Source: https://www.ipwatchdog.com/2018/02/16/berkheimer-hp-eligibility-factual-determination/id=93823/
Timestamp: 2019-04-22 04:49:33+00:00

Document:
Last week the Federal Circuit reached a potentially momentous decision in Berkheimer v. HP Inc., (Fed. Cir. Feb. 8, 2018) (Before Moore, Taranto, and Stoll, J.). Giving hope to patentees who own computer implemented inventions, the Federal Circuit ruled that it is not always appropriate to declare the broadest independent claim to be representative, and also held that questions of fact underlying patent eligibility determinations, which make summary judgment inappropriate in at least some cases.
The case reached the Federal Circuit when appellant Steven E. Berkheimer appealed the district court’s summary judgment holding that claims 1-7 and 9 of U.S. Patent No. 7,447,713 (‘713 patent) were invalid as ineligible under 35 U.S.C. § 101 and Alice. Mr. Berkheimer also appealed the district court’s decision holding claims 10-19 of the ‘713 patent invalid for indefiniteness.
The Federal Circuit, in an opinion authored by Judge Moore, affirmed-in-part, vacated-in-part, and remanded for further proceedings. The Federal Circuit determined that claims 10-19 were invalid for indefiniteness, but that it was inappropriate for the district court to decide patent eligibility with respect to certain of the claims at issue. The Federal Circuit did agree that claims 1-3 and 9 related to an abstract idea and did not capture inventive concepts and, therefore, are ineligible. Notwithstanding, claims 4-7, were found to contain limitations directed to the arguably unconventional inventive concept described in the specification. Ultimately, Judge Moore wrote that whether the claims cover only conventional activities requires a factual determination, which can make it impossible to conclude claims are ineligible on summary judgment (i.e., summary judgment is only appropriate where there are no genuine issues of material fact).
The ‘713 patent relates to processing and archiving files in a digital asset management system. The system parses files into multiple objects and tags the objects to create relationships between them. The system eliminates redundant storage of common text and graphical elements, which improves operating efficiency and reduces storage costs.
1. A method of archiving an item in a computer processing system comprising: presenting the item to a parser; parsing the item into a plurality of multipart object structures wherein portions of the structures have searchable information tags associated therewith; evaluating the object structures in accordance with object structures previously stored in an archive; presenting an evaluated object structure for manual reconciliation at least where there is a predetermined variance between the object and at least one of a predetermined standard and a user defined rule.
The first issue of interest relates to the fact that Berkheimer did not agree that claim 1 was representative of all of the claims for purposes of patent eligibility evaluation. Nevertheless, the district court determined that Claim 1 was representative because it was the only independent claim presented.
Judge Moore explained that a claim is not representative merely because it is the only independent claim. There are certain situations where courts may treat a claim as representative. A claim may be viewed as representative, for example, “if the patentee does not present any meaningful argument for the distinctive significance of any claim limitations not found in the representative claim or if the parties agree to treat a claim as representative,” Judge Moore wrote. In this case, however, Berkheimer did make arguments specifically relating to the dependent claims and, therefore, he did not waive his right to challenge the patent eligibility of the dependent claims on appeal.
This issue alone makes Berkheimer v. HP very important for patent owners. Invalidity is supposed to require a claim-by-claim analysis, but all too frequently courts have select the broadest, weakest independent claim and labeled it as representative of all the claims at issue. When this happens claims are routinely declared ineligible as covering an abstract idea and not having any inventive contribution. But if the patent owner makes arguments specifically relating to the patent eligibility of dependent claims, Berkheimer v. HP stands for the proposition that it is inappropriate to limit eligibility analysis to just an independent claim the court declares to be representative.
The clear take-away message here is that patent owners need to make patent eligibility arguments that take into account the limitations in all asserted claims, and not acquiesce to any particular claim being representative of all claims.
Under Alice Step 1 the court asks whether the claims at issue are directed to a judicial exception, which in the case of computer implemented invention implicates the abstract idea exception. The district court held that claim 1 was directed to the abstract idea of using a generic computer to organize, compare and reconcile date prior to archiving.
Berkheimer argued that the presence of a “parsing” limitation rooted the claims in a technology that transforms data structure from source code to object code. The Federal Circuit disagreed, citing to Intllectual Ventures I, 850 F.3d at 1340, for the proposition that limiting a claim to a technological environment does not in and of itself make an abstract concept any less abstract. Furthermore, Judge Moore pointed out that Berhkeimer admitted that parsers had existed for years prior to the filing of his patent application, without explaining the importance of that concession under Alice Step 1. Federal Circuit seemed to take this as confirmation that the parsing limitation was conventional and routine (although not specifically saying that directly), perhaps bleeding conventionality under the second step of Alice into the analysis of Alice Step 1.
The Federal Circuit ultimately held that claims 1-3 and 9 are directed to the abstract idea of parsing and comparing data; claim 4 is directed to the abstract idea of parsing, comparing, and storing data; and claims 5-7 are directed to the abstract idea of parsing, comparing, storing, and editing data. Thus, it was necessary to proceed to Alice step 2.
At the outset of discussion of Alice step 2, the Federal Circuit pointed out that the question of whether the claim limitations involve more than the performance of well understood, routine, and conventional activities is a question of fact.
The Federal Circuit held that the district court in this case erred in concluding that there are no factual questions underlying the question of law relating to patent eligibility under § 101.
The Federal Circuit concluded that claim 1 does not recite an inventive concept sufficient to transform the abstract idea into a patent eligible application. Since Berkheimer did not advance separate arguments relating to claims 2-3 and claim 9, those too were deemed patent ineligible.
Berkheimer did advance separate argument relating to the limitations specifically found in claims 4-7, which the Federal Circuit found to arguably relate to unconventional inventive concepts described in the specification.
The Federal Circuit was, however quick to say that the decision did not declare claims 4-7 patent eligible, but only that it was improper to declare those claims patent ineligible on summary judgment.
There can be no doubt that Berkheimer is an important decision for patent owners.
The Federal Circuit holds that where a patent owner makes separate patent eligibility arguments relating to dependent claims it is inappropriate to lump all claims together for the purpose of a patent eligibility analysis. This will presumably require district courts (and the Patent Trial and Appeal Board) to go claim by claim for purpose of determining patent eligibility when the patentee makes appropriate argument.
Berkheimer is also equally important, if not more important, because it stands for the proposition that questions of fact can and do underline patent eligibility determinations. This is important not only because it will make summary judgment more difficult for infringers, but because if there are questions of fact underneath the patent eligibility determination it should be exceptionally difficult (if not virtually impossible) for district courts to dismiss patent infringement complaints using FRCP 12(b)(6).1 This is true because under FRCP 12(b)(6) all facts asserted in the complaint by the plaintiff (i.e., the patent owner) are taken as true and dismissal appropriate only where there can be no victory by the plaintiff even based on the facts plead in the complaint.
For patent owners bringing patent infringement lawsuits it will become commonplace, indeed necessary, to factually assert in the complaint that the limitations contained in each of the asserted claims inject inventive contributions that are not well-understood, routine, and/or conventional activities that would be understood by a skilled artisan. By doing that district courts should be forced to accept these statement as true for purpose of a 12(b)(6) motion to dismiss, which should mean dismissals due to lack of patent eligibility will become a much rarer occurrence.
Of course, now we have to wait to see whether the district courts and PTAB will apply Berkheimer as it is written, and whether other panels of the Federal Circuit will actually follow this decision.
 The Federal Circuit has addressed this Rule 12 dismissal issue in Aatrix Software v. Green Shades (Fed. Cir. February 14, 2018). More analysis of that case to follow.
UPDATED February 16, 2018 @ 12:32pm to mention Aatrix Software.
There still must be an actual issue of fact below the legal question of eligibility.
District courts and the PTAB are critical to enforcement, but only a small percent of patents are ever enforced, and so I think the bigger question than whether those bodies will apply Berkheimer as written is whether the patent office will issue new guidance that will change the way 101 is applied by examiners.
As I wrote here https://www.linkedin.com/pulse/pto-speechless-fed-cir-says-evidence-needed-william-morriss/, when the case came out, I called the office of patent legal administration to see if new guidance would be forthcoming, but the person I spoke to wouldn’t say that it was or when it might come out. The question then, would be how much credence examiners would give to Berkheimer as long as the office is officially silent.
An important adder to the comments of Mr. Morriss: examiners are constrained in the manner in which any facts can be used, including how any facts are provided. The origin of these constraints are two-fold: the Administrative Procedures Act and the (official) USPTO Memorandum on how to take Official Notice.
Each of these are binding on examiners.
This necessarily means that mere examiner postulating about any type of “state of the art” absolutely requires substantial evidence, and that a mere applicant request for such evidence places in the record an issue of substantial fact.
This also means that a mere examiner postulation that does not have the substantial evidence along with the rejection is a failure of the Office to establish a prima facie case (and that includes all burden shifting aspects of that term). In other words, an applicant argument pointing out the insufficiency of any examiner conclusory statements concerning “generic” or “conventional” means that no burden shift has occurred, and the full onus of a proper Office Action (in the first instance) remains with the Office.
I would also add a further tidbit (or “roadmap” if you will): Just because the Office in the larger sense has not provided examiners some larger help or tool in the 101 examination protocol in dealing with the underlying factual predicate of the legal question of eligibility, this does not excuse examiners from properly treating the (correct) responses from applicants. That proper treatment includes answering the substance of all arguments presented in a next action. In other words, just because the Office does not provide answers to those such as Mr. Morriss who calls the office of patent legal administration, examiners do not have that same ability to dodge an applicant’s statements.
Not only is there an actual (and substantial) evidentiary requirement, but the level of what that evidence must show is substantially higher than what any examiner that I am aware of is likely going to be able to deliver.
The Court may (attempt) to get away with [despite Void for Vagueness issues] not defining things like “abstract,” “significantly more,” or even what constitutes a “generic computer,” but the administrative agency is NOT the Court (nor a member of the judicial branch).
Anon, I admire your blind adherence to what is “right” and “legal.” However, your clients face the fact that the Office and examiners do or do not do what you say they shouldn’t or should do. Unless you plan to appeal each case outside the Office (which you admit probably wouldn’t help), you need to come up with a practical solution. If you do, please share, because we’re all in the same boat of trying to argue law and procedure to examiners who don’t feel or aren’t aware that they are bound by such.
Do you happen to have a link to the Memorandum on taking official notice?
Gene: you missed one. On Wednesday, the CAFC went a step further and extended the Berkheimer rule to Rule 12 motions. See the Aatrix Software case.
Thanks. I am familiar with that case, but have only heard about it second hand so far. I have an article in already (from Meredith Addy) that discusses both Berkheimer and Aatrix. Will publish that on Sunday 2/18. Good news if the district courts actually apply it the way the decisions are written.
As you may well recognize, each must fight their own battle against the Office when the Office does not comport with their own (and the APA) requirements.
There is no shortcut, no “practical solution,” unless you are willing to settle for less than what your client deserves under the law. I fully grant that not only is this the client’s choice to make (with your helpful advice so that the client is making an informed decision), but that there will be many times when the client will choose to accept less than what the client has a right to.
I do not find your reply helpful. Whether or not MPEP 2106.05 says what it says is not on point to the discussion here concerning the factual underpinnings to any decision as to the eligibility determination. No one is talking about those cases in which a dependent claim has “that more,” and the point is about those cases wherein the examiner does not provide the evidentiary support for a conclusory statement (and given that we do not have to argue in the face of a claim being passed to issue, this clearly only involves claims that are rejected under the spurious circumstances).
That PDF link isn’t working on the USPTO website. It goes to a 404 page. I will see if I can get it from the USPTO. Thanks.
You can grab it from the internet archive: https://web.archive.org/web/20080920192909/https://www.uspto.gov/web/offices/pac/dapp/opla/documents/offnotice.pdf .
-In re Lee, 277 F.3d 1338, 1342 (Fed. Cir. 2002) (“[j]udicial review of a Board decision denying an application for patent is thus founded on the obligation of the agency to make the necessary findings and to provide an administrative record showing the evidence on which the findings are based, accompanied by the agency’s reasoning in reaching its conclusions.”; a “Board decision ‘must be justified within the four corners of the record’”).
The PTO’s memo can be useful, but then you have to establish that their guidance is binding.
With respect to an agency obligation to abide by its own regulations, the first thing that comes to mind is primarily the Accardi doctrine, its original trilogy of cases (United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260 (1954), Service v. Dulles, 354 U.S. 363 (1957), and Vitarelli v. Seaton, 359 U.S. 535 (1959)), and its progeny. In Morton v. Ruiz, 415 U.S. 199 (1974), the Supreme Court offered an expansive application of the Accardi doctrine applying it to a requirement in an agency’s unpublished internal manual, but it’s not clear how to reconcile this with the subsequent approach in Schweiker v. Hansen, 450 U.S. 785 (1981) where the Court held that a claims manual had no legal force and did not bind the Social Security Administration. Schweiker at 789.
I personally am not aware of any application of the Accardi doctrine to the MPEP or published PTO guidance. I’ve found some suggestion that back in 2016 the PTO director indicated in an OED final order that the “USPTO’s broad authority does not extend to acting inconsistent with the plain language of its regulations” and that “the USPTO must follow its own regulations and its own unambiguous commands”, but (1) I haven’t been able to track this final order down yet, and (2) I’m not sure how useful it would be outside of a regulation context.
The words of the memo are clear enough: “acting inappropriately” is a statement of what is binding.
You need not “establish” anything further.
(Citing case law is also good – especially as a groundwork for appeal – but sadly the examiner corp would rather look at something other than cited cases, specifically such things as Office memorandum and the MPEP).
Schweiker v. Hansen is easily distinguishable based on its facts (the Court was faced with TWO requirements, and would not reverse in the face of a second requirement which basically mooted the first: “A court is no more authorized to overlook the valid regulation requiring that applications be in writing than it is to overlook any other valid requirement for the receipt of benefits“).
Such is most definitely not appropriate to the circumstances under discussion here.
Hmmm….the USPTO sees the markedly different characteristics (MDC) analysis as part of Alice/Mayo Step 1, rather than as part of Alice/Mayo Step 2. A number of us have argued to the USPTO that the MDC “test” is not a detour in Step 1 (as the USPTO guidance would have you believe), but one of many tests for patent eligibility that can be found in Step 2 for product/manufacture claims (another being the Hartranft test “name, character, or use”). It seems to me that, had the USPTO put the MDC test in Alice/Mayo Step 2 where it properly belongs, then Berkheimer could be quite useful for product/manufacture claims reciting nature-based products. This might be worth discussing with the Office.

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