Berkheimer v. HP Inc. (Fed. Cir. 2018)

By Michael Borella --

This first five or so weeks of 2018 have been busy for Federal Circuit 35 U.S.C. § 101 jurisprudence.  At last count, four substantive decisions have come down so far (including this one, but not including Rule 36 judgments without opinion).  Out of these, two have found the claims at issue to be patent-eligible, and one has found the claims to be ineligible.  This case splits the baby, finding some claims ineligible and others in need of further review.

But the impact of today's decision may be further-reaching than the other three.  At the very least, it provides a degree of clarity as to the evidentiary standard applicable to a § 101 challenge on summary judgment.  This may result in the USPTO having to update its § 101 guidance for examiners and the PTAB.

Steven E. Berkheimer brought an action against HP in the Northern District of Illinois, alleging infringement of U.S. Patent No. 7,447,713.  After a Markman hearing in which the judge construed several claim terms, HP moved for summary judgment under § 101.  The District Court granted the motion and Berkheimer appealed.

The '713 patent is directed to "digitally processing and archiving files in a digital asset management system."  This system "parses files into multiple objects and tags the objects to create relationships between them," then compares these objects to "to archived objects to determine whether variations exist based on predetermined standards and rules."  Doing so "eliminates redundant storage of common text and graphical elements, which improves system operating efficiency and reduces storage costs."

Claims 1 and 4 of the '713 patent recite:

1.  A method of archiving an item comprising in a computer processing system:
    presenting the item to a parser;
    parsing the item into a plurality of multi-part object structures wherein portions of the structures have searchable information tags associated therewith;
    evaluating the object structures in accordance with object structures previously stored in an archive;
    presenting an evaluated object structure for manual reconciliation at least where there is a predetermined variance between the object and at least one of a predetermined standard and a user defined rule.

4.  The method as in claim 1 which includes storing a reconciled object structure in the archive without substantial redundancy.

The Supreme Court's Alice Corp. v. CLS Bank Int'l case set forth a two-part test to determine whether claims are directed to patent-eligible subject matter under § 101.  One must first decide whether the claim at hand is directed to a judicially-excluded law of nature, a natural phenomenon, or an abstract idea.  If so, then one must further decide whether any element or combination of elements in the claim is sufficient to ensure that the claim amounts to significantly more than the judicial exclusion.  But generic computer implementation of an otherwise abstract process does not qualify as "significantly more."  On the other hand, a claimed improvement to a computer or technological process is typically patent-eligible.

The Federal Circuit began by addressing whether Berkheimer waived his ability to separately argue for the eligibility of the independent and dependent claims.  Notably, a court will usually conduct a § 101 analysis only on a small number of claims (e.g., one) for purpose of judicial economy.  According to the Federal Circuit, "[c]ourts may treat a claim as representative in certain situations, such as if the patentee does not present any meaningful argument for the distinctive significance of any claim limitations not found in the representative claim or if the parties agree to treat a claim as representative."

HP asserted that claim 1 was representative.  But Berkheimer never agreed to this notion, and in fact separately argued claim 5 in an opposition to HP's summary judgment motion.  In the opposition, Berkheimer also argued for the eligibility of other features that only appear in claims 4-7.  The Court observed that an independent claim is not automatically a representative claim just because it is independent.  Also, since Berkheimer "advanced meaningful arguments regarding limitations found only in the dependent claims," these separate arguments were not waived.

Turning to part one of the § 101 analysis, the District Court had ruled that claim 1 was directed to "the abstract idea of 'using a generic computer to collect, organize, compare, and present data for reconciliation prior to archiving.'"  Addressing the claims separately, the Federal Circuit held that "claims 1-3 and 9 are directed to the abstract idea of parsing and comparing data; claim 4 is directed to the abstract idea of parsing, comparing, and storing data; and claims 5-7 are directed to the abstract idea of parsing, comparing, storing, and editing data."

To justify this position, the Court found analogies between Berkheimer's claims and those of In re TLI Commc'ns LLC Patent Litig. and Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n.  In both of those prior cases, claims directed to obtaining, processing, and storing data were found to be abstract.  Berkheimer argued that the claims were not abstract because "the 'parsing' limitation roots the claims in technology and transforms the data structure from source code to object code."  But the Court rejected this notion, stating "[t]hat the parser transforms data from source to object code does not demonstrate non-abstractness without evidence that this transformation improves computer functionality in some way."  In support, the Court pointed out that Berkheimer had admitted that parsers existed well before the priority date of the '713 patent.

Then the Court turned to step two of the § 101 inquiry.  This is where things get interesting.

The Court reiterated that "[t]he second step of the Alice test is satisfied when the claim limitations involve more than performance of well-understood, routine, and conventional activities previously known to the industry."  The Court went on to flesh out this concept:

The question of 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.  Any fact, such as this one, that is pertinent to the invalidity conclusion must be proven by clear and convincing evidence.  Like indefiniteness, enablement, or obviousness, whether a claim recites patent eligible subject matter is a question of law which may contain underlying facts [emphasis added].

In support of this statement, the Court cited to similar language in its Accenture Global Servs., GmbH v. Guidewire Software, Inc. case, as well as Justice Breyer's statement from Mayo v. Prometheus that the § 101 inquiry may overlap with fact-sensitive inquiries such as novelty under § 102.

Nonetheless, some § 101 disputes may be resolved as a matter of law when there is no material issue of fact regarding whether one or more claim elements or combination thereof is well-understood, routine, or conventional to a person of ordinary skill in the art.  In this case, however, Berkheimer argued that "summary judgment is improper because whether the claimed invention is well-understood, routine, and conventional is an underlying fact question for which HP offered no evidence."

The Court went on:

While patent eligibility is ultimately a question of law, the district court erred in concluding there are no underlying factual questions to the § 101 inquiry.  Whether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination.  Whether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art.  The mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional.

Thus, the Court is distinguishing between whether a technology is "known" in the sense of § 102 (e.g., publically available) and whether one of ordinary skill would find this technology to be well-understood, routine, and conventional (e.g., something that this person of ordinary skill would consider to be textbook knowledge or part of his or her ordinary course of activities).

The specification of the '713 patent states that, at the time of the invention, existing digital asset management systems included "numerous documents containing multiple instances of redundant document elements" which resulted in "inefficiencies and increased costs."  The specification continued on to explain that the claimed invention "increases efficiency and computer functionality over the prior art systems."  Thus, according to the Court, "[t]he improvements in the specification, to the extent they are captured in the claims, create a factual dispute regarding whether the invention describes well-understood, routine, and conventional activities, so we must analyze the asserted claims and determine whether they capture these improvements."

Ultimately, the Court concluded that claim 1 does not provide an inventive concept beyond that of the abstract idea therein.  Particularly, claim 1 "does not include limitations which incorporate eliminating redundancy of stored object structures or effecting a one-to-many change of linked documents within an archive."  Furthermore, claim 1 "does not even require the storage of data after it is presented for manual reconciliation."  On the other hand, claim 4 and claims 5-7 that depend therefrom recite "limitations directed to the arguably unconventional inventive concept described in the specification [, that] storing object structures in the archive without substantial redundancy improves system operating efficiency and reduces storage costs."

Accordingly, the Court concluded that "there is at least a genuine issue of material fact in light of the specification regarding whether claims 4-7 archive documents in an inventive manner that improves these aspects of the disclosed archival system."  Thus, "[w]hether claims 4-7 perform well-understood, routine, and conventional activities to a skilled artisan is a genuine issue of material fact making summary judgment inappropriate with respect to these claims."  This does not mean that claims 4-7 are patent-eligible, only that the District Court's summary judgment ruling was improper for these claims.  So, the case was remanded back to that court to make such a determination.

This holding and the supportive reasoning appears to be the first time that the Federal Circuit has explicitly required that a district court make findings of fact in order to justify a § 101 decision.  Previously, § 101 determinations have been addressed purely as a matter of law.  Nonetheless, many such decisions compared the claimed subject matter to prior art, and even used the term "prior art" when doing so.

Since Alice, a challenger has been able to make conclusory statements that claim elements are well-understood, routine, and conventional.  When a patentee would rebut these statements as unsupported, a court could rule that, as a matter of law, there was no need for the challenger to provide supporting evidence.  Similarly, in the USPTO, examiners routinely make § 101 rejections that are conclusory in a similar fashion, and decline to consider evidence to the contrary.

Has this case changed § 101 procedures to the point where patentee or applicant has an opportunity to rebut such presumptive techniques?  With the requirement that the challenger provide clear and convincing evidence of ineligibility, it seems so.  If nothing else, it is now apparent that facts matter in the § 101 analysis.  This may make it more difficult to invalidate patents on the pleadings, as well as at the summary judgment stage.

Berkheimer v. HP Inc. (Fed. Cir. 2018)
Panel: Circuit Judges Moore, Taranto, and Stoll
Opinion by Circuit Judge Moore

Comments

[Atari Man]

" If nothing else, it is now apparent that facts matter in the § 101 analysis. This may make it more difficult to invalidate patents on the pleadings, as well as at the summary judgment stage."

It would also seem that if an examiner, in making a 101 rejection, conclusorily asserts that something was routine and well-known, an affidavit from an expert stating the contrary should be enough to rebut such an assertion.

[skeptical]

Define "generic computer"
Define "significantly more"

Define Void for Vagueness

ps, Atari Man, such an affidavit should not be required - the Office has the burden of presenting a prima facie case, and conclusory assertions do not meet that burden. A mere challenge and request for the examiner to PROPERLY meet the burden of providing a prima facie case of ineligibility - including as required under the AIA and under the Office's own requirements for dealing with assertions of fact (this is called Taking Official Notice, by the way, whether or not those words are used) - is sufficient to "rebut."

It would only be after the Office provides that prima facie case would the need arise to rebut with an affidavit.

[Paul Cole]

Facts always matter, and the benefit of this decision is firstly to act as a reminder and secondly to encourage the attorneys for the patentees in these cases to explain the disputed factual issues clearly and straightforwardly to the judges, not all of whom will have had lengthy experience in patent law or with technology.

[Bernard Tomsa]

This tracks with the December 2016 Office Guidance, such as Example 35, where the Office set forth that the test for "something more" included an inquiry as to whether the whole claim, as a single inventive concept, solved a problem in an atypical or uncommon manner. This case should serve as the requisite legal support to run that argument on appeal, provided that the Examiner has failed to show evidence of typicality.

[Jacob S Sherkow]

Long time listener, first time caller. For what it's worth, I wrote about just this in a 2013 short essay for the Yale Law Journal Online. It's here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2296033.

Not sure I agree with Atari Man that a single affidavit would be enough to rebut the assertion--and how routine is it to get an affidavit in opposition to an application during prosecution? Even if that's the case, I imagine applicants have a lot of leeway to present documentation that the method employed in the application is novel or at the least unpredictable.

"Well-understood, routine, and conventional" are more, in my estimation, questions of day-to-day practice, different from whether they merely exist in the prior art. That's a tough call--at least a tougher call than, "Is there a TSM or reason to combine elements in the prior art?"

If this goes en banc, we'll see if I'm right. If yes, it'll be a tough road for the PTO to hoe. If no, then it's likely back to business as usual of unsupported attorney characterizations of techniques as "routine" or "conventional"--simply because there's documentation that someone did it somewhere once and published it.

[skeptical]

Mr. Sherkow,

Thank you for the link.

How do you feel about the notion that your paragraph (below) merely adds fuel to the fire that the Supreme Court has violated the separation of powers and absconded with the Constitutional power (provided ONLY to the legislative branch) of writing patent law, when it attempts to RE-write that law and insert a "how" when it is MORE THAN CLEAR that Congress in the Act of 1952 not only stripped the Supreme Court of the power of common law evolution (vis a vis "invention") but also went a different path by choosing to branch from the former same paragraph from which 101 comes from and INSTEAD create "obviousness" in 103 and EXPRESSLY stated (in the current version):

Patentability shall not be negated by the manner in which the invention was made.

So.... not only do we have the Court violating Separation of Powers, they are doing so and EXPRESSLY violating the direct words of Congress.

by the way, your passage (emphasis in CAPS added):

"The Mayo Court’s novel test for patent eligibility — whether or not an invention
involves “well-understood, routine, conventional activity, previously engaged in by
researchers in the field” — focuses on HOW AN INVENTION IS ACCOMPLISHED rather than
what an invention is"

[JCD]

Jacob,

(1) Great foresight on the administrative law issue. Interestingly, many patent applicants now frequently find themselves in the situation where they would love for the PTO to provide evidence that a recited limitation or step was even known, much less conventional.

Your point re the distinction between known and conventional is well taken, and as you probably noticed the Fed. Cir. indeed noted this as well in this decision, indicating that “[w]hether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art” as “[t]he mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional.” Berkheimer v. HP Inc., appeal no. 2017-1437, slip op. at 14 (Fed. Cir. Feb. 8, 2018).

The PTO itself had already acknowledged this, noting in the MPEP that “[a]n additional element (or combination of additional elements) that is known in the art can still be unconventional or non-routine”. MPEP 2106.05(d)(I)(1). The MPEP even notes that it’s possible where “features were taught by a single prior art reference (thus anticipating the claims) … [that] the features were not conventional and thus were considered to reflect an improvement to existing technology”. Id.

(2) Interesting argument re discriminating against the manner of invention. Do you think the prohibition with respect to "[p]atentability" should be construed to constrain the Supreme Court's ability to articulate a patent eligibility exception?

I also wanted to note that your paper suggests that "[t]he third justification, however, concerns the method by which the invention is implemented, whether a 'conventional activity' or a unique method", which makes sense, but then characterizes this as a "new focus on how an invention is conceived", which seems to be a different characterization. Sherkow, 122 Yale Law J. Online 351, 352 (2013)

The change in context from how an invention is "implemented" to how an invention is "conceived" doesn't seem directly supported, and indeed the Court's indications regarding conventional activity seem to relate to implementation and not conception (e.g. the conventionality of claim limitations or steps of a claimed invention, rather than the conventionality of steps involved in conception of an invention). (There may be some nuance in the pharma arts that I'm not appreciating.) Regardless, I think there may well still be an interesting argument there, but it may need a bit more development.

JCD

[skeptical]

JCD,

I recommend that your development efforts look (first) backward to the genesis in the Act of 1952 for the break-out of what was once a single paragraph into the structure of law that is now the separate sections of 101, 102, AND 103.

What you see now with the Court is nothing more than their attempting to recreate patent law prior to that Act of 1952, in which they still had common law authority to shape "invention."

Congress had reacted against an anti-patent Court of the '30's and '40's (from which time the SELF-describing quote of "the only valid patent is one that has not yet appeared before us" came into being), and had not only stripped the Court of that common law authority to shape the meaning of the word "invention," but had also - and deliberately - chosen a DIFFERENT PATH, going the route of "obviousness."

In your research, make sure that your read the 1962 (IIRC) article by Judge Rich on why Congress instituted the path of obviousness. THAT Jurist knows best because in fact he helped to write FOR Congress those very words.

[skeptical]

My post last evening would have been better had I read more than just the abstract of the Sherkow piece.

Having now read the item all the way through, I see that several threads LONG on the various patent blogs (including "overlap" and "ignoring prohibitions on 'how' that Congress had set forth in 1952) are alluded to in the article.

Not as direct or forceful as I may have hoped for (in view of the Separation of Powers doctrine and the fact that authority for writing patent law was Constitutionally allocated to only branch - and that one branch was not the judicial branch), but the piece DOES appear to question the legitimacy of the Supreme Court acting as they have done.