Berkheimer v. HP: Federal Circuit says patent eligibility a factual determination inappropriate for summary judgment

By Gene Quinn
February 16, 2018

Berkheimer v. HP: Federal Circuit says patent eligibility a factual determination inappropriate for summary judgmentLast 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.

Representative Claim

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.

Conclusion

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.

_______________

[1] 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.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and founder of IPWatchdog.com. Gene is also a principal lecturer in the PLI Patent Bar Review Course and an attorney with Widerman Malek. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

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 15 Comments comments. Join the discussion.

  1. Anon February 16, 2018 7:23 am

    Gene,

    Your headline overstates the situation. It is not accurate to imply that all cases of patent eligibility will contain that situation as in the present case that would make “a(n) at issue factual determination inappropriate for summary judgment.”

    There still must be an actual issue of fact below the legal question of eligibility.

  2. William Morriss February 16, 2018 8:55 am

    District courts and the PTAB are critical to enforcement, but only a small percent of patents are ever enforced, and so I think the bigger question than whether those bodies will apply Berkheimer as written is whether the patent office will issue new guidance that will change the way 101 is applied by examiners.
    As I wrote here https://www.linkedin.com/pulse/pto-speechless-fed-cir-says-evidence-needed-william-morriss/, when the case came out, I called the office of patent legal administration to see if new guidance would be forthcoming, but the person I spoke to wouldn’t say that it was or when it might come out. The question then, would be how much credence examiners would give to Berkheimer as long as the office is officially silent.

  3. Anon February 16, 2018 10:33 am

    An important adder to the comments of Mr. Morriss: examiners are constrained in the manner in which any facts can be used, including how any facts are provided. The origin of these constraints are two-fold: the Administrative Procedures Act and the (official) USPTO Memorandum on how to take Official Notice.

    Each of these are binding on examiners.

    Notably, the Memorandum on how to take Official Notice is explicit on one critical element of any use of facts for the 101 inquiry:

    Official Notice is not permitted to establish a “state of the art.”

    This necessarily means that mere examiner postulating about any type of “state of the art” absolutely requires substantial evidence, and that a mere applicant request for such evidence places in the record an issue of substantial fact.

    This also means that a mere examiner postulation that does not have the substantial evidence along with the rejection is a failure of the Office to establish a prima facie case (and that includes all burden shifting aspects of that term). In other words, an applicant argument pointing out the insufficiency of any examiner conclusory statements concerning “generic” or “conventional” means that no burden shift has occurred, and the full onus of a proper Office Action (in the first instance) remains with the Office.

    I would also add a further tidbit (or “roadmap” if you will): Just because the Office in the larger sense has not provided examiners some larger help or tool in the 101 examination protocol in dealing with the underlying factual predicate of the legal question of eligibility, this does not excuse examiners from properly treating the (correct) responses from applicants. That proper treatment includes answering the substance of all arguments presented in a next action. In other words, just because the Office does not provide answers to those such as Mr. Morriss who calls the office of patent legal administration, examiners do not have that same ability to dodge an applicant’s statements.

  4. Anon February 16, 2018 10:40 am

    One other thought:

    Evidence of “conventional” means more than mere evidence of either “novel” or non-obvious. Conventional means “widely adopted.”

    Not only is there an actual (and substantial) evidentiary requirement, but the level of what that evidence must show is substantially higher than what any examiner that I am aware of is likely going to be able to deliver.

    So, feel free to draft a “boilerplate” response to the “boilerplpate” 101 rejections that will (or at least should) eviscerate the ability of the administrative agency of the executive branch to play the hand-waving games that the judicial branch (as flows down from the Supreme Court) “gets away with.”

    The Court may (attempt) to get away with [despite Void for Vagueness issues] not defining things like “abstract,” “significantly more,” or even what constitutes a “generic computer,” but the administrative agency is NOT the Court (nor a member of the judicial branch).

  5. curoius February 16, 2018 11:13 am

    Anon, I admire your blind adherence to what is “right” and “legal.” However, your clients face the fact that the Office and examiners do or do not do what you say they shouldn’t or should do. Unless you plan to appeal each case outside the Office (which you admit probably wouldn’t help), you need to come up with a practical solution. If you do, please share, because we’re all in the same boat of trying to argue law and procedure to examiners who don’t feel or aren’t aware that they are bound by such.

  6. Gene Quinn February 16, 2018 11:17 am

    Anon-

    Do you happen to have a link to the Memorandum on taking official notice?

    -Gene

  7. The Monk February 16, 2018 11:37 am

    Gene: you missed one. On Wednesday, the CAFC went a step further and extended the Berkheimer rule to Rule 12 motions. See the Aatrix Software case.

  8. Curious February 16, 2018 12:06 pm

    when the case came out, I called the office of patent legal administration to see if new guidance would be forthcoming, but the person I spoke to wouldn’t say that it was or when it might come out
    They really don’t have to. This is from MPEP 2106.05: “Examiners should examine each claim for eligibility separately, based on the particular elements recited therein. Claims should not be judged to automatically stand or fall with similar claims in an application. For instance, one claim may be ineligible because it is directed to a judicial exception without amounting to significantly more, but another claim dependent on the first may be eligible because it recites additional elements that do amount to significantly more.

  9. Gene Quinn February 16, 2018 12:19 pm

    The Monk-

    Thanks. I am familiar with that case, but have only heard about it second hand so far. I have an article in already (from Meredith Addy) that discusses both Berkheimer and Aatrix. Will publish that on Sunday 2/18. Good news if the district courts actually apply it the way the decisions are written.

  10. Anon February 16, 2018 12:22 pm

    Gene,

    The list of Office Memorandum can be found at (the last item on the list is the item you will want):

    https://www.uspto.gov/patent/laws-and-regulations/examination-policy/memoranda-examining-corps

    curious,

    As you may well recognize, each must fight their own battle against the Office when the Office does not comport with their own (and the APA) requirements.

    There is no shortcut, no “practical solution,” unless you are willing to settle for less than what your client deserves under the law. I fully grant that not only is this the client’s choice to make (with your helpful advice so that the client is making an informed decision), but that there will be many times when the client will choose to accept less than what the client has a right to.

    Curious,

    I do not find your reply helpful. Whether or not MPEP 2106.05 says what it says is not on point to the discussion here concerning the factual underpinnings to any decision as to the eligibility determination. No one is talking about those cases in which a dependent claim has “that more,” and the point is about those cases wherein the examiner does not provide the evidentiary support for a conclusory statement (and given that we do not have to argue in the face of a claim being passed to issue, this clearly only involves claims that are rejected under the spurious circumstances).

  11. Gene Quinn February 16, 2018 12:35 pm

    Anon-

    That PDF link isn’t working on the USPTO website. It goes to a 404 page. I will see if I can get it from the USPTO. Thanks.

    -Gene

  12. JCD February 16, 2018 10:45 pm

    Gene,

    You can grab it from the internet archive: https://web.archive.org/web/20080920192909/https://www.uspto.gov/web/offices/pac/dapp/opla/documents/offnotice.pdf .

    With respect to limitations on a taking of Official Notice, the main things I generally look to are:

    -In re Ahlert, 424 F.2d 1088, 1091, 165 USPQ 418, 420 (CCPA 1970) (not appropriate if not “capable of such instant and unquestionable demonstration as to defy dispute”);

    -In re Eynde, 480 F.2d 1364, 1370, 178 USPQ 470, 474 (CCPA 1973) (“[W]e reject the notion that judicial or administrative notice may be taken of the state of the art. The facts constituting the state of the art are normally subject to the possibility of rational disagreement among reasonable men and are not amenable to the taking of such notice.”);

    -In re Zurko, 258 F.3d 1379, 1385, 59 USPQ2d 1693, 1697 (Fed. Cir. 2001) (the Office “cannot simply reach conclusions based on its own understanding or experience—or on its assessment of what would be basic knowledge or common sense”, instead, the Office “must point to some concrete evidence in the record in support of these findings”; and

    -In re Lee, 277 F.3d 1338, 1342 (Fed. Cir. 2002) (“[j]udicial review of a Board decision denying an application for patent is thus founded on the obligation of the agency to make the necessary findings and to provide an administrative record showing the evidence on which the findings are based, accompanied by the agency’s reasoning in reaching its conclusions.”; a “Board decision ‘must be justified within the four corners of the record’”).

    The PTO’s memo can be useful, but then you have to establish that their guidance is binding.

    With respect to an agency obligation to abide by its own regulations, the first thing that comes to mind is primarily the Accardi doctrine, its original trilogy of cases (United States ex rel. Accardi v. Shaughnessy, 347 U.S. 260 (1954), Service v. Dulles, 354 U.S. 363 (1957), and Vitarelli v. Seaton, 359 U.S. 535 (1959)), and its progeny. In Morton v. Ruiz, 415 U.S. 199 (1974), the Supreme Court offered an expansive application of the Accardi doctrine applying it to a requirement in an agency’s unpublished internal manual, but it’s not clear how to reconcile this with the subsequent approach in Schweiker v. Hansen, 450 U.S. 785 (1981) where the Court held that a claims manual had no legal force and did not bind the Social Security Administration. Schweiker at 789.

    I personally am not aware of any application of the Accardi doctrine to the MPEP or published PTO guidance. I’ve found some suggestion that back in 2016 the PTO director indicated in an OED final order that the “USPTO’s broad authority does not extend to acting inconsistent with the plain language of its regulations” and that “the USPTO must follow its own regulations and its own unambiguous commands”, but (1) I haven’t been able to track this final order down yet, and (2) I’m not sure how useful it would be outside of a regulation context.

    JCD

  13. Anon February 17, 2018 9:08 am

    JCD,

    The words of the memo are clear enough: “acting inappropriately” is a statement of what is binding.

    You need not “establish” anything further.

    (Citing case law is also good – especially as a groundwork for appeal – but sadly the examiner corp would rather look at something other than cited cases, specifically such things as Office memorandum and the MPEP).

  14. Anon February 17, 2018 4:12 pm

    JCD,

    Schweiker v. Hansen is easily distinguishable based on its facts (the Court was faced with TWO requirements, and would not reverse in the face of a second requirement which basically mooted the first: “A court is no more authorized to overlook the valid regulation requiring that applications be in writing than it is to overlook any other valid requirement for the receipt of benefits“).

    Such is most definitely not appropriate to the circumstances under discussion here.

  15. LF February 26, 2018 9:40 am

    Hmmm….the USPTO sees the markedly different characteristics (MDC) analysis as part of Alice/Mayo Step 1, rather than as part of Alice/Mayo Step 2. A number of us have argued to the USPTO that the MDC “test” is not a detour in Step 1 (as the USPTO guidance would have you believe), but one of many tests for patent eligibility that can be found in Step 2 for product/manufacture claims (another being the Hartranft test “name, character, or use”). It seems to me that, had the USPTO put the MDC test in Alice/Mayo Step 2 where it properly belongs, then Berkheimer could be quite useful for product/manufacture claims reciting nature-based products. This might be worth discussing with the Office.

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