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Federal Circuit Sets Higher Standard for Early Alice Motions

Posted in Intellectual Property Litigation, IP, Web/Tech

In Cellspin Soft, Inc. v. Fitbit, Inc. et. al., the Federal Circuit recently held that a lower court wrongly invalidated four patents under Alice because they contain an inventive concept.  The four patents at issue share the same specification and generally relate to connecting a data capture device, e.g., a digital camera, to a mobile device so that a user can automatically publish content from the data capture device to a website.  Defendants had moved to dismiss the case, arguing that the patents are ineligible for patent protection under 35 U.S.C. § 101.  The district court granted these motions and subsequently awarded attorney fees.  However, the Federal Circuit concluded that the district court misapplied Federal Circuit precedent in granting Defendants’ motions to dismiss, and vacated the district court’s ruling.

The district court had granted Defendants’ motions based on the Supreme Court’s two-step framework for analyzing patent eligibility under Alice.  Step one asks whether the claim at issue is “directed to . . . [a] patent-ineligible concept[],” such as an abstract idea.  If so, a court then proceeds to step two, which the Supreme Court has described as “a search for an ‘inventive concept’—i.e., an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself,” or put another way, something more than “well-understood, routine, conventional activities previously known to the industry.”

As to step one, the district court in this case concluded that the asserted claims are directed to the abstract idea of “acquiring, transferring, and publishing data and multimedia content on one or more websites.”  The district court explained that the asserted claims use “generic computer hardware and software components” to automate the conventional, manual process of transferring data from one device to another.  It therefore concluded that Plaintiff failed to show that the data acquisition, transfer, and publication described in the patents represents something more than a simple automation of a conventional (manual) process, i.e., an abstract idea.

As to step two, the district court found that the asserted claims do not recite an “inventive concept.” In particular, the district court concluded that the various claim elements, e.g., the data capture device and Bluetooth enabled mobile device, represent generic computer components performing “as expected according to their ordinary use.” The district court therefore concluded that none of the asserted claims, from any of the asserted patents, were patent eligible.

The Federal Circuit applying this same two-step framework, agreed with the district court that the asserted claims are directed to an abstract idea.  However, the Federal Circuit also found the district court erred with respect to the inventive concept inquiry by ignoring allegations that, when properly accepted as true, preclude the grant of a motion to dismiss.

In regards to step one, the Federal Circuit found the asserted claims are drawn to the idea of capturing and transmitting data from one device to another.  Agreeing with the district court, the Federal Circuit reasoned it has consistently held that similar claims reciting the collection, transfer, and publishing of data are have been found to be directed to an abstract idea. The Federal Circuit then concluded that these cases therefore compel the conclusion that the asserted claims are directed to an abstract idea as well.

Moving on to step two, the Federal Circuit first reasoned that plausible and specific factual allegations that aspects of the claims are inventive can be sufficient to defeat a motion to dismiss when not wholly divorced from the claims or the specification.  Specifically, “[a]s long as what makes the claims inventive is recited by the claims, the specification need not expressly list all the reasons why this claimed structure is unconventional.”  The Federal Circuit then found in this case the Plaintiff made specific, plausible factual allegations about why aspects of its claimed inventions were not conventional, e.g., its two-step, two-device structure requiring a connection before data is transmitted.  The district court erred by not accepting those allegations as true.

Next, the Federal Circuit also reasoned that factual disputes about whether an aspect of the claims is inventive may preclude dismissal at the pleadings stage under § 101.  Here, accepting Plaintiff’s allegations as true, the Federal Circuit could not conclude that the asserted claims lack an inventive concept.  Plaintiff specifically alleged that using HTTP at a specific location, here at the intermediary mobile device, was inventive.  It further alleged that establishing a paired connection before transmitting data was also inventive.  The Federal Cicuit held it had no basis, at the pleadings stage, to say that these claimed techniques, among others, were well-known or conventional as a matter of law.

Moreover, even assuming that Bluetooth was conventional at the time of these inventions, implementing a well-known technique with particular devices in a specific combination, like the two-device structure here, can be inventive.  Plaintiff specifically alleged that its implementation of Bluetooth, using a two-step, two-device structure, was inventive. The same is true for the claimed combination of steps—sharing data only after a certain step is performed, using HTTP at another particular step, etc.  Furthermore, Plaintiff did more than simply label these techniques as inventive.  It pointed to evidence suggesting that these techniques had not been implemented in a similar way.  This sufficiently alleges that Plaintiff has claimed significantly more than the idea of capturing, transferring, or publishing data.  Thus, accepting Plaintiff’s allegations as true, the asserted claims recite a specific, plausibly inventive way of arranging devices and using protocols rather than the general idea of capturing, transferring, and publishing data.

Therefore, the Federal Circuit found the district court erred by not accepting these well-pleaded allegations as true with respect to whether the asserted patents capture, transfer, and publish data in a way that is plausibly inventive.  And, accepting those allegations as true, the Federal Circuit could not say that the asserted claims are ineligible under § 101 as a matter of law. The Federal Circuit therefore vacated the district court’s dismissal and its subsequent award of attorney fees.

This case continues a recent trend of making Section 101 challenges under Alice more difficult to win early in a case.  It also broadens the type of evidence that can be used by patent owners to defeat a patent eligibility motion to dismiss.  Specifically, “plausible and specific factual allegations that aspects of the claims are inventive are sufficient.”  And, “as long as what makes the claims inventive is recited by the claims, the specification need not expressly list all the reasons why this claimed structure is unconventional.”  Finally, this case shows that even five years out from Alice, patent eligibility will still continue to be an evolving body of law.