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  • Federal Circuit Waves Caution Flag On Section 101

    On February 8, 2018, the United States Court of Appeals for the Federal Circuit (CAFC) issued an opinion affirming in part and vacating in part a finding of section 101 unpatentability. Berkheimer v. HP Inc., ___ F.3d ___ (appeal no. 2017-1437).  The district court had granted a motion to dismiss on section 101 grounds, and while the CAFC affirmed the dismissal as to some claims, as to other claims it remanded the case to the district court, emphasizing the role of fact issues in section 101 analyses and thus complicating resolution of section 101 issues.

    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.

    In the wake of the Supreme Court’s opinion in Alice Corp. v. CLS Bank, 134 S.Ct. 2347 (2014), section 101 defenses have appeared more and more frequently, often in the context of computer-implemented inventions.  District courts have settled on addressing these defenses via motions to dismiss or for judgment on the pleadings, a procedure the CAFC has generally endorsed.  The typical analysis under Alice has two steps:  first, determining whether the patent claim in question is directed to, e.g., an abstract idea, and, second, determining whether there are “additional elements” in the claim that “transform the nature of the claim” and make it eligible for patenting.

    The district court in the Berkheimer case followed this well-trod path, but in the CAFC’s view ended at the wrong destination.  The CAFC agreed with the district court that pursuant to the first step of the Alice analysis, the patent claims in question all are directed to abstract ideas (all of which involved “parsing” information). 

    As to the second step, the CAFC agreed with the district court that some of the claims contained no additional elements sufficient to make them patentable.  However, as to others of the claims, the CAFC disagreed with the district court.  The CAFC explained that the second step in an Alice analysis results in patentability “when the claim limitations involve more than performance of well-understood, routine, and conventional activities previously known to the industry.”  The district court had applied that test and found the claims unpatentable, but the CAFC ruled that it was error to do so in this case, because “the 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” that must be proven by clear and convincing evidence.  The CAFC explicitly noted that “the mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional,” and remanded the case to the district court for fact-finding.

    The CAFC did carefully observe that section 101 defenses have often been resolved on motions to dismiss, and that “nothing in this decision should be viewed as casting doubt on the propriety of those cases.”  So, where the CAFC will draw the line about what constitutes a genuine issue of material fact on this question is difficult to predict.