Invalidity of a patent claim is a question of law based on underlying findings of fact. Challenges to patent-eligibility are no different, yet courts often determine §101 invalidity at the pleadings stage or, at the very latest, immediately following a Markman hearing. These determinations are typically based purely on legal questions such as claim construction and do not require any factual findings. However, the Eastern District of Texas recently denied invalidating software patent claims, at least for now, because the arguments against §101-based eligibility required the court to make factual determinations.
The case of Diamond Grading Technologies, Inc. v. American Gem Society, et al., (Case No. 2:14-cv-1161-RWS-RSP, September 12, 2016 report and recommendation) involved an invention that measured a gem for grading purposes. Defendant GIA moved for judgment on the pleadings and argued the claims lacked patent-eligibility under §101. The crux of their argument was that "each step of the claimed methods can be performed by a person with pen and paper using basic ray tracing techniques while following well-known mathematical formulas."
The court found this determination, whether the claimed methods can be "performed by a person with pen and paper," to be a fact-based question that was best determined at summary judgment or, if there was a genuine issue of fact regarding this issue, at trial:
Whether conventional ray-tracing techniques can be used to practice the '963 Patent with a pen and paper is an example of an important fact question that can arise in the §101 analysis. Resolving this fact question (or even considering it) would require the Court to consider evidence outside the pleadings.
The court also found (1) the claims required construction before §101 could be determined, (2) GIA did not establish a representative claim whose patent-eligibility could be applied to the other asserted claims, and (3) the question of whether a claim is entitled to the presumption of validity under §101 is unclear, and should be further briefed during this later proceeding. The court therefore denied GIA's motion, declining to invalidate the asserted claims on §101 grounds, at least for now.
Takeaway:
The Federal Circuit has previously asked district courts to determine patent-eligibility at the pleadings stage to avoid unnecessary and burdensome litigation over invalid claims. Yet, established principles of law make such an exercise easier said than done. Claims sometimes require construction, and fact-based questions may need to be resolved before the eligibility of the claims can be determined by the district court. Litigants should therefore consider these issues when attacking claims on §101 grounds, or defending against such attacks.
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