Complied AliceStorm Updates

April 10, 2015: First off, PTAB continues to wander through the galaxy as the Imperial CBM Death Star. Four for four on new CBM institutions on 101 and two more final decisions finding patent ineligibility. The 100% kill rate continues. Darth Vader would be pleased.

Five district court decisions on motions to dismiss/pleadings and one Federal Circuit case--outcome predetermined. In DietGoal Innovations LLC v. Bravo Media LLC, Federal Circuit affirmed per curiam the invalidity of DietGoal's patents on various meal planning user interfaces. The real question is not the court's opinion or the merits of this case. No, the real question is this: Why does it seem that Dyk, Mayer, Reyna (this panel) along with Lourie, Hughes and Taranto get most of the 101 cases? The distribution of appeals is supposedly random, but that does not seem how it plays out in fact.

At the district courts, the action was split. Finding invalidity on a motions to dismiss were Carfax, Inc. v. Red Mountain Techs. and OpenTV, Inc. v. Apple, Inc. On the other hand, the courts denied such motions in Nomadix, Inc. v. Hospitality Core Servs, Presqriber v. AO Capital Partners, and Content Guard Holdings, Inc. v. Google Inc.

The big picture here is this: when it comes to patent eligibility some courts take the position that the facts and technology underlying the claims does not really matter, or that the presumption of validity does not apply; other courts stand on the presumption and want to see the facts. In the former camp the court in Carfax said it this way: "At the pleading stage, the Court derives "clear and convincing evidence" of a patent's invalidity from the patent claims. See Alice at 2359 (explaining that at Alice Step One the court must evaluate the claims "[o]n their face" to determine to which "concept" the claims a re "drawn" and, at Alice Step Two, the Court must evaluate the invention as described by the claims.)" But the Alice Court's reference here to "claims on their face" did not mean that claim construction or the meaning of the claim was not relevant. It meant that you look to the actual language of the claims--not some derivative gloss. The court in OpenTV decided that the presumption of validity does not apply: "But the Federal Circuit has made it clear that “while a presumption of validity attaches in many contexts, no equivalent presumption of eligibility applies in the section 101 calculus.” Ultramercial, 772 F.3d at 721 (Mayer, J., concurring) (explaining that “[a]lthough the Supreme Court has taken up several section 101 cases in recent years, it has never mentioned—much less applied—any presumption of eligibility”). Of course, the issue of the presumption of validity has never been before the Supreme Court, so it's not surprising that "it has never mentioned" it.

More importantly, Mayer's statement in concurrence is expressly contradicted by the plurality in CLS v. Alice: "Because we believe the presumption of validity applies to all challenges to patentability, including those under Section 101 and the exceptions thereto, we find that any attack on an issued patent based on a challenge to the eligibility of the subject matter must be proven by clear and convincing evidence. Cf. Microsoft, 131 S. Ct. at 2242 ("We consider whether § 282 requires an invalidity defense to be proved by clear and convincing evidence. We hold that it does."). We believe, moreover, that application of this presumption and its attendant evidentiary burden is consistent with the Supreme Court's admonition to cabin the judicially created exceptions to Section 101 discussed above."

Presqriber, Content Guard and Nomadix represent the other view. In Nomadix, the court supported the presumption of validity and stated that “it will be rare that a patent infringement suit can be dismissed at the pleading stage for lack of patentable subject matter." In Presqriber, the court held that claim construction was necessary to determine with "any certainty what the claims encompass" because of the "very different portrayals of the claimed invention" by the parties. In Content Guard, the court stated that the arguments on patent ineligibility were "fundamentally intertwined with disputes regarding the proper construction of terms that the Court has now construed," and that the court's construction was not fully considered by the parties in their arguments.

March 19-31, 2015: The past couple of weeks have been busy, with a number of district court and PTAB decisions. In the district courts, there have been five decisions, Certified Measurement v. Centerprint Energy Houston Elec., My Health, Inc. v. LifeScan, Ameritox Ltd. v. Millennium Health, Tuxis Techs v., and Advanced Auctions v. eBay. The Certified Measurement, MyHealth and Ameritox decisions went favorably for the patentee. Both Ameritox and Tuxis were sequel from prior decisions: Ameritox on a motion for reconsideration, and Tuxis invalidating an additional 99 claims, following the earlier decision invalidating a single independent claim.

The sharp drop in the claims index (-7.4%) is a bit misleading. This is an artifact of the Certified Measurement decision, where the court denied a motion to dismiss four patents with 378 claims, thereby pushing down the claim invalidity rate. The 4.1% drop in the Motions on Pleadings rate is a reflection of the denial of the motions in Certified Measurements and MyHealth.

I discuss these Ameritox, Certified Measurement, and MyHealth decision in more detail in a separate posting.

PTAB has maintained an aggressive streak of Section 101 invalidations in CBMs. Between March 20 and March 31, PTAB instituted five CBMs on Section 101 grounds, and issued four final decisions invalidating patents; only one institution decision was denied, but on procedural grounds, not substantive ones. Overall, PTAB has issued 18 final ineligibility decisions (100%) in CBMs that were instituted on patent ineligibility grounds. That is a very harsh statistic: essentially once PTAB has instituted on 101 grounds, it appears to be a foregone conclusion that they'll "go final" as well and invalidate the patent.

March 11-18, 2015: Two decisions this week, v. AOL Advertising and Modern Telecom Systems v. Juno Online. In Priceplay, the J. Andrews in the Delaware district court invalidated two patents of Priceplay that covered pricing a good in an auction based on both the buyer's bid and the buyer's participation in a "competitive activity" such as a video game, board game, card game, etc. The better the buyer did in the competitive activity the more the auction price would be reduced. An odd idea, but at least one that doesn't seem to be a fundamental economic practice. The court found this combination to be abstract and lacking inventive concept. The court finessed the unusual combination of auctions and competitive activity by considering each as ineligible by itself: "Priceplay's claimed invention merely combines the abstract ideas found to patent ineligible in Schrader [auctions], Planet Bingo [competitive activity] and OIP [price setting]." The word "merely" is awesome in its ability to leap over gaps in logic and law.

At least the court in Modern Telecom was not so willing to play this fast and loose. The court denied a motion on the pleadings to invalidate six patents. The court found that defendants "have failed to meet their burden of establishing that the patents in suite lack an inventive concept". The court rejected the notion that software is ineligible per se, stating "Defendants emphasize the “software focus” of the patents as if recent Federal Circuit cases support a rule that software is categorically patent-ineligible. The Court does not interpret the cases that way and, instead, agrees with the conclusion in Hughes Commc’ns that “software must be eligible under § 101."

*The perspectives expressed in the Bilski Blog, as well as in various sources cited therein from time to time, are those of the respective authors and do not necessarily represent the views of Fenwick & West LLP or its clients.