Rently Asks Full Federal Circuit to Rehear Lockbox Patent Eligibility Case

Last week, Consumer 2.0, Inc. d/b/a Rently filed a combined petition for panel rehearing and rehearing en banc asking the U.S. Court of Appeals for the Federal Circuit (CAFC) to review its recent Rule 36 judgment affirming a decision of the United States District Court for the Eastern District of Virginia that Rently’s patent claims were ineligible. The district court found the claims, which were directed to “the use of lockboxes able to recognize time-limited codes and coordination of those codes with software to facilitate secure automated entry”, ineligible for patent protection under 35 U.S.C. § 101.

Rently argued in its petition for rehearing that the CAFC’s decision was contrary to the precedent of the Supreme Court and the CAFC. Further, Rently noted that the case raised multiple issues that required en banc review, including whether unconventionality alone is sufficient to satisfy the inventive concept requirement under Section 101, whether the determination of unconventionality is one of law or fact, and whether a court is permitted to conduct a quasi-Section 103 analysis of obviousness without the protections against hindsight bias.

The petition cast “Section 101 and its interpretation by the Courts over the last six years” as “the most turbulent and impactful legal development in patent law in modern history.” It continued:

While the doctrine against preemptively patenting abstract concepts without the “how to” has been a positive development, Alice’s application has also resulted in the invalidation of patents directed to real innovation and has disproportionately hurt individual inventors and start-ups, particularly in the realm of software and IT.

Claim Construction and Allegations of Unconventionality

Initially, Rently noted that CAFC precedent dictates that “in deciding whether a patent survives a § 101 challenge at the pleading stage, courts must construe claim terms in the light most favorable to the patentee, and must accept all well-pled allegations of unconventionality.”  Rently explained that its complaint before the district court proposed a specific claim construction for the asserted claim of U.S. Patent No. 9,875,590 (“the ’590 patent”), wherein the claim required an application that provides a time-limited code that is coordinated with a lockbox capable of recognizing the code and opening in response to the time-limited code. Citing Aatrix Software v. Green Shades Software, Rently noted that since the claim construction dispute “arose during the pleading stage, the district court was required to adopt Rently’s construction…, or must have resolved the disputes to whatever extent was needed to conduct the § 101 analysis.” Since neither the district court nor the CAFC provided discussion regarding claim construction, Rently asserted that the claim construction dispute was “seemingly overlooked or misapprehended warranting rehearing.”

Rently also argued that its Amended Complaint contained “well-pled allegations of unconventionality” that were misapprehended. In particular, the Amended Complaint described the benefits of the patented “dynamic, non-static durational code” lockboxes versus “generic” lockboxes that were prevalent at the time of the patent. Noting that there was nothing in the record to contradict these “well-pled allegations”, Rently explained that Federal Circuit precedent required, absent evidence in the specification to the contrary, such plausible allegations be accepted as true for purposes of deciding a motion to dismiss. Thus, Rently asserted that since the district court did not accept its pleadings as true, which it was obligated to do, rehearing is warranted.

Unconventional, But Not “Unknown Enough”

In addition, Rently argued that the “inventive concept” requirement of Section 101 requires the claimed invention to be unconventional, but “does not and should not incorporate a § 103 obviousness test.”  Rently reasoned that, since the district court was obligated to accept its allegations that the ’590 patent claimed an unconventional method, the CAFC’s affirmance of the district court’s findings indicates that it “applied a quasi-103 analysis” to step two of the framework set forth by the Supreme Court in  Alice.

According to the petition, the CAFC determined that “while unconventional, the claimed invention was not unknown enough” to convey an inventive concept under step two of Alice. Rently noted that such a determination “improperly conflates section 101 and 103 analyses…in a way that permits obviousness to be considered in a 101 analysis without any protection against hindsight bias, required showing of motivations to combine, or secondary considerations.” Citing Berkheimer v. HP Inc., Rently reasoned that the’590 patent claims an unconventional method with an unconventional lockbox, as accepted by the CAFC, which “is all that is required to survive a motion to dismiss under § 101.”  Thus, Rently concluded that an investigation into “how unknown” a claimed unconventional invention is would require a 103 analysis, rather than a 101 analysis.

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Author: 72soul