In Shortridge v. Found. Constr. Payroll Serv., the U.S. Court of Appeals for the Federal Circuit upheld the invalidation of Shortridge’s claims directed to software for construction companies that simultaneously generates employee payroll and certified public records required by certain jurisdictions for public works projects. The District Court for the Northern District of California had granted a motion to dismiss the underlying patent infringement suit, finding that the claims were directed to an abstract idea. Specifically, the District Court had characterized the claimed subject matter as being directed to cataloging labor data implemented on generic computer hardware, which it then invalidated as an abstract idea.
Shortridge conceded that the asserted claims were directed to an abstract idea, pinning its entire argument on step two of the subject-matter eligibility analysis. The patentee argued that step two is “where the whole question is.”
In support of the subject-matter eligibility of the asserted claims, the patent owner argued that the simultaneous generation of certified payroll records (documents verifying payment of jurisdiction-specific minimum wages that vary based on location and type of work performed) and core payroll processing was an inventive concept amounting to significantly more than an abstract idea. The Court rejected Shortridge’s argument, concluding that rendering the performance of these two known practices simultaneous by straightforward implementation on generic computer hardware was insufficient to grant patent-eligibility to the claimed subject matter. The Court acknowledged that such a feat could not be performed by a human, but reiterated a statement from OIP Techs. that “relying on a computer to perform routine tasks more quickly or more accurately is insufficient to render a claim patent eligible.”
The Court also dismissed the argument that the one-size-fits-all algorithm for accomplishing the tasks of generating payroll and certified payroll records was an inventive concept that could save the claims from invalidation. It stated that processes employing algorithms to manipulate information solely for the purpose of generating additional information could not grant patent-eligibility to the claimed subject matter. The Federal Circuit also noted that limiting the claims to the field of public construction projects could not render the concept patentable.
The Court distinguished the claims from those confirmed to be patent-eligible in DDR Holdings, characterizing the DDR claims as being rooting in computer technology to overcome a problem specific to the Internet. By contrast, the Court viewed the asserted claims as solving a business problem via automation on a generic computer. Accordingly, the Court affirmed the invalidation of the claims and the dismissal of the suit.
Following the trend begun in Bilski and continued in Alice, the Court in Shortridge confirmed that the straightforward automation of public domain business practices using generic computer hardware cannot achieve patent protection. For claims that approach the line between solving a business problem via computerized automation and solving a computer-specific problem via solutions rooted in computer technology, the characterization of the advance in the specification, prosecution history, and presentation before a court may make the difference between achieving patent protection and losing claims to invalidation.
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