Miller Mendel, Inc. v. City of Anna

107 F.4th 1345

MILLER MENDEL, INC., Plaintiff-Appellant v. CITY OF ANNA, TEXAS, Defendant-Cross-Appellant

2022-1753

2022-1999

United States Court of Appeals, Federal Circuit

Decided: July 18, 2024

Appeals from the United States District Court for the Eastern District of Texas in No. 2:21-cv-00445-JRG, Chief Judge J. Rodney Gilstrap.

Kurt M. Rylander, Rylander & Associates, PC, Vancouver, WA, argued for plaintiff-appellant.

Evan W. Talley, Ryan Whaley, PLLC, OK, argued for defendant-cross-appellant. Also represented by Douglas Sorocco, Dunlap Codding, PC, Oklahoma City, OK.

Before Moore, Chief Judge, Stoll and Cunningham, Circuit Judges.

Cunningham, Circuit Judge.

Miller Mendel, Inc. ("Miller Mendel") sued the City of Anna, Texas ("City") for infringement of certain patent claims relating to a software system for managing pre-employment background investigations. The United States District Court for the Eastern District of Texas granted City's motion for judgment on the pleadings, concluding that the asserted claims¹ do not claim patent-eligible subject matter under 35 U.S.C. § 101. Miller Mendel, Inc. v. City of Anna, 598 F. Supp. 3d 486, 499 (E.D. Tex. 2022) ("Rule 12(c) Decision"). The district court also denied City's motion for attorneys' fees. Miller Mendel, Inc. v. City of Anna, No. 2:21-CV-00445-JRG, 2022 WL 2704790 (E.D. Tex. June 13, 2022) ("Attorneys' Fees Order"). For the reasons below, we affirm.

I. BACKGROUND

On December 2, 2021, Miller Mendel sued City, alleging that the City police department's use of the Guardian Alliance Technologies ("GAT") software platform infringes "at least Claims 1, 5, and 15" of U.S. Patent No. 10,043,188. Rule 12(c) Decision at 488; J.A. 468-69 ¶ 12 (Amended Complaint). The '188 patent is directed to a "software system for managing the process of performing pre-employment background investigations." '188 patent col. 3 l. 66 to col. 4 l. 2. Miller Mendel and City agree that claim 1 of the '188 patent is representative of all asserted claims, Rule 12(c) Decision at 489 n.2, and it recites:

1. A method for a computing device with a processor and a system memory to assist an investigator in conducting a background investigation of an applicant for a position within a first organization, comprising the steps of:

receiving a first set of program data comprising information identifying the applicant, the position, the first organization, and the investigator;

storing a new applicant entry in the system memory, the new applicant entry associated with the first set of program data;

transmitting an applicant hyperlink to an applicant email address associated with the applicant, the applicant hyperlink for viewing an applicant set of electronic documents;

receiving an applicant electronic response with a reference set of program data, wherein the reference set of program data comprises information regarding a reference source, wherein the reference source is a person, the program data including a reference email address associated with the reference source;

determining a reference class of the reference source based on the reference set of program data;

selecting a reference set of electronic documents based on the reference class of the reference source;

transmitting a reference hyperlink to the reference email address, the reference hyperlink for viewing the reference set of electronic documents;

receiving a reference electronic response to the reference set of electronic documents from the reference source;

storing the reference electronic response in the system memory, associating the reference electronic response with the new applicant entry; and

generating a suggested reference list of one or more law enforcement agencies based on an applicant residential address.

'188 patent col. 15 l. 52 to col. 16 l. 19.

On February 15, 2022, City moved for judgment on the pleadings, alleging that the claims of the '188 patent are ineligible for patent protection under 35 U.S.C. § 101. Rule 12(c) Decision at 488; J.A. 136; see also J.A. 127-60 (Rule 12(c) motion opening brief). The district court granted City's Rule 12(c) motion, dismissing the case with prejudice. Rule 12(c) Decision at 499. The district court also rejected Miller Mendel's argument that City's motion went beyond the pleadings allowed under Rule 12(c). Id. at 497 n.4.

Miller Mendel filed a motion for reconsideration, arguing that the district court lacked subject matter jurisdiction over unasserted patent claims and thus could not invalidate all claims of the '188 patent. On June 9, 2022, the district court denied Miller Mendel's motion for reconsideration. Reconsideration Order at *2; see J.A. 753-56. However, the district court clarified that its Rule 12(c) decision only invalidated claims 1, 5, and 15, rather than invalidating all claims of the '188 patent. Reconsideration Order at *1-3.

City also filed a motion for attorneys' fees pursuant to 35 U.S.C. § 285. Attorneys' Fees Order at *1-2; see also J.A. 796, 799-800. On June 13, 2022, the district court denied City's motion for attorneys' fees, finding that the case was not exceptional. Attorneys' Fees Order at *6.

Miller Mendel appealed and City cross-appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II. STANDARD OF REVIEW

We review procedural aspects of the grant of judgment on the pleadings based on the law of the regional circuit. Two-Way Media Ltd. v. Comcast Cable Commc'ns, LLC, 874 F.3d 1329, 1336 (Fed. Cir. 2017). Under Fifth Circuit law, we review a judgment on the pleadings de novo. See Templeton v. Jarmillo, 28 F.4th 618, 620 (5th Cir. 2022). "The standard for dismissing a complaint under Rule 12(c) is the same as a dismissal for failure to state a claim under [Rule] 12(b)(6)." Id. at 621. "The standard requires the complaint to 'contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.' " Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009)).

"We review the district court's ultimate patent-eligibility conclusion de novo." PersonalWeb Techs. LLC v. Google LLC, 8 F.4th 1310, 1315 (Fed. Cir. 2021). "Patent eligibility is a question of law that may involve underlying questions of fact." Id. at 1314 (citation omitted). The inquiry on patent eligibility "may be, and frequently has been, resolved on a Rule 12(b)(6) or (c) motion where the undisputed facts, considered under the standards required by that Rule, require a holding of ineligibility under the substantive standards of law." Id. (citation omitted).

"We review all aspects of a district court's § 285 determination for an abuse of discretion, including its exceptional case determination." Rothschild Connected Devices Innovations, LLC v. Guardian Prot. Servs., Inc., 858 F.3d 1383, 1387 (Fed. Cir. 2017) (cleaned up). "An abuse of discretion occurs when, inter alia, the district court 'bases its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence.' " Id. (quoting Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 572 U.S. 559, 563 n.2, 134 S.Ct. 1744, 188 L.Ed.2d 829 (2014)).

III. DISCUSSION

Miller Mendel appeals the district court's grant of City's Rule 12(c) motion, arguing that (1) the district court did not follow the requirements of Federal Rule of Civil Procedure 12(d), Appellant's Br. 14; see also id. at 15-19; and (2) the district court erred in finding the asserted claims of the '188 patent invalid for lack of patentable subject matter. Id. at 19-20; see also id. at 21-41. City cross-appeals (1) the district court's decision that its invalidity findings pertained only to claims 1, 5, and 15, Cross-Appellant's Principal & Resp. Br. 42-44; see also id. at 45-50; and (2) the district court's finding that the case was not exceptional in denying City's attorneys' fees motion. Id. at 50-51; see also id. at 52-68. We address each argument in turn.

A.

As an initial matter, Miller Mendel argues that the district court erred by relying on and citing parts of City's Rule 12(c) motion, which in turn relied on a declaration that was not part of the pleadings. See Appellant's Br. 14-16; see also id. at 17-19. We are not persuaded that the district court's analysis requires reversal.

In considering a Rule 12(c) motion, "the court is generally limited to the contents of the pleadings, including attachments thereto." Bosarge v. Miss. Bureau of Narcotics, 796 F.3d 435, 440 (5th Cir. 2015) (cleaned up). "The 'pleadings' include the complaint, answer to the complaint, and 'if the court orders one, a reply to an answer.' " Id. (quoting Fed. R. Civ. P. 7(a)). "If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56." Fed. R. Civ. P. 12(d).

Although the declaration here is outside the pleadings, the district court explained that the declaration was not relevant to its analysis because it neither relied on it for its § 101 analysis nor would it have altered its conclusions. Specifically, the district court only referred to the section of City's brief that cited a declaration attached to the Rule 12(c) motion in summarizing the parties' arguments. Rule 12(c) Decision at 496-97 (citing J.A. 157-59). In its patent eligibility analysis, the district court did not rely on any materials outside of the pleadings or sections of City's brief discussing materials outside of the pleadings. Id. at 498-99; see also Reconsideration Order at *5 ("The Court did not rely on evidence outside of the '188 Patent to find that it was directed to an abstract idea because the language intrinsic to the '188 Patent itself demands such a conclusion.").

Moreover, even if the district court erred by not explicitly excluding the declaration, any such error is harmless because the district court also explained that it would have "reach[ed] the same conclusions and result, both when it does and when...