When all else fails, consult the statute!

By Lewis Hudnell
November 14, 2017

patent law with gavel“When all else fails, consult the statute!”  In the Federal Circuit’s fractured en banc decision in CLS Bank v. Alice, one member of the court offered this simple solution to the struggle the Federal Circuit then faced in determining whether the Alice claims were patent eligible under 35 U.S.C. § 101.  See CLS Bank Int’l v. Alice Corp., 717 F.3d 1269, 1335 (Fed. Cir. 2013) (Rader, J., additional reflections).  Over three years later, in the wake of the Supreme Court’s affirmance in Alice Corp. Pty. Ltd. v. CLS Bank Int’l., 134 S. Ct. 2347 (2014), district courts continue to struggle with the two-part test the Supreme Court provided for resolving eligibility challenges.  Numerous patent owners who have had their patents declared ineligible under the Supreme Court’s test have challenged the test through the appeals process.  But unfortunately for many of them, all else has failed.

My clients RPost Communications Limited, RMail Limited, RPost International Limited, and RPost Holdings, Inc. are among those patent owners who are trying to address the problems of the recent § 101 jurisprudence.  On November 6, RPost filed a petition for writ of certiorari to the Supreme Court challenging the use of ineligibility as a litigation defense.  The petition urges the Supreme Court to take up this challenge by revisiting the basis that it recently used to strike down another defense—the patent statute.

The Question Presented

Specifically, the petition presents the question: is patent ineligibility under 35 U.S.C. § 101, which Congress did not codify in 35 U.S.C. § 282(b), not a cognizable defense in a patent litigation?  The question presented parallels that of the one recently decided by the Supreme Court in SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017).  In SCA Hygiene, the Supreme Court examined 35 U.S.C. § 282(b), which enumerates the defenses that may be raised in a patent litigation, and held that laches, which is not recited in § 282(b), is not a defense to patent damages within the statute of limitations set forth in 35 U.S.C. § 286.  RPost’s petition asks the Court to again examine § 282(b) in order to determine whether patent ineligibility under 35 U.S.C. § 101, which, like laches, is not recited in § 282(b), is similarly not a defense that may be raised in a patent litigation.

Section 282(b) of the Patent Act enumerates the patent defenses that may be raised in a patent-infringement action.  See 35 U.S.C. § 282(b).  Patent ineligibility under 35 U.S.C. § 101, however, is not one of them.  The only paragraph of § 282(b) that arguably covers ineligibility is § 282(b)(2), which states a defense of “(2) Invalidity of the patent or any claim in suit on any ground specified in part II of this title as a condition for patentability.”  See 35 U.S.C. § 282(b)(2).  Yet, in the Patent Act, Congress specified only two sections “conditions for patentability”—§ 102 titled “Conditions for patentability; novelty” and § 103 titled “Conditions for patentability; non- obvious subject matter.”  See 35 U.S.C. §§ 102-103.  Neither the statutory language nor the legislative history of § 282(b) show that Congress authorized district courts to decide eligibility challenges in patent litigation.

Unfortunately, district courts across the country—including in this case—routinely invalidate issued patents on ineligibility grounds despite lacking authority from Congress to do so.  The failure of the courts to follow the deliberately designed structure of the Patent Act has led to the invalidation of hundreds of valuable patents, weakened the U.S. patent system, and discouraged investment in U.S. innovation.  See AIPLA Legislative Report and Proposal on Patent Eligible Subject Matter (May 12, 2017).  The Federal Circuit has done nothing to correct the long-term misapplication of Congress’s framework, but instead has affirmed ineligibility challenges in nearly 90 percent of its post-Alice decisions.  Thus, the question presented is critically important to protecting the property rights of patent holders and to ensuring that the courts properly carry out Congress’s will.

Facts And Proceedings In The Lower Courts

RPost is a leading provider of patented e-mail authentication products and services.  GoDaddy sued RPost for declaratory judgment of non-infringement and invalidity of six patents: U.S. Patent Nos. 8,161,104 (“the ’104 patent”); 8,209,389 (“the ‘389 patent”); 8,224,913 (“the ’913 patent”); 8,468,198 (“the ’198 patent”); 8,468,199 (“the ’199 patent”) (collectively “the Tomkow patents”); and 6,182,219 (“the ’219 patent”) (“the Feldbau patent”).  The Tomkow patents address the problem of verifying the transmission, delivery or non-delivery, and/or opening of electronic messages.  The Feldbau patent addresses the problem of proving that a sender of an electronic transmission sent it to a particular destination at a particular time and that it had particular content.

GoDaddy moved for summary of invalidity of the patents-in-suit under § 101.  The District Court granted GoDaddy’s motion and RPost appealed the summary judgment order to the Federal Circuit.  The Federal Circuit affirmed it without opinion under Rule 36.  The Federal Circuit also denied RPost’s petition for a panel rehearing or en banc rehearing.

Highlighting the unsettling nature of these decisions, just four days before the District Court invalidated the asserted claims, another district court found the asserted claims in the ’913, ’389, and ’199 patents patent eligible.  See Sophos Inc. v. RPost Holdings, Inc. et al., Nos. 13-12856-DJC and 14-13628-DJC, 2016 U.S. Dist. LEXIS 72699, at *32-37 (D. Mass Jun. 3, 2016).  Additionally, the PTAB denied petitions to institute CBM reviews of the ’913, ’389, and ’104 patents.  See CBM2014-00010 at Paper 20; CBM2014-00017 at Paper 21; CBM2014-00064 at Paper 13.  The PTO also issued an Ex Parte Reexamination Certificate for the Feldbau patent confirming the validity of all of the reexamined claims.  Consequently, RPost, which actively sells a product that practices the patents-in-suit, is conclusively precluded from recouping millions of dollars in damages on its investment in patents that have had their validity upheld because the District Court granted GoDaddy relief on a litigation defense that it lacked jurisdiction to decide.

What RPost Hopes To Achieve With Its Petition

With its petition, RPost seeks to restore available patent-litigation defenses to the ones Congress provided in the statute.  Such a ruling will benefit all patentees litigating ineligibility challenges and restore stability to the U.S. patent system.  Indeed, issued patents will no longer be subject to district courts subjectively determining what is or is not patent eligible, as Congress originally intended.  RPost also seeks to provide an alternative to legislative initiatives to amend § 101, which may be too hard to come by and too slow to address the problem.  Indeed, a legislative solution already exists—consult the statute.

RPost respectfully requests your support for its petition, which is of substantial import to all inventors, patent holders, and those concerned with the proper functioning of the U.S. patent system.  Amicus briefs are currently due by December 11, 2017.  If you are interested in filing or joining an amicus brief and would like more information about the case, please contact me directly.

The Author

Lewis Hudnell

Lewis Hudnell is an intellectual property attorney specializing in patent litigation. He is committed to providing outstanding client service and to helping clients achieve favorable results in complex patent disputes. Mr. Hudnell has served as lead counsel on numerous patent lawsuits in federal court. Mr. Hudnell has successfully represented clients at trial and obtained numerous settlements in his clients’ favor. He has also successfully represented clients in patent trials before the Patent Trial & Appeal Board. Mr. Hudnell earned a B.S. in Operations Research and Industrial Engineering from Cornell University and a J.D. from the University of Pennsylvania.

For more information or to contact Mr. Hudnell, please visit his Firm Profile Page.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 4 Comments comments. Join the discussion.

  1. Curious November 14, 2017 7:52 am

    Good luck. You are in the right. However, you are facing a court system openly hostile to patents and the patent system.

    It is sad, but it looks like we are looking at the sunset of the US Patent System — to be replaced by the ‘communist-like’ system advocated by Google et al. in which all ‘innovation’ is free for anybody to use and the creators of that ‘innovation’ (formerly called “inventors”) are not compensated. However, to label Google as altruistic-minded in this endeavor would be a mistake — Google (and the rest of the large oligopolies dominating the tech sector) have huge leverage in their market power to exploit these innovations far better than anybody else.

  2. Anon November 14, 2017 10:34 am

    An offshoot of the Golden Rule in place: Competition is not to be under the rubrics of innovation, but rather, under the rubrics of those in power would rather have (elements that those in power have in more abundance than the innovative).

    If this is to continue, then indeed, Curious, this is the end of the golden age of patents for the formerly best innovation machine in the world.

    We have before us not just agency capture at the administrative agency level, we have government capture at the Congressional level (witness AIA) as well as government capture at the judicial level (witness the legislating from the bench with disregard for separation of powers and void for vagueness doctrines, first with the Supreme Court, then with the lower courts that the Supreme Court has bullied into ‘towing the line’).

  3. Judge Rich's Ghost November 14, 2017 12:41 pm

    You should read the third section of this Brief in Opposition. https://patentlyo.com/media/2017/11/RetirementCapResponse.pdf.

    It lays out exactly why you argument about Section 101 is wrong

  4. Unenforceability November 14, 2017 4:42 pm

    Wouldn’t a 101 issue be an unenforceability issue because there is no enforceable subject matter in the patent claims? It does not reach validity issues. Then if it is unenforceable because of a lack of patentable subject matter, 35 USC 282 (b) (1) specifically provides for unenforceability as a defense.

Post a Comment

Respectfully add to the discussion.

Name *
Email *
Website