Federal Circuit Pushes Back Against Premature Grant of § 101 Motions

In a pair of decisions, the Federal Circuit has raised the standard for motions to dismiss and motions for summary judgment on grounds that patent claims are unpatentably abstract. In Berkheimer v. HP Inc., No. 2017-1437, 2018 U.S. App. LEXIS 3040 (Fed. Cir. Feb. 8, 2018), the asserted claims generally involved digitally processing and archiving files in a digital asset management system. The District Court had granted a motion to dismiss on grounds that the claims were directed to a patent-ineligible abstract idea, a now-common argument in software cases.

The Court agreed with the District Court that the claims were directed to an abstract idea. It reasoned that the claims were directed to parsing, comparing, storing, and editing data, which it found to be abstract because the claims merely involved data manipulation utilizing concededly conventional hardware. When considering whether the claims included significantly more than the abstract idea, the Court noted that subject-matter eligibility is a question of law with underlying factual inquiries, such as whether some claim element or combination of elements is well-understood, routine, and conventional. The patentee had argued that the portions of the specification highlighting benefits of the claimed subject matter, such as reduced redundancy and enabling one-to-many editing, were not routine. And the accused infringer had not introduced evidence on the matter. The Court concluded that certain of the claims were properly invalidated because their subject matter was not adequately tied to the purported advancement. But the Court found that at least some of the claims raised the question whether their subject matter represented an unconventional inventive concept. For those claims, the Court reversed the grant of summary judgment and remanded for further proceedings and evidence on the question.

The claims at issue in Aatrix Software, Inc., v. Green Shades Software, Inc., No. 2017-1452, 2018 U.S. App. LEXIS 3463 (Fed. Cir. Feb. 14, 2018) required designing, creating, and importing data into a viewable form utilizing a data processing system. The District Court did not go through the process of claim interpretation, and concluded that the claims were abstract because they were completely intangible. The Federal Circuit disagreed, finding that the claims clearly required a computer operating software. In addition, the lower Court had denied leave to amend the complaint in a way that would raise factual issues relevant to the § 101 inquiry. According to the reviewing Court, introducing facts supporting the patent owner’s assertion that the claims amounted to more than well-understood, routine components and functions of a computer should have been allowed.

Judge Reyna wrote a dissent, arguing that the majority overemphasized the importance of facts, rather than legal analysis. He argued that subject-matter eligibility is particularly well-suited to resolution at the motion to dismiss or motion for summary judgment stage. He also stated that consideration of the facts that had not yet been allowed into the case, and had not been subject to the adversarial process in the lower Court, was improper.

In light of these decisions, it may be more difficult to obtain a resolution on a motion to dismiss or a motion for summary judgment based on subject-matter eligibility. This is particularly true at least where the patentee can raise a material question of fact whether the claimed subject matter is conventional, routine, or an improvement to computer functionality. Patent owners may consider carefully reviewing their patent claims and accompanying patent disclosure to determine whether they amount to evidence that the claimed advance is unconventional and improves the way a computer functions when filing or responding to a complaint.

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