Friday, June 21, 2013

CAFC discusses 101 post-Myriad

from Ultramercial v. Hulu and WildTangent

Ultramercial sued Hulu, LLC (“Hulu”), YouTube, LLC
(“YouTube”), and WildTangent, Inc. (“WildTangent”),
alleging infringement of the ’545 patent. Hulu and
YouTube have been dismissed from the case. WildTangent
moved to dismiss for failure to state a claim, arguing
that the ’545 patent did not claim patent-eligible subject
matter. The district court granted WildTangent’s preanswer
motion to dismiss under Rule 12(b)(6). Ultramercial
appeals. This court has jurisdiction under 28 U.S.C.
§ 1295(a)(1).

The CAFC observed:

First, it will be rare that a patent infringement suit
can be dismissed at the pleading stage for lack of patentable
subject matter. This is so because every issued
patent is presumed to have been issued properly, absent
clear and convincing evidence to the contrary. See, e.g.,
CLS Bank Int’l v. Alice Corp., __ F.3d __, 2013 WL
1920941, *33 (Fed. Cir. May 10, 2013) (Chief Judge Rader,
and Judges Linn, Moore, and O’Malley, concluding
that “any attack on an issued patent based on a challenge
to the eligibility of the subject matter must be proven by
clear and convincing evidence,” and Judges Lourie, Dyk,
Prost, Reyna, and Wallach, concluding that a statutory
presumption of validity applies when § 101 is raised as a
basis for invalidity in district court proceedings.).


Thus, the only plausible reading of the patent must be
that there is clear and convincing evidence of ineligibility.
For those reasons, Rule 12(b)(6) dismissal for lack of
eligible subject matter will be the exception, not the rule.

Second, as is shown more fully below, the analysis
under § 101, while ultimately a legal determination, is
rife with underlying factual issues. For example, while
members of this court have used varying formulations for
the precise test, there is no doubt the § 101 inquiry requires
a search for limitations in the claims that narrow
or tie the claims to specific applications of an otherwise
abstract concept.


Third, and in part because of the factual issues involved,
claim construction normally will be required. This
court has never set forth a bright line rule requiring
district courts to construe claims before determining
subject matter eligibility. Indeed, because eligibility is a
“coarse” gauge of the suitability of broad subject matter
categories for patent protection, Research Corp. Techs.,
Inc. v. Microsoft Corp., 627 F.3d 859, 869 (Fed. Cir. 2010),
claim construction may not always be necessary for a
§ 101 analysis. See, e.g., Bilski v. Kappos, 130 S. Ct. 3218,
3231 (2010) (finding subject matter ineligible for patent
protection without claim construction); CLS Bank, __ F.3d
__, 2013 WL 1920941 (court decided eligibility of subject
matter without formal claim construction).


Finally, fourth, the question of eligible subject matter
must be determined on a claim-by-claim basis. Construing
every asserted claim and then conducting a § 101
analysis may not be a wise use of judicial resources.
With these thoughts in mind, the court turns to the
question of whether the court correctly dismissed the suit
under § 101.

Note the warning:

The Supreme Court repeatedly has cautioned against
conflating the analysis of the conditions of patentability in
the Patent Act with inquiries into patent eligibility. See
Diehr, 450 U.S. at 190 (“The question therefore of whether
a particular invention is novel is wholly apart from
whether the invention falls into a category of statutory
subject matter.” (internal quotation marks omitted)); see
also Prometheus, 132 S. Ct. at 1304 (recognizing that “to
shift the patent-eligibility inquiry entirely to [§§ 102, 103,
and 112] risks creating significantly greater legal uncertainty,
while assuming that those sections can do work
that they are not equipped to do”).


The district court did not construe the claims in accordance
with this court’s precedent. Instead, it held that
there was no “reasonable construction” that would “bring
the patent within patentable subject matter.” A. 6. The
district court erred in requiring the patentee to come
forward with a construction that would show the claims
were eligible. That is presumed. In this procedural
posture, the district court should either have construed
the claims in accordance with Markman, required the
defendant to establish that the only plausible construction
was one that, by clear and convincing evidence rendered
the subject matter ineligible (with no factual inquiries), or
adopted a construction most favorable to the patentee.
For purposes of this appeal, this court adopts the latter
approach. It may be that formal claim construction will
still be required to determine the merits of eligibility.

Bottom line:

In sum, as a practical application of the general concept
of advertising as currency and an improvement to
prior art technology, the claimed invention is not “so
manifestly abstract as to override the statutory language
of section 101.” Research Corp., 627 F.3d at 869. Accordingly,
this court reverses the district court’s dismissal of
Ultramercial’s patent claims for lack of subject matter
eligibility and remands for further proceedings. This
decision does not opine at all on the patentability of the
claimed invention under the substantive criteria set forth
in §§ 102, 103, and 112.

But note the concurring opinion text:

It is our obligation to attempt to follow
the Supreme Court’s guidance in Mayo rather than to set
forth our own independent views, however valid we may
consider them to be.
Indeed, this appeal was specifically
vacated by the Supreme Court and remanded for further
consideration in light of Mayo. WildTangent, Inc. v.
Ultramercial, LLC, 132 S.Ct. 2431 (2012).


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