Berkheimer v. HP Inc., Case No. 2017-1437 (Fed. Cir. February 8, 2018) & Automated Tracking Solutions, LLC v. The Coca-Cola Co., Case No. 2017-1494 (Fed. Cir. February 16, 2018)

Whether Claims Recite Well-Understood, Routine, and Conventional Features Under Alice’s Step Two is a Question of Fact.

In Berkheimer v. HP, the Federal Circuit vacated a grant of summary judgment, which held claims invalid as ineligible under 35 U.S.C. § 101, because there was a genuine issue of material fact as to whether the claims recited archiving documents in an inventive manner.

After completing the Markman hearing, the District Court granted a motion for summary judgment; finding the claims at issue were directed to "collecting, organizing, comparing, and presenting data" and "did not describ[e] a process that overrides the routine and conventional use of a computer." Berkheimer v. HP Co., No. 12-cv-9023, slip op. at 16-20 (N.D. Ill. Dec. 16, 2016).

On appeal the Federal Circuit agreed the claims were directed to various abstract ideas. However, under the second step of the Alice two-step test, the Federal Circuit found that while some of the claims did not recite any unconventional activities, some of the dependent claims “contain limitations directed to the arguably unconventional inventive concept described in the specification.” Berkheimer v. HP Inc., No. 2017-1437, slip. op. at 16 (Fed. Cir. Feb. 8, 2018). Specifically, the Federal Circuit found claim 4, which states:

The method as in claim 1 which includes storing a reconciled object structure in the archive without substantial redundancy.

to include an arguably inventive concept. Id. (citing US Pat. No. 7,447,713). The Federal Circuit also found all the claims which depended from claim 4 to recite arguably unconventional activity.

In reaching this conclusion, the Federal Circuit examined the patent’s specification, noting it “states that storing object structures in the archive without substantial redundancy improves system operating efficiency and reduces storage costs….known asset management systems did not archive documents in this manner.” Id. (citing US Pat. No. 7,447,713) (emphasis added). The presence of the phrase, “without substantial redundancy” in claim 4 created a genuine issue of material fact because the patent’s specification stated that phrase was responsible for an improvement in the system and was not present in the prior art. The Federal Circuit concluded that a grant of summary judgment was inappropriate because the patent’s specification created a genuine issue of material fact as to whether the claims recite an inventive concept.

In vacating the grant of summary judgment, the Court stated, “[w]hether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination.” Id., slip. op. at 14 (emphasis added). This statement aligns with Federal Circuit precedent, which had noted questions of a patent’s eligibility “may contain underlying issues of fact.” Id., slip. op. at 6 (citing Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1325 (Fed. Cir. 2016)). The Federal Circuit went on to describe the factual inquiry as,

[w]hether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art. 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.

Id., slip. op. at 14.

The Federal Circuit also made clear that its decision in Berkheimer did not “cast doubt on the propriety of [previous cases upholding grants of summary judgment].” Id., slip op. at 13. A subsequent Federal Circuit decision demonstrates that Berkheimer will not prevent all patent eligibility cases from being decided in summary judgments.

In a non-precedential opinion, Automated Tracking Solutions v. Coca-Cola, (ATS) the Federal Circuit affirmed a grant of judgment on the pleadings, holding the claims ineligible under § 101, because there was no dispute that the claims recited routine and conventional radio frequency identification (RFID) components.

In ATS, the District Court granted a motion for judgment on the pleadings, finding the claims were directed to: collecting and analyzing; and determining results of the analysis; and involved routine and conventional use of RFID devices and computer. Automated Tracking Sols., LLC v. Coca-Cola Co., 223 F. Supp. 3d 1278, 1280, 92 (N.D. Ga. 2016).

On appeal, the Federal Circuit affirmed the grant of judgment on the pleadings. Automated Tracking Solutions, LLC v. The Coca-Cola Co., No. 2017-1494, slip op. at 11-12 (Fed. Cir. Feb. 16, 2018). The Federal Circuit found the claims were not directed to an improvement in technology because the claims “simply do not require a particular configuration or arrangement of RFID system components” and as such affirmed the holding that the claims were directed to an abstract idea. Id., slip. op. at 8. The Federal Circuit went on to analyze the claims under Alice’s Step Two and to determine whether there was a genuine issue of fact that would make judgment on the pleadings inappropriate. The Federal Circuit found there was no dispute that the claims “use these conventional RFID components in a non-conventional combination or arrangement,” id., slip. op. at 10, and affirmed the District Court’s holding.

Similar to Berkheimer, the Federal Circuit examined the patent’s specification to determine if the claims recited any unconventional activity. However, unlike Berkheimer, the Federal Circuit found the specification in ATS described a simple RFID as a scanner, a transponder and a computer, and these recited components of the claimed RFID system were conventional. Further unlike Berkheimer, the Federal Circuit also examined the complaint for allegations supporting the patent owner’s contentions that the claims recited an inventive concept but found none. Id., slip op. at 11. The Federal Circuit acknowledged the specification claimed RFID was a developing technology but found that alone was not enough to create a genuine issue of material fact.

In both Berkheimer and ATS the Federal Circuit made clear; whether claims recite well-understood, routine, and conventional features is a question of fact and a genuine dispute can prevent judgement before trial. This conclusion is further supported in a third decision by the Federal Circuit that month, Aatrix Software, Inc. v. Green Shades Software, Inc., No. 2017-1452 (Fed. Cir. Feb. 14, 2018).

In Aatrix Software, the Federal Circuit vacated a dismissal under Rule 12(b)(6) because the District Court refused to permit the patent owner to file an amended complaint which included allegations supporting the patent’s eligibility. Id., slip op at 2. Specifically, the patent owner’s proposed amended complaint described problems in the prior art and presented specific allegations that the patented claims improved importing data from third-party software applications, improved efficiency, used less memory, and lead to faster processing speeds. Id., slip op. at 9-10. The District Court’s refusal to permit the patent owner to file its amended complaint was an abuse of dissection because the allegations made in it were sufficient to contradict the Court’s conclusion the claims did not recite an inventive concept.