In Uniloc USA, Inc. v. Rackspace Hosting, Inc., Eastern District of Texas Chief District Judge Leonard Davis granted Rackspace’s motion to dismiss Uniloc’s complaint under Fed. R. Civ. P. 12(b)(6) for failure to allege infringement of a patentable claim under 35 U.S.C. § 101. This ruling is notable for several reasons: the Court granted an early motion to dismiss for the defendant in a historically pro-patentee jurisdiction (E.D. Texas), and the early dismissal resulted from the court finding the patent invalid under 35 U.S.C. § 101.

Uniloc brought suit against Rackspace for infringement of claim 1 of U.S. Patent No. 5,892,697  (the “’697 Patent”), which is directed to a method for processing floating-point numbers. Floating-point numbers, which are often used in software, “have at least three fields: (i) a sign to indicate positive or negative; (ii) an exponent; and (iii) a mantissa, which is the body of the number.” Uniloc, Dkt. No. 38 at 1. Computation of floating-point numbers was standardized in Institute of Electrical and Electronics Engineers (“IEEE”) Standard 754 prior to invention of the ’697 Patent. The ’697 Patent, however, purports to disclose a method which increases computational efficiencies when compared to the IEEE Standard 754.

In finding claim 1 invalid under 35 U.S.C. § 101, the Court first analyzed the claim under the Federal Circuit’s machine-or-transformation test, which the Supreme Court has deemed  “a useful and important clue” but “not the sole test” for determining patent eligibility. Bilski v. Kappos, 130 S. Ct. 3218, 3225-27 (2010). In applying the machine-or-transformation test, the Court noted that the steps of claim 1 do not recite a machine, and the mere manipulation of data in claim 1 does not satisfy the transformation prong. Uniloc, Dkt. No. 38 at 5.

The Court also determined that claim 1 recites a mathematic formula and therefore falls under the law of nature exception to patentable subject matter. Chief Judge Davis compared claim 1 to the claims found invalid in Gottschalk v. Benson, which were directed to “converting one form of numerical representation to another,” Gottschalk v. Benson, 409 U.S. 63, 65 (1972). Like the claims in Benson, Chief Judge Davis found that claim 1 recites “a procedure for solving a given type of mathematical problem,” and therefore preempts “the mathematical formula and in practical effect” covers the algorithm itself. Id. at 65, 72.

Further, the Court concluded that although claim 1 “constitutes an improvement on the known method for processing floating-point numbers” disclosed in IEEE Standard 754, the “improvement over the standard is insufficient to validate Claim 1’s otherwise unpatentable subject matter.” Uniloc, Dkt No. 38 at 9. This reasoning buttressed the fact that even when tied to computing, “a patent on Claim 1 would cover vast end uses, impeding the onward march of science.” Id.

While this opinion might likely have minimal precedential influence, it nonetheless serves as a warning against asserting method claims that are not tied to a machine, are non-transformative, or are merely recited steps of a mathematical calculation.

Gibbons will continue to track the status of this case, and will report any further developments as they arise.

Robert E. Rudnick is a Director in the Gibbons Intellectual Property Department.