Post by Paul S. Mazzola
Four recent Supreme Court cases involving patentable subject matter under 35 U.S.C. § 101 (Bilski v. Kappos, Mayo Collaborative Services v. Prometheus Laboratories, Inc., Ass'n for Molecular Pathology v. Myriad Genetics, Inc., and Alice Corp. v. CLS Bank International ) have had the practical effect of heightening the standard for patentability. However, these cases may also be altering the way patent cases are handled in their early stages.
The Federal Circuit recently decided the case of Ultramercial, Inc. v. Hulu, LLC for a third time. The case was originally filed in the Central District of California in 2009. Initially, the district court granted the defendant's pre-answer motion to dismiss under Rule 12(b)(6), finding the patent at issue did not claim patent-eligible subject matter. In the first appeal, the Federal Circuit reversed the district court, and the Supreme Court vacated the decision of the Federal Circuit for further consideration in light of Mayo. On remand, the Federal Circuit again reversed the district court, finding it was improper to dismiss the suit by granting a Rule 12(b)(6) motion. To that end, the court made several compelling statements regarding the interplay between such motions and the § 101 analysis. The court stated, "[I]t will be rare that a patent infringement suit can be dismissed at the pleading stage for lack of patentable subject matter." The court reasoned that issued patents are presumed to be valid, and "the analysis under § 101, while ultimately a legal determination, is rife with underlying factual issues." Adding that claim construction should be required if there are factual disputes, the court succinctly stated, "Rule 12(b)(6) dismissal for lack of eligible subject matter will be the exception, not the rule."
After a second petition for certiorari was filed with the Supreme Court, the Court decided Alice. The holding in Alice—that an abstract idea is not patent eligible subject matter if "merely requires generic computer implementation"—was squarely relevant to the patent at issue in Ultramericial, leading the Supreme Court to again vacate the decision of the Federal Circuit for further consideration in light of Alice.
In applying Alice to the patent at issue in Ultramericial, the Federal Circuit held that the claims do not recite patent-eligible subject matter under § 101, but affirmed the motion to dismiss under Rule 12(b)(6). In doing so, the court deviated sharply from the decisive language from its previous decision, but dedicated no discussion to reconcile why a motion to dismiss is the appropriate mechanism to dispose of a suit involving an issued patent in an infringement suit presumably "rife with underlying factual issues." However, the concurring opinion of Judge Mayer was almost entirely devoted to this issue. "First, whether claims meet the demands of 35 U.S.C. § 101 is a threshold question, one that must be addressed at the outset of litigation. Second, no presumption of eligibility attends to the section 101 inquiry." Describing section 101 as a "gateway" and a "sentinel" akin to establishing jurisdiction, Judge Mayer forwarded three benefits of resolving any issue of patentable subject matter at the outset of litigation: conserving judicial resources, thwarting vexatious infringement suits, and protecting the public. In addressing the district court opinion, Judge Mayer stated, "No formal claim construction was required because . . . no 'reasonable construction would bring the claims within patentable subject matter.'" Regarding the presumption of validity for issued patents requiring clear and convincing evidence to the contrary, Judge Mayer noted "the PTO has for many years applied an insufficiently rigorous subject matter eligibility standard." Thus, Judge Mayer found, "[T]he district court properly invoked section 101 to dismiss Ultramercial's infringement suit on the pleadings."
Given the apparent shift by the Federal Circuit toward resolving issues of patent-eligible subject matter at the pleadings stage, defendants of infringement suits involving uncertain subject matter eligibility are more likely to use a motion to dismiss to try to avoid costly discovery and claim construction. The opportunity for an alleged infringer to undercut an infringement suit at the pleadings phase may also impact litigation strategy, including whether such a motion should be pursued in conjunction with other mechanisms such as post-grant proceedings before the Patent Trial and Appeal Board.