Section 337 of the U.S. trade laws provides the U.S. International Trade Commission with the authority to prevent “unfair practices in import trade.” While the statute is best known for its provisions that allow the ITC to exclude imported goods that infringe U.S. intellectual property rights, the statute also provides more generally for the ITC’s ability to remedy other “unfair methods of competition and unfair acts in the importation of articles. . . the threat or effect of which is,” inter alia, “to destroy or substantially injure an industry in the United States. . . [or] to restrain or monopolize trade and commerce in the United States.” 35 U.S.C. § 1337(a)(1)(A)(i) & (iii). This section, while not frequently invoked, is used as the basis for non-statutory intellectual property rights claims (such as common law trademarks) and, to a lesser extent, antitrust claims.
The ITC’s investigation in Certain Carbon and Alloy Steel Products, Inv. No. 337-TA-1002 was instituted to investigate alleged violations of Section 337 by the Chinese steel industry based on claims of trade secret misappropriation, false designation of origin, and antitrust violations. In a recent opinion (March 18, 2018), the ITC has determined for the first time that “antitrust injury” standing is required for antitrust claims before the Commission, affirming the Administrative Law Judge’s dismissal of the claims. The Commission reasons that
Without the requirement of antitrust injury, the risk of providing relief against the pro-competitive effects or efficiency enhancing behavior of particular respondents is more acute in the context of section 337 because the Commission does not possess as much enforcement discretion as is available to other federal agencies. . . Thus, we find the practices followed in the federal courts regarding antitrust injury to be a closer analogue to the current proceeding, rather than FTC practice.
The Commission’s decision drew a lengthy dissent from Commissioner Broadbent, who wrote:
Antitrust injury is a separate and distinct standing requirement derived from, and restricted as a matter of statutory interpretation to, section 4 or 16 of the Clayton Act in Article III district courts. It is not a required element of a Sherman Act section 1 violation alleged in [the complaint].
Because antitrust claims under Section 337 are rare, the Commission’s decision may have little direct impact on Section 337 case filings or practice. Nevertheless, the Commission’s discussion of its governing statute and the Federal Circuit precedent applicable to its authority under the statute will likely be mined by litigants in future cases in which questions about the breadth and scope of Section 337 are at issue. The Commission’s decision to self-restrict its authority under its implementing statute and to align it with federal law is an interesting development that may be relevant in other contexts within and outside Section 337 investigations.
For a third time in the past thirty days, a Judge Moore-led panel has found in favor of a patent owner defending its claims from an eligibility challenge under Section 101. In Exergen Corp. v. Kaz USA, Inc., Nos. 2016-2315, 2016-2341 (March 8, 2018), a panel majority (Moore, Bryson) upheld a lower court’s post-trial ruling that claims to a method for detecting body temperature using temperature readings from the forehead skin and ambient temperature were patent eligible. While finding that the claims employed a natural law, the majority held that the lower court’s conclusion that certain claim elements were not routine, well-understood, or conventional was a factual determination that “must be given clear error deference.” On that basis, the majority refused to overturn the lower court’s decision.
The majority’s opinion provoked a vigorous dissent from Judge Hughes, who would have found that “[e]ven under a deferential standard of review, the district court clearly erred by finding that the claims . . . embody an inventive concept.” According to Judge Hughes, the inventor merely identified the “coefficient that governs the relationship between core temperature and the temperature of skin above the temporal artery” for use in a “heat balance equation” that is a “mathematical representation of the law of nature that governs the relationship between skin, air, and core temperatures” and then used the equation to calculate and display core body temperature with a conventional temperature detector and display. The district court “never found” that the claimed elements were not conventional, but erroneously focused on whether the claim elements “were routinely used” for the purpose of calculating core body temperature, the “identical reasoning” that was rejected in Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015), cert denied, 136 S. Ct. 2511 (2016). According to Judge Hughes, the panel majority’s
“attempts to salvage the district court’s decision by emphasizing the novelty of the heat balance coefficient . . . misapplies the step two analysis from the Mayo/Alice framework. . . a patent-ineligible law of nature cannot be the inventive concept that ensures the claimed invention amounts to significantly more than a patent upon that law of nature.”
Takeaway: Like the other two cases decided in the past month (see our prior post), the panel majority’s decision in Exergen turned on its view that patent eligibility analysis requires resolving underlying factual questions regarding whether or not the claims contain unconventional or non-routine (“inventive”) elements. Unlike those cases, which involved allegedly improper fact finding at the motion to dismiss and summary judgment phases, the Exergen case involved review of an eligibility challenge decided after trial. Exergen therefore shows that shifting the character of the § 101 inquiry to a more fact-based analysis may make eligibility challenges more difficult at all phases of a patent infringement lawsuit. Indeed, the panel majority suggests that it might be open to the argument that factual issues underlying eligibility determinations must be heard by a jury; however, the panel did not reach the issue because the patent owner waived any right to a jury trial by agreeing before trial that the district court could “elect” not to have the jury decide the underlying factual issues and by failing to object to the district court’s decision that it would not present special verdict questions on § 101 to the jury. Plainly, requiring that § 101 issues be tried to a jury would add still another level of difficulty for patent infringement defendants.
We are delighted to announce that Rahul Pathak has been recognized as an Intellectual Property Trailblazer by the 2018 National Law Journal. Rahul works with clients on a wide range of patent matters, including prosecution, portfolio management, opinions and due diligence, particularly in the chemistry and biochemistry fields. He was chosen from hundreds of candidates to receive this honor. Click here to read our press release.
Appeals from United States Patent and Trademark Office rejections of patent applications are a critical component of patent prosecution practice. But, the rule governing the all-important question of when a rejection is ripe for appeal is not the model of clarity that practitioners might expect (See 35 U.S.C. §134). Under 37 CFR §41.31(a)(1) (emphasis added), “[e]very applicant, any of whose claims has been twice rejected, may appeal from the decision of the examiner to the [Patent Trial and Appeal] Board (PTAB) by filing a notice of appeal.” The wording of 37 CFR §41.31(a)(1), however, is unclear as to whether “twice rejected” requires two rejections of a claim having exactly the same wording. In other words, would amending a claim after an initial rejection prevent an applicant from filing a notice of appeal after receiving a subsequent rejection of the amended claim? As will be discussed below, the answer to that question is no. There is no “exactness requirement” in the “twice rejected” rule (See MPEP §1204).
The controlling case on the “twice rejected” rule is Ex Parte Lemoine, 46 USPQ2d 1420 (Bd. Pat. App. & Inter. 1994). In Ex Parte Lemoine, an applicant received an Office Action, finally rejecting all of the pending claims in an application under 35 U.S.C. §112, second paragraph, and 35 U.S.C. §103. The applicant responded by filing a continuation application, and made some preliminary amendments to the claims, which included the addition of five new claims. The applicant then received a non-final rejection of the continuation application, which essentially repeated the previous grounds of rejection made in the parent application. The applicant then filed a notice of appeal. In response, the Examiner held the application to be abandoned, stating that the notice of appeal was improper at that particular stage of prosecution (Ex Parte Lemoine, 46 USPQ2d at 1420-22). The appeal was eventually forwarded to the Board of Patent Appeals and Interferences (now the PTAB).
Upon review of the appeal, the Board decided that the applicant had a right to appeal the non-final rejection of the claims. Specifically, the Board stated that the term “claims” as used in 35 U.S.C. §134 is “used in a more general sense to refer to claims ‘for a patent’ … the word is synonymous with a request or demand for a patent” (Ex Parte Lemoine, 46 USPQ2d at 1423 (emphasis added)). The Board further stated that “[u]nder our interpretation, so long as the applicant has twice been denied a patent, an appeal may be filed” (Ex Parte Lemoine, 46 USPQ2d 1423).
In view of the Board’s decision, an applicant is allowed to initiate an appeal as long as the applicant has twice been denied a patent. The “twice rejected” rule of 37 CFR §41.31(a)(1), therefore, does not contain an “exactness requirement,” i.e., a requirement that a claim having the same exact wording be rejected twice. To the contrary, in Ex Parte Lemoine the Board concluded that the applicant has a right to appeal the rejection even though the applicant amended the claims. To confirm this understanding of the “twice rejected” rule, we reached out to a representative from the Office of Patent Legal Administration and several paralegals at the PTAB, all of whom were able to confirm that the “twice rejected” rule of 37 CFR §41.31(a)(1) does not contain an “exactness requirement.”
Another important aspect for practitioners to keep in mind is that “[a] notice of appeal may be filed after any of the claims has been twice rejected, regardless of whether the claim(s) has/have been finally rejected” (See MPEP §1204). The filing of a notice of appeal, therefore, does not depend on the finality of the rejection, meaning that a notice of appeal can be filed after either a non-final or a final rejection of a claim, so long as the claim has been “twice rejected.”
Developments in artificial intelligence (AI) are proving hugely beneficial for society, both at a commercial and individual level (e.g. face recognition and medical diagnostic technology, route mappers for navigation, robotic pets, cleaners and industrial robots). However, with the advancement of such technology, and the increasing integration of AI into our everyday lives, comes the potential for its misuse or misappropriation. This is the concern expressed by a number of research bodies and industry experts in a new report, which describes scenarios that could have been taken straight out of the science fiction series “Black Mirror”.
The report – “The Malicious Use of Artificial Intelligence: Forecasting, Prevention and Mitigation” – considers the potential threats that could arise from the malicious use of AI technology and aims to identify certain interventions which may benefit from further evaluation to help foresee, prevent and mitigate these threats. The report defines AI as “the use of digital technology to create systems that are capable of performing tasks commonly thought to require intelligence” and it considers “Malicious Use” to include all practices which are intended to “compromise the security of individuals, groups or society”.
The report cites AI technology’s “dual-use” nature as the main reason behind its susceptibility to malicious use (in that the same technology can be used for both beneficial and harmful ends). It identifies those aspects of AI and machine learning technology that lend themselves to be particularly attractive to malicious users, and expands on a number of specific misuse scenarios, which the authors perceive as being possible now or in the near future. For example, the paper describes a fictional situation where a cleaning robot is repurposed to deliver and detonate a bomb in the presence of a government official (who it has identified using facial recognition). It successfully evades suspicion in the days leading up to the attack by posing as a legitimate machine and carrying out routine cleaning tasks.
The report calls for greater collaboration between researchers, developers and policymakers to develop a best practice regulatory framework, with the objective of reducing the potential for future AI developments to be maliciously repurposed. One suggestion is that all such developments could be required to incorporate built in protections against cyberattacks or tampering, in line with an agreed regulatory standard.
Developers of AI solutions may want to familiarise themselves with the contents of the report. Separately, contracts between suppliers and customers for AI solutions will become increasingly important. Customers will be looking for warranties around the security of the technology. Suppliers will be wary to guarantee that the technology is resistant to attack or misuse, particularly given that AI as a whole, and its known uses and abuses, is still in its relative infancy. Some interesting contract negotiations could result around the allocation of liability for malicious misuse.
On February 6, 2018, SEC Chairman Jay Clayton and CFTC Chairman Christopher Giancarlo provided testimony on virtual currencies to the U.S. Senate Committee on Banking, Housing, and Urban Affairs. Their written statements and testimony can be found here. Below we provide a summary of the written statements and testimony and analysis for participants in the virtual currency and blockchain spaces.
New Possibilities, New Risks
Takeaway: Both the SEC and CFTC recognize the potential use and value of virtual currency and blockchain technology, but both remain wary of the risks, particularly for investors.
Both Chairmen expressed optimism that developments in financial technology will help facilitate capital formation and provide promising investment opportunities for both institutional and retail investors. SEC Chairman Clayton noted that these developments may assist regulators in monitoring transactions, holdings, obligations, and market characteristics. CFTC Chairman Giancarlo expressed optimism that distributed ledgers have the potential to enhance economic efficiency, mitigate centralized systemic risk, defend against fraudulent activity, and improve data quality and governance. Like Chairman Clayton, Chairman Giancarlo posited that distributed ledger technology could provide assistance to financial market regulators.
At the same time, both Chairmen expressed concern. Chairman Clayton noted that enthusiasm for obtaining a profitable piece of a new technology can attract fraudsters and bad actors, who prey on this enthusiasm. Chairman Giancarlo similarly observed that bad actors historically have invoked the concept of innovation to perpetrate age-old frauds. Both Chairmen repeatedly emphasized the SEC’s and CFTC’s missions to establish a regulatory environment for investors and market participants that fosters innovation, integrity, and confidence.
ICOs as Securities
Takeaway: The SEC considers all or nearly all ICOs to meet the definition of a security and will seek to enforce the federal securities laws as they apply to these ICOs.
The industry has been particularly and rightfully concerned about whether and to what degree the SEC will take the position that ICOs meet the definition of a security. Chairman Clayton provided a strongly worded response in his written testimony, stating that “when investors are offered and sold securities—which to date ICOs have largely been—they are entitled to the benefits of state and federal securities laws.” He reasoned that many products labeled as cryptocurrencies or related assets are increasingly being promoted as investment opportunities that rely on the efforts of others (the well-known Howey test for determining whether an asset is a security), with their utility as an efficient medium for commercial exchange being a distinct secondary characteristic. He rejected the notion that labeling an asset a “utility token or structuring it to provide some utility” can prevent it from being a security. Chairman Clayton noted that as of today, no ICOs have been registered with the SEC.
Chairman Clayton added that the SEC has ramped up enforcement of securities laws in the cryptocurrency space. It has recently established a new Cyber Unit focused on misconduct involving distributed ledger technology and ICOs and has brought a number of enforcement actions concerning ICOs for alleged violation of federal securities laws.
On a somewhat different topic, Chairman Clayton expressed concern with recent instances of public companies with no meaningful track record in pursuing distributed ledger or blockchain technology changing their business models and names to reflect a focus on such technology without adequate disclosure to investors.
Virtual Currencies as Commodities
Takeaway: U.S. regulation of virtual currency transactions is more limited, as cash or “spot” transactions are largely governed by a patchwork of state money transmission regulations. There remains a limited role for regulation and enforcement by the SEC and CFTC, and that role may grow with future legislation.
CFTC Chairman Giancarlo reiterated the CFTC determination that virtual currencies, such as Bitcoin, meet the definition of a commodity. As such, the CFTC has regulatory and enforcement jurisdiction over derivatives on virtual currencies traded in the United States and enforcement jurisdiction to investigate and initiate civil actions based on fraud and manipulation in virtual currency markets. Indeed, the CFTC has recently taken enforcement action against a number of entities allegedly engaged in fraud, market manipulation, and disruptive trading in the virtual currency markets. But neither the CFTC nor any other U.S. Federal agency has regulatory jurisdiction over cash or “spot” transactions in virtual currencies. Thus, the CFTC cannot conduct oversight including imposing registration requirements, surveillance and monitoring, transaction reporting, compliance with personnel conduct standards, customer education, capital adequacy, trading system safeguards, or cyber security examinations. Rather, many U.S.-based cryptocurrency trading platforms have elected to be regulated as money-transmission services, an industry regulated predominately at the state level, without oversight by the SEC or CFTC. SEC Chairman Clayton cautioned that such exchanges may be providing services traditionally associated with securities, commodities, and currency exchanges, such as price quotes. He further noted that the current applicable regulatory framework for cryptocurrency trading was not designed with the type of trading now occurring in mind.
SEC Chairman Clayton did add, however, that the SEC is monitoring the cryptocurrency-related activities of the market participants that it does regulate, including brokers, dealers, investment advisers, and trading platforms. He instructed that those market participants should treat payments and other transactions made in cryptocurrency as if cash were being handed from one party to another and that they should keep in mind their anti-money laundering and know-your-customer obligations.
He also expressed skepticism about approving financial products linked to underlying cryptocurrencies, such as ETFs. He acknowledged the importance of continued innovation in retail fund space. But he also professed a need for examination and resolution of issues concerning liquidity, valuation, custody, creation, redemption, and arbitrage.
The Future of Virtual Currency Regulation
Takeaway: The SEC and CFTC will continue their enforcement work and likely work with and look to Congress for additional guidance and any expansion of regulatory authority.
Both chairmen posed the question of whether the U.S. government’s historical approach to the regulation of sovereign currency transactions is appropriate for the new cryptocurrency markets. As explained above, they both noted that cash or “spot” transactions in virtual currencies are not currently regulated by any U.S. Federal agency and that investors may lack market protections such as rules on best execution, prohibitions on front running, short sale restrictions, and custody and capital requirements. Both chairmen stated that they are open to exploring with Congress whether increased federal regulation of cryptocurrency trading platforms is necessary or appropriate. That said, Chairman Giancarlo expressed more concern that any new regulation (which he admitted may be required) do no harm to the continuing evolution of distributed ledger technology.
It is clear that both the SEC and CFTC are grappling with how to apply existing law—enacted without today’s technology in mind—to the latest innovations in virtual currencies and blockchain technology. Both Chairmen profess to appreciate the value of the new technology while simultaneously acknowledging the risks to investors and the potential need for additional regulation. In the short term, enforcement actions from both agencies will shape the regulatory landscape while in the long term, Congress may intervene with larger changes.
We are pleased to announce that Paolo Beconcini, Consultant and IP expert in our Hong Kong office, will be speaking at the International Trademark Association’s conference in London on Tuesday 27 February 2018 on the topic of multi-national design enforcement. Paolo, along with other keynote speakers, will be considering the remedies available in several key jurisdictions for successful design infringement claims, the proofs required for each and likelihood of achieving those remedies. This is a particularly hot topic in a world where technological advancements make design infringement quick and easy, so this session is one not to be missed. Further information is available here.
In Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71 (2012), and Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014), the Supreme Court of the United States established a two part test for determining patent subject matter eligibility. While most practitioners tend to focus on the second part of the test, for most software-related patents, focusing on the first part of the test may ultimately be a better strategy for patent drafting and during prosecution before the United States Patent and Trademark Office (“USPTO”).
Part I of the Mayo/Alice test requires an evaluation of whether the claims of a patent application are directed to a law of nature, a natural phenomena, or an abstract idea. Part I of the Mayo/Alice test is referred to as step 2A by the USPTO (See MPEP §2106). If the application is found to be directed to a law of nature, natural phenomena, or abstract idea, Part II of the Mayo/Alice test then requires a determination of whether any element, or combination of elements, in the claim is sufficient to ensure that the claim as a whole amounts to significantly more than the judicial exception. Part II of the Mayo/Alice test is referred to as step 2B by the USPTO (See MPEP §2106).
For software-related claims that have been deemed abstract by Examiners at the USPTO, the natural inclination of most practitioners is to either concede or fail to argue under Part I of the Mayo/Alice test, and then proceed to contend that nevertheless the claims as a whole amount to significantly more than a judicial exception under Part II of the Mayo/Alice test. From my experience prosecuting software-related applications in the USPTO, Examiners tend to be equal part offenders in this matter and often give short shrift to Part I of the Mayo/Alice test themselves. Many Examiners simply conclude that software-related claims are abstract and ask that the Applicant present an explanation for why the claims as a whole amount to significantly more than the judicial exception under Part II of the Mayo/Alice test.
Focusing on Part I of the Mayo/Alice test, however, may prove to be a more effective strategy when prosecuting software-related applications in the USPTO. As described in MPEP §2106.04(a)(I), a claim directed to an improvement in computer-related technology or to the functioning of the computer itself is not abstract. Therefore, if a software-related claim is rejected as abstract under Part I of the Mayo/Alice test, it is advisable, when possible, to counter the rejection by arguing that the claim is not abstract because it is directed to an improvement in computer-related technology or to the functioning of the computer itself. In fact, several significant decisions by the United States Court for Appeals for the Federal Circuit finding software-related claims patent eligible have focused on Part I of the Mayo/Alice test rather than Part II (See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1336-37 (Fed. Cir. 2016); McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1315 (Fed. Cir. 2016)).
The Patent Trial and Appeals Board has recently issued a decision that further illustrates the importance of Part I of the Mayo/Alice test. Specifically, the Board issued a decision regarding a software-related patent application, in which it reversed the Examiner’s interpretation that the independent claim was directed to an abstract idea. The underlying claim was to a method for “selecting, with a computer, a subset of measured data as an approximation in a computer implemented iterative geophysical data inversion,” “executing, with the computer, a first cycle of the iterative geophysical data inversion that uses the subset of measured data as the approximation,” and “varying, with the computer, the subset of measured data that is selected for processing in the iterative geophysical data inversion … wherein the varying reduces the artifact in a final subsurface model produced by the iterative geophysical data invention relative to the intermediate subsurface model” (See U.S. Patent Pub. No. 2014/0379315 A1). In reversing the Examiner’s interpretation, the Board relied exclusively on Part I of the Mayo/Alice test, without even addressing Part II of the test (See Ex parte Krebs et al., Appeal 2017-006095 (PTAB Feb. 15, 2018)).
When facing a subject matter eligibility rejection, it is important to argue that software-related claims are not directed to an abstract idea under Part I of the Mayo/Alice test, rather than simply conceding or failing to argue this point. Given that many software-related claims are directed to improvements in computer-related technology, or to the functioning of the computer itself, arguing under Part I of the Mayo/Alice test is an important tool for practitioners. In addition to keeping Part I of the Mayo/Alice test in mind when prosecuting an application before the USPTO, it is just as important to keep Part I of the Mayo/Alice test in mind when drafting software-related applications. Practitioners drafting software-related applications should always be sure to explain how the features recited in the claims provide an improvement to computer-related technology, or to the functioning of the computer itself.
Activity continues apace in the ITC’s pilot program for early disposition, with two more decisions issued in the past few weeks. On January 19, the ITC issued a notice instituting an investigation in Certain Solid State Storage Drives, Stacked Electronics Components, and Products Containing Same, Inv. No. 337-TA-1097 that also designated the investigation for early disposition on the economic prong of the domestic industry requirement. The presiding Administrative Law Judge (Judge Lord) subsequently scheduled a hearing for March 22, 2018 and has set a May 4, 2018 deadline for her decision (Order No. 3). Among its requirements, the procedural schedule mandates a number of initial disclosures, including a chart of domestic industry contentions, for which it provides a suggested template. On February 14, the ITC determined not to use the early disposition pilot program in Certain Microfluidic Systems, Inv. No. 337-TA-1100, stating that “the issues –inventorship, ownership, and standing – may be too complex to be decided within 100 days of institution.”
For more on the ITC’s pilot program, see our prior posts (here, here and here).
On February 14, 2018, a Federal Circuit panel in Aatrix Software, Inc. v. Green Shades Software, Inc., No. 2017-1452, overturned a Middle District of Florida decision that held patent claims to systems and methods for importing data into viewable form on a computer to be patent-ineligible under 35 U.S.C. § 101. According to the majority opinion authored by Judge Moore, the lower court erroneously granted dismissal of the case “in the face of factual allegations” concerning the non-routine and unconventional character of the claimed elements “that, if accepted as true,” would preclude dismissal. In dissent, Judge Reyna criticized the majority for “attempt[ing] to shift the character of the § 101 inquiry from a legal question to a predominately factual inquiry.”
Indeed, the Aatrix majority opinion represents a significant departure from what the Federal Circuit has repeatedly recognized as the “possible and proper” practice of resolving patent eligibility challenges on the pleadings, a practice that legions of district court decisions have observed over the three years since the Supreme Court’s seminal decision in Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014). Under Alice and its progeny, claims directed to an abstract idea can still be patent-eligible if they contain unconventional or non-routine (“inventive”) elements that individually or in combination limit the application of the idea. Numerous Federal Circuit panels have affirmed district court ineligibility decisions that were based on the court’s own reading of the elements a patent owner alleged were inventive in light of the patent’s intrinsic record (i.e., the claims, specification, and prosecution history).
In Aatrix, however, the majority concludes that “[w]hether the claim elements or the claimed combination are well-understood, routine, (sic) conventional is a question of a fact” and that the patent owner’s allegation that the claim element specifying a “data file containing data from a user application for populating the viewable form” is not conventional or routine, if accepted as true, defeats the motion to dismiss. As Judge Reyna points out, the majority’s reasoning could essentially defeat any motion to dismiss, since the allegedly disputed facts need not even be consistent with the intrinsic record.
Aatrix represents the second time in two weeks that a Judge Moore-led panel has overturned a district court finding of patent ineligibility on the ground that the routine or conventional nature of a claim element was disputed. In Berkheimer v. HP Inc., 2017-1437 (Feb. 8, 2018), the Federal Circuit overturned a summary judgment grant of patent ineligibility based on a material dispute of fact over whether the claims contained unconventional elements. Whether these cases signal a permanent break in the so-called “Alice storm,” however, remains to be seen. The Aatrix opinion’s attempt to distinguish prior precedent finding claims ineligible at the pleading stage as involving circumstances in which the question of what was known or routine was uncontested is not likely to convince litigants (let alone the Court members who authored those opinions) and will almost certainly be challenged in future cases.
Nevertheless, for now at least, the new framework signaled by Judge Moore’s opinions will permit patent owners to stave off eligibility rulings at the pleading stage by well-pled allegations in the complaint. On the other hand, the failure to preemptively plead facts that support patent eligibility may still be a problem for patent owners. This view appears to be confirmed by another Judge Moore-led panel decision issued on February 16, 2018 (Automated Tracking Solutions, LLC v. The Coca-Cola Co.), No. 2017-1494, in which the panel affirmed an ineligibility finding made by the Northern District of Georgia under Rule 12(c) because the complaint failed to allege that “any of the hardware components in the representative claims —either alone or in combination as a system—are anything but well understood, routine, and conventional.”
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