“Conventionality” under Mayo-Alice... a True Question of Fact?

Here is a New Year’s resolution for the US Court of Appeals for the Federal Circuit: pick a standard, any standard for Section 101’s doctrinal exclusions and then stick to it.

The year of 2018 started out with a bit of promise for Section 101’s doctrinal exclusions to eligibility with the issuance of Berkheimer v. HP, Case No.: 2017-1437 (Fed. Cir. Feb. 08, 2018). One will recall that in Berkheimer the three-judge panel (consisting of J. Taranto, J. Stoll and J. Moore) affirmed in-part the §101 ineligibility findings of the district court. Some claims were determined ineligible under Mayo-Alice while others were improperly dismissed on summary judgment considering there was a genuine issue of material fact as to the conventional nature of a storage limitation in the claims. The Berkheimer panel (in)famously reasoned that “whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact.”

One might have been tempted to cast Berkheimer into the Sea of Just Another “Erratic” §101 Decision from the Court of Appeals Post-Mayo-Alice but the significance of the Berkheimer decision was amplified when: (a) the entire bench – save Judge Reyna and senior status judges not participating – denied rehearing of Berkheimer en banc (with at least five judges endorsing Berkheimer’s hold); (b) the post-Berkheimer invalidity rate at district courts reached an all-time low of 48.4% (down from 72.1%); and (c) the US Patent Office changed its examining practices to align with the Berkheimer decision. See #AliceStorm: August 2018 Update, https://www.bilskiblog.com/2018/08/alicestorm-august-2018-update/ (August 13, 2018); and U.S. Patent and Trademark Office Subject Matter Eligibility, https://www.uspto.gov/patent/laws-and-regulations/examination-policy/subject-matter-eligibility. The PTO’s guidelines now require examiners to “expressly support[] a rejection in writing with one or more of… [1] an expressed statement in the specification or [] a statement made by an applicant… [2] a citation to one or more of the court decisions discussed in MPEP §2106.05(d)(II)… [3] a publication… [or] [4] official notice…” (emphasis given). Factual support demonstrating genericness is arguably a prudent practice, e.g., trademark cases often require proof of the genericness of terms in the context of challenging a mark. Real Foods v. Frito-Lay, Case Nos: 2017-1959 & -2009 (Fed. Cir. Oct. 4, 2018 *public opinion)). That which is or is not conventional or generic appears to be a fact-driven question; one would expect the requirement of factual support to challenge a patent’s validity.

Contradiction comes, however, in that various panels on the Court of Appeals have continued to affirm even Rule 12 dismissals – where the complaint’s allegations are supposed to be taken as true – with scant or no reference to the factual record. See SAP America, Case No.: 2017-2081 (*modified August 2, 2018)(panel consisting of J. Lourie, J. Taranto and J. O’Malley, where the panel found the abstract concepts were not sufficiently transformed because the additional limitations either related to “abstract” mathematical techniques or statements in the specification were arguably unduly stretched into admissions on genericness); Data Engine Techs, Case No: 2017-1135 (October 9, 2018)(panel consisting of J. Reyna, J. Bryson and J. Stoll, where the Rule 12 dismissal of three patents was affirmed in large part because the limitations “merely recite[d] [a] method of implementing [or applying] the abstract idea itself…” without reference to any factual record); and Interval Licensing, Case Nos: 2016-2502, -2505, 2506 & -2507 (July 20, 2018)(panel consisting of J. Taranto, J. Plager in-part and J. Chen, where it was reasoned that the abstract concept was merely placed in the context of a computer while admittedly referring to the “specification and claims… purport[ing] to describe an improved user experience…” still finding conventionality as “the patent [was] wholly devoid of any details which describe[d] how this [was] accomplished” without a §112 analysis.); but see BSG Tech, Case No.: 2017-1980 (August 15, 2018)(panel consisting of J. Reyna, J. Wallach and J. Hughes, where the district court properly converted the motion to dismiss into one for summary judgment so as to consider evidence outside of the pleadings) and Voter Verified, Case No.: 2017-1930 (April 20, 2018)(panel consisting of J. Newman, J. Lourie and J. Reyna, where the panel cited as much factual support as party admissions, the patent specification and the US Constitution (on voting activities) to establish the conventionality of the claimed features).

Contention with treating §101 as a mixed question of law and fact is highlighted by a recent Court of Appeals panel affirming the PTO’s rejection of claims as ineligible under §101 for a method of playing a dice game. In re: Marco Guldenaar Holding, Case No.: 2017-2465 (Fed. Cir. Dec. 28, 2018)(panel consisting of J. Chen, J. Mayer and J. Bryson). Under step 1 of Alice, the claims were determined to be directed to the abstract concept of “a method of exchanging and resolving financial obligations based on probabilities created during the distribution of the cards [as in Smith, or roll of the die as in this case.]” The claims regarded the use of special die that had a repeating surface on several sides of some of the die. The Court found that the “information” on the die was printed matter, “directed to the content of information and lacking a requisite functional relationship,” therefore the information that made the die unique was not entitled to patentable weight. Under step 2, not surprisingly, nothing was inventive enough to “transform” the claimed subject matter into patent-eligible subject matter.

Notably, Senior J. Mayer concurred, vehemently taking issue with Berkheimer’s hold. (“[T]he 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.… To the contrary, the Court has uniformly treated subject matter eligibility as a question of law.”). J. Mayer did not participate in the en banc vote on Berkheimer, still, the continued frequency of scantly supported Rule 12 decisions after Berkheimer suggests that more than J. Mayer disagrees with a requirement that conventionality/genericness be established with factual proofs. See e.g., SAP America, Data Engine Tech and Interval Licensing.

Accordingly, patent practitioners are left to question: (1) how committed is the Court of Appeals to treating conventionality and genericness under step 2 of Mayo-Alice as a factual question; and (2) how much factual support is necessary to demonstrate that a claim limitation cannot plausibly be unconventional or non-generic on Rule 12?

One can only wait to see what the 2019 New Year will hold. Happy New Year everyone!