In a case recently decided by the Court of Appeals for the Federal Circuit (CAFC), the appeals court appears to announce procedural requirements that may cut down the usefulness of early dismissal motions under the Supreme Court’s landmark Alice Corporation case (read here). In Alice, and in response to the large outpouring of “business method” and other intellectual process patents, the Court established a two-part test for determining patent eligibility. Fist, the court must consider whether a claim is directed to a patent-ineligible concept such as an abstract idea, law of nature, or natural phenomenon. Second, if the claim is directed to a patent-ineligible concept, the court then must determine if the claim elements, both individually and as an ordered combination, transform the nature of the claim into a patent-eligible application of that concept. Tall order, filled with lots of gray areas and room for interpretation.
However, clearly, both parts of the test require an analysis of the claims of the patent; those arcane and bizarrely worded descriptions found at the end of every modern U.S. patent, after the words “I (or We) Claim:”.
Since Alice, those accused of patent infringement have been making challenges under Federal Rule 12, claiming that if a patent cannot withstand an Alice analysis, then no infringement is possible under any set of circumstances, because the underlying patent cannot be valid. Since these Motions are made very near the onset of a case, they have, when successful, saved defendants hundreds of thousands of dollars in defense costs.
But with MyMail v. Oovoo, LLC, IAC Search & Media, Inc. (read here), the courts may be putting a brake on the process. Consider the Alice tests again. Both prongs of the test require an analysis and understanding of the claims of a patent, called in this area of law “claim construction.” Claim construction has typically been done near the end of a patent infringement action, after discovery and expert witness testimony have fleshed out a case. Such claim construction is often done as part of a so-called “Markman” hearing (after the case that originated the term) that is solely devoted to the issue of claim construction.
The District Court in MyMail failed to make any explicit claim construction before finding the claims patent ineligible. The dissent in MyMail tried to rescue the lower court by finding that claim construction was unnecessary because the claims were “clearly abstract,” but the lack of any such explicit statement of such doomed the decision. What’s left open is the extent to which a full-blown claim construction, or Markman hearing, may be required.
BUSINESS TAKE AWAY: Seeking early dismissal under Alice has been a valuable tool for those accused of infringement to get out early from under the plethora of “bad” patents that remain on the books. An early dismissal under Rule 12 is hundreds of thousands of dollars, or more, less expensive than a finding of no-infringement due to patent invalidity at the end of a trial. If the CAFC means that the same level of claim construction needs be done for an early dismissal as for a trial on infringement, a valuable defense tool will be severely cut back.