United States: 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 fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional."17 It ultimately found that claims 4-7, in contrast to the others, "contain limitations directed to the arguably unconventional inventive concept described in the specification."

The court relied on the Supreme Court's decision in Microsoft Corp. v. i4i Ltd.,18 stating that "the question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact" and that any fact "pertinent to the invalidity conclusion must be proven by clear and convincing evidence."19 And just "[l]ike indefiniteness, enablement, or obviousness, whether a claim recites patent eligible subject matter is a question of law which may contain underlying facts."20 Thus, in its strongest signal since Alice and Ultramercial, the Federal Circuit held that the clear and convincing standard applies to § 101 eligibility challenges, and that facts can be important—as they should be—in deciding eligibility.

In Aatrix Software, the district court dismissed the case, finding two patents ineligible under § 101. The court reached this decision based on the pleadings without claim construction.21 While the asserted patent was generally directed to a "data processing system" that could design, create, and import data into viewable forms, the court found that claim 1 of the asserted patent, for example, was "not directed to any tangible or physical component, form, or structure."22 Citing the Federal Circuit's decision in Digitech, the court stated that the "system claim does not 'claim any tangible part of the digital processing system' through which the files, data, and programs are stored, processed, or viewed."23

The court proceeded to examine claim 2 and determined that it claimed a "tangible, physical medium through which the intangible system components described in Claim 1 are embodied, stored, processed, and viewed."24 It found that the recitation of "a client computer and a server computer" in claim 2 did not "describe a problem and solution rooted in computer technology."25 The court thus concluded that claim 2 was "directed to a computer-implemented data processing system that describes a data processing system the human mind is equally capable of conceptualizing and performing" and, similar to the patent at issue in Content Extraction, was directed to an abstract idea.26 In the end, there was no inventive concept sufficient to "transform the claimed abstract idea into a patent-eligible application of that idea."27

On appeal, Aatrix argued that the court prematurely decided patent eligibility without sufficient evidence and due to misunderstanding the claimed invention. For example, Aatrix argued that the "District Court simply misunderstood the technology, mischaracterizing it as a data recognition and imaging technology" because the "Aatrix inventions are neither a data recognition process (synonymous with optical character recognition) nor an imaging technology."28 Aatrix also argued that the claims "are drawn to specific improvements in computer technology for the use and display of forms, specifically designed to allow an 'add-on' forms implementation to work with any third-party application."29 Finally, Aatrix argued that the court prematurely decided the issue, without looking to the patent specification or conducting a claim construction hearing.30

The Federal Circuit agreed with Aatrix.31 After setting forth a rough road map for determining patent eligibility at the pleadings stage, including the strong suggestion that factual allegations related to inventiveness must be taken as true,32 the court found that patent eligibility can be properly determined at the pleadings stage "only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law."33 It determined that "allegations at a minimum raise factual disputes underlying the § 101 analysis" and that those factual disputes "must be resolved en route to the ultimate legal determination."34 It noted that the district court "err[ed] when it denied leave to amend without claim construction and in the face of factual allegations, spelled out in the proposed second amended complaint, that, if accepted as true, establish that the claimed combination contains inventive components and improves the workings of the computer."35 Importantly, it stated that "whether the claim elements or the claimed combination are well-understood, routine, conventional is a question of fact" and should not be "answered adversely to the patentee" without referring to "the sources properly considered on a motion to dismiss, such as the complaint, the patent, and materials subject to judicial notice."36 37

Testing the New Guideposts

Exergen presented an interesting procedural posture for the Federal Circuit to apply its new guideposts. In Exergen, the accused infringer argued that the court erred by not allowing underlying fact issues related to the eligibility determination to go to the jury. To the extent the district court found an underlying fact dispute related to the eligibility determination, it argued the district was not free to simply resolve that dispute post-trial without it having gone to the jury. During summary judgment, the patentee argued that the parties' eligibility disagreements "only underscore[] that there are underlying fact issues here precluding summary judgment."38 The court denied summary judgment, noting that "it is unclear whether [one] technique ha[d] become so prevalent as to be routine or conventional" and that "[t]he question is a close one[.]"39 At trial, the parties submitted "proposed special interrogatories in their respective proposed special verdict questions" to the extent "the Court elects to have the jury decide underlying factual issues relevant to § 101."40 Ultimately, however, the court declined to send the underlying § 101 factual issues to the jury—not because it had determined that the eligibility defense could be denied as a matter of law, but on the ground that it would be "somewhat distracting to the jury to inject that [§ 101] issue into the case."41 It found the asserted claims patent-eligible.42

On appeal, the Federal Circuit, in a nonprecedential opinion, found that the accused infringer waived any Seventh Amendment right to a jury on this issue, noting that the Seventh Amendment issue "awaits more in-depth development and briefing."43 The majority, however, used the opportunity to affirm patent eligibility and to hammer home the point that the "question of whether a claim element is well-understood, routine, and conventional to a skilled artisan in the relevant field is a question of fact and deference must be given to the determination made by the fact finder on this issue."44 It cited Berkheimer and explained that "[s]omething is not well-understood, routine, and conventional merely because it is disclosed in a prior art reference."45 After considering the facts that were presented during trial, the Federal Circuit agreed with the district court's conclusion that "'there is no evidence in the record' that these methods were well-understood, routine, and conventional."46

While the dissent disagreed that the district court clearly erred in its § 101 determination, there was no question that the factual disputes were important to the eligibility analysis or that the resolution of those facts was entitled to deference. The majority opinion indicates that the prominence of "factual underpinnings" in the eligibility determination is likely to remain throughout all stages of a patent case. Even though there have been recent summary affirmances of ineligibility decisions without any discussion of the importance of factual underpinnings,47 Exergen suggests that the tide may be turning. Take, for instance, cases like Front Row Technologies v. MLB Advanced Media, which recently sought certiorari on the question of whether "the Federal Circuit be required to revisit its decision in this case in light of its Berkheimer and Aatrix Software decisions."48 Practitioners are well advised to appreciate the increasing role of facts and the presumption of validity in any case involving an eligibility challenge.


1 134 S. Ct. 2347 (2014).

2 881 F.3d 1360, 1369 (Fed. Cir. 2018).

3 882 F.3d 1121 (Fed. Cir. 2018).

4 No. 2016–2315, 2018 WL 1193529 (Fed. Cir. Mar. 8, 2018).

5 717 F.3d 1269 (Fed. Cir. 2013).

6 Id. at 1304-05 (Chief Judge Rader, and Judges Linn, Moore, and O'Malley, concluding that "any attack on an issued patent based on a challenge to the eligibility of the subject matter must be proven by clear and convincing evidence"); see also id. at 1284 (Judges Lourie, Dyk, Prost, Reyna, and Wallach, concluding that a statutory presumption of validity applies when § 101 is raised as a basis for invalidity in district court proceedings).

7 Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1338 (Fed. Cir. 2013), cert. granted, judgment vacated sub nom. WildTangent, Inc. v. Ultramercial, LLC, 134 S. Ct. 2870, 189 L. Ed. 2d 828 (2014) (citing Alice Corp., 717 F.3d at 1304–05).

8 See, e.g., CG Tech. Dev., LLC v. Big Fish Games, Inc., No. 2:16–CV–00857–RCJ–VCF, 2016 WL 4521682, at *3 (D. Nev. Aug. 29, 2016) ("As these cases demonstrate, and as several courts have noted, there is uncertainty as to whether a presumption of invalidity or a clear and convincing standard applies in § 101 challenges."); Esoterix Genetic Labs. LLC v. Qiagen Inc., 133 F. Supp. 3d 349, 355 (D. Mass. 2015) ("Lower courts appear to be divided on this issue, see Affinity Labs of Texas, LLC v. DirecTV, LLC, No. 6:15–CV–0030–WSS–JCM, 109 F.Supp.3d 916, 2015 WL 3764356, at *16 & n.6 (W.D.Tex. July 7, 2015) (collecting cases), and there is no binding precedent from the Federal Circuit.").

9 E.g., Palomar Techs., Inc. v. MRSI Sys. LLC, No. 15–CV–1484 JLS (S.D. Cal. Mar. 11, 2016); Trading Techs. Int'l, Inc. v. CQG, Inc., No. 05–CV–4811, 2015 WL 774655, at *3 (N.D. Ill. Feb. 24, 2015).

10 Wireless Media Innovations, LLC v. Maher Terminals, LLC, No. 14–7004, 14–7006(JLL), 100 F. Supp. 3d 405, 411 (D.N.J. 2015) ("With no authoritative law binding the Court as to an applicable standard, the Court adopts Judge Mayer's approach and will not afford Plaintiff's Patents the presumption of subject matter eligibility."); Modern Telecom Sys. LLC v. Earthlink Inc., No. SA CV 14–0347–DOC, 2015 WL 1239992, at *7 (C.D. Cal. Mar. 17, 2015) ("Because, ordinarily, no evidence outside the pleadings is considered in resolving a motion to dismiss or a motion for judgment on the pleadings, it makes little sense to apply a 'clear and convincing evidence' standard—a burden of proof—to such motions."); OpenTV, Inc. v. Apple, Inc., No. 14–cv–01622–HSG, 2015 WL 1535328, at *3 (N.D. Cal. Apr. 6, 2015).

11 E.g., Communique Lab., Inc. v. Citrix Sys., Inc., 151 F. Supp. 3d 778, 786–87 (N.D. Ohio 2015).

12 See., e.g., Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016).

13 Berkheimer v. Hewlett-Packard Co., 224 F. Supp. 3d 635, 644 (N.D. Ill. 2016).

14 Id. at 647.

15 Berkheimer, 881 F.3d at 1369.

16 Id.

17 Id.

18 564 U.S. 91, 95 (2011).

19 Berkheimer, 881 F.3d at 1368.

20 Id.

21 Aatrix Software, Inc. v. Green Shades Software, Inc., No. 3:15–CV–164–HES–MCR, 2016 WL 1375141, at *1 (M.D. Fla. Mar. 30, 2016),

22 Id. at *9.

23 Id. (citing Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1349-50 (Fed. Cir. 2014)).

24 Id. at *10.

25 Id.

26 Id. at *11.

27 Id. at *4; see also id. at *12–13.

28 Brief of Plaintiff-Appellant Aatrix Software, Inc., at 24–25, Aatrix Software, 882 F.3d 1121 (No. 17-1452), ECF No. 11.

29 Id. at 25.

30 Id. 26–27.

31 Aatrix Software, 882 F.3d 1121, 1130-31 (Fed. Cir. 2018). But see id. at 1130 (The dissent stated that "the majority's broad statements on the role of factual evidence in a § 101 inquiry" are incorrect. In particular, the dissent stated that "the § 101 inquiry is a legal question" and argued that if "the 12(b)(6) procedure is converted into a full blown factual inquiry on the level of § 102, § 103, and § 112 inquiries . . . [it] would turn the utility of the 12(b)(6) procedure on its head.").

32 Id. ("We have some doubt about the propriety of doing so in this case, but need not reach that issue because it did err when it denied leave to amend without claim construction and in the face of factual allegations, spelled out in the proposed second amended complaint, that, if accepted as true, establish that the claimed combination contains inventive components and improves the workings of the computer.").

33 Id. at 1125.

34 Id. at 1126.

35 Id. at 1125.

36 Id. at 1128.

37 This is contrasted by the recent decision in Automated Tracking Solutions v. Coca Cola where the stated: "The complaint alleges nothing to support ATS's contention that RFID was a developing technology Nor does the complaint 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." No. 2017–1494, 2018 WL 935455, at *5 (Fed. Cir. Feb. 16, 2018).

38 KAZ USA, Inc.'s Corrected Principal Brief at 45, Exergen, 2018 WL 1193529 (Nos. 16-2315, -2341), ECF No. 31 (citation omitted).

39 Id. (citation omitted).

40 Id. (citation omitted).

41 Id. at 46 (citation omitted).

42 Exergen Corp. v. Kaz USA, Inc., 172 F. Supp. 3d 366, 367 (D. Mass. 2016) ("In addition to the parties' exhaustive briefing, I now have the benefit of the evidence presented at the well-litigated jury trial.").

43 Exergen Corp., 2018 WL 1193529, at *6.

44 Id. at *4.

45 Id.

46 Id. at *3.

47 Integrated Technological Systems, Inc. v. First Internet Bank of Ind., No. 17–1795 (Fed. Cir. February 20, 2018) (affirming using Fed. Cir. R. 36).

48 The petition in Cleveland Clinic Foundation v. True Health Diagnostics LLC is also an interesting follow-on, as Cleveland Clinic has requested certiorari on whether "Mayo authorizes a district court to invalidate valuable patent rights on the pleadings when there are disputed questions of fact, a disputed question of claim construction or scope, and/or an undeveloped evidentiary record, notwithstanding the presumption of patent validity and settled procedural and Seventh Amendment safeguards that ordinarily prevent the resolution of such disputed questions on the pleadings."

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