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In <a href="http://www.cafc.uscourts.gov/sites/default/files/opinions-orders/18-1817.Opinion.6-25-2019.pdf">Cellspin Soft, Inc. v. Fitbit, Inc.</a>,[1] the Court of Appeals for the Federal Circuit (CAFC) rendered an important decision declaring that the presumption of validity under § 282 includes the presumption that claims are patent eligible under § 101.

Claimed Invention and Procedural Posture

Cellspin sued several companies for infringing various claims of four different patents related 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.[2] The accused infringers moved to dismiss, arguing that the patents were ineligible under § 101. The district court granted these motions and subsequently awarded attorneys’ fees under § 285. In this case, the Federal Circuit vacated both the district court’s dismissal and its subsequent award of attorneys’ fees, and remanded the case to the district court.

Patent Eligibility at the Motion to Dismiss Stage

The CAFC began its patent-eligibility analysis by noting that at steps one and two, i.e., Alice steps 2A and 2B, it must first be determined whether the claims at issue are directed to a patent-ineligible concept, such as an abstract idea.[3] If so, then it must be determined whether the claims amount to “something more than the application of an abstract idea using well-understood, routine, and conventional activities previously known to the industry.”[4] If the claims do amount to “something more,” they are patent eligible.

Under Alice step 2A, the CAFC agreed with the district court that the asserted claims are “drawn to the [abstract] idea of capturing and transmitting data from one device to another.”[5] This is similar to the Federal Circuit’s previous decisions holding that similar claims reciting “the collection, transfer, and publishing of data” constitute an abstract idea.[6]

Under Alice step 2B, however, the Federal Circuit disagreed with the district court’s conclusion when accepting Cellspin’s allegations as true that the claims did not amount to something more. In vacating the district court’s invalidity ruling, the CAFC concluded that the district court was wrong to discount Cellspin’s allegations that the asserted claims were unconventional since the allegations did not cite the four asserted patents’ shared specification for support.[7] In so doing, the CAFC noted that the specification does not need to list all the reasons why an invention is unconventional, and it reiterated its 2018 Aatrix[8] holding that a motion to dismiss will be defeated where the patentee plausibly and specifically alleges that aspects of the claims are inventive.[9] And because Cellspin made specific, plausible factual allegations about why aspects of its claimed inventions were not conventional, the CAFC held that the district court erred in not accepting those allegations as true and in granting the defendants’ motion to dismiss.[10]

Presumption of Patent Subject Matter Eligibility

After granting the accused infringers’ motion to dismiss, the district court granted the accused infringers’ subsequent motion for attorneys’ fees. In its reasoning, the district court criticized Cellspin for aggressively pursuing 14 lawsuits simultaneously instead of litigating a test case.[11] Even though Cellspin argued that a test case was not required since its patents were presumed valid, the district court rejected that argument based on its conclusion “that Cellspin’s patents ‘are not presumed patent eligible under Section 101.’”[12]

In vacating the district court’s award of attorneys’ fees, the Federal Circuit took issue with the district court’s conclusion that patents are not presumed patent-eligible. The Federal Circuit stated that the alleged infringer must prove by clear and convincing evidence that the patent does not meet the validity prerequisites before the patent loses its presumption of validity. More bluntly, the CAFC pulled no punches in stating:

To the extent the district court departed from this principle by concluding that issued patents are presumed valid but not presumed patent eligible, it was wrong to do so.[13]

Conclusion

This case gave some life to § 282 by stating that the presumption of validity includes the presumption of patent eligibility under § 101. Under the district court’s analysis, it would be up to the patentee to analyze its patents ahead of time to determine whether they could withstand a § 101 challenge before filing suit. If the patentee then decided to proceed with an infringement suit, it would do so under the imminent threat of attorneys’ fees after the Patent and Trademark Office had already determined that the patent satisfied the prerequisites for issuance. A rule such as this would leave patentees somewhere between a rock and a hard place in determining whether to enforce their right to exclude at the risk of incurring attorneys’ fees, or to sit back while others enjoy the fruits (the patent’s disclosure) of the patentee’s labor. Chalk up the Cellspin opinion as a win for patentees.

[1] No. 18-1817 (Fed. Cir. Jun. 25, 2019).
[2] By way of example, Claim 1 of Cellspin’s ‘794 patent recites:
1. A method for acquiring and transferring data from a Bluetooth enabled data capture device to one or more web services via a Bluetooth enabled mobile device, the method comprising:
providing a software module on the Bluetooth enabled data capture device;
providing a software module on the Bluetooth enabled mobile device;
establishing a paired connection between the Bluetooth enabled data capture device and the Bluetooth enabled mobile device;
acquiring new data in the Bluetooth enabled data capture device, wherein new data is data acquired after the paired connection is established;
detecting and signaling the new data for transfer to the Bluetooth enabled mobile device, wherein detecting and signaling the new data for transfer comprises:
determining the existence of new data for transfer, by the software module on the Bluetooth enabled data capture device; and
sending a data signal to the Bluetooth enabled mobile device, corresponding to existence of new data, by the software module on the Bluetooth enabled data capture device automatically, over the established paired Bluetooth connection, wherein the software module on the Bluetooth enabled mobile device listens for the data signal sent from the Bluetooth enabled data capture device, wherein if permitted by the software module on the Bluetooth enabled data capture device, the data signal sent to the Bluetooth enabled mobile device comprises a data signal and one or more portions of the new data;
transferring the new data from the Bluetooth enabled data capture device to the Bluetooth enabled mobile device automatically over the paired Bluetooth connection by the software module on the Bluetooth enabled data capture device;
receiving, at the Bluetooth enabled mobile device, the new data from the Bluetooth enabled data capture device;
applying, using the software module on the Bluetooth enabled mobile device, a user identifier to the new data for each destination web service, wherein each user identifier uniquely identifies a particular user of the web service;
transferring the new data received by the Bluetooth enabled mobile device along with a user identifier to the one or more web services, using the software module on the Bluetooth enabled mobile device;
receiving, at the one or more web services, the new data and user identifier from the Bluetooth enabled mobile device, wherein the one or more web services receive the transferred new data corresponding to a user identifier; and
making available, at the one or more web services, the new data received from the Bluetooth enabled mobile device for public or private consumption over the internet, wherein one or more portions of the new data correspond to a particular user identifier.
(Opinion at 5-7).
[3] Opinion at 11.
[4] Opinion at 17 (internal quotation marks omitted).
[5] Opinion at 16 (alteration added).
[6] Opinion at 16. See, e.g., Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016) (acknowledging that claims reciting “collecting information, analyzing it, and displaying certain results” fall into “a familiar class of claims ‘directed to’ a patent-ineligible concept”).
[7] Opinion at 19-20.
[8] Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1128 (Fed. Cir. 2018)
[9] Opinion at 20.
[10] Opinion at 20.
[11] Opinion at 13.
[12] Opinion at 13 (emphasis added).
[13] Opinion at 23 (emphasis in original).

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CAFC: Patents Enjoy a Presumption of Subject Matter Eligibility