Addressing issue preclusion and patent ineligibility stemming from a Rule 12(b)(6) motion to dismiss, the US Court of Appeals for the Federal Circuit affirmed the district court’s dismissal of Voter Verified’s patent infringement complaint, finding the claims at issue invalid under § 101. Voter Verified, Inc. v. Election Sys. & Software LLC, Case No. 17-1913 (Fed. Cir., Apr. 20, 2018) (Lourie, J).

In 2009, Voter Verified sued the predecessors of Election Systems & Software for infringement of a reissue patent directed to voting methods and systems that provide for “auto-verification” of a voter’s ballot. Through a series of summary judgment orders, the district court held that various claims were not infringed and not invalid under §§ 101 and 112 because Election Systems failed to present any arguments or evidence regarding invalidity for those claims. The issues went on appeal to the Federal Circuit, which affirmed the district court (IP Update, Vol. 15, No. 11).

In 2016, Voter Verified sued Election Systems in a different district court, alleging that Election Systems was infringing the same patent as in the earlier case. Election Systems moved under Rule 12(b)(6) to dismiss the complaint on the grounds that all of the claims of the same asserted patent were invalid under § 101. In response, Voter Verified argued that issue preclusion, also known as “collateral estoppel,” precluded Election Systems from re-litigating the § 101 issue, which Voter Verified contended was decided in the previous litigation. Nevertheless, the district court granted the motion, concluding that the Alice two-step analysis was a substantial change in the law that would prevent issue preclusion from applying in this case, and substantively, that all claims of the asserted patent were directed to patent-ineligible subject matter under § 101. Voter Verified appealed.

The Federal Circuit first addressed the issue of whether the Supreme Court of the United States’ Alice decision was a substantial change in the law such that issue preclusion would not apply. Based on the first factor of a three-part test, the Federal Circuit explained that the Supreme Court in Alice applied the same § 101 test as it previously set out in Mayo and did not materially change it. Therefore, the Federal Circuit held that the intervening change in the law exception did not preclude the application of issue preclusion in the case.

The Court next analyzed the issue preclusion question under the 11th Circuit’s four-factor test, focusing on two of the factors that the parties contested. First, the Court agreed with Election Systems that the § 101 issue was never actually litigated; the district court dismissed the § 101 issue when Election Systems chose not to respond to those arguments during summary judgment briefing. Next, the Court found that the § 101 issue was not necessary to the judgment in the first district court action. Instead, the district court made decisions on both non-infringement and invalidity, but did not specify which were critical to its final judgment. Therefore, finding that issue preclusion did not attach to defendant’s motion to dismiss, the Court proceeded to its § 101 Alice analysis.

The Federal Circuit first grouped the asserted claims into a representative method claim and a representative system claim. Then, taking all of the factual allegations in the pleadings as true and as viewed in the light most favorable to the plaintiff, the Court found that the factual allegations presented did not prevent a § 101 determination. The Court then performed the two-step Alice test.

After considering the claims and the specification, the Federal Circuit determined that “the claims as a whole are drawn to the concept of voting, verifying the vote, and submitting the vote for tabulation.” These steps, the Court noted, are “nothing more than abstract ideas.”

Next, the Federal Circuit looked for an inventive concept in the claims sufficient to transform them into patent-eligible subject matter. The Court found only general-purpose computer functions being used to perform the abstract idea of voter verification. For example, the specification recited general computer-related devices such as “a standard personal computer,” “a visual display device” or “a laser printer.” The Court held that these standard components did not sufficiently transform the patent’s abstract ideas into patent-eligible subject matter.

Practice Note: This decision comes in the wake of the April 19, 2018, US Patent and Trademark Office (PTO) memo concerning “Changes in Examination Procedure Pertaining to Subject Matter Eligibility” following the Berkheimer v. HP, Inc., decision. In the memo, the PTO revises the procedures set forth in the MPEP for formulating a rejection for lack of subject matter eligibility. Specifically, with respect to the second step in the Alice analysis, the PTO instructs that “an additional element (or combination of elements) is not well-understood, routine or conventional unless the examiner finds, and expressly supports a rejection in writing” with one or more of the following that demonstrate the well-understood, routine, conventional nature of the additional element(s):

  • A citation to an express statement in the specification or statement made by an applicant during prosecution
  • A citation to one or more of the court decisions discussed in the relevant MPEP section
  • A citation to a publication that demonstrates the well-understood, routine, conventional nature of the additional element(s)
  • A statement that the examiner is taking official notice on the issue

With respect to the patent in the Voter Verified case, the Federal Circuit noted express statements in the specification to show why the claims simply recited general-purpose computers and standard components. The Court found no assertions in Voter Verified’s complaint that would have brought the “inventive concept” issue into dispute, presumably because none existed. Accordingly, patent drafters may consider, where applicable, making specific reference as to why some of the processing components are not well understood, routine or conventional. Of course, this may then require some expanded disclosure regarding those components.