Close up of dice on Infringement of patents

Following the Supreme Court’s Alice Corp. Pty. v. CLS Bank Int’l decision in 2014, patent eligibility under Section 101 of the Patent Act has been increasingly invoked in early motion practice. In Hantz Software, LLC v. Sage Intacct, Inc., however, the Federal Circuit made a ruling that should give parties pause before moving, particularly in cases where the operative pleading only contains a subset of patent claims. 

In the Hantz case, Hantz Software LLC (Hantz) sued Sage Intacct Inc. (Sage) in the U.S. District Court for the Northern District of California, alleging that Sage infringed two of its patents. Sage moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that the complaint asserted patent-ineligible claims under 35 U.S.C. § 101. The district court agreed with Sage and held that the asserted patents were ineligible. Hantz appealed.

On appeal, Hantz argued that any ineligibility judgment should apply to only claims 1 and 31–33 of the asserted patents because Hantz’s operative complaint asserted infringement of only those claims. The Federal Circuit ultimately agreed, finding that the complaint contained claim charts for only those claims and that Hantz had argued at a hearing that those were the only claims at issue in the case. Accordingly, the court vacated the district court’s judgment with respect to all claims outside the operative pleading.

This decision highlights the importance of the claims listed in the complaint and how they can affect the time and mechanism for moving on patent ineligibility. For example, in Hantz, the Federal Circuit explicitly noted that Sage had not filed any counterclaims of its own but had moved exclusively on Hantz’s complaint. Had Sage waited until the pleadings were closed, taking advantage of a Rule 12(c) motion rather than a Rule 12(b)(6) motion, all of the claims potentially could have been invalidated.

To the extent that fewer than all of a patent’s claims are invalidated, such claims potentially could be distinguished on patent eligibility grounds and reasserted in a later action. For example, the Federal Circuit has previously found claims from the same patent to be meaningfully distinct in past cases. For instance, Berkheimer v. HP Inc., 881 F.3d 1360, 1370 (Fed. Cir. 2018), found certain claims ineligible but held other claims contained limitations directed to an arguably unconventional inventive concept. While issue and claim preclusion may limit this tactic, certain claims potentially could be asserted against customers or partners in future litigation. Parties should carefully analyze these issues before choosing the time and mechanism for early motion practice.