When the Federal Circuit granted en banc review of Alice in 2013, the Court asked the parties and amici curiaefor assistance in developing a test to determine whether a computer-implemented invention is patent-eligible or whether these inventions merely recite abstract ideas ineligible for protection. The Federal Circuit had been struggling to provide guidance on what constitutes a patent-eligible invention and needed an objective test that lower courts could more easily and consistently apply. But, what resulted was seven opinions and zero precedents. With the impossibility of circuit splits, due to the Federal Circuit having jurisdiction over all patent appeals, Certiorari was close to inevitable.

 

35 U.S.C. § 101 provides that a patent may be obtained for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” But the Supreme Court has created several exceptions to § 101—namely laws of nature, natural phenomena, and abstract ideas. One reason, at least, underlying the Court’s carve out of these categories is inappropriate preemption. For example, with regard to abstract ideas, the Court has expressed concerns that a patent covering only an abstract idea will preempt use of that fundamental idea across all categories, given that patents provide a legally-enforceable monopoly likely to stifle innovation.

 

In 2012, the Supreme Court in Mayo established a framework to distinguish patents directed to laws of nature, natural phenomena, and abstract ideas from those that recite patent-eligible applications of the concepts. Two years after Mayo, the Supreme Court built upon that framework when deciding Alice. The resulting two-part Alice/Mayo test is: (1) determine whether the claims at issue are directed to a patent-ineligible concept and (2) search for an “inventive concept” that amounts to significantly more than a patent upon the ineligible concept itself. The test quickly became an effective weapon for alleged infringers—axing hundreds of patents. In the first four years after Alice, over 810 district court decisions considered the issue of patent eligibility under § 101. Of those 810 cases, 480 found claims ineligible under § 101. Of those 480 district court invalidations, 355 resulted from early-stage F.R.C.P. 12(b)(6) and 12(c) motions, and only 122 were appealed. Why were only 25% of the cases with claims found ineligible appealed? Most likely because during that time over 90% of the patent ineligibility cases appealed to the Federal Circuit were affirmed, the majority of them with a “rule 36 affirmance.” That is, an opinion which summarily affirms the decision of the district court without further explanation.

 

In Berkheimer, the Federal Circuit held that whether a patent claim performs a well-understood, routine, and conventional activity to a person skilled in the art is an issue of fact. Thus, where a case presents an evidentiary dispute on this issue, summary judgment is inappropriate. So why could Berkheimerbeimportant? Aside from being the first § 101 determination of invalidity by a district court to be reversed or vacated by the Federal Circuit based on a disputed factual issue, Berkheimeris an open slate for the Supreme Court to potentially set out a new test for § 101. The question presented to the Court oncertiorarifocuses on the issues of § 101 patent eligibility and how courts should handle motions to dismiss patent infringement claims.

 

Members of the Federal Circuit have made it clear that they would like some guidance from the Supreme Court. Similar to the en bancopinions in Alice, Judge Moore’s opinion concurring with an order denying en bancrehearing was joined by only four of the twelve active Federal Circuit judges. Judge Lourie, joined by Judge Newman, also concurred, but for different reasons. Judge Reyna dissented. And the last four judges did not join any concurrence or dissent with no indication of how they voted on the petitions. This is a strong suggestion that going forward decisions could be panel-dependent—the Federal Circuit equivalent to circuit splits—and the Supreme Court needs to grant certiorarito give clear guidance going forward.

 

Furthermore, Berkheimeris already stirring things up at the Patent and Trademark Office (PTO), which has issued new guidance to patent examiners. As described in Enfish v. Microsoft Corp—in the absence of any definition for “abstract idea”—courts have determined eligibility by comparing patent claims to those previously determined to be ineligible. However, as the number of decisions grows, the scope and inconsistency of those decisions has made it increasingly more difficult for examiners to apply the concept in a predictable way. The new guidance emphasizes that any conclusion as to whether a claim is directed to well-understood, routine, conventional activity must be based on factual determinations and documented in writing.

 

But what would a Berkheimer decision entail? A recent Supreme Court decision, Henry Schein, Inc. v. Archer & White Sales, Inc., could provide some insight. In Henry Schein, Justice Kavanaugh’s opinion for a unanimous court shot down an exception in an FAA provision, explaining that “[t]he short answer is that the Act contains no [such] exception, and we may not engraft our own exceptions onto the statutory text.” Applying similar logic to patent law would strip § 101 analysis of its exceptions. What could this mean for Berkheimer? For starters, this would remove the need for an Alice/Mayo test, make the new PTO guidance irrelevant, and place the decisions back—where Judge Lourie believes they belong—in the hands of legislators, who are already working to rewrite the law defining patent eligibility. Alternatively, with this renewed energy behind § 101 legislation, the Supreme Court might decide to give Congress more time to thresh out the details.

 

Another option is that the Supreme Court might pick the ball up and run with it. Looking upstream at the difficulties the district courts are having, and the inconsistent results being reached at the Federal Circuit, the Supreme Court might find the Berkheimer ruling a necessary evil. The Alice/Mayo support stemming from the technology industry is due to a steady decline in patent infringement suits since the test was implemented. As I mentioned supra, in the first four years of Alice/Mayo, 60% of district court decisions on patent eligibility found claims ineligible, with a 90% affirmance rate at the Federal Circuit. Section 101 has proven a good deterrent for reigning in unfounded litigation from patent trolls based on weak patents and has been celebrated for its protection of innovation because these suits could be ended at the pleading stage almost 75% of the time.

 

Unfortunately, trolls are not the only patent holders affected. Affirming the guidance set out by the Federal Circuit in Berkheimercould provide an effective way to separate the patent trolls from the legitimate patentees. The strength in a troll patent is in its broad, all-encompassing claim language, allowing them to initiate extortion-like suits against companies, using the fear of potentially business-closing damages to force settlement. But the strength in the Berkheimerpatent was not in the broad independent claims—which were found ineligible—but in the narrower dependent claims that captured the purported improvements of the invention from the specification. Therefore, the second holding in Berkheimer, that broad independent claims are not always representative of the dependent claims, could be a strong step forward in alleviating Alice/Mayo collateral damage, and restoring eligibility to legitimate patentees.