Drafting Strategies to Avoid Subject Matter Eligibility Issues and to Minimize the Risks of Having a Section 101 Dismissal Based on Recent Federal Circuit Decisions
The Federal Circuit recently issued a trio of decisions relating to early motions seeking dismissal under 35 U.S.C. § 101 based on subject matter eligibility under the Supreme Court’s Alice decision. These cases provide insight on patent drafting strategies to avoid subject matter eligibility issues, as well as potential pitfalls to avoid during the patent drafting process. These cases also demonstrate that properly drafted software and business method patents are likely to avoid early dismissal in litigation based on subject matter eligibility issues, which strengthens these types of patents.
Two of the three Federal Circuit decisions overturned lower court dismissals in the context of a motion to dismiss and a summary judgment motion, respectively. Both decisions found that issues of fact precluded summary determination of the subject matter eligibility issue. These decisions make summary dismissal more difficult to obtain under Alice, while also providing guidance on how applications can be drafted to be best positioned to raise issues of material fact that will preclude summary dismissal related to subject matter eligibility.
The third Federal Circuit decision, while affirming a judgment of ineligibility at the pleadings stage, also provides guidance on traps to avoid in patent drafting that may lead to an early Alice-based dismissal. In particular, this decision illustrates the danger of making admissions in a patent application regarding the conventional nature of some of the elements recited in the patent.
The determination of whether a claim recites patent eligible subject matter in evaluating a dismissal motion under Alice is a question of law that may contain underlying facts. Particularly, the question of whether a claim element or combination of elements is well-understood, routine, and conventional to a skilled artisan in the relevant field under step two of the Alice inquiry is a question of fact.
Case Summaries I. Berkheimer
In Berkheimer v. HP Inc., the Federal Circuit vacated a summary judgment based on subject matter ineligibility. The patent at issue in Berkheimer was related to digitally processing and archiving files in a digital asset management system. The Federal Circuit found that a material issue of fact existed as to whether certain claims recited archiving documents in an inventive manner. The Federal Circuit relied heavily on portions of the specification referring to reducing redundancy and enabling one-to-many editing functionality in archival systems.
The Federal Circuit noted that the specification described the state of the art of document archival systems at the time the patent was filed, as well as the purported improvements provided by the invention. Specifically, the specification provided that conventional digital asset management systems at the time included numerous documents containing multiple instances of redundant document elements, which created inefficiencies and increased costs. The specification further recited that the claimed improvement increased efficiency and computer functionality over the described prior art systems.
Thus, the Federal Circuit determined that the specification described an inventive feature of the claimed invention, i.e., the storage of parsed data in a purportedly unconventional manner to address prior art issues. This inventive feature created a factual dispute regarding whether the invention described well-understood, routine, and conventional activities under step two of the Alice inquiry. Thus, the Federal Circuit determined that the summary judgment was improper.
II. Aatrix Software Similarly, in Aatrix Software, Inc. v. Green Shades Software, Inc., the Federal Circuit vacated a decision granting a motion to dismiss based on section 101 and reversed the district court’s denial of a motion for leave to file a second amended complaint. The patents at issue were directed to systems and methods for designing, creating, and importing data into a viewable form on a computer so that a user could manipulate the form data and create viewable forms and reports. The specification described, inter alia, a “data file” that allowed data from third-party applications to be “seamlessly imported” into a form file program to populate the form fields.
The district court found that the claims were directed to the abstract idea of collecting, organizing, and performing calculations on data to fill out forms. In response, the patent holder filed a motion for leave to amend the complaint to provide additional allegations and evidence related to the § 101 inquiry, which the district court denied. The Federal Circuit determined that the district court erred in denying the motion for leave to file the amended complaint, which included allegations that, according to the Federal Circuit, if accepted as true, established that the claimed combination included inventive components and improved the workings of the computer. In particular, the Federal Circuit found that the allegations in the amended complaint created a factual dispute as to whether the claim term “data file” constituted an inventive concept, alone or in combination with other elements, sufficient to survive the section 101 challenge at the motion to dismiss stage.
The amended complaint described development of the patented invention, including problems present in prior art computerized form file creation systems. The amended complaint also included specific allegations directed to improvements and problems solved by the patented invention. The allegations, which were also supported in the specification, cited improvements in importing data from third-party software that purportedly increased the efficiencies of computers processing forms, saved storage space, reduced the risk of a condition that slowed down prior art systems, and increased processing speed.
The Federal Circuit determined that the amended complaint, along with the specification, provided concrete allegations that the individual elements and the claimed combination were not well-understood, routine, or conventional activity, and that the claimed combinations improved the functioning of the computer. Thus, the Federal Court determined that the motion for leave to amend should have been granted and the case allowed to proceed to claim construction to further determine whether the claimed “data file” provided an inventive concept sufficient for patent eligibility.
III. Automated Tracking Solutions
In contrast, in Automated Tracking Solutions, LLC, v. The Coca-Cola Co., the Federal Circuit affirmed a motion to dismiss under section 101 based on the pleadings. The patents were directed to inventory control, and more specifically were related to processes and systems to perform the functions of identification, tracking, location, and/or surveillance of tagged objects anywhere in a facility or area. The inventions used RFID technology, computer programming, database applications, networking technologies, and hardware elements to achieve the goal of locating, identifying, tracking, and surveilling objects.
The district court granted a motion for judgment on the pleadings that: all asserted claims were patent ineligible as directed to the abstract idea of collecting data, analyzing it, and determining the results based on the analysis of data; and the claims lacked an inventive concept because nothing in the claim limitations or their ordered combination was sufficient to transform the abstract idea into a patent-eligible application.
The Federal Circuit affirmed the dismissal finding that the claims did not require a particular configuration or arrangement of the RFID system components. Further, the Federal Circuit relied on statements in the specification that were deemed as admissions by the applicant that acknowledged certain aspects of the claims were conventional in nature. The specification provided that a conventional, simple RFID system could be composed of three components: a scanner, a transponder, and a computer. These same elements were recited in the claims and there was no evidence that any of the components were unconventional. Thus, the Federal Circuit found that these conventional system elements failed to provide an inventive concept.
The Federal Circuit found that the claims merely recited collecting data from a particular source and analyzing that data, and did not contain an inventive concept. The Federal Circuit decision relied in part on the applicant’s own admission of the conventional nature of the system components. Therefore, the Federal Circuit affirmed the dismissal under section 101.
These recent decisions provide greater clarity on the type of information needed in a patent application specification to avoid summary dismissal under section 101 and to strengthen any resulting patents. In particular, in both Berkheimer and Aatrix, the Federal Circuit relied on statements in the patents identifying specific problems in the art and how the claimed technology disclosed an inventive solution that was not routine, conventional, or well-understood, and finding that material issues of fact existed under the Alice analysis. In contrast, Automated Tracking Solutions illustrates the pitfall of stating in a patent that portions of the technology are conventional. LeClairRyan's patent attorneys are well versed in drafting strategies to reduce subject matter eligibility issues and risks of a section 101 dismissal. We will continue to monitor the developing precedent in this area and will advise you about any further developments.