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Does Alice require fact questions or not? The Federal Circuit appears split.

Zachary Silbersher

Earlier this year, the Federal Circuit issued two precedential decisions that were predicted to stem the tide of early dismissals based upon Alice motions.  The cases were  Berkheimer v. HP and Aatrix Software v. Green Shades Software, and there were both deemed precedential by the Federal Circuit. 

 These were important cases.  IPWatchdog identified them as one of top stories of 2018.  A recent concurrence at the Federal Circuit, however, shows that the Court may be splitting over the rationale underpinning Berkheimer and Aatrix, and that split may be heading for the Supreme Court. 

In the wake of the Supreme Court’s Alice decision in 2014, district courts had increasingly dismissed patent cases at the pleading stage for running afoul of Section 101’s eligibility requirements.  This was possibly only because courts presumed that eligibility was a question of law, and that, more importantly, questions of fact need not bar bouncing the case prior to discovery.

The Berkheimer and Aatrix decisions threw that calculus into question.  As we previously discussed, the Court held that resolving whether a patent is directed to eligible subject matter may, indeed, require questions of fact that cannot be resolved at the pleading stage. 

In both Berkheimer and Aatrix, the Court confirmed that eligibility is a question of law.  Yet, the Court also held that the question of law may itself depend upon ancillary questions of fact.  The question of fact that arises the most, particularly under step two of the Supreme Court’s Alice analysis, is whether the claims are directed to something that is routine, conventional or well-understood. 

On the Aatrix panel, there was a dissent from the Honorable Jimmie V. Reyna.  Judge Reyna asserted that the majority impermissibly expanded the role of Rule 12(b)(6) in the context of a patent’s eligibility, and “[t]his contradicts our case law that patent ineligibility under § 101 is a question of law, and that it can be appropriately decided on a motion to dismiss.”    

Yet, there is a growing chorus on the Federal Circuit that shares Judge Reyna’s concerns.  A recent concurrence in an appeal of another Alice case mirrors Judge Reyna’s dissent in Aatrix.  This suggests that the Court may be splitting over whether, and to what extent, factual questions can underpin an Alice inquiry.

The case, In Re: Marco Guldenaar Holding B.V., involved an appeal from the Patent Office’s rejection of a patent application directed to playing a game of dice.  The patent application claimed a game with three dice, where the die each had different markings, and wagers were placed on which markings would appear upon a roll.  The PTAB affirmed the Examiner’s rejection of the claims for being directed to ineligible subject matter. 

The Federal Circuit affirmed the PTAB’s rejection of the pending claims.  The Court held that the markings on the dice effectively claimed information.  Accordingly, the Court held the claims were essentially printed matter, and thus, directed to ineligible subject matter.

Judge Mayer’s Concurrence

Yet, the Honorable Haldane Robert Mayer wrote separately in a concurrence to assert, “I cannot agree with the court when it states that the patent eligibility inquiry may contain underlying issues of fact.”  Judge Mayer pointed out that, “the Supreme Court has taken up four subject matter eligibility challenges in recent years, but has never once suggested that the section 101 calculus includes any factual determinations.”  (Judge Mayer cited to Alice, Myriad, Mayo and Bilski). 

Judge Mayer reasoned that, in Alice, the patent owner attempted to argue that its computer-implemented method was neither routine nor conventional, but the Supreme Court “firmly rebuffed the effort to turn the patent eligibility analysis into a factual quagmire.”  Instead, Judge Mayer found, the Supreme Court made “quick work” of the analysis after “recognition that, as a matter of basic historical fact, the use of a computer to obtain data, adjust account balances, and issue automated instructions is well-understood and routine.”  (citing Alice, citations omitted).

Judge Mayer’s concurrence fleshed out reasons why Alice inquiries should not, in his view, devolve into factual questions.  On a motion to dismiss under Section 101, the “allegations” regarding the patent are typically limited to the patent’s intrinsic evidence, namely, the claims, specification and prosecution history.  Yet, a patentee will surely include self-serving statements that the claims are not directed to something conventional or routine.  According to Judge Mayer, a patentee is unlikely to confess that that his or her claims “contain nothing new.”

 Given this, Judge Mayer asserted that the court’s role on a Section 101 inquiry cannot rely upon self-serving statements from the patentee about the appearance of an “inventive concept” (Alice step two.)  Rather, the court’s role is to look past the intrinsic evidence to determine if the patent claims “the type of discovery” (Judge Mayer quoted Parker v. Flook, 437 U.S. 584, 593 (1978)) intended to be protected by the statute’s eligibility requirement.  According to Judge Mayer, “[t]his is a pure legal inquiry.”

Is this split heading to Supreme Court?

These are interesting points, but they appear to beg more questions than they answer.  As often lamented by the patent community, the Supreme Court’s two-step Alice framework has proven very difficult for courts to figure out, given the lack of guidance on implementing the test.  Indeed, the very idea that Alice step two searches for an “inventive concept” that is somehow distinct from the novelty and non-obviousness concepts embodied in Sections 102 and 103 has proven slippery, to say the least. 

Moreover, the very point of Berkheimer and Aatrix appeared to be the recognition that district courts were assessing whether particular features of an invention were conventional, routine or well-understood.  In other words, if Alice step two requires searching for an “inventive concept,” but that determination devolves into an ancillary determination whether the technology was “routine, conventional or well-understood,” than under what circumstances is a district court positioned to answer that question without the benefit of discovery or expert opinion? 

Put another way, Judge Mayer’s concurrence does not appear address why questions that would otherwise require expert testimony in the context of obviousness —i.e., whether a particular technology was routine, conventional or well-understood—can be resolved by a district court without the benefit of expert opinion in the context of eligibility. 

Judge Mayer takes recourse to policy to undergird his analysis.  He concludes that because patent disputes are “notoriously time-consuming and costly,” courts need a mechanism to side-step costly discovery and litigation.  Without an expedient Alice framework that can allow Judges to side-step traditionally factual questions, Alice will become a “dead letter” that is “so cumbersome and time-consuming that it will cease to function as an expeditious tool for weeding out patents clearly lacking any inventive concept.”

It is not clear that Congress ever intended Section 101 to be such an expeditious tool for weeding out patents previously allowed by the Patent Office, and for which the Patent Office has previously collected maintenance fees. 

One of the more notable aspects of Judge Mayer’s concurrence is the assertion that Berkheimer “deviated from precedent” when it concluded that issues of material fact can stand in the way of an eligibility determination.  That suggests a growing split within the Federal Circuit over an emerging battleground over Section 101 jurisprudence—can Alice inquiries depend upon factual inquiries? 

The stakes of the answer to that question are high because the answer speaks to whether Alice can continue to be used to “weed out” patent cases early and quickly, as suggested by Judge Mayer.  That is the type of question that the Supreme Court may just have the interest taking up.