On June 25, 2019, the Federal Circuit issued its decision in Cellspin Soft, Inc. v. Fitbit, Inc. finding that allegations in complaint reciting a specific, plausible inventive way was sufficient to overcome a Rule 12(b) and Rule 12(c) motions to dismiss based on 35 U.S.C. sec. 101.
Relevant passages from the opinion are provided below.
All four asserted patents—U.S. Pat. No. 8,738,794 (“the ’794 patent”), U.S. Pat. No. 8,892,752 (“the ’752 patent”), U.S. Pat. No. 9,258,698 (“the ’698 patent”), and U.S. Pat. No. 9,749,847 (“the ’847 patent”)—share the same specification and generally relate to connecting a data capture device, e.g., a digital camera, to a mobile device so that a user can automatically publish content from the data capture device to a website.
Appellees, except for Garmin, filed an omnibus motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), arguing that the asserted patents are ineligible for patent protection under 35 U.S.C. § 101. Garmin separately filed a similar motion to dismiss under Rule 12(c).
The district court granted Appellees’ motions based on the two-step framework for analyzing patent eligibility articulated in Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012), and Alice Corp. v. CLS Bank International, 573 U.S. 208 (2014).
We review the grant of a motion to dismiss under applicable regional circuit law. OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362 (Fed. Cir. 2015). As relevant here, the Ninth Circuit reviews the grant of a motion to dismiss de novo. See Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012) (noting that the analysis under Rule 12(b)(6) and Rule 12(c) is “substantially identical”). This means we “determine whether the facts alleged in the complaint, taken as true, entitle the plaintiff to a legal remedy.” Id. (internal quotation marks omitted).
Under § 101, patents may be granted for “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. According to the Supreme Court, this statutory text includes an important but implicit exception for laws of nature, natural phenomena, and abstract ideas. See Alice, 573 U.S. at 216. Claims for these categories of inventions are not patent eligible. Id.
To distinguish between eligible and ineligible patent claims, the Supreme Court has fashioned a two-step test. Id. at 217–18 (citing Mayo, 566 U.S. at 72–73, 77–79). At step one of the Alice/Mayo framework, we ask whether the CELLSPIN SOFT, INC. v. FITBIT, INC. 15 claim at issue is “directed to . . . [a] patent-ineligible concept[],” such as an abstract idea. Id. at 217. If so, we proceed to step two, which the Supreme Court has described as “a search for an ‘inventive concept’—i.e., an element or combination of elements that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’” Id. at 217–18 (quoting Mayo, 566 U.S. at 73). We have held that deciding whether claims recite an “inventive concept,” or something more than “well-understood, routine, conventional activities previously known to the industry,” id. at 225 (internal brackets omitted), may turn on underlying “question[s] of fact,” Aatrix, 882 F.3d at 1128.
Applying this two-step framework, we agree with the district court that the asserted claims are directed to an abstract idea. 101 Order, 316 F. 316 F. Supp. 3d at 1150. The district court erred with respect to the inventive concept inquiry, however, by ignoring allegations that, when properly accepted as true, preclude the grant of a motion to dismiss.
Alice did not establish any “precise contours” for defining whether claims are directed to “abstract ideas” or something else. 573 U.S. at 221 (“[W]e need not labor to delimit the precise contours of the ‘abstract ideas’ category in this case.”). But we have declined to read Alice “broadly [to] hold that all improvements in computer-related technology are inherently abstract and, therefore, must be considered at step two.” Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016). In fact, we have explained that claims directed to “an improvement to computer functionality itself, not on economic or other tasks for which a computer is used in its ordinary capacity,” are patent eligible. Id. at 1336; Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016) (explaining that the claims in Enfish were eligible “because [they] focused not on asserted 16 CELLSPIN SOFT, INC. v. FITBIT, INC. advances in uses to which existing computer capabilities could be put, but on a specific improvement . . . in how computers could carry out one of their basic functions”).
According to Cellspin, the asserted claims are directed to improving Internet-incapable data capture devices and mobile networks. We disagree. The asserted claims are drawn to the idea of capturing and transmitting data from one device to another.... These cases compel the conclusion that the asserted claims are directed to an abstract idea as well.
Having concluded that the claims are directed to an abstract idea, we next consider whether the claimed elements—“individually and as an ordered combination”— recite an inventive concept. Alice, 573 U.S. at 217 (internal quotation marks omitted). An inventive concept reflects something more than the application of an abstract idea using “well-understood, routine, and conventional activities previously known to the industry.” Aatrix, 882 F.3d at 1128 (internal quotation marks and brackets omitted). It must be “‘enough’ to transform an abstract idea into a patent-eligible invention.” Alice, 573 U.S. at 226 (quoting Mayo, 566 U.S. at 77). But “[i]f a claim’s only ‘inventive concept’ is the application of an abstract idea using conventional and well-understood techniques, the claim has not been transformed into a patent-eligible application of an abstract idea.” BSG Tech LLC v. Buyseasons, Inc., 899 F.3d 1281, 1290–91 (Fed. Cir. 2018).
Cellspin’s allegations identify several ways in which its application of capturing, transferring, and publishing data was unconventional.
The district court discounted these allegations in granting Appellees’ motions to dismiss because Cellspin “fail[ed] to cite to support in the [shared specification]” for its allegations.
The district court discounted these allegations in granting Appellees’ motions to dismiss because Cellspin “fail[ed] to cite to support in the [shared specification]” for its allegations. 101 Order, 316 F. Supp. 3d at 1154. In particular, the district court required Cellspin to cite instances where the patents treat this application of HTTP as inventive or contemplate benefits like smaller, streamlined data capture devices. Id. at 1153 (“The other proffered benefits which relate to . . . [the] order or timing of the Bluetooth wireless pairing; and elimination of the need for bulky hardware and costly cell phone services; do not appear in the patent’s specification.” (internal footnote omitted)). In Aatrix, however, we repeatedly cited allegations in the complaint to conclude that the disputed claims were potentially inventive. See, e.g., 882 F.3d at 1128 (“There are concrete allegations in the second amended complaint that individual elements and the claimed combination are not well-understood, routine, or conventional activity.”). While we do not read Aatrix to say that any allegation about inventiveness, wholly divorced from the claims or the specification, defeats a motion to dismiss, plausible and specific factual allegations that aspects of the claims are inventive are sufficient. Id. As long as what makes the claims inventive is recited by the claims, the specification need not expressly list all the reasons why this claimed structure is unconventional. In this case, Cellspin made specific, plausible factual allegations about why aspects of its claimed inventions were not conventional, e.g., its two-step, two-device structure requiring a connection before data is transmitted. The district court erred by not accepting those allegations as true.
The district court also decided that it need not credit Cellspin’s allegations because the case Cellspin relied on for that proposition, Berkheimer, could be distinguished because it arose in the context of a motion for summary judgment. 101 Order, 316 F. Supp. 3d 1138, 1154–55 n.12 (“Berkheimer addressed a defendant’s burden at the summary judgment stage, not in the context of a motion to dismiss.”). That conclusion is impossible to reconcile with Aatrix, where we expressly stated that “patentees who adequately allege their claims contain inventive concepts survive a § 101 eligibility analysis under Rule 12(b)(6).” Aatrix, 882 F.3d at 1126–27. The district court thus further erred by ignoring the principle, implicit in Berkheimer and explicit in Aatrix, that factual disputes about whether an aspect of the claims is inventive may preclude dismissal at the pleadings stage under § 101.
Accepting the allegations stated above as true, we cannot conclude that the asserted claims lack an inventive concept.... As noted above, Cellspin specifically alleged that using HTTP at a specific location, here at the intermediary mobile device, was inventive. J.A. 2289, 2293–2294. It further alleged that establishing a paired connection before transmitting data was inventive. J.A. 2290. We have no basis, at the pleadings stage, to say that these claimed techniques, among others, were well-known or conventional as a matter of law.
Appellees argue that the limitations relied on by Cellspin “amount to nothing more than minor variations in the technological environment in which the abstract ideas are implemented.” Appellees’ Br. at 37–38. We disagree. In Electric Power, we explained that merely applying an abstract idea to a “particular technological environment,” there “power-grid monitoring,” was not enough to transform the underlying idea into something patent eligible. 830 F.3d at 1354–55. But claims that use an environment—a computer, a mobile phone, etc.—to do significantly more than simply carry out an abstract idea are patent eligible. Id. at 1355 (noting that the limitations there did not “differentiate” the claims from the underlying mental process). Cellspin’s asserted claims do precisely that, at least based on the allegations we must accept as true at this stage. In particular, they recite a specific, plausibly inventive way of arranging devices and using protocols rather than the general idea of capturing, transferring, and publishing data.
Accordingly, the district court erred by granting the motions to dismiss.
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