Capital One Scores Patent Appeal Win; Fed. Cir. Rules Internet Claims Ineligible

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By Anandashankar Mazumdar

July 6 — A software “brain” managing content of a website based on user data was not an inventive concept, an it thus did not make the abstract idea of customizing website content patent-eligible, the U.S. Court of Appeals for the Federal Circuit ruled July 6 in a win for Capital One Bank. 

The court also found a claim on using generic computer components to manage spending over the Internet to be ineligible, in a ruling that dashed the hopes of patent assignees who appealed a lower court ruling that had also favored Capital One.

Patent Assignee Sues Capital One 

Intellectual Ventures I LLC and Intellectual Ventures II LLC are entities affiliated with Intellectual Ventures Management LLC, based in Bellevue, Wash., that hold rights by assignment in three patents, two of which cover certain Internet-related applications—administering financial accounts and giving users access to customized websites—and one of which is related to organizing photographs using a computer (U.S. Patent Nos. 8,083,137, 7,603,382 and 7,260,587).

Capital One Financial Corp. of Tysons Corner, Va., is a bank holding company with subsidiaries engaging in various financial services-related businesses, including Capital One Bank (USA) N.A. and Capital One N.A.

Intellectual Ventures sued the three Capital One entities, alleging infringement of the three patents.

Judge Anthony J. Trenga of the U.S. District Court for the Eastern District of Virginia found that the '137 and '382 patents asserted claims in ineligible subject matter under 35 U.S.C. §101.

The '587 patent was found not to infringe based on a stipulation by the parties after the district court's claim construction ruling. Intellectual Ventures appealed.

No Inventive Concept Found 

On appeal, the Federal Circuit first agreed that the representative Claim No. 5 of the '187 patent was ineligible because it covered an abstract idea, namely “tracking financial transactions to determine whether they exceed a pre-set spending limit (i.e., budgeting).”

The limitation that such budgeting would be accomplished through a “communication medium” didn't transform it into an eligible claim, the court said.

According to the court, the claim was similar to those rejected in Bilski v. Kappos, 561 U.S. 593, 95 U.S.P.Q.2d 1001 (2010), and Alice Corp. Pty. Ltd. v. CLS Bank, Int'l, 134 S. Ct. 2347, 110 U.S.P.Q.2d 1976 (2014).

Under the second step of the Alice analysis, the court said that “it is clear that the claims contain no inventive concept,” because the technologies cited “are all generic computer elements.”

“Instructing one to ‘apply' an abstract idea and reciting no more than generic computer elements performing generic computer tasks does not make an abstract idea patent-eligible,” the court said.

The '382 patent—which set forth a system for customizing the content of a website based on information about the user, including web surfing history—was rejected on similar grounds.

Specifically, Claim No. 1 of the patent recited “an interactive interface configured to provide dynamic web site navigation data to the user.”

The Federal Circuit said this claim was broad enough to encompass “tailoring content based on the time of day at which the user viewed the content,” which was something that had been done for decades with respect to television commercials.

And, once again, the court said that “merely adding computer functionality to increase the speed or efficiency of the process does not confer patent eligibility on an otherwise abstract idea.”

The court rejected the assertion that what was being described in the claim was “an interactive interface that manages web site content.” On the contrary, the court said, this was merely recitation of a “generic computer element” to execute the abstract idea in question.

Intellectual Ventures had argued that the “interactive interface” described was a piece of software that was “basically the brains of the outfit.”

This failed to constitute any inventive concept , however, the court said:

Requiring the use of a “software” “brain” “tasked with tailoring information and providing it to the user” provides no additional limitation beyond applying an abstract idea, restricted to the Internet, on a generic computer.


The court distinguished the patent in this case from that in DDR Holdings, LLC v., L.P., 773 F.3d 1245, 113 U.S.P.Q.2d 1097 (Fed. Cir. 2014).

In DDR Holdings, the court said, the patent in question “dealt with a problem unique to the Internet: Internet users visiting one web site might be interested in viewing products sold on a different web site, but the owners of the first web site did not want to constantly redirect users away from their web site to a different web site.”

That patent asserted an “Internet-based solution” to this problem, the court said. In contrast, the “patent claims here do not address problems unique to the Internet, so DDR has no applicability.”

Finally, the court agreed with the district court's claim construction ruling on the '587 patent and affirmed the judgment of non-infringement of the '587 patent along with the judgment of ineligibility of the two Internet patents.

The court's opinion was authored by Judge Timothy B. Dyk and joined by Judges Jimmie V. Reyna and Raymond T. Chen.

Intellectual Ventures was represented by Feinberg Day Alberti & Thompson LLP, Menlo Park, Calif. Capital One was represented by Latham & Watkins LLP, Washington. Amicus curiae Askeladden LLC was represented by Wilmer Cutler Pickering Hale & Dorr LLP, Washington.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at

To contact the editor responsible for this story: Tom P. Taylor at