Eligibility Test Confusion Shows in Yodlee Patent Rulings

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  • Holding: Magistrate's report says four of seven Yodlee Internet patents pass eligibility muster under Alice, applying Enfish.
  • Takeaway: But judge's reading of Enfish shows difficulty distinguishing Alice steps one and two.


By Tony Dutra

May 24 — One of the first detailed patent eligibility analyses after an important Federal Circuit opinion resulted in a partial win May 23 for patent owner Yodlee Inc., a U.S. software company ( Yodlee, Inc. v. Plaid Techs. Inc. , 2016 BL 164198, D. Del., No. 14-1445, 5/23/16 ).

A magistrate judge of the U.S. District Court for the District of Delaware found four out of seven of the company's patents eligible in an analysis for Chief Judge Leonard P. Stark.

This was Magistrate Judge Christopher J. Burke's “report and recommendation” only, so Stark can alter the outcome. If it stands, Yodlee's claims of infringement by Plaid Technologies Inc. will move forward in litigation.

For Yodlee, the split result in Burke's analysis could be seen as a validation of some stakeholders' claims that the court's Enfish v. Microsoft decision will shift the tide toward courts finding more software patents eligible. But the court's reasoning isn't convincing on that score.

In Enfish, the Federal Circuit held that certain software inventions are not “directed to” ineligible abstract ideas—the first-step hurdle of the Supreme Court's Alice v. CLS Bank test for patent eligibility. But Burke saw no significant difference between determining what the invention is “directed to” and assessing whether a patent has an “inventive concept” that goes beyond applying the abstract idea—the focus of step two of the Alice test.

The additional work of determining “directed to” will disappoint stakeholders who believed that the Enfish step-one result would provide a quick and easy way to move past an eligibility challenge.

‘Directed to' More Than ‘Involves' Abstract Idea

Yodlee provides aggregation services for users' Internet accounts so they can see their e-mail, banking, travel and other information on one screen. Its patents generally involve a software-based personal “agent” acting on behalf of an Internet user to aggregate data in multiple accounts. Yodlee and Plaid compete in supplying consolidated financial data to their customers. Yodlee's complaint was filed in December 2014.

Source Material:

Case docket: No. 1:14-cv-01445

U.S. Patents:No. 6,199,077No. 6,317,783No. 6,510,451No. 7,263,548No. 7,424,520No. 7,752,535No. 8,266,515

Six months earlier, the Supreme Court had set out the two-step test of Alice Corp. Pty Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347, 2014 BL 170103, 110 U.S.P.Q.2d 1976 (2014) ( 88 PTCJ 513, 6/20/14 ).

Until Enfish, the U.S. Court of Appeals for the Federal Circuit applied Alice and held only one patent eligible under 35 U.S.C. §101, in DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 2014 BL 342453 (Fed. Cir. 2014)(89 PTCJ 370, 12/12/14).

The appeals court's May 12 ruling in Enfish LLC v. Microsoft Corp., No. 2015-1244, 2016 BL 151342 (Fed. Cir. May 12, 2016) (92 PTCJ 166, 5/20/16) ended with a step-one decision favoring the software patent owner. However, it included three statements that ultimately caused Burke's dilemma:

  •  Saying a patent claim “involves” an abstract idea is not enough at step one. It must be “directed to” that idea. The Federal Circuit quoted Alice in saying that “the ‘directed to' inquiry applies a stage-one filter to claims, considered in light of the specification, based on whether ‘their character as a whole is directed to excluded subject matter.' ”
  •  Enfish LLC's patents on a new database structure are “directed to a specific improvement to the way computers operate” (Burke's emphasis).
  •  The court said that it expected future “close calls about how to characterize what the claims are directed to. In such cases, an analysis of whether there are arguably concrete improvements in the recited computer technology could take place under step two.”


Burke paraphrased “character as a whole” as the “basic character” of the claimed invention at step one. Elsewhere in the report, he looked for a “key concept” or “key ingredient.” Burke frequently focused on trying to identify a “specific improvement.” He did not distinguish any of those terms from the “inventive concept” of step two, and more than once said it was essentially the same query.

Fact Disputes at Alice Step Two

Burke also determined that one of Yodlee's patents presented a “close call” that Enfish warned about. He also determined that two other patents were eligible after Alice step one, but if he was wrong, there were sufficient “disputed issues of fact” remaining at step two.

Those disputes were about whether Yodlee's identification of key concepts were specific improvements in Internet functionality, or whether they were the “well-understood, routine, and conventional activities” that, according to Alice, add nothing to the eligibility question.

The Federal Circuit in Enfish never mentioned the phrase. That isn't surprising, because it never got to step two.

Fish & Richardson P.C. represents Yodlee. Richards, Layton & Finger PA and Gibson, Dunn & Crutcher LLP represent Plaid.

To contact the reporter on this story: Tony Dutra in Washington at adutra@bna.com

To contact the editor responsible for this story: Mike Wilczek in Washington at mwilczek@bna.com

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