Two cases decided by the Federal Circuit in 2018, Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, en banc rehearing denied, 890 F.3d 1354 and Berkheimer v. HP Inc., 881 F.3d 1360, en banc rehearing denied, 890 F.3d 1369, address what qualifies as patent-eligible subject matter under 35 U.S.C. § 101 and how courts should resolve that question. These cases expose divisions within the court on § 101 issues, however, and leave uncertainty in their wake. Many stakeholders, including judges, are therefore calling for guidance from the Supreme Court as to how to resolve such issues or seeking the aid of Congress.
In the denial of rehearing in Berkheimer, Federal Circuit Judge Alan Lourie, joined by Judge Pauline Newman, called on Congress to resolve “what so many in the innovation field consider are § 101 problems.” 890 F.3d 1369, 1374 (Fed. Cir. 2018). Judges Lourie and Newman expressed concern that “an increasing amount of inventive research is no longer subject to patent,” including such vitally important work as isolating and purifying natural products for possible use in new antibiotics. Id. at 1375-76.
Senators Chris Coons (D-Del.) and Thom Tillis (R-N.C.) held a closed-door session with business stakeholders and intellectual property organizations last week to discuss the prospect of new patent-eligibility legislation. And as of this week, briefing of HP’s certiorari petition in Berkheimer is now closed, and the Supreme Court will soon decide whether to take on the question of “whether patent eligibility is a question of law for the court based on the scope of the claims or a question of fact for the jury based on the state of the art at the time of the patent.”
In view of these developments, this post reviews the current patent-eligibility standard under § 101 and its application in Aatrix and Berkheimer, and looks ahead to the possible judicial or legislative resolution of patent-eligibility questions raised in those cases.
Patent Eligibility under 35 U.S.C. § 101
Under 35 U.S.C. § 101, “any new and useful process, machine, manufacture, or composition of matter” is eligible for a patent. In assessing the question of patent eligibility under § 101, courts apply a two-step test propounded in Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012) and expanded in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). At the first step, the court must “determine whether the claims at issue are directed to a patent-ineligible concept [laws of nature, natural phenomena, or abstract ideas].” Alice, 134 S. Ct. at 2355. If the claims are directed to an ineligible concept, then, the court moves to step two, and “determine[s] whether the additional elements transform the nature of the claim into a patent-eligible application.” Id.
Aatrix and Berkheimer address whether step two of the patent-eligibility inquiry is a question of law or a question of fact and, relatedly, whether factual inquiries prevent resolution of § 101 issues in a motion to dismiss or for summary judgment.
Aatrix involved a patent on a “data processing system for designing, creating, and importing data into, a viewable form viewable by the user of the data processing system.” 882 F.3d at 1123. The defendant moved to dismiss under Rule 12(b)(6), arguing that all of the claims “in the asserted patents were ineligible under § 101.” Id. at 1124. The district court agreed, granted the motion to dismiss, and held every claim ineligible under § 101 because the claims were either “not directed to any tangible embodiment” or were “directed to the abstract idea of collecting, organizing, and performing calculations on data to fill out forms . . . [and] do not supply an inventive concept.” Id. Plaintiff “moved to modify and vacate the judgment, for reconsideration, and for leave to amend the complaint.” Id. The court denied those motions.
On appeal, the Federal Circuit determined that Aatrix was “not a case where patent ineligibility was properly adjudicated with finality at the Rule 12(b)(6) stage.” 882 F.3d at 1125. The majority held that the district court had “err[ed] when it denied leave to amend without claim construction and in the face of factual allegations, spelled out in the proposed second amended complaint, that, if accepted as true, establish that the claimed combination contains inventive components and improves the workings of the computer.” Id. The court further elaborated on patent eligibility under § 101, explaining that “[w]hile the ultimate determination . . . is a question of law, like many legal questions, there can be subsidiary fact questions which must be resolved en route to the ultimate legal determination.” 882 F.3d at 1128. At least in Aatrix, the court reasoned, the second step of the Alice/Mayo test “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.” Id.
Judge Reyna, concurring-in-part and dissenting-in-part, cautioned that “the majority opinion attempts to shift the character of the § 101 inquiry from a legal question to a predominately factual inquiry.” Id. at 1130.
Berkheimer involved claims to “digitally processing and archiving files in a digital asset management system.” Berkheimer, 881 F.3d at 1362. Following a Markman hearing, the district court granted defendants’ motion for summary judgment of patent ineligibility under § 101, finding that the claims were “directed to the abstract idea of using a generic computer to collect, organize, compare, and present data for reconciliation prior to archiving.” Id. at 1366.
On appeal, the Federal Circuit agreed that the claims were directed to an abstract idea. Id. at 1366-67. But, in analyzing step two of the Alice/Mayo test (whether additional elements transform the claim into a patent-eligible application), the majority explained that “[t]he question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact,” which “must be proven by clear and convincing evidence.” Id. at 1368. Thus, the Federal Circuit concluded, “[w]hether a claim recites patent eligible subject matter is a question of law which may contain disputes over underlying facts.” Id. Under this reasoning, the Federal Circuit vacated the district court’s grant of summary judgment under § 101 for several of the claims.
Denial of Rehearing en banc in Aatrix and Berkheimer
The Federal Circuit denied rehearing en banc in both Aatrix and Berkheimer. Given the overlapping issues, the judges affixed the same two concurrences and one dissent to both decisions.
Concurring with the denials of rehearing, Judge Moore, joined by Judges Dyk, O’Malley, Taranto, and Stoll, wrote that “Berkheimer and Aatrix stand for the unremarkable proposition that whether a claim element or combination of elements would have been well-understood, routine, or conventional to a skilled artisan in the relevant...
