United States: 2023 Federal Circuit Case Summaries Year End Report

Chromadex, Inc., Trustees of Dartmouth College v. Elysium Health, Inc.

No. 2022-1116 (Fed. Cir. Feb. 13, 2023)

• 101 - Alice

By: Evan Lim

Topic

This case addresses whether the district court's grant of summary judgment was proper based on the district court's finding that the asserted claims of U.S. Patent No. 8,197,807 ("the '807 patent") were invalid under 35 U.S.C. § 101 for being directed to a natural phenomenon.

Background

"The '807 patent is directed to dietary supplements containing isolated nicotinamide riboside ("NR"), a form of vitamin B3 naturally present – in non-isolated form – in cow's milk and other products." Elysium moved for summary judgment, arguing that the asserted claims were invalid under 35 U.S.C. § 101. The district court granted the motion and entered judgment of invalidity, concluding that isolated NR is a naturally occurring vitamin present in cow milk, stating that "the decision to create an oral formulation of NR after discovering that NR is orally bioavailable is simply applying a patent-ineligible law of nature." ChromaDex, Inc. v. Elysium Health, Inc., 561 F. Supp. 3d 460, 467 (D. Del. 2021).

Issue(s)

• Is the act of isolating NR equivalent to how NR naturally exists in milk patent ineligible under 35 U.S.C. § 101?

Holding(s)

Court of Appeals affirms the district court's invalidity judgment.

Reasoning

The district court looks to the ruling of the Supreme Court's decision in Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576 (2013) where the Supreme Court found that "Myriad did not create or alter any of the genetic information encoded in the BRCA1 and BRCA2 genes. The location and order of the nucleotides existed in nature before Myriad found them... Myriad did not create anything. To be sure, it found an important and useful gene, but separating that gene from its surrounding genetic material is not an act of invention... Myriad's claims [are not] saved by the fact that isolating DNA from the human genome severs chemical bonds and thereby creates a non naturally occurring molecule." Myriad, 569 U.S. at 590 593 (emphasis added). The Supreme Court ruled in Myriad that "a naturally occurring DNA segment is a product of nature and not patent eligible merely because it has been isolated." Id., 569 U.S. at 579 (emphasis added).

Appellants argued that the claimed compositions are advantageous over milk "because the isolation of NR allows for significantly more NAD+ biosynthesis than is found in milk and that the large quantity of NR itself can alone increase NAD+ biosynthesis." However, the Court found that the asserted claims "do not require any minimum quantity of isolated NR [nor] do these claims attribute the claimed increase in NAD+ biosynthesis to the isolated NR, requiring only that the composition increase NAD+ production."

Appellants further argued that the claims "possess markedly different characteristics that render them patent-eligible" in that the "'NR is found in milk in only trace amounts'" and the "'little NR [that] is found in milk is not bioavailable because it is bound to the lactalbumin whey protein." The Court concludes that regardless of there only being trace amounts of NR in milk, nonetheless "increases NAD+ biosynthesis (albeit because it contains tryptophan). Also, the Court stressed that the claims "do not require any specific quantity of isolated NR, and the district court's construction for 'isolated [NR],' which Appellants do not challenge, does not require that the NR be separated from the lactalbumin whey protein but only from 'some of the other components associated with the source of [NR].'" "The district court construed 'isolated [NR]' to mean '[NR] that is separated or substantially free from at least some other components associated with the source of [NR].'"

The Court further stated that while "the claims cover several different composition embodiments, some of which are structurally different from milk ... the claims also encompass – as both parties agree – at least one embodiment that covers milk, except that the NR element is 'isolated.' Because the claims are broad enough to encompass a product of nature, it is invalid under § 101."

Thus, the Court concluded that the "claimed compositions remain indistinguishable from natural milk because, other than separation form some other components, the isolated NR is no different structurally of functionally from its natural counterpart in milk." "Milk, like the claimed compositions, undisputedly 'increase[s] NAD+ biosynthesis' upon oral administration. The claimed compositions do not exhibit markedly different characteristics from natural milk and are, therefore, invalid for claiming a patent-ineligible product of nature."

Therefore, "the act of isolating the NR compared to how NR naturally exists in milk is not sufficient, on its own, to confer patent eligibility."

Hawk Technology Systems, LLC v. Castle Retail, LLC

No. 2022-1222 (Fed. Cir. Feb. 17, 2023) § 101 - Alice

By: Li Guo

Topic

This is a § 101 case, and addresses converting a 12(b)(6) motion to an MSJ under 6th Circuit law.

Background

Hawk Technology System ("Hawk") appealed the district court's decision that found the patent invalid under § 101.

The patent at issue—U.S. Pat. No. 10,499,091 (the '091 patent)—relates to a method of viewing multiple simultaneously displayed and stored video images on a remote viewing device of a video surveillance system. The Federal Circuit focused its § 101 analysis on claim 1 of the '091 patent, as reproduced below:

1. A method of viewing, on a remote viewing device of a video surveillance system, multiple simultaneously displayed and stored video images, comprising the steps of:

• receiving video images at a personal computer based system from a plurality of video sources, wherein each of the plurality of video sources comprises a camera of the video surveillance system;
• digitizing any of the images not already in digital form using an analog-to-digital converter;
• displaying one or more of the digitized images in separate windows on a personal computer based display device, using a first set of temporal and spatial parameters associated with each image in each window;
• converting one or more of the video source images into a selected video format in a particular resolution, using a second set of temporal and spatial parameters associated with each image;
• contemporaneously storing at least a subset of the converted images in a storage device in a network environment;
• providing a communications link to allow an external viewing device to access the storage device;
• receiving, from a remote viewing device remoted located remotely from the video surveillance system, a request to receive one or more specific streams of the video images;
• transmitting, either directly from one or more of the plurality of video sources or from the storage device over the communication link to the remote viewing device, and in the selected video format in the particular resolution, the selected video format being a progressive video format which has a frame rate of less than substantially 24 frames per second using a third set of temporal and spatial parameters associated with each image, a version or versions of one or more of the video images to the remote viewing device, wherein the communication link traverses an external broadband connection between the remote computing device and the network environment; and
• displaying only the one or more requested specific streams of the video images on the remote computing device.

In addition to the § 101 issue, Hawk also asserted that the district court erred in its decision to grant the motion to dismiss because the motion was procedurally premature under Rule 12, where the district court held a technical briefing and allegedly considered testimony and evidence such as appellee's cited references, schematic PowerPoint and appellee's CEO's statement at the technical briefing.

Issue(s)

• Is the '091 patent invalid under Alice?
• Did the district court err when it did not expressly reject matters outside the pleadings and failed to treat the motion as one for summary judgment under Rule 56?

Holding(s)

• Yes, but the error is harmless.

Reasoning

Under Alice step one, citing Two-Way Media Ltd. v. Comcast Cable Commc'ns, LLC, 874 F.3d 1329 (Fed. Cir. 2017), the Court found that the '091 patent claims are directed to a method of receiving, displaying, converting, storing, and transmitting digital video "using result-based functional language." Further citing Adaptive Streaming Inc. v. Netflix, Inc., 836 F. App'x 900 (Fed. Cir. 2020), the Court found that the claims are directed to those same general abstract ideas—displaying images, converting them into a format, transmitting them, and so on. Under Alice step two, the Court found the claims only use generic functional language to achieve the purported solution and require nothing other than conventional computer and network components operating according to their ordinary functions. Nor did the Court see anything inventive in the ordered combination of the claim limitations. In sum, the Court held that the '091 patent is patent ineligible because its claims are directed to an abstract idea and fail to transform that abstract idea into patent-eligible subject matter.

Because this is a procedural issue not unique to patent law, the Court looks to the law of the applicable regional circuit—the Sixth Circuit. Under Rule 12(d), if matters outside the pleadings are presented to, and not excluded by, the court, the motion must be treated as one for summary judgment under Rule 56. Under Sixth Circuit law, a motion to dismiss must ordinarily be decided without resort to matters outside the pleadings; a district court's failure to expressly reject evidence attached to the briefs triggers its duty to treat the motion as one for summary judgment.

Here, the Court found that the district court erred when it did not expressly reject the outside matters or treat the motion as one for summary judgment under Rule 56. But the Court held that the district court's error was harmless because, first, the district court did not discuss these outside materials in its decision. Secondly, the Court noted that the district court holding a technical briefing is simply a procedural fact and where a district court holds a technical briefing, e.g., a technical tutorial, and no matters outside the pleading are presented, it need not convert the motion to one for summary judgment under Rule 56. Finally, the Court noted that the district court expressly stated that it was ruling under 12(b)(6), and its analysis was based wholly on the legal sufficiency, vel non, of the plaintiff's claim, and the dismissal can be justified without reference to any extraneous matters.

Sanderling Management v. Snap Inc.

No. 2021-2173 (Fed. Cir. Apr. 12, 2023)

Alice – 35 U.S.C. § 101

By: Fred Chung

Topic

This case addresses patent eligibility under Alice and whether the district court should have afforded the patent owner leave to amend its complaint.

Background

Sanderling asserted three patents sharing a common specification against Snap in the Northern District of Illinois. The claims are directed to a method of determining a user's location with GPS and displaying images the user based on their location. Snap moved to transfer venues and to dismiss, asserting the patents were invalid for being directed to a patent-ineligible abstract idea under Alice. Sanderling opposed Snap's motions.

Before deciding Snap's motion to dismiss, the Northern District of Illinois court granted Snap's motion to transfer the case to the Central District of California. The Central District of California court then granted Snap's motion to dismiss with prejudice and denied Sanderling's request for leave to amend its complaint, which Sanderling did not make until the hearing. The district court further denied Sanderling's motion for reconsideration.

Issue(s)

• Whether the district court oversimplified the claims under step one of the Alice tests.
• Whether the district court erred by not construing claim terms.
• Whether Sanderling's alleged factual disputes precluded ruling on the motion to dismiss.
• Whether the district court deprived the patents of their statutory presumption of validity and improperly put the burden of proof on the patentee by deciding contrary to the prosecution history where the PTO had determined the presence of an inventive concept.
• Whether Sanderling's proposed amendments to its complaint were futile.

Holding(s)

• The district court's formulation of the abstract idea ("'of providing information – in this case, a processing function – based on meeting a condition,' e.g., matching a GPS location indication with a geographic location.") was correct.
• When proposed constructions have not been provided, the court need not engage in claim construction before resolving a § 101 motion, if the claims are directed to ineligible (or eligible) subject matter under all plausible constructions.
• A patentee's conclusory and generalized allegations of factual disputes do not support denial of a motion to dismiss.
• Improving scalability and speed does not provide innovative concept to an abstract idea.
• Denial of reconsideration was proper because the proposed amendment to the complaint was futile.

Reasoning

The claims are directed to the use of computers as a tool; here, a tool to identify when a condition is met and then to distribute information based on satisfaction of that condition. The challenged claims here are distinguishable from McRO v. Bandai because they claim a much more generic set of steps than McRO's specific claim language. Here, the claims have a "distribution rule" that merely receives, matches, and then distributes the corresponding function based on the user's location.

Sanderling identified terms for claim construction, but failed to provide constructions. To determine whether claim construction is required to resolve a motion to dismiss, the patentee should propose specific constructions and articulate how adoption of the constructions would materially impact the analysis at step one (and/or at step two). Sanderling failed to do so.

A district court has the discretion to require an opposing party to identify, and articulate the significance of, specific factual disputes that purportedly make granting the motion improper. Sanderling failed to timely identify any specific factual disputes.

"No amendment to a complaint can alter what a patent itself states." Thus, the proposed amendments to add conclusory statements that steps were not well-known, routine, and conventional to the complaint were futile. District courts need not credit conclusory allegations. Courts are not required to defer to the Patent Office determinations as to eligibility, because review under ¶ 101 is de novo.

Trinity Info Media, LLC, fka Trinity Intel Media, LLC, v. Covalent, Inc.

No. 2022-1308 (Fed. Cir. July 14, 2023)

By: Evan Lim

Topic

This case addresses whether patents relating to methods and systems for connecting users based on their answers to polling questions claim patentable subject matter under 35 U.S.C. § 101.

Background

Trinity sued Covalent for patent infringement of U.S. Patent 9,087,321 ("the '321 patent") and U.S. Patent 10,936,685 ("the '685 patent") (collectively, "the challenged patents"). The challenged patents are related and both trace their priority date to U.S. Provisional Application No. 61/309,038, filed on March 1, 2010. The challenged patents both teach a similar claimed invention that is "directed to a poll-based networking system that connects users based on similarities as determined through poll answering and provides real-time results to the users." '321 patent col. 1 ll. 53-56. The '685 patent contains additional disclosures discussing progressive polling for ecommerce systems. '685 patent col. 2 l. 1 to col. 3 l. 60.

Trinity asserted claims 1-3, 8 and 20 of the '321 patent and claims 2, 3, 12-14, 16, 17, 20-22, 24 and 25 of the '685 patent. Covalent filed a motion to dismiss asserting the claims are invalid under 35 U.S.C. § 101. The District Court granted Covalent's motion to dismiss, finding the asserted claims were directed to the abstract idea of "matching users who gave corresponding answers to a question" and did not contain an inventive concept. The District Court further described claim 1 of the '321 patent as not improving computer functionality but instead using "generic computer components as tools to perform the functions faster than a human would."

Issue(s)

• Whether the challenged patents are directed to an abstract idea and do not include an inventive concept that is an improvement over the general functionality of a computer

Reasoning The claims are directed to the use of computers as a tool; here, a tool to identify when a condition is met and then to distribute information based on satisfaction of that condition. The challenged claims here are distinguishable from McRO v. Bandai because they claim a much more generic set of steps than McRO's specific claim language. Here, the claims have a "distribution rule" that merely receives, matches, and then distributes the corresponding function based on the user's location. Sanderling identified terms for claim construction, but failed to provide constructions. To determine whether claim construction is required to resolve a motion to dismiss, the patentee should propose specific constructions and articulate how adoption of the constructions would materially impact the analysis at step one (and/or at step two). Sanderling failed to do so. A district court has the discretion to require an opposing party to identify, and articulate the significance of, specific factual disputes that purportedly make granting the motion improper. Sanderling failed to timely identify any specific factual disputes. "No amendment to a complaint can alter what a patent itself states." Thus, the proposed amendments to add conclusory statements that steps were not well-known, routine, and conventional to the complaint were futile. District courts need not credit conclusory allegations. Courts are not required to defer to the Patent Office determinations as to eligibility, because review under ¶ 101 is de novo.

Holding(s)

The Federal Circuit affirmed the District Court's finding that the challenged patents are patent ineligible under § 101.

Reasoning

Section 101 of the Patent Act defines patent-eligible subject matter as "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." 35 U.S.C. § 101. The Supreme Court has long held that there is an "implicit exception" in § 101 in that "[l]aws of nature, natural phenomena, and abstract ideas are not patentable." Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208, 216 (2014) (quoting Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589 (2013)).

To determine if claims contain patent-eligible subject matter, the two-step framework set forth in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66, 77–80 (2012) is applied. Step one, "determine whether the claims at issue are directed to one of those patent-ineligible concepts," such as an abstract idea. Alice, 573 U.S. at 217. Step two, "consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application." Alice, 573 U.S. at 217 (quoting Mayo, 566 U.S. at 78–79). Essentially, step two is described as a search for an "inventive concept" – an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon ineligible subject matter.

When analyzing claims under § 101 for a motion to dismiss, courts may make a determination before conducting claim construction and fact discovery. To invoke a need for claim construction or discovery before an analysis of asserted claims can be made, the patentee must propose a specific claim construction or identify specific facts that need development and explain why those circumstances must be resolved before the scope of the claims can be understood for § 101 purposes. It is not enough to invoke a generic need for claim construction or discovery to avoid a grant of a motion to dismiss under § 101.

Alice/Mayo Step 1

To determine if a claim is directed to a patent-ineligible concept, such as an abstract idea, "the focus of the claimed advance over the prior art [is evaluated] to determine if the claim's character as a whole is directed to excluded subject matter." PersonalWeb Techs. LLC v. Google LLC, 8 F.4th 1310, 1315 (Fed. Cir. 2021) (quoting Intell. Ventures I LLC v. Erie Indem. Co., 850 F.3d 1315, 1325 (Fed. Cir. 2017)). "[W] hile the specification may help illuminate the true focus of a claim, when analyzing patent eligibility, reliance on the specification must always yield to the claim language in identifying that focus." Charge-Point, Inc. v. SemaConnect, Inc., 920 F.3d 759, 766 (Fed. Cir. 2019). In the context of software-based inventions, Alice/Mayo step one "often turns on whether the claims focus on the specific asserted improvement in computer capabilities or, instead, on a process that qualifies as an abstract idea for which computers are invoked merely as a tool." In re Killian, 45 F.4th 1373, 1382 (Fed. Cir. 2022) (quoting Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1303 (Fed. Cir. 2018)).

The Federal Court determined that the independent claims of the challenged patents are focused on collecting information, analyzing it, and displaying certain results, which places them in a class of claims directed to a patent ineligible concept, as a human mind could review people's answers to questions and identify matches based on those answers. While the independent claims may state that such operations be performed in a particular environment, such as on a hand-held device, a web server, a database or a match aggregator, such requirements or limitations to an abstract idea do not change the focus the claims. Additionally, including specificity to the operations as found in the dependent claims, such as performing matches based on gender, varying the number of questions asked, and/or displaying other users' answers, also do not change the focus of the claims as they merely add trivial variations of the abstract idea.

Although humans could not mentally perform "nanosecond comparisons" and aggregate "result values with huge numbers of polls and members," as argued by Trinity, the claims do not require such operations. Moreover, even though a human could not perform operations of claims as quickly as a computer using generic computer components, such claims have been found to be directed to an abstract idea. See Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350, 1351, 1353–54 (Claims were found to be directed to an abstract idea even though a human could not "detect[] events on an interconnected electric power grid in real time over a wide area and automatically analyz[e] the events on the interconnected electric power grid.") See Charge-Point, 920 F.3d at 766–67 (Although a human cannot communicate over a computer network without the use of a computer, claims directed to enabling "communication over a network" were held to be focused on an abstract idea.)

The Federal Circuit further found that the challenged patents' specifications confirm that the asserted claims are directed to an abstract idea that merely seeks to use computers as a tool, not on an improvement in computer capabilities. The specifications of the challenged patents frame the inventor's problem in terms of how to improve existing polling systems by performing progressive polling and focuses on details of receiving and comparing answers to generate matches, and not on how to improve computer technology. The challenged patents also repeatedly note in the specifications that the invention is not limited to specific technological solutions, including, for example, disclosing that the invention may be practiced without necessarily being limited to the specific details described, that there are numerous techniques for determining a likelihood of a match, and that physical connections, protocols and communication procedures of the Internet are well known to those of skill in the art, confirming that the problem being solved by the invention is the ability to perform the abstract idea of matching based on questioning, and not an improvement to computer technology. Thus, any use of specific components, such as a unique identification, match servers, and a match aggregator, merely place the abstract idea in the context of a distributed networking system and does not change the focus of the asserted claims from an abstract idea, as described in the specification.

Alice/Mayo Step 2

Where a claim is directed to an abstract idea under step 1, it is to be determined whether the claim includes "an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application" and "amounts to significantly more than a patent upon the [ineligible concept] itself," rather than simply stating the abstract idea while adding the words "apply it." Alice, 573 U.S. at 217-218, 221. A determination of whether a claim has an "inventive concept" would include an examination of the additional elements of the claim, both individually and as an ordered combination, to determine if such additional elements "transform the nature of the claim" into a patent-eligible application. Mayo, 566 U.S. at 78, 79. Trinity asserts arguments that the asserted claims contain inventive concepts because the prior art did not include, alone or in combination, certain features disclosed in the asserted claims, including match servers, a match aggregator, a mobile device and a mobile application.

Trinity further asserts that because these features are not disclosed in the prior art, the present invention "includes an advance over the prior art and an improvement over a general-purpose computer." The Federal Circuit has found that conclusory allegations that the prior art lacks elements of asserted claims, and that such elements are an advance over the prior art and an improvement over a general-purpose computer, are insufficient to demonstrate an inventive concept. See Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014) ("That some of the eleven steps were not previously employed in this art is not enough—standing alone—to confer patent eligibility upon the claims at issue."); see also Customedia Techs., LLC v. Dish Network Corp., 951 F.3d 1359, 1364 (Fed. Cir. 2020) ("[C] laiming the improved speed or efficiency inherent with applying the abstract idea on a computer [is] insufficient to render the claims patent eligible as an improvement to computer functionality." (citation omitted), see also OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015) ("[R]elying on a computer to perform routine tasks more quickly or more accurately is insufficient to render a claim patent eligible.").

Please click here to view the full report.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.