Who doesn’t remember the warning in Alice about applying the “abstractness” exclusion of Section 101? “[T]read carefully in construing this exclusionary principle lest it swallow all of patent law.” (Id. at 2354).
Many district courts apparently failed to read that part of the Court’s decision. Instead, they have interpreted Alice as authorizing invalidation of issued patents as “abstract” based solely on the pleadings. They have done so even where the invalidation rests on resolution of a disputed issue of fact or of claim construction or scope.
This practice is swallowing inventors whole. And, although this over-reading of Alice has been widely criticized, it has often been abetted by the Federal Circuit.
A quick look at the statistics bears this out. Of 87 Federal Circuit affirmances of ineligibility, in 55 of them, the lower court had invalidated the patents on the pleadings alone. Of those 55 Federal Circuit affirmances of “pleadings invalidations,” 35 of them were done summarily using Federal Circuit Rule 36: decision “affirmed.” If that’s not unsettling enough, out of all the appeals of “pleadings dismissals” since Alice, the Federal Circuit has only reversed five.
I write today to ask for your support in the effort to turn back the tide that is drowning patents and companies. Inventors and American innovation across the US are shouldering the results of this ongoing misapplication of Section 101.
These “pleading invalidations” have resulted in the cancellation of hundreds of valuable patents—each one a vested private property right. They allowed the patent-holder no opportunity for fact-finding, claim-construction briefing, or any other of the protections usually afforded them in litigation on issued patents.
As former Federal Circuit Chief Judge Paul Michel pointed out to the U.S. Congress in testimony this past July and again this past month, this misunderstanding of Mayo and Alice has placed virtually every inventor and patent holder at risk, while dramatically reducing the incentives and capital for innovation throughout the nation.
In short, since Alice, the Federal Circuit has done nothing to clear up the district courts’ confusion, but instead has affirmed pleading invalidations more than 90 percent of the time.
Nothing in Alice, or Mayo for that matter, authorized these “pleadings invalidations.” Whether you agree with the decisions or not, both Alice and Mayo, were decided on summary judgment. In Mayo, the Court observed that “at some level all inventions … embody, use, reflect, rest upon, or apply … abstract ideas.” Mayo, 566 U.S. at 71.
If that is the case, where do we draw the line for an innovation “too abstract for patenting”? Is that line something a generalist trial judge should be empowered to determine? Even if an invention is built on an abstract idea, “application[s]’ of such concepts ‘to a new and useful end’ … remain eligible for patent protection.” Id. (emphasis added) (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972) (emphasis added). Who is the best suited to make the determination? It’s difficult to imagine that should be the generalist judge. Why not one of skill in the art? Why not an expert in the field? At the very least, this question is replete with underlying factual determinations that are being swept under the rug.
This week, my client Evolutionary Intelligence LLC filed a petition for certiorari at the U.S. Supreme Court setting forth these questions. However, for the Court to understand the gravity of the situation, Evolutionary Intelligence needs the help of amici.
If you or your organization is shouldering the weight of a misapplication of Section 101, or if you can foresee how this trend could affect you in the future, please join our fight. We are seeking amicus support on the following issues:
- Do recent “pleading dismissals” and “pleadings judgments” of patent ineligibility under Section 101 grounds undermine the principle that patent rights are property rights, entitled to the same respect as other property rights?
- The district courts’ and the Federal Circuits’ use of Alice and Mayo to deny fact finding in a Section 101 analysis: Like PTAB trials (as in the Oil States case), does this also result in a denial of a jury trial under the 7th Amendment or at least a violation of the Federal Rules of Civil Procedure on the difference between dismissal and summary judgment?
- The presumption of validity under Section 282 of the Patent Act: Does it apply in the Section 101 context, and should it?
- Whether and when there is a requirement for claim construction or analysis of claim scope in the Section 101 context, especially when Alice requires a court to determine “what the claims are directed to.” And, is the settled claim construction process being adequately addressed when the court rules on a Section 101 motion at the pleadings stage?
- District court deference to a PTAB final written decision (under AIA, APA). How should the district court treat underlying factual determinations necessarily made by the PTAB in resolving validity issues presented to it? This issue is especially important when a patent, or claims of a patent, survive the PTAB and are back at the district court (as in our case). Don’t those underlying factual determinations mean anything?
Additional information, including Evolutionary Intelligence’s certiorari petition, filed on Monday, October 23, 2017, can be found here: http://www.businessdenovo.com/?p=346. Amicus briefs would be due sometime on or after November 22, 2017.
 Amdocs (Israel Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir. 2016); Bascom Glob. Inernet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d1341 (Fed. Cir. 2016); McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016); Thales Visionix Inc. v. United States, 860 F.3d 1343 (Fed. Cir. 2017); Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253 (Fed. Cir. 2017). Two Fed. Cir. opinions reversed district court summary judgment findings. Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016); Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042 (Fed. Cir. 2016). Two Federal Circuit opinions affirmed denial of JMOL. DDR Holdings, LLC v. Hotels.com L.C., 773 F.3d 1245 (Fed. Cir. 2014); Trading Techs. Int’l, Inc. v. CQG, Inc., 675 F. App’x 101 (Fed. Cir. 2017)