A Trend Toward Earlier Resolution of Patent Eligibility in the Post-Alice World?

In June 2014, the Supreme Court issued its decision in Alice Corp. v. CLS Bank International, clarifying the test for patent eligibility under 35 U.S.C. §101. ¹Alice Corp. Pty Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2014 BL 17010388 PTCJ 513, 6/20/14. Like the Supreme Court’s prior decisions in Bilski
²Bilski v. Kappos, 130 S. Ct. 3218, 2010 BL 14628680 PTCJ 285, 7/2/10. and Prometheus, ³Mayo Collaborative Servs. v. Prometheus Labs. Inc., 132 S. Ct. 1289, 2012 BL 6601883 PTCJ 727, 3/23/12. the Alice decision illustrates that Section 101 could play a substantial role in culling overbroad patents and mitigating meritless litigation.

The practical impact of Section 101 going forward, however, will depend in part on whether courts are willing to address issues of patent eligibility at an early stage of litigation, before the parties incur substantial costs. Indeed, because claims directed to ineligible subject matter are often invalid for other reasons (e.g., due to obviousness or anticipation), Section 101 will have the greatest significance if it can be raised at the outset of a case when those other invalidity motions are still premature. As discussed below, a number of recent decisions suggest that courts are increasingly willing to entertain Section 101 motions on the pleadings.

Legal Standards Governing Patent Eligibility

Under Section 101, any “new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” is eligible for patenting. Despite the breadth of Section 101, the Supreme Court has “long held that this provision contains an important implicit exception: laws of nature, natural phenomena and abstract ideas are not patentable.” ⁴Alice Corp., 2014 BL 170103

In Alice, the Supreme Court reiterated that there is a two-part test for determining when an invention is directed to patent-ineligible subject matter under Section 101. First, a court must determine if the claim is directed to a law of nature, natural phenomena or abstract idea. ⁵Id. at *6. Second, the court must determine whether the claim contains an “inventive concept” that transforms the abstract idea, law of nature or natural phenomena into a patent-eligible invention. ⁶Id. at *6.

The Supreme Court and the Federal Circuit have both recognized that subject matter eligibility under Section 101 is a “threshold” issue. ⁷In re Bilski, 545 F.3d 943, 2008 BL 24580176 PTCJ 920, 10/31/08 (“Whether a claim is drawn to patent eligible subject matter under §101 is a threshold inquiry.”); Bilski v. Kappos, 2010 BL 146286 (“The §101 patent-eligibility inquiry is only a threshold test.”). Both courts have also suggested that Section 101 should be addressed before other issues of invalidity. ⁸Parker v. Flook, 98 S. Ct. 2522, 27, 437 U.S. 584, 198 U.S.P.Q. 193 (1978) (analysis of patent eligibility “must precede the determination of whether that discovery is, in fact, new or obvious” under sections 102 and 103); In re Comiskey, 554 F.3d 967, 2009 BL 655777 PTCJ 266, 1/16/09 (“Only if the requirements of §101 are satisfied is the inventor allowed to pass through to the other requirements for patentability.”). Citing these precedents, Federal Circuit Judge Haldane Robert Mayer recently emphasized in a concurring opinion that patent eligibility should be addressed “at the very outset” of a case. Judge Mayer explained:

From a practical perspective, there are clear advantages to addressing Section 101’s requirements at the outset of litigation. Patent eligibility issues can often be resolved without lengthy claim construction, and an early determination that the subject matter of asserted claims is patent ineligible can spare both litigants and courts years of needless litigation. ⁹I/P Engine, Inc. v. AOL Inc., 2014 BL 22668988 PTCJ 1044, 8/22/14.

Although Judge Mayer’s statement is only a few weeks old and nonprecedential, it has already been cited by two courts to justify early resolution of Section 101 motions. ¹⁰Eclipse IP LLC v. McKinley Equip. Corp., No. 2:14-cv-00154-GW-AJW, 2014 BL 250679 at *5 (C.D. Cal. Sept. 4, 2014)88 PTCJ 1181, 9/12/14; Genetic Techs. Ltd. v. Lab. Corp. of Am. Holdings, No. 12-1736-LPS-CJB., 2014 BL 243747 at *5 (D. Del. Sept. 3, 2014).

Despite these observations that patent eligibility is a “threshold” issue, defendants have frequently been unable to successfully assert Section 101 at an early stage of litigation. This difficultly arises primarily from the Federal Circuit’s holding that “it will ordinarily be desirable—and often necessary—to resolve claim construction disputes prior to a §101 analysis” because “the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter.” ¹¹Bancorp Servs., LLC v. Sun Life Assurance Co. of Canada, 687 F.3d 1266, 2012 BL 18616484 PTCJ 551, 8/3/12.

Although claim constriction is “ordinarily … desirable,” the Federal Circuit has also made clear that it is not required in every case: “claim construction is not an inviolable prerequisite to a validity determination under §101.” ¹²Id. at *5. As a result, even prior to the Alice decision, several district courts had opted to entertain Section 101 motions prior to claim construction. ¹³Lumen View Tech. LLC v. Findthebest.com, Inc., 2013 BL 326786; OIP Techs. Inc. v. Amazon.com, Inc., 2012 BL 235668.

Recent Decisions Addressing Section 101 on the Pleadings

Subsequent to the Supreme Court’s decision in Alice, several district courts have issued decisions resolving Section 101 motions on the pleadings. In most of these cases, the courts have eliminated the need for lengthy claim construction proceedings by simply adopting constructions advocated by the patent owner in opposition to the Section 101 motion.

Eclipse IP LLC v. McKinley Equipment Corp. (C.D. Cal. Sept. 4, 2014)

In Eclipse IP, the defendant filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6) arguing that 21 asserted claims from three related patents were invalid under Section 101. As a general matter, the patents-in-suit taught methods for sending requests to a personal communication device asking the owner of the device to take some action. The defendant argued that each claim was directed to an abstract idea, such as “asking someone if they are available to perform a task and then either waiting for them to complete it or contacting the next person.” ¹⁴Eclipse IP LLC at *6.

The plaintiff Eclipse opposed the motion as premature because claim construction would be necessary to address “whether the preambles of the asserted claims are limiting.” According to Eclipse, the preambles required a “computer-based notification system.” ¹⁵Id at *10-11. Eclipse argued that such a computer system is patent-eligible under Section 101.

Judge George H. Wu of the U.S. District Court for the Central District of California rejected Eclipse’s arguments and granted the defendant’s motion to dismiss. The court first held that the motion was ripe for resolution and there was no need for “separate” claim construction proceedings. The court assumed for the purpose of its analysis that the claims’ preambles were limiting and therefore required a “computer-based” system. The court, however, found that requiring generic computer implementation of an abstract idea is insufficient under Alice.

Tuxis Technologies, LLC v. Amazon.com, Inc. (D. Del. Sept. 3, 2014) ¹⁶Tuxis Techs., LLC v. Amazon.com, Inc., 2014 BL 243738.

The patent-in-suit in Tuxis taught a method of generating “upsell offers” for consumers based on their online purchases. Amazon filed a motion to dismiss under Rule 12(b)(6) arguing that the asserted claim was invalid under Section 101 because it was “directed to the abstract idea of offering something to a customer based on his or her interest in something else.”

Judge Richard G. Andrews of the U.S. District Court for the District of Delaware noted that the issue at the motion to dismiss stage was whether the “only plausible reading of the patent” established that the claims are patent-ineligible. The court thus “issued an oral order directing [plaintiff] to identify the asserted claims … and provide proposed constructions for any claim terms it believed required construction.” ¹⁷Id at *5. In response, the plaintiff indicated that two terms (“upsell” and “real time”) were defined in the specification and all other terms should be accorded their plain and ordinary meaning.

In opposition to the motion, the plaintiff argued that the upselling method was patent-eligible because it required offers to be made based on combined information about the user and the primary purchase transaction. The plaintiff also argued that the claim satisfied Section 101 because it required upsell offers to be made in “real time” using a computer.

The court rejected plaintiff’s arguments and granted the motion to dismiss. The court held that the asserted claim was directed to the abstract concept of upselling and the requirement that the method be performed using a computer was not a meaningful limitation under Alice.

Genetic Technologies Ltd. v. Laboratory Corp. of America (D. Del. Sept. 3, 2014) ¹⁸Genetic Techs. Ltd. v. Lab. Corp. of Am. Holdings, supra note 10.

The defendant in Genetic Technologies was accused of infringing a patented method directed to predicting athletic ability based on the presence of certain genetic traits. The defendant moved to dismiss under Rule 12(b)(6), arguing that the asserted claim was impermissible under Section 101 because it was drawn to a natural law—“that individuals with a particular genetic variation are better sprinters than those without it.” Defendant argued that the limitations of the asserted claim—“analyzing” a sample, “detecting” the presence of a genetic trait, and “predicting” athletic ability based on that trait—were not meaningful limitations sufficient to make the claim patent eligible.

In opposition, the plaintiff argued that the motion to dismiss was premature because the court needed to construe the meaning of “predicting” athletic ability. The plaintiff asserted that the “predicting” step provided a meaningful limitation on the natural law because it required “the act of declaring or stating the potential sprinting, strength or power performance of the human.”

On Sept. 3, 2014, U.S. Magistrate Judge Christopher J. Burke recommended that the motion to dismiss be granted. In the written Report and Recommendation, the court rejected the argument that the motion was premature. The court noted that rather than conducting full claim construction proceedings, it is permissible to simply adopt the meaning proposed by the plaintiff for the terms in question. The court thus adopted plaintiff’s argument that “predicting” means “to declare or indicate in advance.” Based on that construction, the court held that the “predicting” step of the method claim was not a meaningful limitation and the claim was otherwise drawn to a patent-ineligible law of nature.

DietGoal Innovations LLC v. Bravo Media LLC (S.D.N.Y. July 8, 2014) ¹⁹DietGoal Innovations LLC v. Bravo Media LLC, 2014 BL 188254.

In DietGoal, the defendant filed a motion for summary judgment prior to claim construction arguing that the asserted claims were ineligible under Section 101. In particular, the defendant argued that the claims were directed to the abstract idea of “meal planning”—i.e., “selecting meals for the day according to one’s particular dietary goals and food preferences.”

In opposition to the motion, the plaintiff argued that “it would be improper for the Court to decide whether the [patent-in-suit] is drawn to patent-eligible subject matter without first performing claim construction.” Plaintiff also argued that the computer-implementation of the steps of the asserted claims—such as using a “Picture Menu” to display meals—was sufficient under Section 101.

Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York granted the motion to dismiss, finding the asserted claims patent ineligible under Section 101. The court noted that the motion for summary judgment could have been styled as a motion for judgment on the pleadings. The court held that the motion was nonetheless ripe and “formal” claim construction was unnecessary.

The court explained that under “any reasonable construction” the asserted claims were invalid under Section 101. For the purposes of the eligibility analysis, however, the Court adopted the construction advanced by the plaintiff in a parallel litigation in the Eastern District of Texas. In particular, the court accepted that the steps of the asserted claims were computer-implemented based on the preambles of those claims. The court then held that “[t]he addition of a computer to perform calculations, retrieve data, and visually display images is nothing more than post-solution activity that cannot render the process patentable.”

Recent Decisions Declining to Address Section 101 on the Pleadings

At least one court—the U.S. District Court for the District of New Jersey—has recently declined to address issues of patent eligibility on the pleadings. In Data Distribution Technologies, LLC v. Brer Affiliates, Inc., Chief Judge Jerome B. Simandle held that the patent-in-suit was directed to “the abstract idea of maintaining a database and updating users about new information.” Having identified the abstract idea, however, the court held that claim construction would be necessary to determine whether the asserted claims contained an “inventive concept” sufficient to transform the abstract idea into a patent-eligible invention.

The court acknowledged that other courts had addressed motions to dismiss by adopting constructions advocated by the plaintiff. The plaintiff in Data Distribution, however, refused to provide its proposed constructions and the court was “reluctant to presume, sua sponte, the constructions that would be most favorable” to plaintiff. ²⁰Data Distrib. Techs., LLC v. Brer Affiliates, Inc., 2014 BL 230378. Rather than ordering the plaintiff to provide its constructions (as was done in Tuxis), the court simply denied the motion without prejudice to re-filing.

Conclusion

Recent district court decisions have provided defendants a glimmer of hope that Section 101 will begin to play a gatekeeping role in patent litigation, affording an early opportunity to challenge invalid patent claims before incurring substantial expenses. These same decisions illustrate the conundrum that patent owners now face in responding to motions to dismiss under Section 101. Plaintiff’s traditional refrain—that such motions are simply “premature”—appears to be losing some of its luster as more and more decisions are issued on the pleadings.

At the same time, if a patent owner now moves beyond such procedural issues to argue that the claims reflect an “inventive concept,” it is even more likely that the court will entertain the Section 101 motion because the court can adopt plaintiff’s interpretation of the claims in lieu of holding formal claim construction proceedings. This may require that the court request “proposed” claim constructions at an early date.

Some plaintiffs will inevitably argue that such constructions are premature. A plaintiff, however, should have a good idea on proposed claim constructions at the onset of litigation and thus, would not suffer prejudice in most cases. If the court is concerned about any possible prejudice, it could take up early claim construction in the case with very limited discovery thereby reaching the merits of the Section 101 issues immediately following claim construction.