Federal Circuit Decisions Breathe New Life Into Alice Responses by Patent Prosecutors

Federal Circuit Decisions Breathe New Life Into Alice Responses by Patent ProsecutorsWhile most commentary to date has focused on the implications for litigation, two recent Federal Circuit decisions have promising implications for patent prosecutors struggling to overcome conclusory rejections that claims lack subject matter eligibility.  Since Alice and the subsequent interim guidance by the U.S. Patent Office, one aspect of subject matter eligibility determinations that has frustrated patent prosecutors has been the fact-free, conclusory analysis commonly provided.  However, three Federal Circuit’s decisions authored by Judge Moore, Berkheimer, Aatrix, and Exergen, conflict with the Patent Office’s guidance that “judicial notice” fact-finding is sufficient for subject matter eligibility rejections, and the substantial evidence standard applicable to administrative fact-finding during examination does not comport with the underlying “examiner expertise” rationale for that guidance.

The panel in Berkheimer v. HP, Inc., — F.3d —, 2018 WL 774096 (Fed. Cir. 2018) explained that the legal question of subject matter eligibility involves underlying, subsidiary fact questions precluding summary judgment:  “Like indefiniteness, enablement, or obviousness, whether a claim recites patent eligible subject matter is a question of law which may contain underlying facts.”  A week later, a subsequent panel including two of the same judges reiterated that holding in the context of a Rule 12(b)(6) judgment on the pleadings, in Aatrix Software, Inc. v. Green Shades Software, Inc., — F.3d —, 2018 WL 843288 (Fed. Cir. 2018):  “While the ultimate determination of eligibility under § 101 is a question of law, like many legal questions, there can be subsidiary fact questions which must be resolved en route to the ultimate legal determination.”  Three weeks later a third panel applied that reasoning in Exergen Corp. v. KAZ USA, Inc. — Fed.Appx.—, 2018 EL 1193529 (Fed. Cir. 2018), according deference to a trial court’s conclusion that certain “claim elements were not well-understood, routine, and conventional.”

Each of Berkheimer, Aatrix and Exergen addressed one key aspect of the subject matter eligibility analysis under Alice:  whether the additional elements recited in a claim, beyond the identified judicial exception, amount to “significantly more” than “well-understood, routine and conventional” activities and thus impart subject matter eligibility.  Aatrix held that determining whether the claim limitations, individually or in combination, furnish an inventive concept beyond a judicial exception sufficient to ensure that the claim as a whole amounts to significantly more than the judicial exception itself is a fact question:  “These allegations at a minimum raise factual disputes underlying the § 101 analysis, such as whether the claim term ‘data file’ constitutes an inventive concept, alone or in combination with other elements, sufficient to survive an Alice/Mayo analysis . . .”  Berkheimer went even further, stating that proving an activity to be “well-understood, routine and conventional” requires proof “beyond [being] simply known in the prior art”:

Whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination. 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.

Both decisions found that factual disputes on that issue precluded disposition as a matter of law.

The same fact questions identified in Berkheimer and Aatrix are implicated by analysis of subject matter eligibility during examination, setting up a conflict with current Patent Office examination guidance.  In the Manual of Patent Examining Procedure update promulgated in January, subject matter eligibility is characterized as a question of law that can be decided “without resolving any factual issues.”  The MPEP tells examiners that factual support is unnecessary not only for the determination of whether a claim is “directed to” a judicial exception, but also for the “something more” analysis:  “Similarly, the courts do not require any evidence when conducting the significantly more inquiry.”  In fact, the January update tells examiners that “courts have not required evidence to support a finding that additional elements were well-understood, routine, conventional activities, but instead have treated the issue as a matter appropriate for judicial notice.”  That guidance directly conflicts with the Federal Circuit’s subsequent statement in Aatrix that “[w]hether the claim elements or the claimed combination are well-understood, routine, conventional . . . cannot be answered . . . based on . . . materials subject to judicial notice.”  The Federal Circuit explained that, in earlier decisions such as those cited by the Patent Office examination guidance, evidence was not necessary because the facts were undisputed, such as having been conceded:

As our cases demonstrate, not every § 101 determination contains genuine disputes over the underlying facts material to the § 101 inquiry. See, e.g., Content Extraction, 776 F.3d at 1349 (patent owner conceded the argued inventive concept “was a routine function of scanning technology at the time the claims were filed”); Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1370 (Fed. Cir. 2015) (patent owner argued an “interactive interface” is “a specific application of the abstract idea that provides an inventive concept” and did not dispute that the computer interface was generic). . . . 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.

Similarly, patent applications sometimes acknowledge that concepts may be “conventional.” (or, at least, are interpreted as containing “admitted prior art.”

In addition, the MPEP’s stated rationale for evidence being unnecessary—“the examiner’s expertise” in the art—is inconsistent with precedent regarding application of the substantial evidence standard in patent examination:

Finally, the deficiencies of the cited references cannot be remedied by the Board’s general conclusions about what is “basic knowledge” or “common sense” to one of ordinary skill in the art. . . . We cannot accept these findings by the Board. This assessment of basic knowledge and common sense was not based on any evidence in the record and, therefore, lacks substantial evidence support. As an administrative tribunal, the Board clearly has expertise in the subject *1386 matter over which it exercises jurisdiction. This expertise may provide sufficient support for conclusions as to peripheral issues. With respect to core factual findings in a determination of patentability, however, the Board cannot simply reach conclusions based on its own understanding or experience—or on its assessment of what would be basic knowledge or common sense. Rather, the Board must point to some concrete evidence in the record in support of these findings. To hold otherwise would render the process of appellate review for substantial evidence on the record a meaningless exercise. . . . Accordingly, we cannot accept the Board’s unsupported assessment of the prior art.

Thus, like the “basic knowledge” and “common sense” rejected above, “the examiner’s expertise in the art” should not be insufficient to meet the substantial evidence standard for administrative fact-finding. The Administrative Procedure Act (APA), which applies during patent examination, further requires that factual determinations on which legal conclusions are based be supported by substantial evidence. Dickinson v. Zurko, 527 U.S. 150, 165 (1999); In re Gartside, 203 F.3d 1305, 1315 (Fed. Cir. 2000); see also In re Zurko, 258 F.3d 1379, 1384 (Fed. Cir. 2001) (“We review factual findings underlying this [legal] determination [of obviousness] for substantial evidence.”).

Judge Reyna dissented in Aatrix from “the majority’s broad statements on the role of factual evidence in a § 101 inquiry,” and Judge Hughes dissented in Exergen based in part on the district court having “clearly erred by finding an inventive concept based on the asserted claims’ use of well-understood, routine, and conventional . . . techniques for [a] new purpose.”  However, HP’s petition for rehearing en banc in Berkheimer, if granted, may afford the full Court an opportunity to participate in clarifying the role of factual evidence in eligibility determinations.

While arising in the context of litigation, the holdings of Berkheimer and Aatrix are in tension with Patent Office guidance on examination for subject matter eligibility.  With luck, a rational, fact-based approach to eligibility determinations may be introduced to patent prosecution, as well as patent litigation.

The Author

Neil Ferrari

Neil Ferrari Neil G. Ferrari is a partner at Munck Wilson Mandala, practicing in the technology/intellectual property law group. Neil focuses his practice in the areas of patent preparation and prosecution, patent litigation, and intellectual property licensing. Neil has a broad range of legal experience in patent matters, including domestic and international patent preparation and prosecution, patent infringement and litigation matters, defending and prosecuting inter partes reviews, licensing, and opinions. Neil prepares and prosecutes domestic and international patent applications in a variety of technical areas including electrical circuitry, semiconductor devices, telecommunication systems, software applications, computer architecture, lighting systems, control systems, aircraft components, and medical devices. Neil also works with counseling companies on the identification, protection, development, and monetization of their intellectual property.

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

Neil Ferrari

Daniel Venglarik is a partner in the technology/intellectual property law group of Munck Wilson Mandala. Dan practices in both enforcement of intellectual property rights and defense of intellectual property claims, providing licensing assistance and domestic and international litigation support, prosecuting and defending patent reexaminations and inter partes reviews, and providing opinions and expert testimony on infringement and validity. Dan also represents clients in the development of patent portfolios, including drafting patent applications on key technologies for clients and counseling on patent portfolio management for enterprise core technologies.

For more information or to contact Dan, 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 17 Comments comments.

  1. Anon March 15, 2018 9:29 am

    That “advice” is also in direct conflict as to the Office own directions as to when even taking “Official Notice” (even if otherwise could be taken) is simply not allowed:

    Official Notice may NOT be taken in order to establish the “state of the art.”

    As noted here, conclusory comments are not appropriate, do not establish a prima facie case, AND the level of evidence required goes beyond mere presence (in either the 102 or 103 senses).

    Further, ALL arguments supplied by an applicant must be answered in an ensuing Office Action, and there is a quote in the MPEP that is handy: the MPEP is not the law, and examiners may not place the MPEP above the law.

    Yes, I do hear (from others) that it is “unfair” that attorneys that know the law are “arguing” with examiners that lack that legal training that being an attorney brings, but I don’t make the “rules of the game” and those rules are finally being recognized in the favor of applicants when it comes to the factual predicates of the legal question of eligibility.

  2. Dan Venglarik March 15, 2018 12:05 pm

    Excellent point, Anon.

  3. B March 15, 2018 12:50 pm

    Golly, the CAFC is affirming basically every premise I briefed two years ago, and again briefed in the last year. Regardless, I doubt that Judges Reyna and Hughes will faithfully adhere to this nuevo-radical idea that factual issues should require supporting evidence.

    That said, I’ve used Berkheimer no less than four times to address capricious 101 rejections.

    Anon – ‘Official Notice may NOT be taken in order to establish the “state of the art.”’ Yeah, but official notice can be used to declare that something is notoriously well-known. For example, I believe that Examiners might be allowed to take official notice that charging interest for a loan is a well-known business practice when establishing what is “abstract.” That said, the rest – particularly Alice/Mayo step two assertions of fact – will likely require evidence.

  4. B March 15, 2018 1:08 pm

    “The Administrative Procedure Act (APA), which applies during patent examination, further requires that factual determinations on which legal conclusions are based be supported by substantial evidence.”

    I swear to you all that three CAFC judges thought I was out of my mind for arguing this same thing two years ago.

    About a year ago, a 3600 panel from the PTAB partially got the message, but still made a number of errors by trying to import “facts” and “legal conclusions” from other cases. The particular panel I’m sure had no choice from PTAB management but to reject the claims. Reading their opinion, I got the feeling that they took their job seriously, and reversed the Examiner’s 112, 1st, 112, 2nd, 102 and 103 rejections (yes, its 3600). I cannot believe that the APJs were so ridiculous as to declare the Examiner’s assertions of fact unsupported and conclusory for three separate claim limitations when addressing the 102/103 rejections, but agreed with the Examiner that the very same claim limitations were well-understood, routine and conventional for the 101 rejection. Moore hit the nail on the head when she observed that “well-understood, routine and conventional” is a harder thing to prove than merely being known.

  5. Anon March 15, 2018 1:18 pm

    B,

    The notion of “well known” is a comment on the state of the art.

    State of the art is what it implies – and is NOT limited to that notion for merely 102 or 103 arguments.

    Official Notice is simply inappropriate for the 101 factual predicate portion and is against the prior stated protocol for using Official Notice.

    Period.

    The Office is constrained by its already published rules.

    What we are (finally) seeing is the realization and understanding of WHAT those rules mean.

    Doubtless, more “teaching” (read that as fighting bad examination) will be required, but the Patent Office does not get to write the law that it must apply – it must apply the law as it is. And they must do so constrained by their own published rules on top of that. The rule on impermissibility of using “Official Notice” in any way related to establishing “state of the art” carries over into the factual predicate aspect of 101.

    They have to supply actual evidence. Further, since such is required for a prima facie case, all that is required of an applicant to “win”*** it to rebut the use of “Official Notice” even if the Office refuses to use that label for what it is doing.

    ***winning, like teaching, is easier said than done and will no doubt involve challenging the Office as much as possible – in every encounter to push as hard as the client is willing pay. I fully recognize that client’s can be – and will be – worn out before “lessons are learned,” but enough people do this, the Office will need to come to grips with the legal reality.

  6. Anon March 15, 2018 1:21 pm

    By the way, B, kudos to you for persevering – even as I am aware that you personally have been run over by the cart of BS.

  7. B March 15, 2018 1:56 pm

    “The notion of “well known” is a comment on the state of the art.”

    Respectfully, while I understand your point, there will be times in the future when an examiner will take official notice and be able to back it up by citing an old textbook.

    ———-

    “By the way, B, kudos to you for persevering – even as I am aware that you personally have been run over by the cart of BS.”

    Run over? Not me – my poor client – and I haven’t persevered yet. What was frustrating on round one is that I never briefed a single thing not 100% supported by Bilski/Mayo/Alice, the MPEP, or the APA, and was still Rule 36’ed.

    Round two at the CAFC will depend on the panel drawn. I definitely don’t want Reyna and Hughes.

  8. Dan Venglarik March 15, 2018 3:56 pm

    B, would you share (at least by e-mail) the style of the case(s) that you briefed “two years ago, and again . . . in the last year”? Thanks in advance.

  9. Anon March 15, 2018 6:55 pm

    and be able to back it up by citing an old textbook

    That is not taking Official Notice.

    That is providing some sort of evidence. Taking Official Notice is simply not providing any evidence.

    (as to kudos, I still present them, as you appear to be one willing to fight for a strong patent system!)

  10. B March 15, 2018 7:32 pm

    ‘“and be able to back it up by citing an old textbook” . . . That is not taking Official Notice.’

    I apologize for not making myself clear. The Examiner first takes official notice, then LATER (when challenged) cites an old textbook as evidence.

    Personally, whether I wanted to challenge such an official notice would depend on whether I thought evidence would actually help my case. Evidence provides context, and context may or may not be helpful.

    For example, I might accept it if an Examiner took official notice that X was abstract, given that in my heart I thought he was correct in general, but mistaken as to some aspect of X. It’s damned difficult to say that additional steps are “well-known, routine and conventional” when the core issue is naught but an assertion. The only place one will get evidence on whether additional steps to X are well-known, routine and conventional is an expert witness, an old textbook or an old reference, e.g., an encyclopedia.

  11. Anon March 15, 2018 9:11 pm

    B,

    The challenge then of improper notice can be said to have been successful, as the examiner has produced the necessary evidentiary foundation.

    That changes nothing at all of what I have been posting.

    Bottom line is that there is NO prima facie case possible for a 101 position that attempts to improperly use Official Notice for a state of the art.

    The remainder of your comment goes well beyond the point that I presented, and – as you indicate – context may change upon circumstances.

  12. B March 15, 2018 9:18 pm

    “Bottom line is that there is NO prima facie case possible for a 101 position that attempts to improperly use Official Notice for a state of the art.

    And I agree, but I will inform you that I know for a fact that Judge Hughes thinks differently.

  13. Anon March 15, 2018 11:10 pm

    I certainly hope that you do not draw him then – best of luck to you!

  14. B March 16, 2018 11:05 am

    @Dan Venglarik

    Style of cases? I’m not sure what you mean. Do you want the Appeal Numbers?

  15. Dan Venglarik March 16, 2018 11:09 am

    B: Yes, the appeal numbers would be sufficient. I’d love to be able to review your briefing. A link to my firm profile is below. Thanks in advance.

  16. Dan Venglarik March 16, 2018 11:10 am

    B: Sorry, the link didn’t show in my comment:

    https://www.munckwilson.com/attorney/daniel-e-venglarik/

  17. B March 16, 2018 2:16 pm

    Dan,

    2016-1062; 2017-2069

    FYI, this is from a Reply Brief filed almost exactly two years ago:

    “Further, it is not enough for a given claim limitation to be merely known – the limitation must be “routine” and “conventional,” which Appellants assert is a standard greater than obviousness and anticipation in various instances. Something can be known, but not routine and conventional. However, how can anything be routine or conventional if it isn’t known?
    . . .
    The Supreme Court never stated that every known business practice is “fundamental,” and to merely assume that providing AVM values is a fundamental business practice without evidence eviscerates this Court’s precedent K/S HIMPP v. Hear-Wear Technologies, Appeal No. 2013-1549 (Fed. Cir. 2014) , where this Court required the PTO to “point to some concrete evidence in the record” to support a core issue of patentability.

    The idea that no evidence is required to determine whether a business method is “fundamental” should be rejected by this Court.

    Without an evidentiary requirement, there can be no meaningful judicial review. Patent law would no longer resemble law, but instead would be reduced to capricious acts more akin to fashion or superstition. Law should be based on thoroughly reasoned public policy and cognizable rules; not capricious dictates.
    . . .
    The PTO cited no evidence that would allow this Court to hold that a single claim step was routine or conventional.”

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