Federal Circuit Affirms District Court Rule 12(b)(6) Dismissal Of “Wholly Functional” Claims As Patent Ineligible
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  • Federal Circuit Affirms District Court Rule 12(b)(6) Dismissal Of “Wholly Functional” Claims As Patent Ineligible

    On Thursday, December 20, 2018, the Court of Appeals for the Federal Circuit (CAFC) issued an opinion affirming a dismissal under Federal Rule of Civil Procedure 12(b)(6) by the U.S. District Court for the Western District of Washington. Glasswall Solutions Ltd. v. Clearswift Ltd., —F.App’x—, (Fed. Cir. Dec. 20, 2018). The CAFC ruled that the district court had correctly decided that the asserted claims are invalid as patent ineligible abstract ideas under 35 U.S.C. § 101.

    Section 101 of the United States patent laws prescribes the categories of inventions and discoveries that can properly be the subject of a patent: “any new and useful process, machine, manufacture, or composition of matter.” These categories are limited by judicially-created proscriptions against patenting abstract ideas, laws of nature, and natural phenomena.

    The Supreme Court has set out a two-step framework for determining patent eligibility:
    1. determine whether the claims at issue are directed to one of the patent-ineligible concepts (such as an abstract idea); and, if so, then:
    2. determine whether the elements of the claim, considered both individually and as an ordered combination, recite an “‘inventive concept’ – i.e., an element or combination of elements that is ‘sufficient to ensure that the practice amounts to significantly more than a patent upon the [ineligible concept] itself.”

    Alice Corp. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354–55 (2014) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1294 (2012)).

    In the instant case, the CAFC applied this two-step framework to the asserted patent claims, which recited, for example, a series of steps for “processing an electronic file to create a substitute electronic file containing only allowable content data”:
    1. A method for processing an electronic file to create a substitute electronic file containing only allowable content data, the method comprising:
    • receiving an electronic file containing content data encoded and arranged in accordance with a predetermined file type;
    • determining a purported predetermined file type of the received electronic file and an associated set of rules specifying values or range of values of allowable content data;
    • determining at least an allowable portion of the content data that conforms with the values or range of values specified in the set of rules corresponding to the determined purported predetermined file type;
    • extracting, from the electronic file, only the at least an allowable portion of content data;
    • creating a substitute electronic file in the purported file type, said substitute electronic file containing only the extracted allowable content data;
    • forwarding the substitute regenerated electronic file only if all of the content data from within the electronic file conforms to the values or range of values specified in the set of rules; and
    • forwarding the incoming electronic file if a portion, part or whole of the content data does not conform only when the intended recipient of the electronic file has pre-approved the predetermined file type when associated with the sender of the electronic file.

    With respect to step one, the CAFC agreed with the district court’s characterization that the claims are directed to the abstract idea of the filtering of electronic files and data by regenerating an electronic file without non-conforming data.

    With respect to step two, the CAFC found that the claims lacked an inventive concept. According to the CAFC, “the claims are framed in wholly functional terms, with no indication that any of [the claimed] steps are implemented in anything but a conventional way.” That is, the claims “do not purport to claim how the invention receives an electronic file, how it determines the file type, how it determines allowable content, how it extracts all the allowable data, how it creates a substitute file, how it parses the content according to predetermined rules into allowable and nonconforming data, or how it determines authorization to receive the nonconforming data.” (emphasis in original). Moreover, the claims require only “generic computer-implemented steps,” which fails to impart patent-eligibility under Alice.

    The CAFC also rejected the plaintiff’s attempt to introduce factual issues in order to defeat the motion to dismiss. The CAFC found “no error in the district court’s resolution of the patent ineligibility of the claims on a Rule 12(b)(6) motion” and that plaintiff’s “alleged ‘factual’ assertions” (including a “declaration of the alleged advantages in the claimed invention”) were merely “conclusory legal assertions.”

    The CAFC’s ruling is the latest in a long line of patent eligibility decisions, and illustrates that, while it has become more difficult to achieve dismissal at the pleading stage after the Berkheimer and Aatrix decisions, as we discussed in our prior post, see Shearman & Sterling LLP, Federal Circuit Emphasize Factual Nature of Section 101 Determinations, Need-to-Know Litigation Weekly, June 5, 2018, https://www.lit-ip.shearman.com/federal-circuit-emphasizes-factual-nature-of-section, it is still possible under the right circumstances.