Source: https://blog.lrrc.com/ip/2018/04/05/federal-circuit-reigns-early-dismissals-based-patent-liabilities/
Timestamp: 2019-04-26 11:49:01+00:00

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In a span of less than a week in February, the Federal Circuit issued two precedential decisions that may impact the willingness of district courts to resolve patent eligibility issues on early motions.
First, on February 8, 2018, the Federal Circuit issued its opinion in Berkheimer v. HP, Inc., vacating a district court’s summary judgment determination that several claims of the single patent-in-suit were patent ineligible under 35 U.S.C. § 101. The following week, on February 14, 2018, the Federal Circuit issued its opinion in Aatrix Software, Inc. v. Green Shades Software, Inc., and vacated a district court dismissal of several claims of two patents-in-suit on § 101 ineligibility grounds. These two opinions may reveal the beginning of a trend at the Federal Circuit in which greater consideration may be given to allegations pleaded in a patentee’s infringement complaint, making it more difficult to invalidate claims at the motion to dismiss and/or summary judgment stages of an infringement lawsuit.
For several years now, some judges at the Federal Circuit have expressed concern at the procedural ease with which patent claims have been invalidated on § 101 grounds in the wake of the Supreme Court’s Alice decision. In some instances, those judges have expressed concern that insufficient deference has been shown to the Federal Rules of Civil Procedure, and in particular the rules governing motions to dismiss, motions for judgment on the pleadings, and motions for summary judgment. Several earlier decisions authored by Judge Moore, including Core Wireless Licensing S.A.R.L. v. LG Electronics, Inc., No. 16-2684 (Jan. 25, 2018) and Thales Visionix Inc. v. U.S., No. 15-5150 (Mar. 8, 2017), reveal the related concern that in many § 101 analyses, district courts are ignoring recited, specific and non-abstract technological improvements over disclosed prior art.
The Berkheimer and Aatrix Software decisions may reflect a movement on the Federal Circuit to recognize that early disposition on § 101 grounds may be premature in many cases. The details of the two cases are discussed below. Although the Berkheimer panel took pains to point out that “nothing in this this decision should be viewed as casting doubt on the propriety of [earlier cases finding ineligibility at the motion to dismiss or summary judgment stage,]” it seems plausible that the Federal Circuit is going to stress a more rigorous and conservative approach by district courts in the future when ruling on such early-stage § 101 motions.
The Berkheimer case involved U.S. Patent No. 7,447,713, which in general terms is directed to “digitally processing and archiving files in a digital management system.” The district court held on summary judgment—after construing several claim terms—that at Alice/Mayo Step 1, the asserted claims were merely directed to the abstract idea of “using a generic computer to collect, organize, compare, and present data for reconciliation prior to archiving.” The district court held that at Alice/Mayo Step 2, there was no inventive concept recited in the claims sufficient to yield patent eligible subject matter.
In an opinion authored by Judge Kimberly Moore, the panel agreed with the district court that certain claims of the ’713 Patent (in particular, claims 1-3 and claim 9) were directed to abstract ideas without supplying any inventive concept that would render the claims patent eligible. However, the panel determined that claims 4-7, although directed to abstract ideas, “contain limitations directed to the arguably unconventional concept described in the specification.” The panel did not determine that claims 4-7 were eligible; rather, it concluded that the district court had failed to give appropriate consideration to whether there was a factual dispute concerning conventionality. In particular, the panel stated that “the improvements in the specification, to the extent they are captured in the claims, create a factual dispute regarding whether the invention describes well-understood, routine, and conventional activities.” According to the panel, claims 4-7 did (at least arguably) capture alleged improvements related in the specification such as “eliminat[ing] redundancies, improv[ing] system efficiency, reduc[ing] storage requirements, and enabl[ing] a single edit to a stored object to propagate throughout all documents linked to that object.” Accordingly, there was an unresolved issue of fact as to whether such claimed improvements were well-understood, routine, or conventional to the skilled artisan at the time of the patent, and summary judgment was thus inappropriate. The case was remanded for further proceedings addressing the unresolved factual issues.
In Aatrix Software, the district court invalidated six claims on eligibility grounds in two patents—U.S. Patent Nos. 7,171,615 and 8,984,393. For claim 1 of the ‘615 Patent, the district court determined that there was no corresponding “tangible embodiment” and therefore the claim was directed to ineligible subject matter. For the other five claims, the district court determined that the claims were generally directed to the abstract idea of “collecting, organizing, and performing calculations on data to fill out forms: a fundamental human activity that can be performed using a pen and paper” with no additional inventive concepts recited in the claims. The district court also denied a motion to file a second amended complaint that included new factual allegations and supporting documentation.
In a majority opinion also (like Berkheimer) authored by Judge Moore, the Federal Circuit held that the district court’s invalidity determination for claim 1 of the ’615 Patent on the lack of a tangible embodiment in the claim was legally erroneous. Moreover, the district court’s denial of leave to file the second amended complaint was unjustified and lacked a reasonable explanation under regional (Eleventh) circuit law. Had the allegations in the second amended complaint been taken as true, as required by the Federal Rules of Civil Procedure, there were unresolved issues of fact as to whether the claims included an inventive concept that precluded early dismissal.
Judge Reyna concurred-in-part and dissented-in-part. He agreed that claim 1 of the ‘615 Patent should not have been held ineligible just because it was not directed to a tangible embodiment. He also agreed that the district court should have granted leave for the second amended complaint to be filed. However, he would have left it to the district court to evaluate the second amended complaint in the first instance.
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