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Fact Issues Preclude Dismissal Under Alice

Fact Issues Preclude Dismissal Under Alice

The Federal Circuit recently handed down two decisions that give guidance to patent owners contemplating patent litigation in the post-Alice world. The first was Berkheimer v. HP Inc. which was decided on February 8, 2018. Berkheimer was an appeal from the Northern District of Illinois court granting summary judgment in favor of the accused infringer, in part, that claims were patent ineligible under 35 U.S.C. Section 101. The Federal Circuit held the claims were directed to an abstract idea, and then moved on to the second part of the Alice analysis. The second part of the Alice analysis requires that patent owners, accused infringers and courts consider the elements of each claim both individually and “as an ordered combination” to determine whether the additional elements transform the nature of the claim into something patent eligible. Citing precedent, the Berkheimer Court recognized that the second step may be satisfied when the limitations of the claim “involve more than performance of well-understood, routine and conventional activities previously known to the industry.” The Court then stated “[t]he question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact. Any fact, such as this one, that is pertinent to the invalidity question must be proven by clear and convincing evidence.” However, the Court then proceeded to acknowledge that whether a claim recites patent eligible subject matter is a question of law – which may contain underlying factual disputes –that can be decided on summary judgment. In that case, the Federal Circuit determined that the district court erred in concluding there were no underlying factual questions, stating the “mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine and conventional.” This ruling turned on 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.”

On February 14, 2018, the Federal Circuit handed down its decision in Aatrix Software, Inc. v. Green Shades Software, Inc. This was an appeal of a Rule 12(b)(6) ruling of the district court, and the district court’s refusal to allow the patent owner to amend its complaint. In this case, the Court stated that although patent eligibility can be determined on a 12(b)(6) motion, “[t]his is true only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law. “ In that case the Court decided the patent ineligibility was not properly decided at the Rule 12(b)(6)stage and the district court erred when it denied the patent owner leave to amend the complaint with allegations “that, if accepted as true, establish the claimed combination contains inventive components and improves the workings of the computer.” The Court’s opinion analyzing the proposed amended complaint is an interesting read.

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