DING DONG! THE FEDERAL CIRCUIT STRIKES AGAIN: Yesterday, the Federal Circuit released the opinion for IPXL Holdings, LLC v. Amazon.com, in which it was decided (among other things), that claiming both a system and the method for using that system renders a claim invalid under 35 U.S.C. 112, paragraph 2. While this concept has been generally known for a long time, its application has not been actively invoked in the courts. In fact, this issue was one of first impression in the Federal Circuit.

But when one reads the decision, and the context in which the court made its ruling, you can't help but get cold sweats thinking about the numerous ways that claims can now be invalidated, especially those pertaining to software. What's even worse, the court spent only TWO paragraphs explaining its rationale for invalidating the claim, and basically relied on Landis and the MPEP for support. For a matter of first impression, you'd think the court would provide a little more guidance for patentees and practitioners, but this was not the case. In essence, they placed a flaming bag of you-know-what at the doorstep of the patent bar, rang the doorbell, and ran away.

The offending claim of US patent 6,149,055 read as follows (the emphasis was included in the court's opinion):

25. The system of claim 2 wherein the predicted transaction information comprises both a transaction type and transaction parameters associated with that transaction type, and the user uses the input means to either change the predicted transaction information or accept the displayed transaction type and transaction parameters.

And this is what the court ruled:

Thus, it is unclear whether infringement of claim 25 occurs when one creates a system that allows the user to change the predicted transaction information or accept the displayed transaction, or whether infringement occurs when the user actually uses the input means to change transaction information or uses the input means to accept a displayed transaction. Because claim 25 recites both a system and the method for using that system, it does not apprise a person of ordinary skill in the art of its scope, and it is invalid under section 112, paragraph 2.

And that was it. Now clearly the patentee had intermingled a method step into a system claim. However, functional steps are essential when claiming matters such as software. Just about every software system includes (1) some kind of processor and (2) some kind of memory; the novelty is always based in the steps performed in the software, sometimes even with user input.

I can only guess that the claim was invalidated because it affirmatively claimed the user performing the step. However, you can't tell this from reading the decision. For example, would the claim have been valid if the claim recited:

The system of claim 2 wherein the predicted transaction information comprises both a transaction type and transaction parameters associated with that transaction type, wherein the input means either changes the predicted transaction information or enables acceptance of the displayed transaction type and transaction parameters?

Again, the decision doesn't say. And if the claim would be valid, is the Federal Circuit invoking a form-over-substance requirement on such claims?

Furthermore, the scant legal authority that the court relied on only included cases that predated State Street (the most recent decision was one from the BPAI, Ex Parte Lyell, decided in 1990). And a more interesting note is that such 112(2) rejections are closely related to non-statutory rejections under 35 U.S.C. 101:

Such claims [claiming both apparatus and method steps] should also be rejected under 35 U.S.C. 101 based on the theory that the claim is directed to neither a "process" nor a "machine," but rather embraces or overlaps two different statutory classes of invention set forth in 35 U.S.C. 101 which is drafted so as to set forth the statutory classes of invention in the alternative only.

See MPEP 2173.05(p). However, this theory of non-statutory matter was significantly whittled down after State Street. Has 112 failed to keep up?

What a mess.

Just for kicks, I decided to look up Amazon's notorious one-click patent (US Patent 5,960,411) to see what goodies i could find (after all, the IPXL Holdings decision was based on the one-click system - what's good for the goose . . .). Here is what I found in claim 6:

6. A client system for ordering an item comprising:

an identifier that identifies a customer;

a display component for displaying information identifying the item;

a single-action ordering component that in response to performance of only a single action, sends a request to a server system to order the identified item, the request including the identifier so that the server system can locate additional information needed to complete the order and so that the server system can fulfill the generated order to complete purchase of the item; and

a shopping cart ordering component that in response to performance of an add-to-shopping-cart action, sends a request to the server system to add the item to a shopping cart.

Under IPXL Holdings, this claim should be toast. Then again, so should about half of all the e-commerce and software patents currently in existence that have this type of claiming format.

So, when is the petition for rehearing en banc being filed?