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Berkheimer v. HP Inc.

United States Court of Appeals, Federal Circuit

May 31, 2018

STEVEN E. BERKHEIMER, Plaintiff-Appellant
v.
HP INC., FKA HEWLETT-PACKARD COMPANY, Defendant-Appellee

          Appeal from the United States District Court for the Northern District of Illinois in No. 1:12-cv-09023, Judge John Z. Lee.

          James P. Hanrath, Much Shelist, PC, Chicago, IL, filed a response to the petition for plaintiff-appellant. Also represented by Michael John Femal; Paul Skiermont, Skiermont Derby LLP, Dallas, TX.

          Jason C. White, Morgan, Lewis & Bockius LLP, Chicago, IL, filed a petition for rehearing en banc for defendant-appellee. Also represented by Nicholas A. Restauri; Thomas R. Davis, David Jack Levy, William R. Peterson, Houston, TX; Allyson Newton Ho, Dallas, TX; Julie S. Goldemberg, Philadelphia, PA.

          Mark Andrew Perry, Gibson, Dunn & Crutcher LLP, Washington, DC, for amicus curiae T-Mobile USA, Inc. Also represented by Brian Buroker; Alexander N. Harris, San Francisco, CA; Josh Krevitt, New York, NY.

          David Evan Finkelson, McGuireWoods LLP, Richmond, VA, for amici curiae Sprint Spectrum LP, Cellco Partnership. Also represented by Matthew Allen Fitzgerald, Brian David Schmalzbach.

          Daniel K. Nazer, Electronic Frontier Foundation, San Francisco, CA, for amici curiae Electronic Frontier Foundation, R Street Institute. Also represented by Charles Duan, R Street Institute, Washington, DC.

          Daryl Joseffer, King & Spalding LLP, Washington, DC, for amici curiae The Internet Association, Computer and Communications Industry Association, High Tech Inventors Alliance. Also represented by Paul Alessio Mezzina, Jesse D.H. Snyder.

          Before Prost, Chief Judge, Newman, Lourie, Dyk, Moore, O'Malley, Reyna, Wallach, Taranto, Chen, Hughes, and Stoll, Circuit Judges.

         ON PETITION FOR REHEARING EN BANC

          ORDER

          Per Curiam.

         Appellee HP Inc. filed a petition for rehearing en banc. A response to the petition was invited by the court and filed by Appellant Steven E. Berkheimer. Several motions for leave to file amici curiae briefs were also filed and granted. The petition, response, and amici curiae briefs were first referred to the panel that heard the appeal, and thereafter, to the circuit judges who are in regular active service. A poll was requested, taken, and failed.

         Upon consideration thereof, It Is Ordered That:

         1) The petition for panel rehearing is denied.

         2) The petition for rehearing en banc is denied.

         3) The mandate of the court will issue on June 7, 2018.

          Moore, Circuit Judge, with whom Dyk, O'Malley, Taranto, and Stoll, Circuit Judges, join, concurring in the denial of the petition for rehearing en banc.

         Berkheimer and Aatrix stand for the unremarkable proposition that whether a claim element or combination of elements would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time is a question of fact. The Supreme Court has described historical facts as "a recital of external events." Thompson v. Keohane, 516 U.S. 99, 110 (1995). In other words, facts relating to "who did what, when or where, how or why." U.S. Bank Nat'l Ass'n ex rel. CWCapital Asset Mgmt. LLC v. The Village at Lakeridge, LLC, 138 S.Ct. 960, 966 (2018).

          Whether a claim element or combination of elements would have been well-understood, routine, and conventional to a skilled artisan in the relevant field at a particular point in time may require "weigh[ing] evidence, " "mak[ing] credibility judgments, " and addressing "narrow facts that utterly resist generalization." Id. at 967 (quoting Pierce v. Underwood, 487 U.S. 552, 561-62 (1988)). The Supreme Court in Alice asked whether the claimed activities were "previously known to the industry, " and in Mayo asked whether they were "previously engaged in by researchers in the field."[1] Alice Corp. Pty. v. CLS Bank Int'l, 134 S.Ct. 2347, 2359 (2014); Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 73 (2012). Indeed, the Court recognized that "in evaluating the significance of additional steps, the § 101 patent-eligibility inquiry and, say, the § 102 novelty inquiry might sometimes overlap." Mayo, 566 U.S. at 90. "[C]ase law from the Supreme Court and this court has stated for decades that anticipation is a factual question." Microsoft Corp. v. Biscotti, Inc., 878 F.3d 1052, 1068 (Fed. Cir. 2017). While the ultimate question of patent eligibility is one of law, it is not surprising that it may contain underlying issues of fact. Every other type of validity challenge is either entirely factual (e.g., anticipation, written description, utility), a question of law with underlying facts (e.g., obviousness, enablement), or a question of law that may contain underlying facts (e.g., indefiniteness).[2]

         This question may require weighing evidence to determine whether the additional limitations beyond the abstract idea, natural phenomenon, or law of nature would have been well-understood, routine, and conventional to an ordinarily skilled artisan. Because the patent challenger bears the burden of demonstrating that the claims lack patent eligibility, 35 U.S.C. § 282(a), there must be evidence supporting a finding that the additional elements were well-understood, routine, and conventional. Relying on the specification alone may be appropriate where, as in Mayo, the specification admits as much. 566 U.S. at 79; see also id. at 73-74. In Mayo, the Court considered disclosures in the specification of the patent about the claimed techniques being "routinely" used and "well known in the art." Id. at 73-74, 79. Based on these disclosures, the Court held that "any additional steps [beyond the law of nature] consist of well-understood, routine, conventional activity already engaged in by the scientific community" that "add nothing significant beyond the sum of their parts taken separately." Id. at 79- 80. In a situation where the specification admits the additional claim elements are well-understood, routine, and conventional, it will be difficult, if not impossible, for a patentee to show a genuine dispute. Cf. Pharmastem Therapeutics, Inc. v. ViaCell, Inc., 491 F.3d 1342, 1362 (Fed. Cir. 2007) (stating that "[a]dmissions in the specification regarding the prior art are binding on the patentee for purposes of a later inquiry into obviousness").[3]

         As this is a factual question, the normal procedural standards for fact questions must apply, including the rules in the Federal Rules of Civil Procedure applicable to motions to dismiss or for summary judgment and the standards in the Federal Rules of Evidence for admissions and judicial notice. See SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S.Ct. 954, 964 (2017) (stating that "the same common-law principles, methods of statutory interpretation, and procedural rules as other areas of civil litigation" also govern patent law). Though we are a court of special jurisdiction, we are not free to create specialized rules for patent law that contradict well-established, general legal principles. See Teva, 135 S.Ct. at 840; Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S.Ct. 1744, 1748-49 (2014); eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 393-94 (2006).

          If there is a genuine dispute of material fact, Rule 56 requires that summary judgment be denied. In Berk-heimer, there was such a genuine dispute for claims 4-7, but not for claims 1-3 and 9. Berkheimer v. HP Inc., 881 F.3d 1360, 1370 (Fed. Cir. 2018). The specification described the increases in efficiency and computer functionality that the invention, in claims 4-7, had over conventional digital asset management systems. Id. at 1369 (citing U.S. Patent No. 7, 447, 713 at 1:24-27, 2:22-26, 16:52-60). It further stated that "known asset management systems" did not contain the one-to-many claim element and its advantages, '713 patent at 2:23-26, and that redundant document images "are the convention" in "today's digital asset management systems, " id. at 1:24-27. While assertions in the patent will not always be enough to create a genuine dispute of material fact, they did so here. HP's evidence focused almost exclusively on the limitations of claim 1. See J.A. at 1054-62, Berkheimer, 881 F.3d 1360. Its only evidence that addressed the additional limitations in claims 4-7 was the conclusory statement from its expert's declaration that the features disclosed and claimed in the '713 patent, including one-to-many changes, "were known functions at the time the application was filed" and "[w]hen combined into a single computerized system, these known features perform[ed] the exact same functions to yield predictable results." Id. at 1061. This evidence did not address whether the additional limitations were well understood, routine, and conventional. Based on this evidence, HP fell short of establishing that it was entitled to summary judgment that claims 4-7 are ineligible, a defense it bore the burden of proving. 35 U.S.C. § 282(a). Indeed, beyond its expert's conclusory declaration, HP could point to no evidence in the record contradicting the statements from the specification. Applying the standard for summary judgment in Rule 56, as we must, summary judgment had to be denied as to claims 4-7. Because no genuine issue of fact existed for claims 1-3 and 9, we affirmed the grant of summary judgment that those claims were not eligible. As with claims 1-3 and 9, when the evidence that aspects of the invention are not well-understood, routine, and conventional does not pertain to the invention as claimed, it will not create a factual dispute as to these claims. See also Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1326 (Fed. Cir. 2016) (expert testimony about problems solved by the invention does not create a genuine dispute of material fact when "the claims do not actually contain the 'conflict-free requirement'"); Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1321-22 (Fed. Cir. 2016) (when technological details or particular features set forth in other claims that incorporate an inventive concept are not present in the claims at issue they cannot create a question of fact as to these claims).

         If patent eligibility is challenged in a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), we must apply the well-settled Rule 12(b)(6) standard which is consistently applied in every area of law. A motion to dismiss for failure to state a claim must be denied if "in the light most favorable to the plaintiff and with every doubt resolved in the pleader's favor-but disregarding mere conclusory statements-the complaint states any legally cognizable claim for relief." 5B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1357 (3d ed. 2018). In the Eleventh Circuit, the Rule 12(b)(6) standard requires accepting as true the complaint's factual allegations and construing them in the light most favorable to the plaintiff. Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1124 (Fed. Cir. 2018) (citing Speaker v. U.S. Dep't of Health & Human Servs. Ctrs. for Disease Control & Prevention, 623 F.3d 1371, 1379 (11th Cir. 2010)). The second amended complaint in Aatrix included "concrete allegations . . . that individual elements and the claimed combination are not well-understood, routine, or conventional activity." Id. at 1128. For example, it alleged that the patents "improve the functioning of the data processing systems, computers, and other hardware" and explained in detail how the invention achieves these improvements. J.A. at 454 ¶ 107, Aatrix, 882 F.3d 1121; id. at 429 ¶¶ 38-39. "These allegations suggest[ed] that the claimed invention is directed to an improvement in the computer technology itself and not directed to generic components performing conventional activities." Aatrix, 882 F.3d at 1127. As we have previously held, "[i]n ruling on a 12(b)(6) motion, a court need not 'accept as true allegations that contradict matters properly subject to judicial notice or by exhibit, ' such as the claims and the patent specification." Secured Mail Sols. LLC v. Universal Wilde, Inc., 873 F.3d 905, 913 (Fed. Cir. 2017). But nothing in the limited record we could consider at the Rule 12(b)(6) stage refuted these allegations, so there was no legal basis to affirm the dismissal of the complaint. See, e.g., Aatrix, 882 F.3d at 1128. These allegations "at a minimum raise[d] factual disputes underlying the § 101 analysis, such as whether the claim term 'data file' constitutes an inventive concept, alone or in combination with other elements, sufficient to survive an Alice/Mayo analysis at the Rule 12(b)(6) stage." Id. at 1126.

         We cannot adopt a result-oriented approach to end patent litigation at the Rule 12(b)(6) stage that would fail to accept as true the complaint's factual allegations and construe them in the light most favorable to the plaintiff, as settled law requires. The conclusion that the patent claims in Aatrix survived the motion to dismiss is not a holding that they are eligible. And the mere fact that there were ...


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