The US Court of Appeals for the Federal Circuit affirmed a district court decision awarding the defendant almost $1 million in attorneys’ fees because the plaintiff should have recognized that its patent claims were manifestly directed to an abstract idea and invalid under AliceInventor Holdings, LLC v. Bed Bath & Beyond, Inc., Case No. 2016-2442 (Fed. Cir., Dec. 8, 2017) (Chen, J).

Inventor Holdings sued Bed Bath & Beyond (BBB) on a patent for a method of purchasing remote products by paying at local retailers using an order code for increased security. Although the district court had previously denied § 101 motions for unpatentable subject matter against Inventor Holdings’ patent, the district court granted BBB’s motion after the Supreme Court of the United States’ decision in Alice (IP Update, Vol. 17, No. 7). Inventor Holdings appealed, and the Federal Circuit affirmed the ineligibility ruling. Afterward, the district court found the case exceptional under 35 USC § 285 and granted BBB attorneys’ fees for post-Alice litigation because Inventor Holdings’ “claims were entirely without merit” after the Alice decision, and there was a need to deter future wasteful litigation on similarly weak arguments. Inventor Holdings appealed the attorneys’ fees.

The Federal Circuit found that the lower court had acted within the scope of its discretion. Under the two-part Alice test, the invention was patent ineligible because it was “manifestly directed to an abstract idea” of locally processing payments for remote purchases using only admittedly conventional computer technology without any additional inventive concept.

Inventor Holdings argued that Alice did not change the law and that the law on patent eligibility was evolving at that time, but the Federal Circuit explained that Alice was a significant change in the law and that patents claiming economic arrangements with conventional technology (as were in issue here) were of a class specifically brought into question by Alice. It was Inventor Holdings’ responsibility to reassess its case in view of new controlling law, and this specific patent was “clearly invalid in view of Alice.” The Court found that it was well within the district court’s exercisable discretion to grant BBB attorneys’ fees, because Inventor Holdings should have recognized the obvious issues with the patent claims post-Alice.