Are Questions Of Fact Being Overlooked In Software Cases?

Defendants have used 35 U.S.C. § 101 as a powerful tool to short-circuit infringement cases involving software patents since the U.S. Supreme Court's proclamation in Alice Corp. Pty. Ltd. v. CLS Bank.1 Emboldened by recent appellate decisions, they are filing dispositive motions at the onset of litigation that assert a patent claims patent-ineligible subject matter. District court judges have granted many of these motions, often tossing software cases before meaningful fact discovery has been completed and before conducting a claim construction hearing.2

The manner and timing of these dismissals raises an important question that has not yet been raised or addressed: Can a Section 101 analysis present questions of fact? One key to the early resolution of software cases since the Supreme Court's Alice Corp. decision is that the question of whether a patent claim is ineligible under 35 U.S.C. § 101 has been treated by the courts as a purely legal one. If a question of fact is implicated, however, it must be resolved by a trier of fact by weighing evidence and credibility. District courts would then be prevented, at least in some instances, from dismissing cases under Section 101 so quickly.

Section 101 defines the subject matter eligible for patent protection. To its broad grant of eligibility, the courts have long recognized an implicit exception — namely, that "[l]aws of nature, natural phenomena, and abstract ideas are not patentable."3 In Alice Corp., the Supreme Court articulated a new framework when it determined that any claim drawn to an abstract idea and lacking an inventive concept is invalid for failure to claim patent-eligible subject matter.4 The Federal Circuit recently applied the new test in Ultramercial Inc. v. Hulu LLC,5 which was remanded for further consideration in light of Alice Corp., and invalidated patent claims covering a "method for distributing copyrighted media products over the Internet."6

The Ultramercial decision is noteworthy because the Federal Circuit found the same claims patentable on two separate occasions prior to the Supreme Court's Alice Corp. decision.7 It also signaled a potential shift in the Federal Circuit's approach to Section 101. In particular, Judge H. Robert Mayer's concurrence declares Section 101 a "threshold question" and invites early challenges to patentability.8

But, what neither the Supreme Court nor the Federal Circuit have addressed is whether the Section 101 inquiry is factual, legal, or both. If it involves a factual determination, and the parties dispute an issue of material fact, the fact-finder needs to fully examine the relevant evidence prior to reaching a conclusion. Defendants in these circumstances would face a more...