The Impact of Fact Issues on Patent Eligibility after Berkheimer
The Federal Circuit’s 2018 decision in Berkheimer v. HP Inc. was likely the most consequential development in patent eligibility since the Supreme Court introduced its two-part eligibility framework in Alice Corp. v. CLS Bank and Mayo Collaborative Services v. Prometheus Laboratories. Alice and Mayo had a dramatic impact on patent law, paving the way for lower courts to invalidate thousands of claims from hundreds of patents for failure to claim patent-eligible subject matter under 35 U.S.C. § 101. Berkheimer tempers Alice and Mayo by imposing procedural requirements that may insulate patent claims from § 101 challenges.
Berkheimer emphasized that patent eligibility may turn on questions of fact and relied on the presence of such fact questions to partially vacate a district court’s finding of ineligibility. The Federal Circuit simply did not find enough facts in the record to demonstrate ineligibility for some of the claims at issue. Post-Berkheimer, the poten-tially fact-intensive nature of the eligibility inquiry may prevent courts from resolving § 101 challenges early in litigation. Without early resolution, the costs of litigation increase dramatically, and patentees gain additional lever-age to extract settlement payments from accused infring-ers. Patentees also gain additional time to marshal any evidence that may be relevant to the eligibility inquiry.
There is broad recognition that fact questions have more impact on patent eligibility outcomes after Berkheimer, but the extent of that impact is hotly contested. Patentees seek to maximize the role of fact questions by focusing on Berkheimer’s broad language, while patent challeng-ers seek to minimize it by relying on prior and subse-quent precedents that constrain Berkheimer’s holding. Although the Federal Circuit has applied Berkheimer narrowly in view of the overall body of precedent, lower courts that are less familiar with such precedent have applied Berkheimer inconsistently. In some cases, lower courts have denied early § 101 motions as premature without considering whether the alleged fact questions are relevant under the proper legal standard.
The Supreme Court’s framework for determining patent eligibility, as explained in Alice and Mayo, has two steps. First, the Court determines whether the claim is directed to an ineligible concept such as an abstract idea or law of nature. Second, the Court determines whether any addi-tional claim limitations beyond the ineligible concept pro-vide a contribution that is “sufficient to ensure that the patent in practice amounts to significantly more than a pat-ent upon the ineligible concept itself.” This type of contri-bution is called an “inventive concept.” Claim limitations fail to supply an inventive concept if they require only “well-understood, routine, conventional” activity. A claim that is directed to an abstract idea or natural law without an inven-tive concept is not patent-eligible under 35 U.S.C. § 101.
In Berkheimer, the Federal Circuit reiterated the estab-lished principle that “patent eligibility is ultimately a question of law,” but further explained that the underly-ing question of “[w]hether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination.” Addressing the patent at issue, the court identified certain “pur-ported improvements” to computer technology that were described in the specification. The court held that these purported improvements, “to the extent they are cap-tured in the claims, create a factual dispute regarding whether the invention describes well-understood, rou-tine, conventional activities.” Because four of the eight claims at issue in Berkheimer contained “limitations directed to the arguably unconventional inventive con-cept described in the specification,” the court found that those claims raised a “genuine issue of material fact mak-ing summary judgment inappropriate.” Accordingly, the Federal Circuit vacated the district court’s grant of sum-mary judgment of ineligibility on those four claims, but affirmed the ineligibility of the other four claims that did not recite the arguably unconventional limitations. 
There is tension between Berkheimer and Alice. The Supreme Court never stated in Alice that fact questions might impact the analysis, even though that case was decided at the summary judgment stage. Nor did the Supreme Court cite any evidence or engage in fact find-ing as part of its inventive concept analysis. Seizing on this tension, the patent challenger in Berkheimer peti-tioned the Supreme Court for certiorari. Six amicus curiae briefs were filed in support of the petition. The Supreme Court requested a response to the petition from the patent holder, and after receiving that response invited the Solicitor General to express the views of the United States. At the time this article was submitted for publication, the Supreme Court had not yet decided whether to grant certiorari.
Although Berkheimer identified no support in Supreme Court precedent for its holding that fact issues may pre-clude resolution of the § 101 inquiry, that holding was consistent with several previous decisions of the Federal Circuit. For example, the Federal Circuit noted in two earlier cases that that “the § 101 inquiry may contain underlying factual issues.” But in each of those cases, the Federal Circuit found that no material fact issues were present and affirmed the district court’s summary judgment of invalidity—so the recognition of poten-tial fact issues was not essential to the holdings in those cases. As another example, the Federal Circuit reversed a district court’s finding of invalidity at the motion-to-dismiss stage in BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC. The court concluded that on the “limited record” there, the claimed method “cannot be said, as a matter of law, to have been conventional or generic.” By referencing the “limited record,” and leav-ing open the possibility that additional evidence would change the outcome, the court implicitly held that fact issues impacted the § 101 analysis.
Berkheimer makes BASCOM’s holding explicit, and expands on it. For example, after identifying the potential fact question underlying the § 101 analysis, Berkheimer goes on to state that this question must be resolved “by clear and convincing evidence.” Moreover, Berkheimer may be read to suggest that the fact question—whether claim limitations are “well-understood, routine, and con-ventional”—is dispositive of the entire inventive concept inquiry, as explained below.
Divergent Readings of Berkheimer
The Supreme Court explained in Alice that “well-under-stood, routine, conventional” limitations cannot supply an inventive concept. But in a subtle shift, Berkheimer changes from a negative criterion to a positive one: “The second step of the Alice test is satisfied when the claim limitations ‘involve more than performance of ‘well-understood, routine, [and] conventional activities ….’”
This statement from Berkheimer may be read to suggest that unconventional claim limitations are not only neces-sary to provide an inventive concept, but sufficient. Under this reading, any claim limitation (or combination of limitations) that is unconventional would automatically provide an inventive concept for purposes of determining eligibility. Berkheimer’s holding—affirming the ineligibility of half the claims at issue—shows that such a reading is unjustified, however. Furthermore, such a reading would be contrary to Federal Circuit and Supreme Court precedent.
In claim 1 of the patent at issue in Berkheimer, the claimed combination included certain undisputedly “conventional limitations” that were “combined with” other limitations not identified as conventional. The Court never required the entire combination to be found in the prior art or otherwise deemed conventional, but instead held the claim invalid because it failed to “trans-form the abstract idea into a patent-eligible invention.”
The outcome for each claim in Berkheimer turned on whether the claim recited an “improvement in computer functionality.” The ineligible claims provided no such improvement as a matter of law. The remaining claims arguably recited such an improvement because they required data to be stored in a “reconciled object struc-ture” that allowed a computer system to operate more efficiently. For those remaining claims only, whether the claimed combination was conventional presented a mate-rial question of fact. Thus, Berkheimer itself shows that factual questions will not always be material to the § 101 analysis.
Reconciling Berkheimer with Other Precedent
If any unconventional combination of claim limitations automatically provided an inventive concept, then any claim that is novel over the prior art would satisfy § 101. The Supreme Court and Federal Circuit, however, have repeatedly held that novelty alone does not satisfy § 101. Berkheimer did not purport to contradict or overrule any of this precedent. This is not surprising, because panels of the Federal Circuit are bound by both Supreme Court decisions and prior panel decisions.
In the wake of Berkheimer, the Federal Circuit has repeatedly clarified that its holding was narrow. One such clarification came in response to HP’s petition for en banc rehearing in Berkheimer. The court denied the peti-tion, but the denial was accompanied by several written opinions—including one opinion in which all of the judges from the original panel joined. In that opinion, Judge Moore explained: “Our decisions in Berkheimer and Aatrix are narrow: to the extent it is at issue in the case, whether a claim element or combination is well-understood, routine, and conventional is a question of fact.” As Judge Moore explained, fact questions are not always material to the § 101 inquiry and in such cases the Federal Circuit has “repeatedly recognized the absence of a genuine dispute as to eligibility.” For example, when the “only alleged ‘inventive concept’ is the abstract idea,” it is irrelevant whether that idea is conventional.
The Federal Circuit provided another clarification in BSG Tech LLC v. Buyseasons, Inc. The court stated that “the relevant inquiry is not whether the claimed inven-tion as a whole is unconventional or non-routine.” Addressing the claims at issue, the court explained:
Here, the only alleged unconventional feature of BSG Tech’s claims is the requirement that users are guided by summary comparison usage information or relative historical usage information. This, how-ever, simply restates what we have already determined is an abstract idea. At Alice step two, it is irrelevant whether considering historical usage information while inputting data may have been nonroutine or unconventional as a factual matter. As a matter of law, narrowing or reformulating an abstract idea does not add “significantly more” to it.
Thus, any reading of Berkheimer that would deem claims patent-eligible simply because they recite an unconventional element or combination of elements appears to contradict both earlier and later precedent.
Litigating Fact Issues in View of Berkheimer
Despite the Supreme Court and Federal Circuit prec-edent that cautions against an expansive reading of Berkheimer, patentees routinely advocate for such a reading. This is unsurprising given Berkheimer’s loose description of the circumstances in which Alice step two “is satisfied.”
The broad reading of Berkheimer is likely to persist, partly because it has gained traction with some dis-trict courts. For example, in Kroy IP Holdings, LLC v. Groupon, Inc., a district court denied an early § 101 motion because “questions of fact remain as to whether the asserted claims of the ‘660 patent were conven-tional.” This analysis was incorrect because, as the Federal Circuit explained in BSG, “the relevant inquiry is not whether the claimed invention as a whole is unconventional.”
To district courts, the broad reading of Berkheimer is likely to be attractive because it creates a shortcut for resolving early § 101 motions. As long as the patentee can point to some evidence that one or more claim ele-ments was unconventional (or a lack of evidence show-ing otherwise), the motion can be denied. Denying 101 motions in this way, however, leads to much higher litigation costs, which may be unjustified if the alleged fact issues are immaterial under the proper legal standard.
Unless the Supreme Court grants certiorari and reverses Berkheimer, accused infringers litigating § 101 motions should be prepared to explain the proper appli-cation of it and rebut any assertion that factual disputes automatically preclude an early finding of ineligibil-ity. Patentees should be prepared to explain why the allegedly unconventional features of their claims add something “significantly more” to any ineligible con-cept to which they are directed—for example, because the unconventional features provide an “improve-ment in computer functionality.” Also, district courts should read Berkheimer in the context of the Supreme Court and Federal Circuit precedents that constrain its holding.
Editor: Ted M. Canon
 Alice Corp. v. CLS Bank Int’l., 134 S. Ct. 2347, 2355 (2014).
 Id. at 2359.
 Berkheimer v. HP Inc., 881 F.3d 1360, 1367 (Fed. Cir. 2018).
 Id. at 1369.
 Id. at 1370.
 Id. at 1370–71.
 134 S. Ct. at 2353.
 Id. at 2357–60.
 See Supreme Court Docket in HP Inc. v. Berkheimer, Case No. 18-415 (“HP Docket”), https://www.supremecourt.gov/docket/docketfiles/html/ public/18-415.html.
 Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1325 (Fed. Cir. 2016); Accenture Global Servs. GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1344 (Fed. Cir. 2013).
 Mortg. Grader, 811 F.3d at 1325-26; Accenture, 728 F.3d at 1337–38.
 827 F.3d 1341 (Fed. Cir. 2016).
 Id. at 1350.
 Berkheimer, 881 F.3d at 1368.
 Alice, 134 S. Ct. at 2359.
 Berkheimer, 881 F.3d at 1367 (emphasis added).
 This reading of Berkheimer is common among patent holders. For example, in comments submitted to the USPTO, the Intellectual Property Owners Association (IPO) stated its view of Berkheimer as follows: “To fail step two of the Alice test, a claim element (or combination thereof) must be ‘well understood, routine, and conventional.’” See, e.g., Comments on the USPTO’s Berkheimer Memorandum, p.2 (Intellectual Property Owners Association, Aug 20, 2018) (available at https://www.ipo.org/wp-content/uploads/2018/08/ USPTO_Berkheimer-Memo-Response.pdf) (emphasis added).
 See id. at 1368 (“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.”) (emphasis added).
 Id. at 1370.
 See, e.g., Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329, 1340 (Fed. Cir. 2017), cert. denied, 139 S. Ct. 378 (2018) (“Eligibility and novelty are separate inquiries.”); Affinity Labs of Texas, LLC v. DirecTV, LLC, 838 F.3d 1253, 1263 (Fed. Cir. 2016) (novelty “does not avoid the problem of abstractness”); Genetic Techs. Ltd. v. Merial LLC, 818 F.3d 1369, 1376 (Fed. Cir. 2016) (“a claim directed to a newly discovered law of nature (or natural phenomenon or abstract idea) cannot rely on the novelty of that discovery for the inventive concept necessary for pat-ent eligibility”); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1352 (Fed. Cir. 2014) (abstract ideas are unpatentable “no matter how ‘[g]roundbreak-ing, innovative, or even brilliant’” they may be); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014) (the fact that a method was “not previously employed in this art is not enough—standing alone—to conferpatent eligibility upon the claims”); Mayo Collaborative Servs. v. Prometheus Labs., 132 S. Ct. 1289, 1297 (2012) (even a truly groundbreaking abstract idea, like Einstein’s theory of relativity, cannot make a claim patent-eligible); Diamond v. Diehr, 450 U.S. 175, 190 (1981) (novelty is “wholly apart from whether the invention falls into a category of statutory subject matter” under § 101); Parker v. Flook, 437 U.S. 584, 587, 592-95 (1978) (a claim directed to an abstract idea was invalid even assuming “that respon-dent’s formula is novel and useful”).
 See Newell Cos. v. Kenney Mfg. Co., 864 F.2d 757, 765 (Fed. Cir. 1988) (“This court has adopted the rule that prior decisions of a panel of the court are binding precedent on subsequent panels unless and until overturned in banc.”)
 Berkheimer v. HP Inc., 890 F.3d 1369 (Fed. Cir. 2018) (denying reh’g en banc).
 Id. at 1374 (emphasis added).
 Id. at 1373–74.
 899 F.3d 1281 (Fed. Cir. 2018).
 Id. at 1290 (emphasis added).
 Id. (emphasis added).
 881 F.3d at 1367 (emphasis added).
 2018 WL 4905595, *16 (D.Del. Oct. 9, 2018) (Report & Recommendation); 2018 WL 6499675 (D. Del. Dec. 10, 2018) (adopting Report & Recommendation).
 899 F.3d at 1290 (emphasis added).