Last week the Federal Circuit reached a potentially momentous decision in Berkheimer v. HP Inc., (Fed. Cir. Feb. 8, 2018) (Before Moore, Taranto, and Stoll, J.). Giving hope to patentees who own computer implemented inventions, the Federal Circuit ruled that it is not always appropriate to declare the broadest independent claim to be representative, and also held that questions of fact underlying patent eligibility determinations, which make summary judgment inappropriate in at least some cases.
The case reached the Federal Circuit when appellant Steven E. Berkheimer appealed the district court’s summary judgment holding that claims 1-7 and 9 of U.S. Patent No. 7,447,713 (‘713 patent) were invalid as ineligible under 35 U.S.C. § 101 and Alice. Mr. Berkheimer also appealed the district court’s decision holding claims 10-19 of the ‘713 patent invalid for indefiniteness.
The Federal Circuit, in an opinion authored by Judge Moore, affirmed-in-part, vacated-in-part, and remanded for further proceedings. The Federal Circuit determined that claims 10-19 were invalid for indefiniteness, but that it was inappropriate for the district court to decide patent eligibility with respect to certain of the claims at issue. The Federal Circuit did agree that claims 1-3 and 9 related to an abstract idea and did not capture inventive concepts and, therefore, are ineligible. Notwithstanding, claims 4-7, were found to contain limitations directed to the arguably unconventional inventive concept described in the specification. Ultimately, Judge Moore wrote that whether the claims cover only conventional activities requires a factual determination, which can make it impossible to conclude claims are ineligible on summary judgment (i.e., summary judgment is only appropriate where there are no genuine issues of material fact).
The ‘713 Patent
The ‘713 patent relates to processing and archiving files in a digital asset management system. The system parses files into multiple objects and tags the objects to create relationships between them. The system eliminates redundant storage of common text and graphical elements, which improves operating efficiency and reduces storage costs.
Independent claim 1 recites:
1. A method of archiving an item in a computer processing system comprising: presenting the item to a parser; parsing the item into a plurality of multipart object structures wherein portions of the structures have searchable information tags associated therewith; evaluating the object structures in accordance with object structures previously stored in an archive; presenting an evaluated object structure for manual reconciliation at least where there is a predetermined variance between the object and at least one of a predetermined standard and a user defined rule.
The first issue of interest relates to the fact that Berkheimer did not agree that claim 1 was representative of all of the claims for purposes of patent eligibility evaluation. Nevertheless, the district court determined that Claim 1 was representative because it was the only independent claim presented.
Judge Moore explained that a claim is not representative merely because it is the only independent claim. There are certain situations where courts may treat a claim as representative. A claim may be viewed as representative, for example, “if the patentee does not present any meaningful argument for the distinctive significance of any claim limitations not found in the representative claim or if the parties agree to treat a claim as representative,” Judge Moore wrote. In this case, however, Berkheimer did make arguments specifically relating to the dependent claims and, therefore, he did not waive his right to challenge the patent eligibility of the dependent claims on appeal.
This issue alone makes Berkheimer v. HP very important for patent owners. Invalidity is supposed to require a claim-by-claim analysis, but all too frequently courts have select the broadest, weakest independent claim and labeled it as representative of all the claims at issue. When this happens claims are routinely declared ineligible as covering an abstract idea and not having any inventive contribution. But if the patent owner makes arguments specifically relating to the patent eligibility of dependent claims, Berkheimer v. HP stands for the proposition that it is inappropriate to limit eligibility analysis to just an independent claim the court declares to be representative.
The clear take-away message here is that patent owners need to make patent eligibility arguments that take into account the limitations in all asserted claims, and not acquiesce to any particular claim being representative of all claims.
Alice Step 1
Under Alice Step 1 the court asks whether the claims at issue are directed to a judicial exception, which in the case of computer implemented invention implicates the abstract idea exception. The district court held that claim 1 was directed to the abstract idea of using a generic computer to organize, compare and reconcile date prior to archiving.
Berkheimer argued that the presence of a “parsing” limitation rooted the claims in a technology that transforms data structure from source code to object code. The Federal Circuit disagreed, citing to Intllectual Ventures I, 850 F.3d at 1340, for the proposition that limiting a claim to a technological environment does not in and of itself make an abstract concept any less abstract. Furthermore, Judge Moore pointed out that Berhkeimer admitted that parsers had existed for years prior to the filing of his patent application, without explaining the importance of that concession under Alice Step 1. Federal Circuit seemed to take this as confirmation that the parsing limitation was conventional and routine (although not specifically saying that directly), perhaps bleeding conventionality under the second step of Alice into the analysis of Alice Step 1.
The Federal Circuit ultimately held that claims 1-3 and 9 are directed to the abstract idea of parsing and comparing data; claim 4 is directed to the abstract idea of parsing, comparing, and storing data; and claims 5-7 are directed to the abstract idea of parsing, comparing, storing, and editing data. Thus, it was necessary to proceed to Alice step 2.
Alice Step 2
At the outset of discussion of Alice step 2, the Federal Circuit pointed out that the question of whether the claim limitations involve more than the performance of well understood, routine, and conventional activities is a question of fact.
“Whether a claim recites patent eligible subject matter is a question of law which may contain disputes over underlying facts,” Judge Moore wrote. “Patent eligibility has in many cases been resolved on motions to dismiss or summary judgment. Nothing in this decision should be viewed as casting doubt on the propriety of those cases. When there is no genuine issue of material fact regarding whether the claim element or claimed combination is well-understood, routine, conventional to a skilled artisan in the relevant field, this issue can be decided on summary judgment as a matter of law.”
The Federal Circuit held that the district court in this case erred in concluding that there are no factual questions underlying the question of law relating to patent eligibility under § 101.
“Whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination,” Judge Moore wrote. “Whether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art. 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.”
The Federal Circuit concluded that claim 1 does not recite an inventive concept sufficient to transform the abstract idea into a patent eligible application. Since Berkheimer did not advance separate arguments relating to claims 2-3 and claim 9, those too were deemed patent ineligible.
Berkheimer did advance separate argument relating to the limitations specifically found in claims 4-7, which the Federal Circuit found to arguably relate to unconventional inventive concepts described in the specification.
“At this stage of the case… there is at least a genuine issue of material fact in light of the specification regarding whether claims 4-7 archive documents in an inventive manner that improves these aspects of the disclosed archival system,” Judge Moore wrote. “Whether claims 4-7 perform well-understood, routine, and conventional activities to a skilled artisan is a genuine issue of material fact making summary judgment inappropriate with respect to these claims.”
The Federal Circuit was, however quick to say that the decision did not declare claims 4-7 patent eligible, but only that it was improper to declare those claims patent ineligible on summary judgment.
There can be no doubt that Berkheimer is an important decision for patent owners.
The Federal Circuit holds that where a patent owner makes separate patent eligibility arguments relating to dependent claims it is inappropriate to lump all claims together for the purpose of a patent eligibility analysis. This will presumably require district courts (and the Patent Trial and Appeal Board) to go claim by claim for purpose of determining patent eligibility when the patentee makes appropriate argument.
Berkheimer is also equally important, if not more important, because it stands for the proposition that questions of fact can and do underline patent eligibility determinations. This is important not only because it will make summary judgment more difficult for infringers, but because if there are questions of fact underneath the patent eligibility determination it should be exceptionally difficult (if not virtually impossible) for district courts to dismiss patent infringement complaints using FRCP 12(b)(6).1 This is true because under FRCP 12(b)(6) all facts asserted in the complaint by the plaintiff (i.e., the patent owner) are taken as true and dismissal appropriate only where there can be no victory by the plaintiff even based on the facts plead in the complaint.
For patent owners bringing patent infringement lawsuits it will become commonplace, indeed necessary, to factually assert in the complaint that the limitations contained in each of the asserted claims inject inventive contributions that are not well-understood, routine, and/or conventional activities that would be understood by a skilled artisan. By doing that district courts should be forced to accept these statement as true for purpose of a 12(b)(6) motion to dismiss, which should mean dismissals due to lack of patent eligibility will become a much rarer occurrence.
Of course, now we have to wait to see whether the district courts and PTAB will apply Berkheimer as it is written, and whether other panels of the Federal Circuit will actually follow this decision.
 The Federal Circuit has addressed this Rule 12 dismissal issue in Aatrix Software v. Green Shades (Fed. Cir. February 14, 2018). More analysis of that case to follow.
UPDATED February 16, 2018 @ 12:32pm to mention Aatrix Software.