Aatrix Software, Inc. v. Green Shades Software, Inc.,
882 F.3d 1121 (Fed. Cir. 2018)
Authored by Razi Safi
Statement of Facts: Aatrix and Green Shades are software companies. Aatrix Software, Inc. (“Aatrix”) sued Green Shades Software, Inc. (“Green Shades”) for infringement of systems and methods claims in Aatrix’s U.S. Patent No. 7,171,615 (“the ’615 patent”) and No. 8,984,393 (“the ’393 patent”) directed to designing, generating, and importing data into a computer-based viewable form to permit the user to control the form data and generate viewable forms and reports. The preferred embodiment for both patents is a data processing system with three main components: a form file aimed at modelling the physical characteristics of an existing form, a data file able to seamlessly import third-party data, and a viewer that is capable of generating reports for the user. Aatrix also filed declarations discussing the claimed invention which the district court analysis left unconsidered.
Procedural History: After Aatrix filed suit, Green Shades moved to dismiss the complaint under Rule 12(b)(6), arguing that the claims in the asserted patent were ineligible under Section 101. The district court granted Green Shades’s motion and held every claim ineligible; notwithstanding Aatrix’s argument that the motion should be denied to allow for claim construction and for the court to familiarize itself with the claimed inventions. The district court also denied Aatrix’s motion to amend its complaint. In its decision, the district court found that claim 1 of ’615 patent is not directed to a tangible embodiment and is therefore not directed to eligible subject matter under 35 U.S.C. § 101. The court applied the Alice/Mayo two-step analysis to the remaining claims. The court held that the independent claims do not give an inventive concept and, therefore, were directed to patent ineligible abstract ideas. Aatrix appealed.
Questions Presented: Whether subsidiary fact questions must be resolved before § 101 patent eligibility can be determined as a question of law.
Holdings: Yes. As an initial matter, the Federal Circuit held on appeal that the district court erred in holding that that one of the asserted claims was ineligible solely because it was directed to an intangible embodiment. The court rejected the district court’s treatment of the Section 101 decision at the Rule 12(b)(6) stage because subsidiary fact questions must be resolved before the ultimate legal question of patent eligibility.
Reasoning: Judge Moore delivered the court’s opinion. In the initial matter, the court found that the claim recited a data processing system requiring computer operating software, a means for viewing and changing data, and a means for viewing forms and reports. These requirements, the court held, established that the claims were directed to a tangible system.
In rejecting the district court’s treatment of the Section 101 decision at the Rule 12(b)(6) stage, the court explained that although Section 101 patent eligibility is ultimately a question of law, there are subsidiary fact questions which must be resolved before the ultimate legal determination can occur. Here, the factual inquiry was whether the claimed invention was well-understood, routine, or conventional activity under the second step of the Alice/Mayo test. That inquiry cannot be answered adversely to the patent owner based on the sources considered on a motion to dismiss because Aatrix’s second amended complaint included concrete allegations, where the claimed inventions satisfied the requirements under the second step of the Alice/Mayo test and demonstrated an improvement to the functioning of the computer. Thus, there was no proper basis for rejecting those allegations as a factual matter, the court held. Because the court ultimately concluded Aatrix was entitled to file its proposed second amended complaint, the court declined to address whether Aatrix should have been afforded claim construction proceedings before granting the motion to dismiss.
Dissenting/Concurring Opinion: In a separate opinion concurring in part and dissenting in part, Judge Reyna agreed that the district court erred in concluding that one of the asserted claims was ineligible solely because it was directed to an intangible embodiment but disagreed with “the majority’s broad statements on the role of factual evidence in a § 101 inquiry.” 882 F.3d at 1130. Instead, Judge Reyna concluded that the Federal Circuit’s precedent establishes that the matter is a legal question and that the majority’s emphasis on subsidiary fact questions allows plaintiffs fighting a motion to dismiss to simply amend a complaint to allege extrinsic facts regardless of its consistency with the intrinsic record.