LendingTree, LLC v. Zillow, Inc. (Fed. Cir. 2016) – Claims of Another “Loan Application” Patent Invalidated Under Section 101 | McDonnell Boehnen Hulbert & Berghoff LLP


In an unprecedented opinion issued earlier today, the Federal Circuit struck down the 35 USC § 101 claims that had survived the district court in LendingTree, LLC, v Zillow, Inc., Nextag, Inc. and Adchemy, Inc. This case is eerily similar both in object and outcome to the recent Federal Circuit decision in Grader Mortgage, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1318 (Cir. Fed. 2016). Both cases involved lending application software patents, and both had claims found to be invalid under 35 USC § 101. The Federal Circuit’s analysis here, comparing the contested claims under Section 101 to the prior claims found to be invalid, continues to be the strongest evidence considered by the Court when analyzing patentable subject matter.

LendingTree brought an action against Zillow and other defendants in the U.S. District Court for the Western District of North Carolina, asserting claims of U.S. Patent Nos. 6,385,594 and 6,611,816 (the ‘816 patent is a continuation of the ‘594 patent, and therefore, the costume patents share a common specification). Zillow sought summary judgment of invalidity under 35 USC § 101 with respect to the claimed claims of the two patents, but the district court delayed ruling on the petition until after the trial, in which case the court l ‘denied orally. After the trial, the jury returned a verdict finding that Zillow and the other defendants had not infringed the claimed claims of the patents in dispute and that all claims of the patents in dispute were invalid for improper inventor. All of these issues were appealed, respectively.

The only substantive issue regarding the claims the Federal Circuit resolved on appeal was patentability under 35 USC § 101. This rendered other issues moot.

The patents in issue relate to a process for coordinating loans on an Internet loan processing computer. According to the ‘594 patent, which was filed in May 1998, traditional methods of applying for a loan were cumbersome and time consuming as there was no way to apply without physically going or calling each lender and filling out an application. or a credit qualification form. . The inventors sought to combine the vast resources and speed of the Internet with additional knowledge of the various criteria for selecting credit institutions to create a simple mechanism by which an internet user can submit a single credit application to a plurality of institutions. which then make offers to the customer over the Internet. There are ten general steps in the process of coordinating the loans of the ‘594 patent. Independent Claim 1 of the ‘594 patent is representative of the subject matter claimed and is reproduced below.

1. A method of coordinating an electronic credit qualification form between an Internet user and a plurality of credit institutions via the Internet, comprising the steps of:
a) receive the selection criteria from the plurality of credit institutions;
b) store the selection criteria in a database;
c) posting a plurality of documents on a website;
d) receive a plurality of credit data sent by the Internet user;
e) applying said credit data to a filter comprising the plurality of database selection criteria to select without manual intervention each of said plurality of credit institutions associated with a correspondence of said credit data with said selection criteria;
f) determining an appropriate transfer method for transmitting said electronic credit qualification form to credit institutions associated with a match of said credit data;
g) transmitting said electronic qualification form comprising said credit data to said plurality of credit institutions associated with a match of said credit data via said appropriate transfer method, transmission of said electronic qualification form comprising said credit data occurring without deadline for receiving all credit decisions from said credit institutions;
h) receiving a plurality of positive credit decisions from said plurality of credit institutions associated with a match of said credit data relating to a credit offer or a loan to the Internet user;
I) simultaneously display the plurality of positive credit decisions to the Internet user on the website;
j) receive via the website at least one decision of the Internet user concerning at least one of the positive credit decisions, the decision of the Internet user including an acceptance, a refusal or a request for further information concerning a positive decision for the one of said lending institutions associated with a match of said credit data; and
k) transmit the decision of at least one Internet user to at least one credit institution corresponding to a positive credit decision so that said Internet user can obtain a credit or a loan from one of said credit institutions associated with a correspondence of said data credit, whereby said credit institutions associated with a match of said credit data compete for business with the Internet user.

Disability under 35 USC § 101

Abstract idea-Zillow argued that the patents in issue are directed towards the idea of ​​”comparing credit information to loan criteria” (that is to say., a “credit request clearing house”). In Zillow’s view, this idea represents a core economic practice that is not significantly different from practices previously held to be abstract by the Supreme Court and therefore not eligible for patent under § 101.

The Federal Circuit has found that at first glance, claim 1 is aimed at an abstract idea; that is, a clearinghouse for loan applications or, more simply, loan coordination. The Federal Circuit has found similarities between these concepts and those of risk coverage in Bilski, and intermediated settlement in Alice since each is something long prevalent in our financial system. The Federal Circuit found that the patents in issue use a computer program on a loan processing computer to organize the process without any consequences, since the use of a third-party intermediary (or a clearing house) is also a constituent part of the process. modern system economy.

The Federal Circuit noted that inside Mortgage Grader, similar claims were also considered to be directed towards abstract ideas (considering that the claims directed against the idea of ​​“anonymous loan seeking” were abstract).

Inventive concept– The Federal Circuit then ruled that claim 1 does not cite anything which, individually or as an ordered combination, turns the abstract idea of ​​loan coordination into a patent-eligible application of that idea. Federal Circuit thinking, at best, claim 1 describes the automation of a fundamental economic concept through the use of generic computing functions.

LendingTree argued that the particular limitation on “concurrent competition” amounts to an inventive concept sufficient to make the patent of the claims eligible. But the Federal Circuit noted that similar claims with similar limitations had been addressed and lacked an inventive concept.

In Mortgage Grader, the representative claim of the patents at issue required a computer system configured to enable a borrower “to research [a] database for identifying a set of loan sets “from a plurality of lenders and” for comparing loan sets within the set “, and which has also been configured” to display to the borrower an indication of the total cost of each set of loans in the set. This has been summed up as the simultaneous competition of several lenders for the business of the potential borrower. Mortgage Grader, it was found that the claims did not include an inventive concept.

Likewise, here, the Federal Circuit has found that using a generic computer to display a “plurality of positive credit decisions”, as set out in claim 1 of the ‘594 patent, is not significantly different from the ‘use a generic computer to display competing loan packages or give instructions. Therefore, the Federal Circuit stated that, like the Mortgage Grader and Alice, claim 1 is not eligible for patent because it only facilitates the process of applying for the claimed loan using generic technology.

In addition to comparing the claims to those previously deemed invalid under Section 101, the Federal Circuit researched and found no technological issues resolved by the claims. Rather, it turned out that the claims provided only a generic technological environment (that is to say., computers and the Internet) to realize the abstract idea of ​​coordinating loans. Likewise, the Federal Circuit further noted that the claims were not aimed at improving computer technology (as in To fish). Simply speeding up the loan application process by allowing borrowers to avoid going to or physically calling each lender and filling out an application was insufficient technological improvement, in the eyes of the Federal Circuit, to satisfy the need. “inventive concept” requirement of the section 101 analysis.

Accordingly, the Federal Circuit found that the claimed claims of the patents in issue are directed to an abstract idea and do not present an “inventive concept”, and are therefore directed to an ineligible subject matter under 35 USC § 101. The Denial of the district court Zillow’s summary judgment motion was overturned.


At trial, the jury declared invalid all claims of the patents in issue for improper inventor. The conclusion on the § 101 issue – that some claims of the ‘594 patent and the’ 816 patent are invalid – still leaves a number of claims intact, and the Federal Circuit therefore assessed the inventor issue.

During the lawsuit, LendingTree decided to correct the inventor of the subject patents in accordance with 35 USC § 256. The PTO issued certificates of correction (adding James F. Bennett, Jr. as named inventor) for the patents involved. In LendingTree’s view, the actions of the PTO rendered the inventor dispute moot.

The Federal Circuit agreed and returned LendingTree’s permission, if it chooses to do so, to file a petition under the Fed. R.Civ. P. 60 (b) to set aside the Irregular Inventor Invalidity Judgment in respect of the remaining claims of the patents at issue.

LendingTree, LLC v Zillow, Inc. (Cir. Fed. 2016)
Unprecedented layout
Panel: circuit judges Moore, Schall and O’Malley
Opinion of Circuit Judge Schall

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