventional technological components. In-
stead, the claim is directed to a particular way of using a
conventional application server to nevertheless allow on-
demand installation of an application incorporating prefer-
ences from two different sources by adding the application
manager and configuration manager as additions to each
application. This is not an abstract idea under Alice step
one. See Enfish, 822 F.3d at 1337–38 (holding patent eligi-
ble claims directed to “a specific improvement to computer
functionality” that “functions differently than conventional
database structures” and “achieves other benefits over con-
ventional databases”). The two specific added components
do not merely fulfill their ordinary roles—their use to-
gether on an application server represents a different way
of achieving the improvement claimed in the ’578 patent.
Moreover, even if the claim was abstract under step
one, it would still be eligible under step two. The position-
ing of these components on the application server is akin to
the inventive concept in Bascom Global Internet Servs., Inc.
v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir.
2016) (“The inventive concept described and claimed in the
[patent-at-issue] is the installation of a filtering tool at a
specific location, remote from the end-users, with customi-
zable filtering features specific to each end user. This de-
sign gives the filtering tool both the benefits of a filter on a
local computer and the benefits of a filter on the ISP
UNILOC USA, INC. v. ADP, LLC 15
server.”). The positioning of these components on the ap-
plication server together with the application launcher on
the client computer allows customization by both the ad-
ministrator and the user in such a way as the installation
can proceed on-demand with both sets of preferences.
There has been no showing or determination that such a
network architecture was conventional.
Appellees argue that Uniloc has waived the argument
that the steps and ordered combination of steps of the ’578
patent were not conventional by not raising it to the district
court. We disagree. In Uniloc’s opposition to Big Fish’s
motion to dismiss, Uniloc argued that the claims of the ’578
patent were patent eligible because, inter alia, the configu-
rable preferences and the combination of connections and
hardware and applications were unconventional. Plain-
tiffs’ Opposition to Defendant Big Fish Games, Inc.’s Mo-
tion to Dismiss for Failure to State a Claim, Uniloc USA,
Inc. v. ADP, No. 2:16-cv-00741 (E.D. Tex. Dec. 1, 2016),
ECF No. 97 at *8–10.
We thus conclude that the district court erred in hold-
ing that Claim 1 of the ’578 patent is patent ineligible. We
reverse the district court’s grant of Appellees’ motion to dis-
miss with respect to the ’578 patent and remand for further
proceedings consistent with this opinion.
C. ’466 Patent
In considering step one, the district court began its
analysis by characterizing what the claims of the ’466 pa-
tent were directed to by merely repeating the language of
the claims themselves. See AVG Decision, at 11. The dis-
trict court more appropriately went on, however, to con-
sider the “focus of the claimed advance over the prior art”
and “the character of the claim as a whole” in concluding
that the representative claim did not claim a particular
way of programming or designing the software, and did not
use computers in any non-conventional way. We agree
with this conclusion and hold that the claims of the ’466
16 UNILOC USA, INC. v. ADP, LLC
patent are directed to using a desktop interface to access
an application server. This is an abstract idea.
Uniloc argues that the invention claimed in the ’466
patent improves upon the prior art by allowing for “seam-
less integration of application access and session charac-
teristics across heterogenous network.” ’466 patent, col. 3,
ll. 21-25. Uniloc argues that it does this through a user
desktop interface that includes “display regions associated
with application programs for which the user is author-
ized.”
The “display regions” of the claimed desktop interface
are simply icons that execute programs. Appellees alleged
that the components are all conventional. Uniloc does not
argue that the display icons or the user desktop incorporate
any unconventional software or perform any unconven-
tional functionality, see Appellant’s Opening Br. at 33; id.
at 4 (“A known approach to reducing software distribution
problems was to use an application server to store and
maintain applications that may then be transmitted over a
network to clients using a software program.”), nor does
Uniloc contend that using an icon to access an application
is in any way unconventional. Moreover, the mere fact of
using a desktop interface to access a conventional applica-
tion server using conventional software is not an improve-
ment in “network architecture” as Uniloc contends. The
user desktop interface with display regions does not impart
any materially different functionality to the network itself
over a conventional application server.
The claim is wholly functional and does not include the
“specificity required to transform a claim from one claiming
only a result to one claiming a way of achieving it.” See
SAP, 898 F.3d at 1167. Moreover, the user-specificity of
the available applications is merely an elementary form of
customization, which we have previously held does not it-
self render claims non-abstract. See Intellectual Ventures
I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1369–70
UNILOC USA, INC. v. ADP, LLC 17
(Fed. Cir. 2015) (holding that tailoring a website display to
a user’s personal characteristics is abstract). The focus of
the claims here is on the abstract idea of using a desktop
interface to access an application server. The alleged func-
tional improvements in efficiency arise wholly out of the
conventional advantages of using networked computers as
tools, not a particular improvement in the computer or net-
work. See Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d
1350, 1354 (Fed. Cir. 2016) (distinguishing patent eligible
improvements in computer functionality from patent ineli-
gible improvements that use computers as tools).
The claims of the ’466 patent also do not pass muster
under step two. Uniloc merely argues that the ordered
combination in the claims, “namely, the various software
limitations and their interaction,” Appellant’s Opening Br.
at 36, is an inventive concept. However, the “software lim-
itations” are merely the conventional ones described above.
There is nothing unconventional about the “ordered combi-
nation” that is not merely the sum of the parts. See In re
TLI Commc’ns Patent Lit. v. AV Automotive, LLC, 823 F.3d
607, 615 (Fed. Cir. 2016) (holding that where “recited phys-
ical components behave exactly as expected according to
their ordinary use,” they do not constitute an inventive con-
cept).
Uniloc argues that whether the components were con-
ventional under step is a question of fact, and that the dis-
trict court erred by deciding these fact issues against
Uniloc as the non-moving party. See Berkheimer v. HP
Inc., 881 F.3d 1360, 1364–65 (Fed. Cir. 2018). In particu-
lar, Uniloc argues that there is “zero evidence” of a user-
specific desktop interface, where the server interface in-
cludes display regions for which the user is authorized, and
where the server receives a selection from the interface and
provides an instance of the application to the client for ex-
ecution. We disagree. The district court adequately sup-
ported its conclusion by reference to the specification’s
description of a prior art client-server environment. AVG
18 UNILOC USA, INC. v. ADP, LLC
Decision at 15 (citing ’446 patent, col. 1, l. 57 – col. 2, l. 11).
That section of the specification describes the prior art cli-
ent-application server architecture, which necessarily in-
cludes a user interface, and allows the transmission of an
application program from a server to a client for installa-
tion. Although that section explains that the prior art had
certain limitations, like limiting the install to a particular
client, the overcoming of those limitations is nowhere in
the claim.
Uniloc also briefly argues that the prosecution history
supports a lack of conventionality because the examiner
did not find any references that taught the display region.
Uniloc does not point to anything in particular in the pros-
ecution history. The mere allowance of claims during pros-
ecution does not preclude dismissal for patent ineligibility.
Moreover, Uniloc is incorrect that an improvement in effi-
ciency guarantees patent eligibility. The cases Uniloc cites
are inapposite because the efficiency improvements in
those cases arose out of claimed unique improvements in
computer functionality, rather than improvements inher-
ent in the use of conventional computer components as
tools to perform conventional functions. See Core Wireless
Licensing S.A.R.L. v. LG Elecs., Inc., 880 F.3d 1356, 1363
(Fed. Cir. 2018) (holding patent eligible claims that created
an efficiency improvement through a new user interface);
Berkheimer, 881 F.3d at 1369 (holding that claims that fail
to capture a purportedly unconventional form of data stor-
age ineligible, while finding that other claims that do cap-
ture purportedly unconventional forms of data storage
gave rise to a factual dispute underlying patent eligibility);
Enfish, 822 F.3d at 1339 (noting that improvements in ef-
ficiency arising out of an invention that “functions differ-
ently than conventional” structures “bolster[s]” the
conclusion that the claims are directed to technological im-
provements rather than abstract ideas).
We thus affirm the district court’s conclusion that rep-
resentative claim 1 of the ’466 patent is not patent eligible.
UNILOC USA, INC. v. ADP, LLC 19
D. ’766 Patent
Uniloc argues that the ’766 patent claims a network ar-
chitecture that enables user-specific license management
over a network, and that this functionality contrasts with
prior art licensing on a client/workstation basis. Uniloc ar-
gues that this is a particular improvement in computer
functionality—changing the network architecture by main-
taining license management policy information at a license
management server so that users can move from client to
client and maintain their permissions.
Representative Claim 1 is directed to a license manage-
ment method that indicates a user’s authorization to access
an application. The task in claim 1 is simply to “provid[e]
an unavailability indication . . . or an availability indica-
tion,” based on “at least one of a user identity based policy,
an administrator policy override definition or a user policy
override definition.” This is an abstract idea.
Claim 1 does “not go beyond requiring the collection,
analysis, and display of available information.” See Elec.
Pwr. Grp., 830 F.3d at 1351. The information being col-
lected is who the user is, tested against the user identity
policy, with a resulting display of authorization. This is not
an improvement in network architecture—it is the use of a
computer as a tool to process information. Uniloc’s attempt
to reframe the claimed improvement to allow client-inde-
pendent user-specific application access must fail; neither
that functionality nor how that can be achieved is in the
claims. Finally, as noted above, we have held that incorpo-
rating user-customization when using the computer as a
tool does not render claims patent eligible. See id. at 1354;
Intellectual Ventures I, 792 F.3d at 1369–70.
Uniloc argues that the prosecution history supports its
position that the claim is directed to an improvement in
computer technology because Uniloc argued to the exam-
iner that the claim was not obvious over the prior art be-
cause its claims associated the license with a user, whereas
20 UNILOC USA, INC. v. ADP, LLC
the prior art associated the license with a computer.
Uniloc’s argument is inapposite. Uniloc does not explain
how its argument to the examiner for non-obviousness in-
forms the step one directed-to inquiry here. Moreover, as
we noted above, a license to a user is not materially differ-
ent than a license to a computer for purposes of eligibility
of this claim—the claim is nevertheless directed to the li-
cense management method which merely provides infor-
mation to the user about the user’s authorization.
The claims also contain no inventive concept under
step two. Nothing about the licensing policy, the applica-
tion server, or the notification of authorization is asserted
as unique or non-conventional from the way that those
components ordinarily function. The licensing policy deter-
mines authorization to an application like a conventional
licensing policy, the server stores and delivers the authori-
zation information like a conventional server, and the no-
tification notifies the user in a conventional way.
Uniloc is incorrect that the real-time availability of au-
thorization information improves efficiency and is an in-
ventive concept. Such real-time availability of information
is a staple of a conventional network. Intellectual Ventures
I, 792 F.3d at 1367 (noting that improvements in “speed or
efficiency inherent with applying the abstract idea on a
computer” do not provide an inventive step). Similarly,
even if a “user identify based policy” is a new source or type
of information, it is still abstract information that, as such,
does not contribute to any inventive concept.
We thus affirm the district court’s conclusion that rep-
resentative claim 1 of the ’766 patent is patent ineligible.
AFFIRMED-IN-PART, REVERSED-IN-PART AND
REMANDED
COSTS
No costs.