Latest Federal Court Cases, 4/20/20
PATENT CASE OF THE WEEK
Ericsson Inc. v. TCL Communication Technology Holdings Limited, Appeal No. 2018-2003 (Fed. Cir. April 14, 2020)
This week’s case of the week deals with issues relating to patent eligibility under 35 U.S.C. § 101. In an appeal from the United States District Court from the Eastern District of Texas, the Court reversed the magistrate judge’s decision denying TCL’s motion for summary judgment that Ericsson’s U.S. Patent No. 7,149,510 (“the ’510 patent”), which generally claims a method and system for limiting and controlling access to resources in a telecommunications system, is ineligible subject matter under Section 101. TCL appealed that decision.
As an initial matter, Ericsson argued that TCL waived its right to appeal the summary judgment decision because it failed to raise the issue in a motion for judgment as a matter of law under FRCP 50. Notably, no Section 101 issues were addressed at trial, or in post-trial motions practice. The Court disagreed with Ericsson’s waiver argument, first explaining that where, as here, a district court enters a judgment, based only on analysis of the claims and existing case law rather than any factual issues, that the claims of the patent were not directed to an abstract idea, such a judgment is appealable because it is effectively an entry of judgment of validity. Because the motion for summary judgment was not denied based on material issues of fact that prevented judgment, the issue was sufficiently preserved. The Court further explained that even if TCL had waived its right to appeal this issue, it still has discretion to hear issues that have been waived. The Court has such discretion where the issue has been fully briefed (here, the issue was fully briefed and argued both at the district court and on appeal), the issue is a matter of law or the record is complete, there will be no prejudice to any party, and if no purpose is served by remand. The Court further explained that it had discretion to hear the issue because TCL’s arguments did not shift over time and, as explained below, the resolution of the eligibility question was straightforward.
As to the merits of whether the claims of the ’510 patent were patent-eligible, the Court first analyzed step one of the Mayo/Alice test—whether the claims were directed to an abstract idea—and held that based on the claim language alone, the claims at issue were directed to the abstract idea of controlling access to, or limiting permission to, resources, such as apps, available on certain platforms. Specifically, the core of the claims at issue is the abstract idea of simply controlling access to resources by receiving a request for access and determining if that request should be granted. Moreover, the remaining limitations of the claims merely recite functional computer components rather than specifying how the claim controls access to any platform. The Court clarified that while the step one inquiry of the test looks to the character of the claim as a whole rather than evaluating each limitation in a vacuum, where, as here, the bulk of the claim is an abstract idea, and the remaining limitations only provide necessary antecedent and subsequent components, the claim’s character as a whole is directed to that abstract idea.
Ericsson’s arguments to the contrary were not persuasive to the Court. First, Ericsson argued that the Supreme Court requires an abstract idea to be either a mathematical algorithm, method of organizing human activity, or fundamental economic practice. The Court found this legally erroneous because the Supreme Court has rejected use of such categorical rules to decide eligibility, and controlling access to resources is “exactly the sort of process that can be performed in the human mind, or by a human using a pen and paper”—processes that have historically been unpatentable. The Court also disregarded Ericsson’s second argument—that its claims were not abstract because they solve the specific problem of controlling app access in resource-constrained mobile phones. This is because, first, the claims are not limited to only mobile phones; and second, because the claims do not have the specificity to transform a claim from one claiming only a result to one claiming a way of achieving that result. Merely claiming functional recitations in general terms, without limiting them to technical means for performing the functions that are arguably an advance, does not make a claim eligible at step one of the test.
As to step two—whether the abstract claims nonetheless contain an inventive concept that would support patent eligibility—the Court concluded that they do not. Ericsson argued that the novelty of the claims is found in the arrangement of horizontally partitioned functional software units, which differs from the standard model that uses vertical layers only. But these elements are not actually found in the claims at issue. Ericsson conceded this point, but argued that the Court could consider the specification, which describes these benefits. The Court disagreed, explaining that any reliance on the specification in a Section 101 analysis must always yield to the claim language. The Court also declined to import this arrangement into the asserted claims; if Ericsson had wanted that arrangement to be a part of the claims, it should have made the argument at claim construction. In sum, the Court held that the claims at issue did no more than require a generic computer to perform generic computer functions, and as such, the claims lacked an inventive concept sufficient to demonstrate step-two patent eligibility.
Judge Newman issued a dissenting opinion, finding that the majority opinion ignored the Federal Rules and the precedent of the Fifth Circuit, which she believes is controlling for procedural issues such as those here. Specifically, Judge Newman found that the majority’s decision to hear the Section 101 arguments—without benefit of a trial record or evidence on the question of whether the claimed invention is an abstract idea and devoid of inventive content—is contrary to the Federal Rules and Fifth Circuit precedent. Rule 50, which governs whether an issue is available for appeal, requires a post-trial motion and a final decision of the district court—both of which were absent here. And the Fifth Circuit explicitly prohibits appeal of interlocutory orders denying summary judgment, even after a full trial on the merits and even for purely legal issues, unless it is sufficiently preserved in a Rule 50 motion.
Judge Newman also disagreed with the majority’s Section 101 analysis, and would have found the claims patent-eligible because, in her opinion, they are directed to a complex multi-layered system of computer-implemented interception, conversion, and control. She also found that the majority created new Section 101 law in requiring that all of the technologic information in the specification be recited in the claims in order to avoid a finding of abstractness, and that the majority erred in holding the claim limitations irrelevant.
The opinion can be found here.
ALSO THIS WEEK
Spigen Korea Co., Ltd. v. Ultraproof, Inc., Appeal Nos. 2019-1435, -1717 (Fed. Cir. April 17, 2020)
In an appeal of a summary judgment ruling of invalidity of design patents, the Federal Circuit reversed. The design patents claim ornamental designs for cell phone cases. The district court held the patents invalid as obvious over a prior art reference. The Federal Circuit reversed, finding that there was a genuine dispute of fact as to whether the prior art reference was a proper primary reference. A primary reference must create “basically the same visual impression as the claimed design.” The Court held there was a genuine dispute about whether the prior art design in this case qualified, given a number of differences between the two designs pointed out by Spigen’s expert. A cross-appeal concerning the district court’s denial of attorneys’ fees was held moot.
The opinion can be found here.
CardioNet, LLC v. InfoBionic, Inc., Appeal No. 2019-1149 (Fed. Cir. April 17, 2020)
In this case, the Federal Circuit reversed a district court’s determination, on a Rule 12(b)(6) motion to dismiss, that asserted claims of a patent were ineligible under 35 U.S.C. § 101. The claims were directed to an improved cardiac monitoring device that determined the relevance of beat-to-beat timing variability to specific heart conditions, in light of variability caused by premature ventricular beats. The district court determined that the claims were directed to the abstract idea of identifying the conditions via the variability of an irregular heartbeat, and essentially claimed the automation of known techniques. The Federal Circuit reversed, focusing on the patent’s recitation of specific advantages gained by elements of the claimed device. Accepting those statements as true and drawing reasonable inferences in the patentee’s favor, the Federal Circuit found that the district court erred by disregarding the patent’s recitation of these advantages, and in its factual finding that the claims were directed to automating known techniques where the record did not support that conclusion. The Court further found that it was unnecessary to remand the case to assess the state of the art at the time of invention. On this point, the majority noted that under step one of the analysis prescribed in Alice Corp. v. CLS Bank Int’l, 573 U.S. 208 (2014), determining whether the claims are directed to an abstract idea is a legal question that may be answered based on intrinsic evidence, with or without regard to disclosures in the prior art.
Judge Dyk concurred in the result but dissented in part, arguing that extrinsic evidence may be relevant to determining whether a patent is directed to automation of a long-standing practice under the Alice inquiry, and took issue with what he characterized as “confusing dicta” concerning the extent to which a district court should rely on such evidence.
The opinion can be found here.
O.F. Mossberg & Sons, Inc. v. Timney Triggers, LLC, Appeal No. 2019-1134 (Fed. Cir. April 13, 2020)
In an appeal of a denial of attorney’s fees, the Federal Circuit affirmed. Mossberg filed suit against Timney for patent infringement. Instead of answering Mossberg’s complaint, Timney filed for an inter partes reexamination and a stay of the district court proceedings, which was granted. After Timney successfully invalidated the patent in the inter partes proceeding, Mossberg voluntarily dismissed the district court proceedings under FRCP 41(a)(1)(A)(i). Timney then moved for attorney’s fees as a prevailing party under 35 U.S.C. § 285. The Court held that while “defendants need not prevail on the merits to be classified as a ‘prevailing party,’” there must be “a judicially sanctioned change in the legal relationship of the parties” for a party to be the “prevailing party.” In this case, Mossberg’s voluntary dismissal became effective upon filing, so there was no judicially sanctioned change. The Court further held that “[a] stay, standing alone, is simply not a final court decision capable of establishing the judicial imprimatur required for a litigant to emerge as the prevailing party under § 285.” Accordingly, the Court affirmed the district court’s holding that Timney was not a “prevailing party.”
The opinion can be found here.
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