Xlear, Inc. v. STS Health, LLC (D. Utah 2019)

By Donald Zuhn --

In April, in Xlear, Inc. v. STS Health, LLC, District Judge David Nuffer of the U.S. District Court for the District of Utah denied a motion for summary judgment filed by Defendant STS Health, LLC, finding that the asserted claims of U.S. Patent No. 6,054,143 "do not point to an ineligible subject matter."  In denying STS's motion, the District Court also noted that "even if it were necessary to analyze the '143 patent under step two of the Alice Framework, STS has not carried its burden under that step."

Plaintiff Xlear initiated the dispute between the parties when it filed suit against STS for infringement of the '143 patent.  In response, STS filed a motion to dismiss, arguing that the asserted claims were directed to the naturally occurring product xylitol, which was administered using well-understood, routine, conventional activity previously engaged in by researchers in the field.  The District Court denied the motion, finding that the '143 patent did not claim the naturally occurring product xylitol/xylose, but rather was directed to a method for delivery of the xylitol/xylose to clean out the nasopharynx in a human.  The Court also found that STS had not presented evidence of similar applications of xylitol prior to the '143 patent.  STS then filed its motion for summary judgment that the asserted claims were invalid under 35 U.S.C. § 101 for failing to recite patent eligible subject matter, citing seven issued patents as evidence that the nasal administration of xylitol/xylose was well-known, conventional, and routine when Xlear filed the application that issued as the '143 patent.

In dismissing STS's motion for summary judgment, the District Court noted that when it denied STS's motion to dismiss, the Court had determined that under step one of the Alice framework the asserted claims were directed to a process or method that is not a law of nature or natural phenomenon.  In particular, the Court found that "the '143 patent does not claim the discovery of xylitol/xylose or the product itself," and "does not claim the exclusive right to every application of xylitol/xylose," but rather, the asserted claims "focus on the process of practically applying xylitol/xylose to clean the nasopharynx."  The Court therefore noted that:

Because it was determined that the claims do not point to an ineligible subject matter, it was unnecessary to proceed to the second step and determine "whether additional elements 'transform[ed] the nature of the claims' into a patent-eligible application."  The analysis in the Previous Order should have stopped after concluding that the claims of the '143 patent do not point to patent ineligible subject matter.  The Previous Order should not have stated that additional evidence was needed to resolve the second step of the Alice Framework.

However, the Court also noted that STS's motion for summary judgment would have failed even if it had been necessary to analyze the '143 patent under step two of the Alice framework.  In support, the District Court cited the Federal Circuit's decision in Berkheimer v. HP, Inc. for the proposition that whether "something is well-understood, routine, or conventional to a skilled artisan at the time of the patent is a factual determination" that "goes beyond what was simply known in the prior art."  In particular, the Court noted that:

STS has not shown how the seven cited patents teach the same invention as the '143 [patent].  The seven cited patents address the use of xylitol/xylose to aid in the absorption of other compounds through mucosal membranes, such as that found in the nose.  None of the cited patents address using xylitol/xylose to clean the nasopharynx.

The Court also pointed out that notwithstanding the seven patents identified by STS, Xlear continued to argue that nasal administration of xylose/xylitol for cleaning the nasopharynx in a human was not conventional at the time of application, and the Court determined that "[t]he seven cited patents do not disprove that contention and STS has not demonstrated the absence of an underlying genuine issue of material fact that would permit deciding patent eligibility 'on summary judgment as a matter of law.'"

The District Court concluded its opinion by noting that "[a]s the Previous Order determined under the first step of the Alice Framework, the claims of the '143 patent do not point to patent ineligible subject matter," and finding that "[t]he ‘143 Patent is therefore not invalid under § 101."  The Court therefore denied STS's motion for summary judgment.

Xlear, Inc. v. STS Health, LLC (D. Utah 2019)
Memorandum Decision and Order Denying Motion for Summary Judgment by District Judge Nuffer

Comments

[Skeptical]

No comments yet (and not that surprising given the depth of the Tillis Congressional hearings), but I did want to point out that the proper application of the result of the Berkheimer case CANNOT rest with the challenge to the granted patent (or, for that matter, within the patent office prior to grant, the challenge to the application) based on "establishing" the factual determination as to whether or not something...

[and here I would stress that THAT something can be not only a single element, but also can be an ordered combination of elements that themselves INDIVIDUALLY may well be admittedly "conventional")

...is well-understood, routine, or conventional "GOES BEYOND WHAT WAS SIMPLY KNOWN IN THE PRIOR ART."

This contrasts with this article's notation of "in particular" which is at THE LOWER LEVEL of not even reaching the obviousness stage of "teaching."

The item to be stressed (and this points to a reason why Director Iancu created specific "off-ramps" in the new eligibility examination protocol) is that to SHOW the necessary factual predicates (per BOTH the Berkheimer decision, as well as standing APA requirements - as may be pointed out by Admin Law Expert Dave Boundy), the opponent to the granted patent (AND perhaps just as importantly, the examiners in the Office during examination) MUST show more than merely "known" or EVEN "taught" as would be typical under either of 35 USC 102 or 35 USC 103 - and for which, the typical "tools" of the examiner in the Office do NOT include the necessary rigor of establishing that basis.

Examiners typically only know how to cite prior art (and far too many only by "key word matching), and simply do not know HOW to establish that REQUIRED "goes beyond."

I would point out that in prosecution then, EVERY opportunity should be taken to challenge the lack of rigor for ANY rejection that does not rise to the REQUIRED factual establishment.

Far too often, examiners use a cut-N-paste boilerplate statement WITHOUT being challenged as to the sufficiency of what is actually required for any such boilerplate to properly apply. Just because an examiner CAN make a conclusory statement that a claim...

(and here, it is important to stress again that an ordered combination of a claim must have the factual predicate satisfied FOR THE ORDERED COMBINATION ITSELF and not just "individually for individual elements")

... is "only" well-understood, routine, or conventional, does NOT mean that this satisfies the requirements of examination FOR providing the REQUIRED meaning and level of the assertion of fact.

I would also point out that diligence in making sure that the Office does indeed answer the direct substance of this argument is necessary.

I cannot tell you how many times now (since the Berkheimer Memorandum was published), that the Office has attempted to NOT answer the argument. Part of that diligence (an easy part) is to stress to the Office that a "next action" in order to be complete on the merits MUST answer the substance of ALL of the applicant's arguments. The Office does not have the authority to NOT answer this point, even though "answering" the point may well show that the rejection itself cannot stand.

I take the time to publish this view, even though here this is a District Court case, and the point is most likely merely dicta, because this type of PUSH BACK during prosecution (and the publication of this tactic) is what I firmly believe to be one of the reasons WHY Director Iancu created express "off ramps" in the new eligibility examination protocol PRIOR TO when the factual basis of Berkheimer (and the APA) would come to bear FOR examiners.

I think that to be properly done, the challenge of any mere conclusory statement for any claimed FULL ordered combination would require a level of fact finding and substantiation that NO examiner would likely be able to sustain.

With this type of challenge, the "easy path" is actually made FAR more difficult than the traditional path of examination under the rubrics of 102/103 (and even of 112).

And while Director Iancu personally may not justifiably be labelled a "bully," there ARE many examiners who DO act like a bully. And just like any real world bully, fighting back is the last thing that a bully wants to encounter.

[Skeptical]

Omitted one thought:

"goes beyond" MEANS that whatever it is that is being claimed to be "conventional" MUST BE widely adopted.

When one understands that to show not just "knowledge of," not just "teaching of," but rising to show that the item actually has been widely adopted, is simply not an easy task.

And of course, to compound that difficulty, this "widely adopted" HIGHER LEVEL needs to be shown NOT JUST at any individual element level. This is where the subtle "trick" and trap for the unwary comes in with the Berkheimer Memorandum as written!

The Berkheimer Memorandum has a trick that basically permits examiners to "try" to get away with a mere conclusory statement as to the effect of a fully ordered combination of elements BEING at that "more required" state, and ONLY IF CHALLENGED, need the examiner actually then need to go out and do the necessary job -- for the fully ordered combination -- of finding the factual evidence of widely adopted.

[Skeptical]

...and another quick comment, but definitely worth highlighting, is reflected by the District Court's writing on page 4 (footnotes omitted):

35 U.S.C. § 282 establishes a presumption of validity for granted patents. “The burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity.” In an argument for invalidity, any fact “that is pertinent to the invalidity conclusion must be proven by clear and convincing evidence.”

Thus, here in the case of a post-grant situation, we have NOT ONLY the higher level than mere presence of knowledge, higher than even a teaching, that higher level being one of widespread adoption, but we have to have THIS level proven at the HIGHER LEVEL of "Clear and Convincing."