Plausible and Specific Factual Allegations That Aspects of a Claim Are Inventive Are Sufficient to Defeat a Motion to Dismiss for Patent Ineligibility
Before Lourie, O’Malley, and Taranto. Appeal from the United States District Court for the Northern District of California.
Summary: While not all factual allegations that are wholly divorced from the patent claims or specification would defeat a motion to dismiss under Section 101, plausible and specific allegations that certain aspects of the claims are inventive are sufficient. Additionally, a patent’s presumption of validity is also a presumption of eligibility under § 101.
Cellspin filed complaints against numerous defendants alleging infringement of one or more of its four patents relating to uploading media from a data capture device to the Internet using a cellphone as an intermediary. Defendants filed an omnibus motion to dismiss on the basis that all four patents were drawn to the patent-ineligible abstract idea of acquiring, transferring, and publishing data. Just a few days before the hearing on the motion to dismiss and after briefing was completed, Cellspin amended its complaints to allege that the patents’ claim limitations were unconventional. The parties then submitted supplemental briefing addressing the Federal Circuit’s then-recent decisions in Berkheimer and Aatrix. The district court granted Defendants’ omnibus motion to dismiss, finding that all asserted claims were ineligible under § 101. Several Defendants also moved for attorneys’ fees under § 285, which the district court granted.
On appeal, the Federal Circuit first explained that the patents were drawn to the abstract idea of capturing and transmitting data from one device to another. Despite Cellspin’s arguments that the claims were directed to improving Internet-incapable data capture devices and mobile networks, the Court stated that it had consistently held that similar claims reciting the collection, transfer, and publishing of data are directed to an abstract idea. However, on step two of Alice, the Federal Circuit explained that the district court erred in discounting the factual allegations regarding unconventionality in Cellspin’s amended complaints. The Federal Circuit noted that while not just any allegation of inventiveness, “wholly divorced from the claims or the specification,” would defeat a motion to dismiss, the district court must accept plausible and specific factual allegations as true. Because the district court did not credit Cellspin’s allegations in its amended complaint, the Federal Circuit vacated the dismissal and remanded to the district court.
The Federal Circuit also vacated the attorneys’ fees award as Defendants were no longer the prevailing parties. The Court further added that the district court erred in the underlying exceptional case analysis. First, the Federal Circuit explained that the presumption of validity applies to eligibility under § 101, because the USPTO examines whether patents comply with § 101. The Federal Circuit also found that the district court erred in faulting Cellspin for filing the amended complaints just days before the motion to dismiss hearing, since the amended complaints were filed within the permissible time outlined in the scheduling order and because Berkheimer and Aatrix had been decided only a few weeks prior.