CAFC addresses 101 issues in "Voter Verified" case from ND FL

Voter Verified, Inc. (“Voter Verified”) appeals from the
United States District Court for the Northern District of
Florida’s dismissal under Fed. R. Civ. P. 12(b)(6) of its
claim for patent infringement, holding that the claims of
U.S. Reissue Patent RE40,449 (“the ’449 patent”) are
directed to patent-ineligible subject matter and are thus
invalid under 35 U.S.C. § 101. See Voter Verified, Inc. v.
Election Sys. & Software LLC, No. 1:16-cv-267, 2017 WL
3688148, at *2 (N.D. Fla. Mar. 21, 2017) (“Voter Verified
NDFL”). For the reasons that follow, we affirm.



There was an issue preclusion matter in the history of the case:


The district court granted Election Systems’s motion
to dismiss. See Voter Verified NDFL, 2017 WL 3688148,
at *2. The court concluded that the “two-step analysis”
recited in Alice Corp. v. CLS Bank International, 134 S.
Ct. 2347 (2014), constituted a “substantial change” in the
law such that “the issue of patent validity is not precluded
from further litigation.” Voter Verified NDFL, 2017 WL
3688148, at *1–2. The district court therefore did not
reach an issue preclusion analysis under Eleventh Circuit
law. The court then proceeded to analyze the claims of
the ’449 patent under the two-step § 101 framework.
First, the court determined that the patent was based on
the abstract idea of “vote collection and verification.” Id.
at *2. Second, the court determined that the voting
system was made up of “generic computer components
performing generic computer functions,” and that this was
insufficient to transform the abstract idea into patenteligible
subject matter. Id. As a result, the court held
that all the claims of the ’449 patent were directed to
patent-ineligible subject matter and thus invalid under
§ 101. Id.



Of issue preclusion:


Before we reach the merits of the § 101 issue, we must
first determine whether the district court properly concluded
that the § 101 judgment from the prior litigation
does not have preclusive effect in this case for the reason
that Alice was an intervening change in the law. See
Wright et al., 18 Fed. Prac. & Proc. Juris. § 4425 (3d ed.)
(“Preclusion is most readily defeated by specific Supreme
Court overruling of precedent relied upon in reaching the
first decision.”); see also Dow Chem. Co. v. Nova Chems.
Corp. (Can.), 803 F.3d 620, 628–29 (Fed. Cir. 2015);
Wilson v. Turnage, 791 F.2d 151, 157 (Fed. Cir. 1986)

(...)

The district court held that Alice was a “substantial
change” in the law such that issue preclusion does not
apply here. See Voter Verified NDFL, 2017 WL 3688148,
at *1. On appeal, Voter Verified argues that issue preclusion
should apply because there was no change in the law,
and Alice merely applied a rule from Bilski v. Kappos, 561
U.S. 593 (2010), which it states was the controlling law at
the time the district court in the prior litigation entered
summary judgment on the § 101 issue. Election Systems
counters that there was a change in the law, because “the
two-step analysis [was] established in Mayo and further
refined in Alice.” Appellee’s Br. 23; see also Oral Arg. at
23:34–25:25, Voter Verified, Inc. v. Election Sys. & Software
LLC, No. 17-1930 (Fed. Cir. Feb. 9, 2018),
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
17-1930.mp3.

We agree with Voter Verified to the extent that it argues
that Alice was not an intervening change in the law,
so that it does not exempt a potential application of issue
preclusion. However, we ultimately conclude for the
reasons that follow that issue preclusion does not apply in
this case.



Note:


We agree with Election Systems on both points. First,
the § 101 issue was not actually litigated. It was in fact
barely considered. The district court disposed of the § 101
issue when Election Systems chose not to respond. From
the court’s opinion, it appears, as Election Systems has
argued, that the § 101 issue was never “actually litigated,”
because the court did not evaluate that question. See
Restatement (Second) of Judgments § 27, cmt. e (1982)
(“A judgment is not conclusive in a subsequent action as
to issues which might have been but were not litigated
and determined in the prior action.”).
Second, the § 101 issue of invalidity was not necessary
to the judgment in the first district court action. Whether
issues of invalidity are critical or necessary to a judgment
holding that a defendant is not liable for infringement is
an aspect that is “special or unique” to patent cases.

(...)

We therefore conclude that issue preclusion does not
apply in this case, not because there was a change in law
as the district court held, but because the issue of patent
eligibility under § 101 was not actually litigated and it
was not necessary to the judgment rendered.



As to 101:



In response, Election Systems argues that the claims
are directed to the abstract idea of “voting and checking
the accuracy of a paper election ballot.” Appellee’s Br. 30.
Furthermore, Election Systems contends that this represents
only a well-established human activity. Because the
patent only discloses use of general purpose computers,
Election Systems argues that this is nothing more than
automating a fundamental human activity, which is
insufficient to transform the claimed abstract idea into
patent-eligible subject matter under step two.

(...) [The CAFC noted:]

First, the claims as a whole are drawn to the concept
of voting, verifying the vote, and submitting the vote for
tabulation. Humans have performed this fundamental
activity that forms the basis of our democracy for hundreds
of years. See ’449 patent col. 2 ll. 62–66 (stating
that the “voting process is ultimately founded upon the
law which governs elections”); see also U.S. Const. art. I,
§ 1, cl. 1 (1789) (conveying a right in the “People of the
several States” to vote). Even Voter Verified characterized
these steps as “human cognitive actions.” Appellant’s
Br. 11. These steps are therefore nothing more than
abstract ideas. Cf. CyberSource Corp. v. Retail Decisions,
Inc., 654 F.3d 1366, 1373 (Fed. Cir. 2011) (“[M]ethods
which can be performed entirely in the human mind are
the types of methods that embody the ‘basic tools of
scientific and technological work’ that are free to all men
and reserved exclusively to none.” (quoting Gottschalk v.
Benson, 409 U.S. 63, 67 (1972))).
Second, there is no inventive concept in the claims
sufficient to transform them into patent-eligible subject
matter.