Source: https://www.b2ipreport.com/swip-report/patent-eligibility-graham-v-john-deere/
Timestamp: 2019-04-19 05:07:48+00:00

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In vacating a motion to dismiss because it disagreed with a district court’s finding that patent claims were “invalid as directed to ineligible subject matter under 35 USC § 101,” a Federal Circuit panel has made explicit a debate about whether patent-eligibility is a question of law or requires factual determinations. Aatrix Software, Inc. v. Green Shades Software, Inc., No. 2017-1452 (Fed. Cir. Feb. 14, 2018) (precedential). Judge Moore, joined by Judge Taranto, wrote the majority opinion. Judge Reyna concurred in part and dissented in part. As noted in the PatentlyO blog, the outcome of this debate, raised in Judge Moore’s recent opinion in Berkheimer v. HP, Inc., has important ramifications for litigants seeking to resolve patent disputes at the pleading stage. But more than that, what if patent examiners were required to make explicit factual findings in order for a patent-eligibility rejection to be sustained?
We have held that claims to pure data and claims to transitory signals embedded with data are directed to ineligible subject matter under § 101. Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1348–50 (Fed. Cir. 2014); In re Nuijten, 500 F.3d 1346, 1353–57 (Fed. Cir. 2007). But the rationale of those decisions—failure of the claimed matter to come within any of the four statutory categories: process, machine, manufacture, composition of matter—does not apply here. It remains true after Alice Corp. Pty. v. CLS Bank International, 134 S. Ct. 2347 (2014), that “[a] § 101 analysis begins by identifying whether an invention fits within one of the four statutorily provided categories of patent eligible subject matter.” Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 713–14 (Fed. Cir. 2014) (post-Alice); Digitech, 758 F.3d at 1348–50 (post-Alice). Claim 1 of the ’615 patent meets that requirement. Like many claims that focus on software innovations, it is a system claim. It claims a data processing system which clearly requires a computer operating software, a means for viewing and changing data, and a means for viewing forms and reports. This is very much a tangible system. [footnote omitted] The district court erred in holding claim 1 ineligible because it was directed to intangible matter and should have instead performed an Alice/Mayo analysis of claim 1.
The emphasis is mine – next time a patent examiner tells you that a claim fails the Alice test (or, like the lower court here, doesn't even get to the Alice test) because it is directed to no more than manipulating data, here is what you might cite back. As the court here has clearly explained, claims that are directed to manipulating and displaying data do not therefore fail the Alice test. A rejection that simply assumes that software data manipulation and/or presentation claims automatically fail the Alice test is clearly improper. Instead, such claims must be analyzed under the Alice test.
Does The Alice Test Implicate Questions of Fact?
The majority then turned to the district court’s finding that allowing the patent owner to file an amended complaint would be futile; according to the majority, “the proposed amended complaint . . . alleges facts directed to the inventive concepts in its claimed invention” that, if true, could allow the patent claims to survive an Alice challenge. In particular, the proposed second amended complaint made allegations that the recited data file was a technical improvement, and one that increased computing efficiency.
The majority acknowledged that patent-eligibility ultimately is a question of law, but, “like many legal questions, there can be subsidiary fact questions which must be resolved in route to the ultimate legal determination.” The second step of the Alice/Mayo test presents such questions, requiring an inquiry into what is routine and conventional activity as opposed to an inventive concept.
First, Judge Reyna objected that the majority had opened the door to “an inexhaustible array of extrinsic evidence, such as prior art, publications, other patents, and expert opinion.” Judge Reyna was also concerned that the majority seem to suggest claim construction might be necessary even when claim constructions had not been presented.
Second, Judge Reyna pointed out that much of the majority’s opinion discussed “’new’ allegations and evidence” that were in the proposed second amended complaint, and that therefore “were not raised before the District Court.” Therefore, Judge Reyna stated, “the part of the majority opinion devoted to the Second Amended Complaint is dicta.” That is, the District Court should be given “the opportunity to perform a § 101 analysis in light of this new complaint,” which the Federal Circuit might (or might not) then later review.
Obviously, patent owners will be happy, and litigants defending patent infringement actions not so much, if that once-efficacious tool for combating patents of suspect patent-eligibility, the Rule 12 motion to dismiss, is impaired. But beyond that, this case offers two important lessons for patent prosecution practice.
First, as noted above, if a patent examiner alleges that claims are directed to a patent-ineligible abstract idea simply because they recite manipulations and/or presentations of data, there is good law to traverse this basis for rejection.
Second, there is at least an argument that patent examiners should consider facts supporting patent-eligibility. I mentioned the venerable case of Graham v. John Deere in the title to this post because, under that case, patent examiners making obviousness rejections under 35 USC § 103 are supposed to make certain factual findings. Even if they rarely do so (when was the last time you had an examiner set forth the level of skill of one of ordinary skill in the art?), the Graham inquiry is an important bellwether of whether a prima facie case of obviousness has been stated. With respect to Section 101 patent-eligibility practice, where one of the most frustrating aspects of practice is the vague and conclusory nature of many rejections, it would certainly be interesting if the law had an explicit requirement for findings of fact, even if subsidiary to the legal determination of patent-eligibility.

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