Berkheimer Files Response to HP's Petition for En Banc Review

By Michael Borella --

In early February, the Federal Circuit published an opinion in HP Inc. v. Berkheimer stating clearly –- for the first time -- that patent-eligibility under 35 U.S.C. § 101 should be determined as a matter of law, but with possible underlying factual issues.  While supported in principle by Supreme Court and previous Federal Circuit decisions, neither body had unambiguously stated that facts matter in eligibility disputes.  Thus, this ruling has the potential to fundamentally shift how the § 101 inquiry is carried out.

Berkheimer's U.S. Patent No. 7,447,713 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."

A District Court Judge in the Northern District of Illinois granted HP's motion for summary judgment of patent-ineligibility, contending that as a matter of law the claims of the '713 were directed to no more than unpatentable abstract ideas under the two prong rubric of Alice Corp. v. CLS Bank Int'l.  On review, the Federal Circuit agreed with the District Court for some of the claims, but disagreed for others.  In particular, the purported technical improvement of reducing storage requirements was enough to render a handful of the dependent claims not clearly ineligible.

In an opinion by Judge Moore, the Court stated "[l]ike indefiniteness, enablement, or obviousness, whether a claim recites patent eligible subject matter is a question of law which may contain underlying facts."  The Court remanded the case back to the District Court for further review, another first for § 101 challenges.

On March 12, HP filed a petition for en banc review.  In it, HP argued that the panel's decision was inconsistent with precedent, effectively required a factual review for all § 101 analyses, and would lead to protracted litigation.  As I previously wrote, HP is on shaky ground for at least two of these points, and missed an opportunity to expound upon the potential can of factual worms opened by Judge Moore.

This week, Berkheimer filed a reply, arguing that en banc review is unnecessary.  Berkheimer's position is set forth rather directly -- the case law supports consideration of facts in the § 101 evaluation, and HP's parade of horribles is a hyperbolic overreaction to a decision that merely clarifies the status quo.

To that point, Berkheimer points out that the panel explicitly stated that summary judgment on eligibility issues can be appropriate when there is no material issue of fact regarding whether the claims recite an inventive concept.  Berkheimer further noted that authority to support the position that facts can be considered runs through the Supreme Court's Mayo Collaborative Servs. v. Prometheus Labs., Inc. decision as well as a number of Federal Circuit decisions.  Notably, Enfish, LLC v. Microsoft Corp., McRO, Inc. v. Bandai Namco Games Am. Inc., Amdocs (Isr.) Ltd. v. Openet Telecom, Inc., Thales Visionix, Inc. v. U.S., and several other cases exhibit § 101 outcomes that turned on issues of fact.

Berkheimer continues by asserting that the panel correctly applied this law:

The panel recognized that the § 101 inquiry involves a basic question of what is the invention.  This is not simply a question of reading the claims; it involves deeper inquiries as to what the invention is "directed to" at Alice step one, and—if the claims are directed to one of the exceptions to patent eligibility—whether they add an "inventive concept" at Alice step two.  This requires a factual inquiry to evaluate the technological context of an invention, especially when assessing an inventive concept over what was well-understood, routine, and conventional to a skilled artisan at the time of the invention (which itself is an extrinsically facing historical fact variable based on a patent's priority date – namely October 2000 for the '713 patent).

HP and its amici claim the panel has opened the floodgates for patent assertion entities to manufacture factual allegations, advance an inexhaustible array of extrinsic evidence, proffer expert opinions, merely write bare assertions of improvements or advantages into a specification, or create a material issue of fact by the draftsman's or litigant's art.  This purported "sea change" is illusory.  Dispositive motions may still be made.  The panel does not protect claims involving "nonce" word devices, generic computer components, ubiquitous elements, "apply it" directives, expected functionalities, longstanding commercial practices, methods of organizing human activities, and so on.  Claims and their informing specifications will still be scrutinized under the Alice standard.

If taken up en banc, the Federal Circuit will have to consider the opposing poles of HP's contention that the panel made a mistake of biblical proportion and Berkheimer's position that the decision was little more than business as usual.  The Court may be a little gun-shy given that the last time it entertained a § 101 dispute en banc, it was the much-maligned 5-opinion split decision that led to the Supreme Court rendering the Alice test.  But in the nearly four years since then, the Federal Circuit has not managed to carry out its gap-filling function in a manner that has made Alice workable in practice.

Grading purely on the briefs, Berkheimer appears to have the edge in terms of clarity, succinctness, and interpretation of the case law.  But both parties avoid addressing the 800-pound gorilla in the proceeding -- how does one properly carry out a factual analysis under § 101?  What is required for the patentee to establish that there is a material issue of fact?  How understood does a claim element need to be in order to qualify as "well understood"?  How does one explain § 101 issues to a jury when judges and patent examiners often express frustration over the jurisprudence and fail to apply the Alice decision clearly or consistently?

Within a few weeks we may begin to find out.

Comments

[skeptical]

"in a manner that has made Alice workable in practice."

You have a very odd view of what "workable in practice" means.

The "ping-pong" effect of panel to panel decisions in the 101 space show the very opposite.

[Paul Cole]

An online version of both the HP Petition and the Berkheimer reply would be extremely helpful for this potentially important case, together with, if possible, a list of the amici who have filed briefs so far.

From the standpoint of this alien reader, it is difficult to say that ANY case can be a matter of law devoid of the surrounding facts. Even if the claimed concept is a mere idea or an ineligible natural product, that conclusion flows from a reading of the words of the claim in question, which are themselves of a factual nature. Even if a full interpretation of the claim language is not feasible within the context of section 101 proceedings, an understanding of the claim language(or lack of it!) and of the elements recited within that language underpins all decisions on this subject.

There have in recent times been several deserving petitions for en banc rehearing which have been refused, and there is therefore a likelihood that this case will go the same way. It is possibly in the interests of our profession that this should happen, leaving the present case available as a precedent for the future. But copies of the briefs would be very helpful to enable full understanding of the positions being advanced.

[Mike Borella]

Full quote: "But in the nearly four years since then, the Federal Circuit has not managed to carry out its gap-filling function in a manner that has made Alice workable in practice."

I think we are in agreement.

[skeptical]

Sorry Mike - we are in agreement.

I also agree with Mr. Cole in that links to the underlying documents would be very beneficial.

[JCD]

Paul,

Feel free to email me at jdoerre AT ti-law DOT com and I would be happy to send you a copy of the briefs.

So far Amicus briefs have been filed by:

-T-Mobile/Sprint/Verizon (supporting rehearing)
-EFF and R Street Inst. (supporting rehearing)
-some collection of tech alliances (supporting rehearing)