In the ongoing case of Inmar Brand Solutions, Inc. v. Quotient Technology Inc., the district court was tasked with conducting an analysis under the Supreme Court’s two-step test in Alice Corp. v. CLS Bank International to determine whether Inmar’s patented coupon-processing system, exclusively licensed from Intelligent Clearing Network, Inc. (ICN), was entitled to patent protection. Under the Alice framework, the district court must first ascertain whether claims are directed towards patent-ineligible subject matter, such as abstract ideas. If so, the district court proceeds to the second step, wherein it evaluates whether the claims contain an inventive concept that transforms the abstract idea into a patent-eligible application.
Quotient contends that the patents asserted by Inmar are invalid and directed towards a patent-ineligible abstract idea: namely the processing of coupons on a remote server. According to Quotient, the claims lack an inventive concept and merely recite generic computer components.
Inmar opposes this characterization, and contends that the claims represent an improved coupon processing architecture that significantly reduces fraud and cannot be accomplished by humans.
As explained by the district court, the primary concern underlying this argument is the concept of preemption, which aims to prevent the granting of a monopoly over an abstract idea that could impede innovation. While the Supreme Court in Alice did not provide precise contours for what constitutes an abstract idea, subsequent Federal Circuit decisions have shed light on this issue.
An abstract idea is at issue when the claimed advance is “a method of organizing human activity.” Alice, 573 U.S. at 220. A telltale sign of abstraction is when claimed functions are mental processes that can be performed using only human cognition or simple tools like pencil and paper. For instance, a poll-based networking system that connects users based on similarities determined through poll answering was deemed abstract because it did not improve existing technology and did not require specialized computer components.
The district court further explained that not all systems that automate tasks previously performed by humans necessarily fall into the abstract idea category. For example, a patent directed to an improved system for washing jet engines was held to be non-abstract because it provided technical improvements over prior art systems.
Inmar emphasizes that its patents are directed towards a specific arrangement and operation of computer systems for coupon clearing, leading to tangible improvements in efficiency, security, and speed.
In its ruling, the district court acknowledges the validity of Quotient’s concerns regarding preemption and the potential stifling of innovation. Nonetheless, the district court concludes that Inmar’s patents do not fall within the realm of abstract ideas. Instead, they represent a significant technological advancement in coupon processing.
For that reason, the district court did not proceed to step two of Alice and denied the motion to dismiss.
Inmar Brand Solutions, Inc. v. Quotient Technology Inc., No. 23-994, Civ. Act. (D. Del. Apr. 18, 2024)
The authors of www.PatentLawyerBlog.com are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.