Section 101 Decisions Clarify ‘Clear And Convincing Evidence'

Since the U.S. Supreme Court's decision in Alice Corp. v. CLS Bank International,1 many practitioners have been confused about whether the presumption of validity and proof by clear and convincing evidence still apply when a patent has been challenged under § 101, particularly at the pleadings stage. But in a series of three recent Federal Circuit decisions—Berkheimer v. HP Inc.,2 Aatrix Software Inc v. Green Shades Software Inc.3 and Exergen Corp. v. KAZ USA Inc. 4—the Federal Circuit appears to have brought some needed clarity to this question.

Prior to Supreme Court review in Alice, the Federal Circuit's fractured en banc analysis5 suggested that the presumption of validity applied to all patent eligibility challenges. In particular, while failing to command a majority, some of the court's judges stated that an allegation that a patent covered ineligible subject matter had to be proven by "clear and convincing evidence" and most agreed that the statutory presumption of validity applies.6 Shortly thereafter, in Ultramercial, the court observed that it was "rare that a patent infringement suit can be dismissed at the pleading stage for lack of patentable subject matter ... because every issued patent is presumed to have been issued properly, absent clear and convincing evidence to the contrary."7 But because the en banc decision in Alice was splintered, and the statements regarding the burden of proof were not part of the decision that the Supreme Court affirmed, it was unclear whether any of those statements remained valid. Similarly, Ultramercial was vacated and remanded by the Supreme Court for other reasons, so its continued validity was also questionable.

In this void, district court decisions appear divided.8 Some have applied a presumption of validity and the clear and convincing standard in the context of determining patent eligibility, even at the pleadings stage.9 Others, however, either have rejected that approach10 or tried to find a proper middle ground.11 That said, in the broader context, district courts have rarely assigned much weight to the factual inquiries underpinning patent eligibility, to the extent they were considered at all. This may have been due, at least in part, to the lack of guidance from the Federal Circuit as to whether factual questions are properly considered for determining patent eligibility, even though there have been strong suggestions that factual disputes may be relevant, if not dispositive, in some cases.12

A Necessary Pendulum Swing Back to Center

The Federal Circuit's recent decision in in Berkheimer v. HP Inc. now provides a proverbial port in the storm for patent holders facing § 101 challenges. The district court in Berkheimer summarily found asserted claims to be ineligible under § 101. The claims involved digital processing and archiving files in a digital asset management system where the system parses files into multiple objects and tags the objects to create relationships between them. The objects are analyzed and compared, either manually or automatically, to archived objects to determine whether variations exist based on predetermined standards and rules. According to the district court, the claims involved simply "conventional data-gathering activities" are "unquestionably directed to an abstract idea."13

Under the second part of Alice's two-step inquiry, the district also found no inventive concept sufficient to transform the abstract idea into patent-eligible subject matter. The court found the claims not "necessarily rooted in computer technology" because "[t]he need to minimize redundancy in archival systems and to increase efficiency in editing, control, and usage of archived items is a challenge that by no means arises uniquely in the field of computer technology."14

On appeal, the Federal Circuit held that "the district court erred in concluding there are no underlying factual questions to the § 101 inquiry."15 It explained that "[w]hether something is well-understood, routine, and conventional, to a skilled artisan at the time of the patent is a factual determination."16 It further explained that "[w]hether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art" and that the "mere...