Berkheimer v. Hp Inc.
Berkheimer v. Hp Inc.
Opinion
Appellee HP Inc. filed a petition for rehearing en banc. A response to the petition was invited by the court and filed by Appellant Steven E. Berkheimer. Several motions for leave to file amici curiae briefs were also filed and granted. The petition, response, and amici curiae briefs were first referred to the panel that heard the appeal, and thereafter, to the circuit judges who are in regular active service. A poll was requested, taken, and failed.
Upon consideration thereof,
IT IS ORDERED THAT :
1) The petition for panel rehearing is denied.
*1370 2) The petition for rehearing en banc is denied.
3) The mandate of the court will issue on June 7, 2018.
Berkheimer
and
Aatrix
stand for the unremarkable proposition that whether a claim element or combination of elements would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time is a question of fact. The Supreme Court has described historical facts as "a recital of external events."
Thompson v. Keohane
,
Whether a claim element or combination of elements would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time may require "weigh[ing] evidence," "mak[ing] credibility judgments," and addressing "narrow facts that utterly resist generalization."
Id.
at 967 (quoting
Pierce v. Underwood
,
This question may require weighing evidence to determine whether the additional limitations beyond the abstract idea, natural phenomenon, or law of nature would have been well-understood, routine, and conventional to an ordinarily skilled artisan.
*1371
Because the patent challenger bears the burden of demonstrating that the claims lack patent eligibility,
As this is a factual question, the normal procedural standards for fact questions must apply, including the rules in the Federal Rules of Civil Procedure applicable to motions to dismiss or for summary judgment and the standards in the Federal Rules of Evidence for admissions and judicial notice.
See
SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC
, --- U.S. ----,
If there is a genuine dispute of material fact, Rule 56 requires that summary judgment be denied. In
Berkheimer
, there was such a genuine dispute for claims 4-7, but not for claims 1-3 and 9.
Berkheimer v. HP Inc.
,
If patent eligibility is challenged in a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), we must apply the well-settled Rule 12(b)(6) standard which is consistently applied in every area of law. A motion to dismiss for failure to state a claim must be denied if "in the light most favorable to the plaintiff and with every doubt resolved in the pleader's favor-but disregarding mere conclusory statements-the complaint states any legally cognizable claim for relief." 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2018). In the Eleventh Circuit, the Rule 12(b)(6) standard requires accepting as true the complaint's factual allegations and construing them in the light most favorable to the plaintiff.
Aatrix Software, Inc. v. Green Shades Software, Inc.
,
*1373
Secured Mail Sols. LLC v. Universal Wilde, Inc.
,
We cannot adopt a result-oriented approach to end patent litigation at the Rule 12(b)(6) stage that would fail to accept as true the complaint's factual allegations and construe them in the light most favorable to the plaintiff, as settled law requires. The conclusion that the patent claims in Aatrix survived the motion to dismiss is not a holding that they are eligible. And the mere fact that there were sufficient allegations in the pleading to state a claim for patent infringement does not mean that the case need go to trial.
There are many vehicles for early resolution of cases. An accused infringer can move for summary judgment at any time. In fact, under Rule 12(d), the Rule 12(b)(6) motion could be converted into a summary judgment motion and decided under the summary judgment standard rather than the harder Rule 12(b)(6) standard. Alternatively, the court can raise summary judgment sua sponte under Rule 56(f)(3). Moreover, if the allegations in the complaint about the invention as claimed ultimately lack evidentiary support or if the case is exceptional, district courts can award attorneys' fees to the accused infringer under either Rule 11 or § 285 to compensate the accused infringer for any additional litigation costs it incurs.
As stated in
Berkheimer
, "Nothing in this decision should be viewed as casting doubt on the propriety" of our previous cases resolving patent eligibility on motions to dismiss or summary judgment.
Patent law does not protect claims to an "asserted advance in the realm of abstract ideas ... no matter how groundbreaking the advance."
SAP Am.
,
Our decisions in
Berkheimer
and
Aatrix
are narrow: to the extent it is at issue in the case, whether a claim element or combination is well-understood, routine, and conventional is a question of fact. This inquiry falls under step two in the § 101 framework, in which we "consider the elements of each claim both individually and 'as an ordered combination' to determine whether the additional elements 'transform the nature of the claim' into a patent eligible application."
Alice
, 134 S.Ct. at 2355 (quoting
Mayo
,
For the foregoing reasons, we concur in the order denying en banc review.
Lourie, Circuit Judge, with whom Newman, Circuit Judge, joins, concurring in the denial of the petition for rehearing en banc.
I concur in the court's declining to rehear this case en banc. There is plausibility to the panel holding that there are fact issues potentially involved in this case concerning the abstract idea exception to patent eligibility. And the panel, and the court, are bound to follow the script that the Supreme Court has written for us in § 101 cases.
However, I believe the law needs clarification by higher authority, perhaps by Congress, to work its way out of what so many in the innovation field consider are § 101 problems. Individual cases, whether heard by this court or the Supreme Court, are imperfect vehicles for enunciating broad principles because they are limited to the facts presented. Section 101 issues certainly require attention beyond the power of this court.
We started from the statute that provides for patents on "any new and useful process, machine, manufacture, or composition of matter."
But it's in the details that problems and uncertainties have arisen. The Court held in
Mayo Collaborative Services v. Prometheus Laboratories, Inc.
, that the claim at issue "set forth laws of nature" and was ineligible under § 101 as "a drafting effort designed to monopolize the law of nature itself."
The Supreme Court whittled away at the § 101 statute in
Mayo
by analyzing abstract ideas and natural phenomena with a two-step test, including looking for an "inventive concept" at step two, thereby bringing aspects of §§ 102 and 103 into the eligibility analysis.
The case before us involves the abstract idea exception to the statute. Abstract ideas indeed should not be subject to patent. They are products of the mind, mental steps, not capable of being controlled by others, regardless what a statute or patent claim might say.
Gottschalk v. Benson
,
But why should there be a step two in an abstract idea analysis at all? If a method is entirely abstract, is it no less abstract because it contains an inventive step? And, if a claim recites "something more," an "inventive" physical or technological step, it is not an abstract idea, and can be
*1376
examined under established patentability provisions such as §§ 102 and 103. Step two's prohibition on identifying the something more from "computer functions [that] are 'well-understood, routine, conventional activit[ies]' previously known to the industry,"
Alice Corp. Pty. Ltd. v. CLS Bank Int'l
, --- U.S. ----,
I therefore believe that § 101 requires further authoritative treatment. Thinking further concerning § 101, but beyond these cases, steps that utilize natural processes, as all mechanical, chemical, and biological steps do, should be patent-eligible, provided they meet the other tests of the statute, including novelty, nonobviousness, and written description. A claim to a natural process itself should not be patentable, not least because it lacks novelty, but also because natural processes should be available to all. But claims to using such processes should not be barred at the threshold of a patentability analysis by being considered natural laws, as a method that utilizes a natural law is not itself a natural law.
The Supreme Court also held in
Association for Molecular Pathology v. Myriad Genetics, Inc
., that claims to isolated natural products were ineligible for claiming "naturally occurring phenomena."
However, finding, isolating, and purifying such products are genuine acts of inventiveness, which should be incentivized and rewarded by patents. We are all aware of the need for new antibiotics because bacteria have become resistant to our existing products. Nature, including soil and plants, is a fertile possible source of new antibiotics, but there will be much scientific work to be done to find or discover, isolate, and purify any such products before they can be useful to us. Industry should not be deprived of the incentive to develop such products that a patent creates. But, while they are part of the same patent-eligibility problems we face, these specific issues are not in the cases before us.
Accordingly, I concur in the decision of the court not to rehear this § 101 case en banc. Even if it was decided wrongly, which I doubt, it would not work us out of the current § 101 dilemma. In fact, it digs the hole deeper by further complicating the § 101 analysis. Resolution of patent-eligibility issues requires higher intervention, hopefully with ideas reflective of the best thinking that can be brought to bear on the subject.
Reyna, Circuit Judge, dissenting from the denial of the petition for rehearing en banc.
The court's vote to deny
en banc
review of
Aatrix
and
Berkheimer
1
is a declaration that nothing has changed in our precedent on patent subject matter eligibility under
*1377
Perhaps the single most consistent factor in this court's § 101 law has been our precedent that the § 101 inquiry is a question of law. Stated differently, there is no precedent that the § 101 inquiry is a question of fact. The Aatrix and Berkheimer decisions are contrary to that well-established precedent.
Aatrix
and
Berkheimer
alter the § 101 analysis in a significant and fundamental manner by presenting patent eligibility under § 101 as predominately a question of fact. For example, in addressing
Alice
step two, the
Aatrix
and
Berkheimer
panels raised and considered the same, exact question of "whether the invention describes well-understood, routine, and conventional activities."
Aatrix
,
Having made this profound change, the court offers no meaningful guidance to the bar, the government, or the public on how to proceed on these new grounds. 3 For *1378 example, to what extent will discovery be allowed to prove or disprove a fact that has been placed in contention? Does this new factual inquiry extend to other aspects of the § 101 inquiry, such as whether a claim is directed to an abstract idea or a natural phenomenon? Can expert opinion supplant the written description? Does the court or jury determine this factual issue? What deference is due to the fact finder? These and similar questions will have to be addressed and resolved by the district courts. Instead of creating a period of uncertainty with the expectation of addressing these issues sometime in the future, this court should address them now.
I.
The Supreme Court has characterized the § 101 patent-eligibility inquiry as a threshold test that precedes the requirements described in §§ 102, 103, and 112.
See
Alice Corp. Pty. Ltd. v. CLS Bank Int'l
, --- U.S. ----,
The two-step test for assessing subject matter eligibility under § 101 evolved from framework introduced by the Supreme Court in
Mayo
and refined in
Alice
. First, we determine whether "the claims at issue are directed to one of those patent-ineligible concepts," i.e., laws of nature, natural phenomena, and abstract ideas.
Alice
, 134 S.Ct. at 2355. If so, we proceed to step two, and consider elements of each claim both individually and "as an ordered combination" to determine whether the additional elements " 'transform the nature of
*1379
the claim' into a patent-eligible application."
Id.
(quoting
Mayo
,
The Court's treatment of the "inventive concept" search at step two makes clear that this inquiry is predominately a legal question focused on
the claims
. The inventive concept cannot merely be alleged; rather, "the
claim
ha[s] to supply a 'new and useful' application of the idea in order to be patent eligible."
Alice
, 134 S.Ct. at 2357 (emphasis added) (quoting
Gottschalk v. Benson
,
Contrary to this established body of law, the majority opinion in
Aatrix
emphatically declares that the inventive concept inquiry "
cannot
be answered adversely to the patentee based on the sources properly considered on a motion to dismiss, such as the complaint, the patent, and materials subject to judicial notice."
Aatrix
,
*1380
Nor are the allegations tethered to the application of the abstract idea at issue; the step two inquiry "asks if ... there is some inventive concept in the application of the abstract idea" described in the claims-i.e., whether some additional steps in the claimed process integrate the claimed abstract idea into patentable application.
See
Enfish, LLC v. Microsoft Corp.
,
Similarly, the majority in
Aatrix
contends that "[t]here are concrete allegations in the second amended complaint that individual elements and the claimed combination are not well-understood, routine, or conventional activity."
Thus,
Aatrix
removes the inventive concept inquiry from the claims and the specification, and instead places it firmly in the realm of extrinsic evidence. This is a change in our law, and is counter to guidance from the Supreme Court and our own precedent.
See
Alice
, 134 S.Ct. at 2357 ("[W]e must examine the elements
of the claim
to determine whether it contains an 'inventive concept.' " (emphasis added) );
Synopsys, Inc. v. Mentor Graphics Corp
.,
The consequences of this decision are staggering and wholly unmoored from our precedent. Unlike prior art for purposes of §§ 102 and 103, we have no established parameters or guidance for what evidence we can and should consider for inventive concept purposes. And although the § 101 inquiry has often been described as a "threshold" issue, capable of early resolution, transforming the predominately legal inquiry into a factual dispute almost guarantees that § 101 will rarely be resolved early in the case, and will instead be carried through to trial. Before now, none of our decisions support the proposition that a jury should decide whether a patent includes an inventive concept sufficient to survive Alice step two. And given our adoption of Aatrix and Berkheimer , I see no principled reason that would restrain extending a factual inquiry to step one of Alice .
The approach adopted in
Aatrix
also threatens to upset the
Alice
framework by letting the inventive concept inquiry swallow the entirety of step two. Merely identifying an inventive concept is insufficient; the additional elements must also " 'transform the nature of the claim' into a patent-eligible application." Instead, by emphasizing whether the claimed elements are "not well-understood, routine, or conventional," the approach in
Aatrix
reduces the § 101 inquiry into a novelty analysis. This is improper.
See
Diamond
,
II.
Unlike the novelty and obviousness inquiries under §§ 102 and 103, which necessarily involve factual determinations relating to the scope and content of prior art, the § 101 analysis is analogous to contract interpretation, in which a legal determination is made by reviewing the face of the contract, and additional fact finding is war-ranted only in some limited circumstances.
See, e.g
.,
Kamfar v. New World Rest. Grp., Inc.,
The fact that the parties disagree on the proper interpretation of the contract does not render the contractual language ambiguous.
See
Metro. Life Ins. Co. v. RJR Nabisco, Inc.
,
*1382 ("When the intent of the parties is unambiguously expressed in the contract, that expression controls, and the court's inquiry should proceed no further. But when the contract is ambiguous, a court may consider extrinsic evidence to determine the intentions of the parties.") (citing 11 Richard A. Lord, Williston on Contracts §§ 30:2, 30:6, 30:7 (4th ed. 2012) ).
Adopting the principles from contract interpretation, a plaintiff's allegations of inventiveness do not necessarily render the claims of the patent (i.e., contract) "ambiguous" to justify considering evidence outside of the patent. The factual allegations of the inventiveness of the claimed invention do not have to be accepted by the court if the claims of the asserted patent do not reflect the alleged innovative concepts and transform the nature of the claim into a patent-eligible abstract idea. See, e.g ., Ariosa, 788 F.3d at 1379 ("Sequenom argues that 'before the '540 patent, no one was using the plasma or serum of pregnant mothers to amplify and detect paternally-inherited cffDNA.' This argument implies that the inventive concept lies in the discovery of cffDNA in plasma or serum. Even if so, this is not the invention claimed by the '540 patent." (citation omitted) ).
The § 101 inquiry can similarly be analogized to claim construction. When construing patent claims, the court may rely on factual findings in some instances, but predominately construes the terms according to the claims and specification, i.e., a purely legal determination. The Supreme Court has said as much:
We recognize that a district court's construction of a patent claim, like a district court's interpretation of a written instrument, often requires the judge only to examine and to construe the document's words without requiring the judge to resolve any underlying factual disputes. As all parties agree, when the district court reviews only evidence intrinsic to the patent (the patent claims and specifications, along with the patent's prosecution history), the judge's determination will amount solely to a determination of law , and the Court of Appeals will review that construction de novo .
Teva Pharm. USA, Inc. v. Sandoz, Inc
., --- U.S. ----,
A § 101 patent eligibility determination can be resolved without the need to look beyond the four corners of the patent. Thus, the analysis becomes solely a question of law for the court to properly decide. This does not mean that there will never be factual allegations that would preclude dismissal for ineligible subject matter, but consistent with our precedent, such a determination can be made based solely on the claims and written description.
See, e.g.
,
In re TLI Commc'ns LLC Patent Litig.
,
Accordingly, just as in claim construction and contract interpretation, looking *1383 beyond the four corners of the patent should only occur in exceptional circumstances. A factual allegation or dispute should not automatically take the determination out of the court's hands; rather, there needs to be justification for why additional evidence must be considered-the default being a legal determination.
Whether a § 101 analysis is more akin to §§ 102 or 103 analysis-i.e., predominately factual-or contract interpretation and claim construction-i.e., predominately legal-is significant, for example, in the context of a Rule 12(b)(6) motion because these legal determinations can be decided at an early stage of the case rather than having to proceed to summary judgment or trial.
See
OIP Techs.,
788 F.3d at 1364-65 (Mayer, J., concurring) ("Addressing
III.
The court's inaction today has prevented us from exploring the important question raised in the en banc petitions. The en banc process is intended to offer careful, in-depth study by the full court of exceptionally important questions, with the benefit of briefing and argument by the parties, involvement of amici, and hearing the government's views. I dissent from court's vote to reject this benefit, in particular where the Aatrix and Berkheimer decisions upset established precedent and offer no guidance to the many questions they raise.
It has been suggested that contrary to these pronouncements by the Supreme Court, whether claim limitations involve well-understood, routine, and conventional activities should not be assessed from the perspective of a person of ordinary skill in the art. The alternative is unclear, the reasonable judge? Such a conclusion would be at odds with all patentability questions, which are assessed from the perspective of the ordinarily skilled artisan. It would be bizarre, indeed, if we assessed the question from the perspective of a jurist because for much of the technology we encounter, very little would be well-understood, routine, and conventional to the jurist.
It would be odd to suggest that § 101 is not an in-validity challenge. It falls under Part II, Chapter 10 of the Patent Act entitled Patentability of Inventions. It sits alongside §§ 102, 103 and 112, which likewise articulate validity concerns. Moreover, the single sentence in § 101 actually contains two patentability requirements: eligibility and utility. Both have long been treated by courts as questions of validity.
See
,
e.g.
,
Internet Patents Corp. v. Active Network, Inc.
,
When claim construction is limited to the intrinsic evidence, we review it de novo.
Teva Pharm. USA, Inc. v. Sandoz, Inc.
, --- U.S. ----,
This court's opinion in
Aatrix Software, Inc. v. Green Shades Software, Inc.
,
Federal Rule of Appellate Procedure 35 and our Internal Operating Procedures provide that en banc consideration is required to overrule a precedent of this court. In addition, these rules establish reasons for which en banc action should be taken, including the necessity of securing or maintaining uniformity of decisions; involvement of a question of exceptional importance; necessity of overruling a prior holding of this or a predecessor court expressed in an opinion having precedential status; or the initiation, continuation, or resolution of a conflict with another circuit. Based on these rules and procedures, sufficient reason exists here for en banc review.
The reaction of the patent bar and intellectual property community underscores the exceptional importance of the questions presented by this court's recent decisions and their departure from precedent. On April 19, 2018, the USPTO issued a memorandum of changes in examination procedure in light of
Berkheimer
. USPTO, Memorandum on Changes in Examination Procedure Pertaining to Subject Matter Eligibility, Recent Subject Matter Eligibility Decision (
Berkheimer v. HP, Inc.
) (Apr. 19, 2018), available at https://www.uspto.gov/sites/default/ files/documents/memo-berkheimer-20180419.PDF. The memorandum highlights that, for the first time, this court held that "whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination."
Further, district courts immediately started relying on these decisions to deny summary judgment motions.
E.g.
,
Vaporstream, Inc. v. Snap Inc
., No. 2:17-CV-220,
Aatrix's new allegations in the Second Amended Complaint included the following: the background and development of the inventions of the Aatrix Patents; specific allegations and diagrams spelling out the technology of the Aatrix Patents; the prosecution history of the patents with the relevant USPTO file wrappers attached as exhibits; a large number of prior art references and patentably distinct means and methods of creating, displaying and filling out forms on computers, such as Aatrix's own "monolithic software"; hundreds of search results by the USPTO disclosing prior art in the field; eleven patents or publications disclosing prior art and/or patentably distinct means and methods cited by the USPTO in the prosecution of the applications for the Aatrix's patents; several products for creating, designing and filling out forms, allegedly distinct from Aatrix's patents, on sale before the date of invention; alternative methods for creating, displaying and filling out forms such as Superforms and the use of SDK's to launch monolithic software; and the allegedly many improvements, objectives, and advantages over the prior art that the inventions of Aatrix's patents provide, including improvements in the functioning of the computer components of the inventions. Aatrix , J.A. 407-09.
See, e.g.
,
Oil States Energy Servs. v. Greene's Energy Grp., LLC
, --- U.S. ----,
Reference
- Full Case Name
- Steven E. BERKHEIMER, Plaintiff-Appellant v. HP INC., Fka Hewlett-Packard Company, Defendant-Appellee
- Cited By
- 36 cases
- Status
- Published