The Federal Circuit’s 2018 decision in Berkheimer v. HP Inc. was likely the most consequential development in patent eligibility since the Supreme Court introduced its two-part eligibility framework in Alice Corp. v. CLS Bank and Mayo Collaborative Services v. Prometheus Laboratories. Alice and Mayo had a dramatic impact on patent law, paving the way for lower courts to invalidate thousands of claims from hundreds of patents for failure to claim patent-eligible subject matter under 35 U.S.C. § 101. Berkheimer tempers Alice and Mayo by imposing procedural requirements that may insulate patent claims from § 101 challenges.
Berkheimer emphasized that patent eligibility may turn on questions of fact and relied on the presence of such fact questions to partially vacate a district court’s finding of ineligibility. The Federal Circuit simply did not find enough facts in the record to demonstrate ineligibility for some of the claims at issue. Post-Berkheimer, the poten-tially fact-intensive nature of the eligibility inquiry may prevent courts from resolving § 101 challenges early in litigation. Without early resolution, the costs of litigation increase dramatically, and patentees gain additional lever-age to extract settlement payments from accused infring-ers. Patentees also gain additional time to marshal any evidence that may be relevant to the eligibility inquiry.
There is broad recognition that fact questions have more impact on patent eligibility outcomes after Berkheimer, but the extent of that impact is hotly contested. Patentees seek to maximize the role of fact questions by focusing on Berkheimer’s broad language, while patent challeng-ers seek to minimize it by relying on prior and subse-quent precedents that constrain Berkheimer’s holding. Although the Federal Circuit has applied Berkheimer narrowly in view of the overall body of precedent, lower courts that are less familiar with such precedent have applied Berkheimer inconsistently. In some cases, lower courts have denied early § 101 motions as premature without considering whether the alleged fact questions are relevant under the proper legal standard.
Background
The Supreme Court’s framework for determining patent eligibility, as explained in Alice and Mayo, has two steps. First, the Court determines whether the claim is directed to an ineligible concept such as an abstract idea or law of nature[1]. Second, the Court determines whether any addi-tional claim limitations beyond the ineligible concept pro-vide a contribution that is “sufficient to ensure that the patent in practice amounts to significantly more than a pat-ent upon the ineligible concept itself.”[2] This type of contri-bution is called an “inventive concept.”[3] Claim limitations fail to supply an inventive concept if they require only “well-understood, routine, conventional” activity.[4] A claim that is directed to an abstract idea or natural law without an inven-tive concept is not patent-eligible under 35 U.S.C. § 101.
In Berkheimer, the Federal Circuit reiterated the estab-lished principle that “patent eligibility is ultimately a question of law,” but further explained that the underly-ing question of “[w]hether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination.”[5] Addressing the patent at issue, the court identified certain “pur-ported improvements” to computer technology that were described in the specification.[6] The court held that these purported improvements, “to the extent they are cap-tured in the claims, create a factual dispute regarding whether the invention describes well-understood, rou-tine, conventional activities.”[7] Because four of the eight claims at issue in Berkheimer contained “limitations directed to the arguably unconventional inventive con-cept described in the specification,” the court found that those claims raised a “genuine issue of material fact mak-ing summary judgment inappropriate.”[8] Accordingly, the Federal Circuit vacated the district court’s grant of sum-mary judgment of ineligibility on those four claims, but affirmed the ineligibility of the other four claims that did not recite the arguably unconventional limitations. [9]
There is tension between Berkheimer and Alice. The Supreme Court never stated in Alice that fact questions might impact the analysis, even though that case was decided at the summary judgment stage.[10] Nor did the Supreme Court cite any evidence or engage in fact find-ing as part of its inventive concept analysis.[11] Seizing on this tension, the patent challenger in Berkheimer peti-tioned the Supreme Court for certiorari.[12] Six amicus curiae briefs were filed in support of the petition.[13] The Supreme Court requested a response to the petition from the patent holder, and after receiving that response invited the Solicitor General to express the views of the United States.[14] At the time this article was submitted for publication, the Supreme Court had not yet decided whether to grant certiorari.
Although Berkheimer identified no support in Supreme Court precedent for its holding that fact issues may pre-clude resolution of the § 101 inquiry, that holding was consistent with several previous decisions of the Federal Circuit. For example, the Federal Circuit noted in two earlier cases that that “the § 101 inquiry may contain underlying factual issues.”[15] But in each of those cases, the Federal Circuit found that no material fact issues were present and affirmed the district court’s summary judgment of invalidity—so the recognition of poten-tial fact issues was not essential to the holdings in those cases.[16] As another example, the Federal Circuit reversed a district court’s finding of invalidity at the motion-to-dismiss stage in BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC.[17] The court concluded that on the “limited record” there, the claimed method “cannot be said, as a matter of law, to have been conventional or generic.”[18] By referencing the “limited record,” and leav-ing open the possibility that additional evidence would change the outcome, the court implicitly held that fact issues impacted the § 101 analysis.
Berkheimer makes BASCOM’s holding explicit, and expands on it. For example, after identifying the potential fact question underlying the § 101 analysis, Berkheimer goes on to state that this question must be resolved “by clear and convincing evidence.”[19] Moreover, Berkheimer may be read to suggest that the fact question—whether claim limitations are “well-understood, routine, and con-ventional”—is dispositive of the entire inventive concept inquiry, as explained below.
Divergent Readings of Berkheimer
The Supreme Court explained in Alice that “well-under-stood, routine, conventional” limitations cannot supply an inventive concept.[20] But in a subtle shift, Berkheimer changes from a negative criterion to a positive one: “The second step of the Alice test is satisfied when the claim limitations ‘involve more than performance of ‘well-understood, routine, [and] conventional activities ….’”[21]
This statement from Berkheimer may be read to suggest that unconventional claim limitations are not only neces-sary to provide an inventive concept, but sufficient.[22] Under this reading, any claim limitation (or combination of limitations)[23] that is unconventional would automatically provide an inventive concept for purposes of determining eligibility. Berkheimer’s holding—affirming the ineligibility of half the claims at issue—shows that such a reading is unjustified, however. Furthermore, such a reading would be contrary to Federal Circuit and Supreme Court precedent.
In claim 1 of the patent at issue in Berkheimer, the claimed combination included certain undisputedly “conventional limitations” that were “combined with” other limitations not identified as conventional.[24] The Court never required the entire combination to be found in the prior art or otherwise deemed conventional, but instead held the claim invalid because it failed to “trans-form the abstract idea into a patent-eligible invention.”[25]
The outcome for each claim in Berkheimer turned on whether the claim recited an “improvement in computer functionality.”[26] The ineligible claims provided no such improvement as a matter of law. The remaining claims arguably recited such an improvement because they required data to be stored in a “reconciled object struc-ture” that allowed a computer system to operate more efficiently.[27] For those remaining claims only, whether the claimed combination was conventional presented a mate-rial question of fact.[28] Thus, Berkheimer itself shows that factual questions will not always be material to the § 101 analysis.
Reconciling Berkheimer with Other Precedent
If any unconventional combination of claim limitations automatically provided an inventive concept, then any claim that is novel over the prior art would satisfy § 101. The Supreme Court and Federal Circuit, however, have repeatedly held that novelty alone does not satisfy § 101.[29] Berkheimer did not purport to contradict or overrule any of this precedent. This is not surprising, because panels of the Federal Circuit are bound by both Supreme Court decisions and prior panel decisions.[30]
In the wake of Berkheimer, the Federal Circuit has repeatedly clarified that its holding was narrow. One such clarification came in response to HP’s petition for en banc rehearing in Berkheimer. The court denied the...
