§ 101 Inquiry Remains Question of Law But Need to Know Underlying Facts
- In Berkheimer v. HP, four claims survived the Alice Two-Step Analysis on the appellate record
- Yet the Federal Circuit remanded for more development of facts
- § 101 remains a legal question, but you still need to know what are the “conventional activities of a skilled artisan”
In Berkheimer v. HP Inc. et al, decided on Feb 8, 2018, the Federal Circuit maintained the character of the § 101 inquiry as a legal question but not without emphasizing that you still need to know what are the “conventional activities of a skilled artisan,” an important factual component in deciding the legal question. On appeal was a grant of summary judgment by the U.S. District of Illinois in favor of HP. The Federal Circuit found four of the § 101 claims on appeal to survive the Alice Two-Step Analysis, based on the facts in the record, yet still remanded for more development of facts on the “conventional activities of a skilled artisan.”
View the Berkheimer claims analyzed using the PSAI-PG℠ Alice Framework in Keeping Tabs on Alice.
The lower court decision of indefiniteness on another set of claims was affirmed by the Federal Circuit.
The law is clear that a § 101 inquiry is a legal question. See Intellectual Ventures I LLC v. Capital One Fin. Corp., 850 F.3d 1332, 1338 (Fed. Cir. 2017). This means that in theory, to defeat the lower court’s summary judgment in favor of HP on the § 101 issue, all Berkheimer needed to show was that the lower court ruling was a mistake of law, which he appeared to do based on the appellate record. As the Federal Circuit explained “Claims 4–7, in contrast, contain limitations directed to the arguably unconventional inventive concept described in the specification.” Op. at 16.
When claims survive the Alice Two-Step Analysis at the appellate level, that typically ends the § 101 challenge because the legal question of whether the claims satisfy the Alice Two-Step have been decided. Here, however, instead of reversing the lower court, the Federal Circuit remanded for further proceedings because “the district court erred in concluding there are no underlying factual questions to the § 101 inquiry.” Op. at 14. More specifically, the Federal Circuit remanded the § 101 question to the lower court on the issue of “Whether claims 4–7 perform well-understood, routine, and conventional activities to a skilled artisan.” Op. at 17.
The Federal Circuit relies on Mortgage Grader II in emphasizing the factual component in the § 101 inquiry. See 89 F. Supp. 3d at 1325 (“We have previously stated that [t]he § 101 inquiry ‘may contain underlying factual issues.’ (emphasis in original).”) There is some similarity between the two cases since in both, the patent holder argued that the district court improperly resolved material factual disputes in connection with granting summary judgment. However, the factual record on appeal in Mortgage Grader involved questions between dueling expert reports. This was not the case here, since HP appears to have offered no evidence on the question, only lawyer’s arguments that “redundancy and efficiency are considerations in any archival system, including paper-based systems.” Op. at 13, 17, which are not facts.
The troubling part of the Federal Circuit decision is not its emphasis on the importance of developing the factual component, which is important in every § 101 inquiry — to wit “Whether claims perform well-understood, routine, and conventional activities to a skilled artisan.” A good litigator already knows that.
The troubling part is that here, the Federal Circuit did not finally decide the patent eligibility question based on the evidence developed by both parties, which appears to have been largely the specification of the patent itself. See McRO, Inc. v. Bandai Namco Games America Inc., No. 15-1080, 2016 WL 4896481 (Fed. Cir. Sept. 13, 2016) where the Federal Circuit reversed a lower court grant of judgment on the pleadings under Fed. R. Civ. P. 12(c) and held claims patent eligible: “Defendants provided no evidence that the process previously used by animators is the same as the process required by the claims.”
By remanding in Berkheimer v. HP, the Federal Circuit appears to have given HP another bite of the apple, a chance for HP to have a do-over in developing that part of the record. This raises serious questions under the doctrine of “judicial estoppel.”
Key take-aways for patent holders:
A number of dependent claims survived the Alice 2-step on the appellate record which is good news for software patent owners.
- The language used in the surviving and defeated claims provide some insight into how to position claims to overcome Alice.
- Keep the Alice analysis from being lumped into an “illustrative claim.” Many patents fail because the “illustrative claim,” often the broadest, is also the easiest to argue as being an abstract application. The Berkheimer claims survived the Alice Two-Step (at least for now) because he preserved his right to have analysis applied to his dependent claims as well, some of which survived the initial challenge.
- Create a factual record in support of what is conventional and unconventional art that creates questions of fact to defeat an Alice summary judgment motion. This includes factually asserting in the complaint that the claim limitations introduce inventive contributions that are not well-understood, routine, and conventional activities that would be understood by a skilled artisan. This can even help defeat dismissals due to lack of patent eligibility brought on a 12(c) motion for judgment on the pleadings since the lower court should accept these statements as true for purposes of deciding the motion.
Key take-aways for patent infringers:
- Create a factual record supporting as absolute an abstract concept in Alice Step 1 as possible
- Create a factual record supporting as absolute a preemption of the abstract concept by the claim as possible
- Create a factual record supporting as absolute a general functioning of the computer or other physical components as possible.
The decision underscores the difficulty faced by an infringer in invalidating a patent under § 101 brought on a motion for summary judgment in cases in which a patent owner has sown questions of facts on “conventional activities of a skilled artisan” into the record. At the same time, it is troubling that the Federal Circuit did not finally decide the patent eligibility question in Berkheimer v. HP based on the evidence developed by both parties in the appellate record, which appears to have been largely the specification of the patent itself, as the McRO court did.
To see the Berkheimer claims analyzed using the PSAI-PG℠ Alice Framework, view them in Keeping Tabs on Alice.