Bilski Blog

The Power Play Between Congress and the Courts Over Patents

By: Stuart P. Meyer

The interplay between the legislative and judicial branches in the area of patent law has become a tectonic collision. Congress appears to be ever more active in telling courts how to handle patent matters, and the courts are increasingly writing their own exceptions into the statutory language governing patents.

For several years now, Congress has been promising to address patent litigation abuse, but judges have expressed concern that this would be a land grab in Article III territory.  In 2013, Federal Circuit judges publicly warned that Congress was ill-suited to address litigation reform, and that any such attempts might encroach on the constitutionally enshrined power of the judiciary.  One judge chided a senior senator for saying that there were three branches of government: the executive, the House, and the Senate.  The judge devoted an entire keynote address to the topic of “how dismissive the other branches of government have become of the judiciary.”  She spoke of “the inherent authority of the courts to manage and control patent litigation” and criticized legislative proposals dictating when sanctions are to be applied and how much discovery should be allowed.  The Judicial Conference of the United States ultimately sent letters to the ranking members of the House Judiciary Committee in late 2013 warning that the proposed Innovation Act introduced by Rep. Goodlatte “runs counter to” the process set forth in the Rules Enabling Act. 

Continue Reading: The Power Play Between Congress and the Courts Over Patents

 

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. Amazon.com, 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, Priceplay.com 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."   

Recent Patent Eligibility Decisions: Ameritox, Certified Measurement, and MyHealth

By: Robert R. Sachs

In Ameritox v. Millenium Health (W.D. Wis., J. Conley) the court rejected the defendant's motion to reconsider its earlier ruling that Ameritox's patents were not ineligible.  (The earlier decision cited my Law360 article, noting that only 26% of patents have survived post-Alice motions.)  Here, Millenium argued that the court should not have considered that "the prior art steered a skilled artisan away" from the claimed invention, and that one of the claimed steps was not conventional, since this allegedly conflated eligibility with novelty and non-obviousness.  The court ripped Millenium on this point, saying "this argument ignores that Millenium itself squarely argues the relevant relevance of this factor in assessing the eligibility of the ’680 patent under § 101, by citing the Federal Circuit's decisions in In re BRCA1- and BRCA2- Based Hereditary Cancer Test Patent Litigation, where the court specifically held that "what practitioners already knew" and what were "well-understood, routine, and conventional techniques that a scientist would have thought of" were relevant to eligibility.

This is, in my view, the right approach.   Several recent district court decisions have said that evidence of novelty is not relevant to eligibility, and cited Diehr's statement that "the "novelty" of any element or steps in a process, or even of the  process itself, is of no relevance in determining whether the subject matter of a claim falls within the § 101 categories of possibly patentable subject matter."  This interpretation utterly misreads Diehr: the Court was discussing claim dissection, emphasizing that "it is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis."  The Court was criticizing the approach of disregarding "old elements" that lack novelty from the the claim for the purposes of eligibility--not saying that actual novelty was irrelevant.  

One could argue that Diehr's approach cuts both ways, and so actual novelty does not matter.  In a perfect Diehr regime this would be correct.  The problem is that Alice/Mayo brought "conventional, well-understood, routine" into play.  If evidence (or more frequently mere assertions) of the "conventional" aspect of the claim is now relevant, then likewise is evidence of actual novelty or non-obviousness.  For a court to accept the former and reject the  latter is not legally sound.  Thus, the Ameritox court's analysis is squarely in line with the actual logic of Alice, even if Alice would superficially suggest a different result.

The Certified Measurement and MyHealth decision are of a piece.  Both were decided by Magistrate Judge Payne in the Eastern District of Texas on motions to dismiss for ineligibility, and suggest that he's predisposed to deny such motions. The text of both opinions in regards to Section 101 is identical. The court denied the motions stating that  "while the issue of patentable subject matter presents a question of law, the legal analysis can – and often does – “contain underlying factual issues," and that in the present case "the need for claim construction is especially apparent, where the defendants' invalidity argument is implicitly premised on its conclusions about the meanings of certain claim terms."  By using the exact same template in both cases, the court both literally and behaviorally signaled its overall view that motions to dismiss under § 101  are disfavored in his court:  

The difficulty of making a substantive ruling on the validity of an issued patent in what is – in essence – a complete vacuum cannot be understated. While the claim language of some patents may be so clear that the court need only undertake a facial analysis to render it invalid at the pleading stage, that will not be the norm and is certainly not the case here. (emphasis added). 

What makes this striking is that the asserted claim in MyHealth is not an especially technical one:

1. A method for tracking compliance with treatment guidelines, the method comprising:

determining a current assessment of one or more diagnosed conditions in a patient based

on data about each of the diagnosed conditions from the patient who is at a remote location and on one or more assessment guidelines for each of the diagnosed conditions;

updating an existing treatment plan for each of the diagnosed conditions based on the

existing treatment plan, the current assessment, and on one or more treatment guidelines for each of the diagnosed conditions to generate an updated treatment plan for each of the diagnosed conditions;

reviewing the updated treatment plan for each of the diagnosed conditions;

determining if one or more changes are needed to the reviewed treatment plan for each

of the diagnosed conditions;

changing the reviewed treatment plan if the one or more changes are determined to be

needed;

providing the patient with the reviewed treatment plan for each of the diagnosed conditions; and

generating and providing compliance data based on the updated treatment plan and the

reviewed treatment plan for each of the diagnosed conditions.

Most district courts would likely entertain, and probably grant a Section 101 motion to dismiss on such a claim, saying that there's no claim construction that could impact what appears to be the "abstract" and "mental" nature of these steps.  It would have been beneficial to future litigants if the court had identified some specific element of this claim that required claim construction.

On the other hand, the claims in Certified Measurement should easily pass Section 101 (and would also seem to require claim construction).  For example:

1. A device for secure measurement acquisition and certification, comprising:

a sensor;

a time generator for transmitting a representation of a time;

a computing device, including a computer processor and a memory, coupled to receive a

measurement signal representative of a physical measurement from the sensor and the representation of the time from the time generator, said computing device producing an augmented measurement including the measurement signal and the representation of the time, and performing a cryptographic operation on at least a portion of the augmented measurement to form a certifiable measurement;

an output device, coupled to the computing device, for writing the certifiable measurement in

response to a request for the certifiable measurement; and

tamper resistance means for rendering at least one of the sensor, the time generator, and the

computing device resistant to tampering.

Here, claim construction would definitely appear necessary, if for nothing else than the "tamper resistant means."  More over, unlike MyHealth, in which there was only a single claim at issue, there were 387 claims at issue in Certified Measurement. On its face it seems implausible to argue that they are all invalid on their face, with no need for claim construction or other evidence.  

Thus, while these decisions  may be at odds with the current zeitgeist of granting motions to dismiss and summary judgment in the absence of claim construction, the underlying rationale for these decisions is sound: patent eligibility, even if a question of law, still requires a real analysis of the claims and that turns on questions of fact.