Patent Docs

Conference & CLE Calendar

February 25, 2018

February 26, 2018 – "Chinese Patent Developments" (Practising Law Institute) – 4:00 to 5:00 pm (Eastern)

February 27, 2018 – "Patent Inventorship: Best Practices for Determination and Correction — Distinguishing Between Inventor and Contributor; Navigating Joint Inventorship, Disclosure of Ownership, Real Party in Interest" (Strafford) – 1:00 to 2:30 pm (EST)

February 28, 2018 – "Going Global with Patents" (Bereskin & Parr) – 12:00 to 1:00 pm (EST)

March 3, 2018 – "Patent Post-Grant Practice" (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) – 9:00 am to 4:30 pm, Chicago, IL

March 5-6, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Houston, TX

March 7, 2018 – "Inside the European Patent Office: Questions & Answers" (Intellectual Property Law Association of Chicago Patents-International Committee) – 11:45 am to 1:00 pm (CT), Chicago, IL

March 8, 2018 – "Patent Exclusivity Health Checks for Small Molecules: Are Your U.S. Patents Ready to Maximize ROI? — Phase II Efficacy Trials, Phase III Clinical Trials, NDA Submission, Approval and Marketing" (Strafford) – 1:00 to 2:30 pm (EST)

March 8-9, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Cincinnati, OH

March 13, 2018 – "Top Stories at the PTAB: What You Need to Know" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

March 14, 2018 – Patent Litigation Seminar (New Jersey Intellectual Property Law Association) – 12:00 to 5:00 pm, Iselin, NJ

March 15, 2018 – "On Sale and Public Use Bars to Patentability: Minimizing the Risk of Patent Ineligibility or Invalidation" (Strafford) – 1:00 to 2:30 pm (EDT)

March 15, 2018 – 2018 Business Methods Partnership Meeting (U.S. Patent and Trademark Office) – 1:00 to 4:00 pm (ET), Alexandria, VA
MBHB Webinar on PTAB

February 24, 2018

McDonnell Boehnen Hulbert & Berghoff LLP will be offering a live webinar entitled "Top Stories at the PTAB: What You Need to Know" on March 13, 2018 from 10:00 am to 11:15 am (CT). In this presentation, Patent Docs author and MBHB attorney Andrew Williams and MBHB attorney George "Trey" Lyons, III will examine the Supreme Court's Oil States Energy Services case and the impact it might have on future PTAB practice, and also address the following topics:

• Estoppel, and the impact the Supreme Court might have on protecting patent owners in the future.
• Has claim amendment practice changed since the Aqua Products, Inc. v. Matal decision (and should it be changing more)?
• What issues related to institution decisions are now reviewable in the wake of Wi-Fi One?
• How is the PTAB handling the growing number of remands from the Federal Circuit (and how could this impact your trial and appeal)?
• What is the Board doing to address multiple petitions against the same patent (and should they be doing more)?

While there is no fee to participate, attendees must register in advance. Those wishing to register can do so here. CLE credit is pending for the states of California, Illinois, New Jersey, New York, North Carolina, and Virginia.
IPLAC Presentation on EPO

February 24, 2018

The Intellectual Property Law Association of Chicago (IPLAC) Patents-International Committee will be offering a presentation by Alfred Keyack, EPO Attaché to the United States, entitled "Inside the European Patent Office: Questions & Answers" on March 7, 2018 from 11:45 am to 1:00 pm (CT) at DePaul College of Law in Chicago, IL.

The registration fee for the presentation is $20 (IPLAC members and seniors), $30 (non-members), free (students). Those interested in registering for event can do so here. Additional information regarding the seminar can be found here.
On Sale and Public Use Bars Webinar

February 24, 2018

Strafford will be offering a webinar entitled "On Sale and Public Use Bars to Patentability: Minimizing the Risk of Patent Ineligibility or Invalidation" on March 15, 2018 from 1:00 to 2:30 pm (EDT). Thomas L. Irving of and Doris Johnson Hines of Finnegan Henderson Farabow Garrett & Dunner and Daniel G. Brown of Latham & Watkins will examine the on-sale and public use bars to patentability/validity and the impact of the AIA on these statutory bars. The panel will also discuss recent court treatment and offer best practices to minimize the risk of patent ineligibility or invalidation. The webinar will review the following issues:

• How do AIA changes impact the on sale bar and the public use bar?
• How are courts and PTAB treating the on-sale bar and the public use bar?
• What best practices can counsel employ to adapt patent prosecution and enforcement strategies?

The registration fee for the webcast is $297. Those interested in registering for the webinar, can do so here.
USPTO 2018 Business Methods Partnership Meeting

February 24, 2018

The U.S. Patent and Trademark Office will be holding 2018 Business Methods Partnership Meeting (BMPM) from 1:00 to 4:00 pm (ET) on March 15, 2018. The BMPM was established to create a collaborative forum providing attendees with the opportunity to meet and share ideas, experiences, and insights with management from the Business Methods Technology Center.

The meeting will be held in the USPTO's Madison-North Auditorium, 600 Dulany Street, Alexandria, VA, with webcast viewing sessions at the USPTO regional offices in Dallas, Denver, Detroit, and San Jose. Those wishing to attend the meeting can register here. Additional information regarding the customer partnership meeting can be found here.
Motions to Amend at the PTAB — Does Anyone Have the Burden (And Will That Change)?

February 22, 2018

By Andrew Williams —

Last year, the Federal Circuit decided the Aqua Products, Inc. v. Matal case en banc in what could be considered the epitome of a fractured decision. After 148 pages and five separate opinions, the only agreed-to result could be summed up in two conclusions: (1) that the PTO had not adopted a rule regarding the burden of persuasion, and that (2) because there was nothing that was entitled to deference, "the PTO may not place that burden on the patentee." Nevertheless, Judge Rayne's concurrence-in-part, at Part III, articulated a rule regarding the burden of production, even if there was disagreement whether it was a judgement of the Court or mere "cogitations." This conclusion was that, in the absence of a properly promulgated rule, "the Patent Office must by default abide by the existing language of inter partes review statute and regulations, § 316(d) and 37 C.F.R. § 42.121, which only allocate a burden of production to the patent owner." At the time, we did not know whether the Board would follow Judge Rayne's pronouncement. But in the interim, the picture has become clear.

The writing was on the proverbial wall when Chief Judge Ruschke issued his memorandum on November 21, 2017 entitled "Guidance on Motions to Amend in view of Aqua Products" (see "PTAB Motions to Amend Post-Aqua Products — Chief Judge Ruschke Issues Guidance"). The tenor of his message was that there is "nothing to see here" (and that we should all just move along). He indicated that the only actual outcome from Aqua Products was that the Board will no longer "place the burden of persuasion on a patent owner with respect to the patentability of substitute claims presented in a motion to amend." As a result, the Chief Judge explained, the "practice and procedure before the Board will not change," except when the entirety of the evidence is in equipoise, in which case the motion to amend will now be granted.

The guidance did make clear that a patent owner still must satisfy the requirements of 35 U.S.C. § 316(d) and 37 C.F.R. § 42.121. In fact, perhaps tellingly, the Board has been citing to Judge's Rayne's decision at Part III in Aqua Products for this proposition. See, e.g., Apple Inc. v. Personalized Media Communications LLC, IPR2016-01529, Paper 38 at 56 (PTAB Feb. 15, 2018) ("'There is no disagreement that the patent owner bears a burden of production in accordance with 35 U.S.C. § 316(d). Indeed, the Patent Office has adopted regulations that address what a patent owner must submit in moving to amend the patent.' [Aqua Products] at 1341.") But with regard to who has the burden of persuasion, the Board appears to have taken the position that no one actually does. Instead, they have indicated that they will rule on the motion by simply looking at the entirety of the record. For example, in one of the more recent final written decisions, the Board set out what it is required to do when deciding a Motion to Amend:

Accordingly, we base our decision on the substitute claims provided in the Motion to Amend on the entirety of the record before us. Petitioner's arguments regarding the patentability of the substitute or new claims, as well as Patent Owner's Reply thereto, are considered below, after consideration of the procedural requirements of Rule 121 and 35 U.S.C. § 326(d).

Id. at 57. Again, tellingly, there is no mention of which party actually has the burden of persuasion with regard to the motion to amend. This raises the question about whether the Board could deny a motion to amend in cases where the patent owner has satisfied the requirements articulated in 35 U.S.C. § 316(d), but where the petitioner has not opposed the motion (or provided any evidence with regard to the substitute claims). Without any burden on the petitioner, this eventuality would appear to be a possibility.

Of course, not every APJ seems to be on board with this absence of an articulation as to who has the burden. As we recently reported, APJ Michael J. Fitzpatrick filed a concurrence in the Taiwan Semiconductor Manufacturing Company v. Godo Kaisha IP Bridge (IPR2016-01249) final written decision. He stated he was of the belief that the decision should explain who bears the burden(s) because future "patent owners will be left guessing what their motion to amend must contain." His solution would have been to explicitly hold that both the burden of production and the burden of persuasion be on the petitioner. With regard to the burden of persuasion, he indicated that it should be put on the petitioner "because doing so is consistent with the most relevant statutory provision and there is no applicable rule requiring otherwise." He did nevertheless acknowledge that the initial burden of production should be on the patent owner to show that the written description requirement has been met, because (among other reasons) 35 U.S.C. § 316(d)(3) states that "[a]n amendment . . . may not . . . introduce new matter." He also acknowledged that the Aqua Products did not overrule Rule 42.20(c) ("Burden of proof. The moving party has the burden of proof to establish that it is entitled to the requested relief."), and therefore the burden of production is still on the patent owner to establish that a substitute claim is responsive to an instituted ground of unpatentability.

A final interesting note about the Aqua Products case relates to the fact that the Federal Circuit's holding in Aqua Products was not that the Patent Office could not promulgate a rule assigning the burden of persuasion to patent owners. Instead, it was only that such a rule was not promulgated. Correspondingly, it is possible that the Patent Office could take use back to pre-Aqua Products days. There has been no indication from the Office that it intends to do so, but a new Director of the Patent Office has just been confirmed and sworn in, so it remains to be seen what will happen. But in an action that might have tipped the hand of the Office, the Under Secretary of Commerce for Intellectual Property and Director, U.S. Patent and Trademark Office as intervenor in the case of Bosch Automotive Service Solutions, LLC v. Matal recently filed an Intervenor's Petition for Panel Rehearing. The Office is not asking the Federal Circuit to alter its judgment in that case. Rather, it believes that the panel decision incorrectly stated the holding of Aqua Products when it said: "Rather, the petitioner bears the burden of proving that the proposed amended claims are unpatentable 'by a preponderance of the evidence.' 35 U.S.C. § 316(e)." The Office reasoned that, because there were only two take-aways from the Aqua Products case (as articulated above), this reading is an impermissible extension of that holding.

The Office may have a valid point. 35 U.S.C. 316(e) reads: "In an inter partes review instituted under this chapter, the petitioner shall have the burden of proving a proposition of unpatentability by a preponderance of the evidence." If the above quoted language from the Bosch Automotive case is correct, then the statute is not ambiguous and the Patent Office could not promulgate a rule placing the burden of persuasion on patent owners for motions to amend. However, as the Office points out, a majority of judges in Aqua Products found that this statutory language was ambiguous. Therefore, as the Office's petition puts it:

Thus, Aqua Products simply holds that under the current landscape, the USPTO cannot place the burden of persuasion with respect to patentability of amended claims on the patentee. It recognizes, however, that it might be possible for the USPTO to do so in the future. But the panel's reading of Aqua Products could leave the mistaken impression that the panel foreclosed what Aqua Products expressly left open.

Of course, this begs the question whether the Office is currently planning on promulgating such a rule. On the one hand, it can be argued that the Office simply wants the Court to be as precise as possible, and therefore this is no indication of its intent to undo Aqua Products. However, on the other hand, why expend the energy and resources of the Office to request this small change unless it does have plans to promulgate a new rule. It remains to be seen what will happen, but it may no longer be a surprise if we see a Notice of Proposed Rulemaking from the Patent Office in the near future.
USPTO News Briefs

February 21, 2018

By Donald Zuhn –-

USPTO and EAPO Establish PPH Pilot Program

In a notice issued in the Official Gazette (1446 OG 52) last month, the U.S. Patent and Trademark Office announced that it was implementing a Patent Prosecution Highway (PPH) pilot program with the Eurasian Patent Office of the Eurasian Patent Organization (EAPO). PPH programs permit applicants who receive a positive ruling on patent claims from one participating office to request accelerated prosecution of corresponding claims in another participating office.

Because the EAPO is not currently a Global or IP5 PPH participating office, the USPTO noted that it would be partnering with the EAPO on a bilateral basis only. The three-year pilot program began on January 1, 2018 and may be extended if necessary to adequately assess the feasibility of the PPH program.

Requirements for participation in the USPTO-EAPO PPH can be found here.

USPTO Releases Revised MPEP

The U.S. Patent and Trademark Office announced via a Patent Alert e-mail last month that the Ninth Edition, Revision 08.2017 of the Manual of Patent Examining Procedure (MPEP) has been released. The new version of the MPEP includes changes to chapters 200, 700-1000, 1200, 1400, 1500, 1800, 2000-2300, 2500, and 2700. According to the Office's Alert, Appendices L and R have been revised to include laws and rules as of August 31, 2017, and Appendices T and AI have been revised to reflect the PCT Articles, Rules, and Administrative Instructions that were in force as of July 1, 2017. The new version of the MPEP can be accessed at the USPTO's MPEP webpage.

USPTO to Offer Sessions on Structured Text Features

Last fall, the U.S. Patent and Trademark Office announced that EFS-Web-registered and Private PAIR users could now file structured text via EFS-Web and access structured text submissions, structured text Office actions, and XML downloads via Private PAIR (see "USPTO News Briefs," October 25, 2017). As a result, EFS-Web-registered users can submit application parts in DOCX format, and Private PAIR users have the option to download XML or DOCX versions of PDF documents.

In a Patent Alert e-mail sent last month, the Office announced that members of the eCommerce Modernization (eMod) team will be conducting DOCX Info Sessions in which information regarding the new structured text features, including the ability to file structured text via EFS-Web and access structured text submissions, structured text office actions, and XML downloads via Private PAIR will be shared. The sessions, which will be one hour in length and limited to 20 attendees, will include a demonstration. According to the session registration page, four session dates and times are currently available: March 7, 2018 at 2:00 pm ET; March 21, 2018 at 2:00 pm ET; April 5, 2018 at 2:00 pm ET; and April 18, 2018 at 11:30 am ET.
Who’s in Charge Here? Or Is the PTAB Bound by USPTO Guidances?

February 19, 2018

By Kevin E. Noonan –

In a decision from an appeal before the Patent Trial and Appeal Board following rejection of claims to an isolated nucleic acid apparently (to applicants) falling within the scope of U.S. Patent and Trademark Office Guidance setting forth Office policy for implementing the Supreme Court's decision in AMP v. Myriad Genetics is this assertion by the Board:

Appellants cite as support the USPTO's 2014 . . . ("Interim Guidance"). In particular, Appellants points to Claim 2 of Example 7 in the Interim Guidance . . . —"Isolated nucleic acid comprising a sequence that has at least 90% identity to SEQ ID No. 1 and contains at least one substitution modification relative to SEQ ID No. 1"—which was found in the Interim Guidance to be patent eligible. We are not persuaded. As an initial matter, we are not bound by the Interim Guidance. Furthermore, we find the instant claims distinguishable from the example in the Interim Guidance, which requires a specific type of mutation (substitution) and specifies that "[n]o substitution modifications of [the gene at issue] are known to occur in nature."

Ex parte Lukyanov, U.S. Appl. Ser. No. 11/607,828 (appeal decided 05/25/2017) (emphasis added).

In contrast, another panel of the Board found the following claim patent-eligible based on another Guidance:

1. A method for detecting and quantitating in a biological fluid sample from a human [a biomarker having a specific SEQ ID NO], comprising
    (a) contacting the sample with a labeled monoclonal or polyclonal antibody which specifically binds to said [biomarker] and
    (b) detecting and quantitating the resulting [biomarker]: antibody complex using an immunoassay, wherein said immunoassay
        (i) is not a radioimmunoassay, and
        (ii) has a limit of detection of about 50 pmol/L.

Ex parte Bergmann, U.S. Appl. Ser. No. 10/551,298 (appeal decided 07/10/2017):

It seems curious, and the source of inconsistent policy, for the PTAB to take the position that the Board can choose to ignore USPTO Guidances at its leisure (if not its whim) in view of the stance the Office has taken with regard to the importance of maintaining consistency in its policies in other situations. For example, in convening an expanded panel for deciding whether filing a lawsuit asserting a patent waives sovereign immunity as a grounds to dismiss an inter partes review before the Board (it does; see "PTAB Decides Patent Infringement Lawsuit Waives Eleventh Amendment Sovereign Immunity to Inter Partes Review"), the expanded panel, which comprised Deputy Chief Administrative Patent Judge Scott R. Boalick, Vice Chief Patent Judges Jacqueline Wright Bonilla and Scott C. Weidenfeller, and Administrative Patent Judges Jennifer S. Bisk, Robert J. Weinschenk, and Charles J. Boudreau, in addition to the Chief Administrative Patent Judge, expressly set forth its reliance on the Chief Judge's authority under 35 U.S.C. § 6 to expand panels when issues before the Board are of exceptional importance or are "necessary to secure and maintain uniformity of the Board's decisions." And a different Board panel excoriated counsel for the St. Regis Mohawk Tribe for filing a motion for discovery regarding whether there would be any attempt to "stack" the Board against it (see "The PTAB Strikes Back — Issues Order Prohibiting St. Regis Mohawk Tribe from Filing Any Additional Papers in IPR"), despite there being concern before the Federal Circuit (see "Yissum Research Development Co. v. Sony Corp.") and, less directly, the Supreme Court regarding this policy. In the Tribe's motion that provoked the panel's vociferous response, the request cited portions of the Administrative Procedures Act (specifically, 5 U.S.C. § 554(d)) that others have alleged, and it seems reasonable to suspect, might be bruised if not violated by the enlarged panel practices employed by the PTAB, i.e., a prohibition on members of a PTAB panel from being "subject to the supervision or direction of an employee or agent engaged in the performance of investigative or prosecuting functions for an agency." In addition, the request cited the prohibition on ex parte communications under 5 U.S.C. § 557 or, if such communications have occurred, that they be included in the public record.

Article I courts, and the PTAB in particular, have a legitimate goal of providing consistent application of the law to applicants and, in the case of implementing the adversarial avenues the AIA created, developing a consistent body of procedural and substantive law. To this end, for example, the PTAB has designated some (albeit few) cases precedential, thus providing notice to the public regarding how the Office can be expected to conduct the "trials" mandated by the statute.

But the Board's efforts are a larger part of, and expressly dependent on, the authority of the Office through the Director (as Under Secretary of Commerce) "for providing policy direction and management supervision for the Office and for the issuance of patents and the registration of trademarks [] in a fair, impartial, and equitable manner." 35 U.S.C. § 3(2)(A). Those duties include the powers to "establish regulations, not inconsistent with law" for "govern[ing] the conduct of proceedings in the Office." 35 U.S.C. § 2(2)(A). However, those activities "shall be made in accordance with section 553 of title 5," 35 U.S.C. § 2(2)(A), which govern administrative rulemaking. More fundamentally, the Office is established under statute so that while being "subject to the policy direction of the Secretary of Commerce" it "otherwise shall retain responsibility for decisions regarding the management and administration of its operations and shall exercise independent control of its budget allocations and expenditures, personnel decisions and processes, procurements, and other administrative and management functions in accordance with this title and applicable provisions of law." 35 U.S.C. § 1. Finally, nothing in the enabling statute for establishing the PTAB arrogates to that body any powers or authority independent of or superior to the powers vested in the Director over operation of the Office. 35 U.S.C. § 6.

Which brings us to the source of the Interim Guidance ignored by the PTAB in the Lukyanov case, the Office of Legal Administration, which operates within the Office of Patent Examination Policy. According to the USPTO website, the OPLA has the following functions:

The Office of Patent Legal Administration (OPLA) drafts regulations and develops practices for the examination of patent applications, as well as assists in the implementation of these new regulations and practices. In addition, OPLA staff author rule packages published in the Federal Register, create Official Gazette notices, monitor public comments, and formulate Frequently Asked Questions (FAQs). To reflect changes in law, rules, procedures, and policies, OPLA recommends updates to the Manual of Patent Examining Procedure (MPEP) as well as the forms used by the Patent Examining Corps (Corps) and external customers. Lastly, OPLA prepares and delivers training to the Corps.

Other OPLA staff duties include supporting post grant instruments such as reexamination proceedings and reissue applications, and treating applications for patent term extension and patent term adjustment. OPLA has the authority to decide various petitions which have been delegated for consideration. Legal advisors also deliver training on specialized subjects and patent law and procedure for the Office of Patent Training.

Additionally, in its representative capacity of the USPTO, OPLA responds to inquiries about patent law and Office policies and procedures via letters, phone calls, lectures, presentations, and other contacts with members of the public and the patent bar. OPLA also assists in the efforts to negotiate the harmonization of patent laws and other international matters.

What is unclear is the statutory basis for the PTAB's evident conviction that it has the authority to ignore USPTO policies, as evinced by Guidances from the OPLA. As an adjudicatory body it is reasonable for the Board to take the position that is needs the authority to decide how to apply such Guidances from the OPLA a particular case. But in the language of the Lukyanov decision lingers a flavor of an assertion of a higher authority, along the lines of the Board having the responsibility to decide what the law is independent from and superior to the Office's administration. This is consistent with the impression created by the chimerical nature of IPR and other adversarial review procedures established by the AIA, which are sometimes characterized as being in the nature of a trial and other times (when the characterization suits) are analogized to any other administrative procedure. These various roles may have had the effect of engendering a belief that the Board has an obligation greater than its statutory brief, and this reasonably calls into question the legitimacy of its decisions. Many have opined in the wake of new Director Iancu's confirmation on the matters requiring his attention. The proper role of the PTAB in the policy-making hierarchy of the USPTO appears to be one of them.
Aatrix Software, Inc. v. Green Shades Software, Inc. (Fed. Cir. 2018)

February 18, 2018

By Michael Borella —

Aatrix brought an infringement action against Green Shades in the Middle District of Florida, alleging infringement of U.S. Patent Nos. 7,171,615 and 8,984,393. Green Shades filed a 12(b)(6) motion to dismiss on the grounds that all asserted claims were not eligible for patent under 35 U.S.C. § 101.

The patents in suit are directed to "designing, creating, and importing data into a viewable form on a computer so that a user can manipulate the form data and create viewable forms and reports." In particular, a "form file is created using in-house form development tools and is designed to model the physical characteristics of an existing form, including the calculations and rule conditions required to fill in the form." A data file "allows data from third-party applications to be seamlessly imported into the form file program to populate the form fields." A "viewer generates a report by merging the data in the [data] file with the fields in the form file, performing calculations on the data, and allowing the user to review and change the field values."

Claim 1 of the '615 patent recites:

1. A data processing system for designing, creating, and importing data into, a viewable form viewable by the user of the data processing system, comprising:
    (a) a form file that models the physical representation of an original paper form and establishes the calculations and rule conditions required to fill in the viewable form;
    (b) a form file creation program that imports a background image from an original form, allows a user to adjust and test-print the background image and compare the alignment of the original form to the background test-print, and creates the form file;
    (c) a data file containing data from a user application for populating the viewable form; and
    (d) a form viewer program operating on the form file and the data file, to perform calculations, allow the user of the data processing system to review and change the data, and create viewable forms and reports.

The Supreme Court's Alice Corp. v. CLS Bank Int'l case set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101. One must first decide whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea. If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion. But generic computer implementation of an otherwise abstract process does not qualify as "significantly more." On the other hand, a claimed improvement to a computer or technological process is typically patent-eligible.

Aatrix argued that Green Shades' motion should be denied so that the District Court could carry out claim construction. The District Court ultimately granted the motion, and concluded that claim 1 of the '615 patent was "not directed to any tangible embodiment and therefore not directed to eligible subject matter." This latter point was not argued by the parties. The District Court also held that the Alice test rendered the remaining claims abstract, without an inventive concept, and therefore invalid as well.

Aatrix moved for the District Court to reconsider the judgment, as well as for leave to amend its complaint. Particularly, Aatrix wished to file a second amended complaint that provided evidence that would preclude a § 101 dismissal on the pleadings. The District Court denied this request, merely stating that "[u]pon consideration of the filings and the relevant case law, the [district court] sees no reason to reconsider its prior determination." Aatrix appealed.

The majority opinion began by noting that the Federal Circuit has held that patent eligibility under § 101 can be determined on the pleadings, but that "[t]his is true only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law." On the other hand, "[i]f there are claim construction disputes . . . either the court must proceed by adopting the non-moving party's constructions . . . or the court must resolve the disputes to whatever extent is needed to conduct the § 101 analysis, which may well be less than a full, formal claim construction."

Here, the Federal Circuit found that the District Court erred in its determination that claim 1 is not directed to a tangible embodiment. While the case law has long held that claims directed to nothing more than signals or data structures do not fall into any of the four categories of patentable subject matter, Aatrix's system claim "requires a computer operating software, a means for viewing and changing data, and a means for viewing forms and reports." Thus, the system is tangible.

The District Court also erred in denying Aatrix the opportunity to amend its complaint. The District Court did so without explanation. But the Federal Circuit viewed the second amended complaint as including factual allegations that "if accepted as true, establish that the claimed combination contains inventive components and improves the workings of the computer." Notably, the second amended complaint included specific allegations regarding the technical improvements of, and problems solved by, the claimed inventions. If accepted as true, they would "contradict the district court's conclusion that the claimed combination was conventional or routine." As a consequence, the District Court's dismissal was an abuse of discretion, and premature.

For these reasons, the dismissal of the case was vacated, and the matter was remanded to the District Court for further proceedings.

Judge Reyna concurred in part and dissented in part. He agreed that the District Court erred in its characterization of claim 1 being directed to an intangible embodiment, and believed that this conclusion led the District Court to improperly deny Aatrix's motion to file a second amended complaint. He took issue, however, with "with the majority's broad statements on the role of factual evidence in a § 101 inquiry," noting that this determination is a matter of law.

Specifically, he wrote:

[T]he majority opinion attempts to shift the character of the § 101 inquiry from a legal question to a predominately factual inquiry. The risk of this approach is that it opens the door in both steps of the Alice inquiry for the introduction of an inexhaustible array of extrinsic evidence, such as prior art, publications, other patents, and expert opinion. Similarly, the majority opinion strongly suggests that the district court must require claim construction where the meaning of a claim term is placed in controversy, even where, as here, proposed claim constructions are not presented to the court. One effect of this approach is that a plaintiff facing a 12(b)(6) motion may simply amend its complaint to allege extrinsic facts that, once alleged, must be taken as true, regardless of its consistency with the intrinsic record.

Judge Reyna also pointed out that the new allegations and evidence from the second amended complaint were not before the Court, as "[t]here was no motion to dismiss filed challenging the Second Amended Complaint." He noted that "[a]s an appellate court, we should not pass judgment on matters not addressed by the district court."

Following so quickly on the heels of the Berkheimer v. HP case, the Federal Circuit once again used its remand power to address a § 101 dispute where there may be a matter of material fact as to whether a claimed invention is a technical improvement over conventional art. While Berkheimer took place at the summary judgment stage, this case was decided on the pleadings. If the opinions in these cases stand, it may become significantly more difficult for a challenger to invalidate claims under § 101. The patentee need only explain how the specification describes that the claimed invention is a technical improvement over existing systems. This will mean that far fewer § 101 cases are dismissed on the pleadings, and more will go to trial.

On the other hand, the disagreement between the majority opinion and Judge Reyna point to a split in the Federal Circuit case law, with authority supporting both positions. This tees up the issue of whether a § 101 analysis involves underlying issues of fact for en banc review.

But lifting our heads up out of the details of the case law for a moment, how can the determination of whether an invention involves significantly more than well-known, conventional, and routine features be anything less than a factual inquiry in at least some situations? What is well-known, conventional, and routine is defined by the prior art, and whether an invention is a technical improvement over this art should not be subject to sweeping and conclusory statements.

Aatrix Software, Inc. v. Green Shades Software, Inc. (Fed. Cir. 2018)
Panel: Circuit Judges Moore, Reyna, and Taranto
Opinion by Circuit Judge Moore; opinion concurring-in-part and dissenting-in-part by Circuit Judge Reyna
Conference & CLE Calendar

February 18, 2018

February 20, 2018 – "Patent-Eligibility in 2018: Current Status and Best Practices" (McDonnell Boehnen Hulbert & Berghoff LLP) – 10:00 am to 11:15 am (CT)

February 20, 2018 – "Managing and Defending Against Patent Infringement Lawsuits: Best Strategies and Practical Tips Explored" (The Knowledge Group) – 3:00 to 4:00 pm (ET)

February 21-22, 2018 – Advanced Summit on Life Sciences Patents (American Conference Institute) – New York, NY

February 22, 2018 – "Managing Patent Infringement Risk in Product Development" (Strafford) – 1:00 to 2:30 pm (EST)

February 22, 2018 – "PTAB on Wi-Fi One: What's Next for Appeals?" (Intellectual Property Owners Association) – 2:00 to 3:00 pm (ET)

February 22, 2018 – "Drafting Quality Patents: Avoiding 112 Rejections at the USPTO" (LexisNexis) – 12:00 pm (ET)

February 26, 2018 – "Chinese Patent Developments" (Practising Law Institute) – 4:00 to 5:00 pm (Eastern)

February 27, 2018 – "Patent Inventorship: Best Practices for Determination and Correction — Distinguishing Between Inventor and Contributor; Navigating Joint Inventorship, Disclosure of Ownership, Real Party in Interest" (Strafford) – 1:00 to 2:30 pm (EST)

February 28, 2018 – "Going Global with Patents" (Bereskin & Parr) – 12:00 to 1:00 pm (EST)

March 3, 2018 – "Patent Post-Grant Practice" (John Marshall Law School Center for Intellectual Property, Information & Privacy Law) – 9:00 am to 4:30 pm, Chicago, IL

March 5-6, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Houston, TX

March 8, 2018 – "Patent Exclusivity Health Checks for Small Molecules: Are Your U.S. Patents Ready to Maximize ROI? — Phase II Efficacy Trials, Phase III Clinical Trials, NDA Submission, Approval and Marketing" (Strafford) – 1:00 to 2:30 pm (EST)

March 8-9, 2018 – Advanced Patent Law Seminar (Chisum Patent Academy) – Cincinnati, OH

March 14, 2018 – Patent Litigation Seminar (New Jersey Intellectual Property Law Association) – 12:00 to 5:00 pm, Iselin, NJ

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