The Facts in the “Abstract”


“We demand rigidly defined areas of doubt and uncertainty!”

—Douglas Adams, Hitchhiker’s Guide to the Galaxy

 

It seems that Douglas Adams has a great many fans in the universe of IP law. While he almost certainly didn’t have patent issues in mind while penning his cult classic, he was nevertheless prophetic of our current situation.  In 2014, the Supreme Court issued its landmark Alice decision, which had the effect of significantly raising the bar for “patent eligibility.” The opinion has had a particularly adverse effect on so-called “software” enabled patents; the buzz being that the very concept of “software” patents is now dead. As a general proposition, that statement is simply wrong. However, it is true that many software patents—primarily those issued before the days of Alice—are now being invalidated for claiming only “abstract” ideas.

But what exactly does it mean to be “abstract”? Because of the amorphous state of patent “eligibility” standards, the decisions invalidating “abstract” patents largely lack consistency or predictability. I have listened to numerous District and Appellate Judges as well as new USPTO director Adrei Iancu suggest, or say outright, that the current standards for defining an “abstract idea” are a virtual black hole. I completely agree.

Despite the doubt and uncertainty behind the ultimate question of whether a claimed invention is “abstract or not,” there has been a reasonable certainty during patent litigation that the issue will be raised, and likely decided, by a judge relatively early in a case. For example, from the date of the Alice case through the first quarter of 2017 there were approximately 270 patent eligibility decisions that stemmed from early Motions to Dismiss or Motions for Judgment on the Pleadings compared to only about 100 decisions from Motions for Summary Judgment. Those stats tell us that judges have been ready and willing to take up the patent eligibility question at the outset.  However, even that consistency may be changing.

A recent pair of Federal Circuit decisions have ruled that, at least in some cases, patent eligibility under Alice may involve questions of fact for a jury to decide. In Berkheimer v. HP, Inc., the Federal Circuit held that one of the central components of the “abstract” inquiry – “whether a claim element or combination of elements is well-understood, routine and conventional” – is a fact question that a patent challenger must prove by “clear and convincing” evidence. This is the same standard used to invalidate patents on any other ground, such as whether the patent is obvious. Those questions, with very rare exception, go to a jury. At the same time, however, the Berkheimer court emphasized that there are plenty of times when “abstractness” can be decided as a matter of law. Even under the particular facts of Berkheimer, the court found some patent claims summarily ineligible, while other claims of the same patent were held to present factual issues that should have gone to a jury.

Similarly, the Federal Circuit decided in Aatrix Software, Inc. v. Green Shades Software, Inc. that a plaintiff’s initial complaint could raise fact issues that, when accepted as true, might preclude finding a patent ineligible at the early pleading stages. This means that in some cases the eligibility issue must be decided either at summary judgement or by a jury.

To summarize, the determination of whether a patent is invalid because it is too “abstract” could be decided in an early motion to dismiss, during summary judgement, during trial, or perhaps even after trial. But in some cases, it is error to decide the issue early in a motion to dismiss.  And in other cases, it is error to decide the issue during summary judgment. Make sense?

Although only a couple months old, these decisions are already disrupting the relative order of patent litigation. As a patent holder, “is there anything that can be done at the outset to dissuade an Alice motion?” As a defendant, “should we now wait to file our Alice motion?” As a judge, “should I defer to a jury to avoid a reversal under this new precedent?” The answers to these, and other, questions are shifting in ways that require more deep thought and strategy while offering less certainty of the outcome.

Challenges to patent eligibility through Alice motions will continue to be a hallmark of patent litigation for the foreseeable future. However, decisions tackling this issue are released weekly, and as the stats so far show, there appears to be a relative inertia to district courts identifying issues of “fact” in questions of the “abstract.” Since Berkheimer and Aatrix, and as of the date of this article, 15 decisions have tackled whether “fact issues” barred deciding the eligibility questions in the early stages of a case or at summary judgment. But only five of those decisions have found that fact issues precluded an early ruling. Thus, while the procedural law of patent eligibility begins its descent into the same void as the substantive law, as Douglas Adams would say, “don’t panic.” At least not yet.


Meet Matt

Matt C. Acosta is an experienced intellectual property and patent litigation attorney. Matt advises clients on a variety of commercial issues, including effective management of e-discovery costs, developing practical expert witness strategies, and navigating the practices of Federal Courts. Though based in Texas, Matt has litigated intellectual property cases throughout the country and has argued before the Judicial Panel on Multi-District Litigation. He is a graduate of the University of Texas and Baylor Law School.