In Berkheimer and Aatrix, the Federal Circuit indicated that although patent eligibility under Section 101 is ultimately a question of law, the determination may have factual underpinnings that, at least in some cases, render it inappropriate for motions to dismiss or for summary judgment. The Federal Circuit did state, however, that “[p]atent 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.” Berkheimer, 881 F.3d at 1368. Specifically, patent eligibility can be determined at the Rule 12(b)(6) stage “only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law.” Aatrix, 882 F.3d at 1125. And indeed, following Berkheimer and Aatrix, the Federal Circuit has itself affirmed numerous Section 101 rulings that were made at the dismissal or pleadings stage. See, e.g., Burnett v. Panasonic Corp., Interval Licensing LLC v. AOL, Inc., SAP America, Inc. v. InvestPic, LLC and Voter Verified, Inc. v. Election Sys. & Software LLC). Further, the recent decisions highlighted below illustrate that district courts remain willing to invalidate patents under Section 101 at the motion to dismiss stage. Finally, it is worth noting that Senators Chris Coons and Thom Tillis held a roundtable on December 12, 2018, inviting dozens of companies, industry groups, and patent law experts to discuss potential legislative reform of Section 101, which could redefine the contours of patent eligibility.
Below is a summary of recent district court decisions granting Rule 12(b)(6) motions to dismiss under Section 101.
- Finnavations LLC v. Payoneer, Inc., No. 1:18-cv-00444, 2018 U.S. Dist. LEXIS 199386 (D. Del. Nov. 26, 2018): The court found that the asserted claims of the plaintiff’s electronic financial recordkeeping patent are directed to an abstract idea, rendering them patent ineligible. “Humans have kept accounting records for about 7000 years. The [patent in suit] attempts to capture part of this practice in the area of electronic financial recordkeeping through the use of a generic computer.” Applying the two-step Alice/Mayo framework, the court found under step one that the asserted claims describe the concept of “bookkeeping”—a “fundamental economic practice”—and “amount to no more than the abstract idea of using a generic computer to search, analyze, and store information,” which is patent ineligible. “The [patent] does not address a problem unique to computer technology. Nor does it announce an improvement in computer operation.” Further, under step two, the court found that the asserted claims “recite performing an abstract idea using conventional computer functions: running a program, searching information, copying information, translating information, and transmitting information. These steps are ‘basic functions of a computer’ and fail to transform the claims into patent eligible subject matter.” Thus, the court granted the defendants’ Rule 12(b)(6) motion to dismiss under Section 101.
- Tangelo IP, LLC v. Tupperware Brands Corporation, No. 1:18-cv-00692, 2018 U.S. Dist. LEXIS 199138 (D. Del. Nov. 26, 2018: Under Alice step one, the court found that the asserted claims of the plaintiff’s advertising patent “are directed to the abstract idea of using an identifier to allow a reader of a printed publication to access related information not in the printed publication—the same concept long practiced by systems of sales representatives and printed product catalogs.” Specifically, the court found that the asserted claims “are directed to improving usability of a physical publication page, not a graphical user interface,” and thus, the asserted claims “are not directed to improvements in computer functionality.” Under Alice step two, the court found that the asserted claims lacked an inventive concept. “Claim 1 merely applies the abstract idea of using a catalog identifier to obtain additional product information in a generic computer environment. Rather than receiving information orally from a sales representative, a user can now receive information visually on the computer. The claim limitations are elements inherent to using a generic computer.” Thus, the court granted the defendants’ Rule 12(b)(6) motion to dismiss under Section 101.
- Epic IP LLC v. Backblaze, Inc., No. 1:18-cv-00141, 2018 U.S. Dist. LEXIS 199148 (D. Del. Nov. 26, 2018): Under the first step of the Alice framework, the court found that the asserted claims of the plaintiff’s internet chat session patent are directed to abstract ideas. “First, the claims are directed to a method of organizing human activity. Second, the claims do not recite an improvement in computer technology. Third, the claims are functional in nature; they recite what the objective of the invention is, but not how that objective is to be accomplished.” Specifically, the court found that the asserted claims “are directed to the idea of a ‘chat session’ for users of the Internet” where “the idea underlying the claims is to provide an Internet user the ability to visit a website and then form a group from among those visiting the website to conduct a ‘chat’ independent of the website.” “The novelty, according to [plaintiff], is that the invention provides for individuals who are visiting the same website to initiate private chats with one another, separate from the website that the individuals initially visited. The problem, however, is that the idea of a chat session separate from the original website is not an invention; it is a disembodied concept. The asserted claims . . . recite the concept, but not the way to implement it.” Under the second step of the Alice framework, the court found that “the asserted claims do not require any non-conventional computer or network, or even a non-conventional and non-generic arrangement of known, conventional pieces. Rather, the claims merely call for the initiation of a chat session that is separate from any previously established chat room, by use of a set of generic computer components and display devices. Thus, . . . the asserted claims in this case do not recite an inventive concept.” Finally, the court specifically addressed the appropriateness of resolving the case on a motion to dismiss in light of Berkheimer and Aatrix and concluded that “there are no factual issues that would preclude entry of judgment under Rule 12(b)(6) and no claim construction issues that would require the Court to await claim construction before determining whether the plaintiff’s claims are patent-eligible.” “Because Epic has not suggested that there is a factual issue as to whether the asserted claims are directed to something significantly more than the abstract idea itself, Epic has failed to point to a discrete factual issue on which the presence of an ‘inventive concept’ in claim 19 would turn.” As to claim construction, “The claims are straightforward and not technical in nature, and plaintiff’s counsel has not pointed to any terms from the asserted claims that would likely give rise to a material dispute over claim construction.” Thus, the court granted the defendants’ Rule 12(b)(6) motion to dismiss under Section 101.
- Coqui Technologies, LLC v. Gyft, Inc., No. 17-777, 2018 U.S. Dist. LEXIS 196169 (D. Del. Nov. 16, 2018): Under the first step of the Alice framework, the court found that the asserted claims of the plaintiff’s electronic gift certificate patent are “directed to the abstract idea of selling, gifting, and using electronic gift certificates over a network, which is a longstanding commercial practice. . . . The claims of the [patent in suit] do not improve the functioning of a computer or any of the other components involved in the method. Instead, the asserted claims add conventional computer components to well-known business practices.” Under the second step of the Alice framework, the court found that the asserted claims “implement the longstanding commercial practice of selling, gifting, and using gift certificates by using a generic computer and networking components in conventional ways.” Specifically, the court found that the components in the asserted claims “operate in their typical capacities in conventional ways and do not embody an inventive concept. The [patent in suit] does not specify precise devices that must be used in the method or provide any explanation about how the software solves a technological problem.” Further, the patent in suit “does not describe the order or combination of generic components in a non-generic arrangement, nor does it describe how the configuration of components is necessary to make the claimed method innovative. . . . The application of barcodes, MMS messages, and devices with Internet access to a system comprising generic computing components for circulating electronic gift certificates is not an inventive concept. . . . The idea that the [patent in suit] improves the electronic gift certificate process by facilitating the purchase, usage, and gifting of certificates without requiring the customer to be physically present in the store is not an inventive concept. The claims at issue here do not solve a technological problem. Instead, the claims provide a conventional technological environment (i.e. computers and the Internet) in which to carry out the abstract idea of using electronic gift certificates.” Thus, the court found that the asserted claims lacked an inventive concept, and the magistrate judge recommended that the court grant the defendants’ Rule 12(b)(6) motion to dismiss under Section 101.
- Valmont Industries Inc. v. Lindsay Corporation, No. 1:15-cv-00042, 2018 U.S. Dist. LEXIS 193867 (D. Del. Nov. 14, 2018): As a threshold matter, the court considered Berkheimer and Aatrix and “determined that no disputes of fact make resolution of the issues presented by the motion inappropriate” and noted that “both parties now agree that claim construction does not bear on the motion to dismiss.” Next, under the first step of the Alice framework, the court found that the claims at issue of the plaintiff’s irrigation system patent are directed to the abstract idea “of remotely monitoring and controlling irrigation equipment.” “Plaintiff describes how the invention allows computers to perform the same functions as in the prior art, but on a smaller screen. This data-reformatting, even if captured in the claims, is an abstract idea. . . . [A]pplying irrigation data to an ‘interactive interface limitation [remains] a generic computer element.’” Moving on to Alice step two, the court found that “The patent functions conventionally, achieving portability over the prior art through the application of a standard computer telecommunication system, processor, and display.” “Plaintiff argues that its SAC (as well as the specification) demonstrates that the patent is ‘directed to specific implementations of the claimed invention that are particular for use in remote devices and their monitoring and controlling of irrigation equipment.’ . . . This characterization finds no basis in the patent and cannot, therefore, render the claims patent eligible.” Thus, the court granted the defendants’ Rule 12(b)(6) motion to dismiss the claims at issue under Section 101.
- Secure Cam, LLC v. Tend Insights, Inc., No. 5:18-cv-02750, 2018 U.S. Dist. LEXIS 194499 (N.D. Cal. Nov. 14, 2018): The court first identified a representative claim of the plaintiff’s digital image categorizing patent for the Section 101 analysis. Next, under the first step of the Alice analysis, the court found that the claims at issue are “directed to the abstract idea of analyzing and automatically categorizing digital images. . . . [T]he Patents-in-Suit describe physical components such as a digital camera, but the physical components ‘merely provide a generic environment in which to carry out the abstract idea.’ . . . Contrary to Plaintiff’s assertions, the claims at issue do not describe a specific improvement to digital camera functionality. Rather the claims at issue describe ‘conventional or generic technology in a nascent but well-known environment.” Under the second step of the Alice analysis, the court found that the claims at issue lack an inventive concept because they “recite only generic, conventional computer components such as a processor and memory. Nothing in the claims calls for any specific kind of computer architecture, component or data structure.” Further, “[t]he analysis module also fails to provide an inventive concept because it is simply a generic component that analyzes and categorizes digital images. . . . The claimed analysis module in the patents-in-Suit is simply a substitute for the human effort it would take to analyze and categorize images.” Thus, the court granted the defendants’ Rule 12(b)(6) motion to dismiss under Section 101.