Aatrix Software, Inc. v. Green Shades Software, Inc.

890 F.3d 1354 (Mem)

AATRIX SOFTWARE, INC., Plaintiff-Appellant

v.GREEN SHADES SOFTWARE, INC., Defendant-Appellee

2017-1452

United States Court of Appeals, Federal Circuit.

Date May 31, 2018

John Bentley Lunseth, II, Briggs & Morgan, PA, Minneapolis, MN, filed a response to the petition for plaintiff-appellant. Also represented by Scott Michael Flaherty.

Harold Timothy Gillis, Shutts & Bowen LLP, Jacksonville, FL, filed a petition for rehearing en banc for defendant-appellee. Also represented by Joseph W. Bain, West Palm Beach, FL.

Before Prost, Chief Judge, Newman, Lourie, Dyk, Moore, O'Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll, Circuit Judges.

Moore, Circuit Judge, with whom Dyk, O'Malley, Taranto, and Stoll, Circuit Judges, join, concurs in the denial of the petition for rehearing en banc.

Lourie, Circuit Judge, with whom Newman, Circuit Judge, joins, concurs in the denial of the petition for rehearing en banc.

Reyna, Circuit Judge, dissents from the denial of the petition for rehearing en banc.

ON PETITION FOR REHEARING EN BANC

ORDER

Per Curiam.

Appellee Green Shades Software, Inc. filed a petition for rehearing en banc. A response to the petition was invited by the court and filed by Appellant Aatrix Software, Inc. The petition and response 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.

2) The petition for rehearing en banc is denied.

3) The mandate of the court will issue on June 7, 2018.

Moore, Circuit Judge, with whom Dyk, O'Malley, Taranto, and Stoll, Circuit Judges, join, concurring in the denial of the petition for rehearing en banc.

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 , 516 U.S. 99, 110, 116 S.Ct. 457, 133 L.Ed.2d 383 (1995). In other words, facts relating to "who did what, when or where, how or why." U.S. Bank Nat'l Ass'n ex rel. CWCapital Asset Mgmt. LLC v. The Village at Lakeridge, LLC , ––– U.S. ––––, 138 S.Ct. 960, 966, 200 L.Ed.2d 218 (2018).

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 , 487 U.S. 552, 561–62, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988) ). The Supreme Court in Alice asked whether the claimed activities were "previously known to the industry," and in Mayo asked whether they were "previously engaged in by researchers in the field."¹ Alice Corp. Pty. v. CLS Bank Int'l , ––– U.S. ––––, 134 S.Ct. 2347, 2359, 189 L.Ed.2d 296 (2014) ; Mayo Collaborative Servs. v. Prometheus Labs., Inc. , 566 U.S. 66, 73, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012). Indeed, the Court recognized that "in evaluating the significance of additional steps, the § 101 patent-eligibility inquiry and, say, the § 102 novelty inquiry might sometimes overlap." Mayo , 566 U.S. at 90, 132 S.Ct. 1289. "[C]ase law from the Supreme Court and this court has stated for decades that anticipation is a factual question." Microsoft Corp. v. Biscotti, Inc. , 878 F.3d 1052, 1068 (Fed. Cir. 2017). While the ultimate question of patent eligibility is one of law, it is not surprising that it may contain underlying issues of fact. Every other type of validity challenge is either entirely factual (e.g., anticipation, written description, utility), a question of law with underlying facts (e.g., obviousness, enablement), or a question of law that may contain underlying facts (e.g., indefiniteness).²

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. Because the patent challenger bears the burden of demonstrating that the claims lack patent eligibility, 35 U.S.C. § 282(a), there must be evidence supporting a finding that the additional elements were well-understood, routine, and conventional. Relying on the specification alone may be appropriate where, as in Mayo , the specification admits as much. 566 U.S. at 79, 132 S.Ct. 1289 ; see also id. at 73–74, 132 S.Ct. 1289. In Mayo , the Court considered disclosures in the specification of the patent about the claimed techniques being "routinely" used and "well known in the art." Id. at 73–74, 79, 132 S.Ct. 1289. Based on these disclosures, the Court held that "any additional steps [beyond the law of nature] consist of well-understood, routine, conventional activity already engaged in by the scientific community" that "add nothing significant beyond the sum of their parts taken separately." Id. at 79–80, 132 S.Ct. 1289. In a situation where the specification admits the additional claim elements are well-understood, routine, and conventional, it will be difficult, if not impossible, for a patentee to show a genuine dispute. Cf. Pharmastem Therapeutics, Inc. v. ViaCell, Inc. , 491 F.3d 1342, 1362 (Fed. Cir. 2007) (stating that "[a]dmissions in the specification regarding the prior art are binding on the patentee for purposes of a later inquiry into obviousness").³

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. ––––, 137 S.Ct. 954, 964, 197 L.Ed.2d 292 (2017) (stating that "the same common-law principles, methods of statutory interpretation, and procedural rules as other areas of civil litigation" also govern patent law). Though we are a court of special jurisdiction, we are not free to create specialized rules for patent law that contradict well-established, general legal principles. See Teva , 135 S.Ct. at 840 ; Highmark Inc. v. Allcare Health Mgmt. Sys., Inc. , ––– U.S. ––––, 134 S.Ct. 1744, 1748–49, 188 L.Ed.2d 829 (2014) ; eBay Inc. v. MercExchange, LLC , 547 U.S. 388, 393–94, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006).

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. , 881 F.3d 1360, 1370 (Fed. Cir. 2018). The specification described the increases in efficiency and computer functionality that the invention, in claims 4–7, had over conventional digital asset management systems. Id. at 1369 (citing U.S. Patent No. 7,447,713 at 1:24–27, 2:22–26, 16:52–60). It further stated that "known asset management systems" did not contain the one-to-many claim element and its advantages, '713 patent at 2:23–26, and that redundant document images "are the convention" in "today's digital asset management systems," id. at 1:24–27. While assertions in the patent will not always be enough to create a genuine dispute of material fact, they did so here. HP's evidence focused almost exclusively on the limitations of claim 1. See J.A. at 1054–62, Berkheimer , 881 F.3d 1360. Its only evidence that addressed the additional limitations in claims 4–7 was the conclusory statement from its expert's declaration that the features disclosed and claimed in the '713 patent, including one-to-many changes, "were known functions at the time the application was filed" and "[w]hen combined into a single computerized system, these known features perform[ed] the exact same functions to yield predictable results." Id. at 1061. This evidence did not address whether the additional limitations were well understood, routine, and conventional. Based on this evidence, HP fell short of establishing that it was entitled to summary judgment that claims 4–7 are ineligible, a defense it bore the burden of proving. 35 U.S.C. § 282(a). Indeed, beyond its expert's conclusory declaration, HP could point to no evidence in the record contradicting the statements from the specification. Applying the standard for summary judgment in Rule 56, as we must, summary judgment had to be denied as to claims 4–7. Because no genuine issue of fact existed for claims 1–3 and 9, we affirmed the grant of summary judgment that those claims were not eligible. As with claims 1–3 and 9, when the evidence that aspects of the invention are not well-understood, routine, and conventional does not pertain to the invention as claimed, it will not create a factual dispute as to these claims. See also Mortg. Grader, Inc. v. First Choice Loan Servs. Inc. , 811 F.3d 1314, 1326 (Fed. Cir. 2016) (expert testimony about problems solved by the invention does not create a genuine dispute of material fact when "the claims do not actually contain the ‘conflict-free requirement’ "); Intellectual Ventures I LLC v. Symantec Corp. , 838 F.3d 1307, 1321–22 (Fed. Cir. 2016) (when technological details or particular features set forth in other claims that incorporate an inventive concept are not present in the claims at issue they cannot create a question of fact as to these claims).

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...