Reviewing Factual Findings that Support a Legal Conclusion (of Eligibility)

FoundationThe Federal Circuit has denied Prism Tech‘s petition for en banc rehearing on the question of deference to district court factual-findings that underlay a decision on patent eligibility.  Prism had raised the following question:

This case warrants en banc review because it involves the precedent-setting question of whether this Court should apply a clear error standard of review to a district court’s underlying factual findings regarding patent eligibility under 35 U.S.C. § 101.

In this case, the District Court found the Asserted Claims patent eligible under § 101 and made several factual findings in support thereof. On appeal, the Panel characterized patent eligibility under § 101 purely as an issue of law and applied a de novo standard of review to both the legal issue of patent eligibility and the District Court’s underlying factual determinations. The Panel should have granted deference to the District Court’s factual findings. Failing to do so was inconsistent with precedent of the Supreme Court and this Court that grants deference to subsidiary factual determinations made by district courts in deciding similar questions of law—namely, Teva Pharm. USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831 (2015) (Federal Circuit must review for clear error district court’s subsidiary factual findings regarding claim construction); Mintz v. Dietz & Watson, Inc., 679 F.3d 1372 (Fed. Cir. 2012) (Federal Circuit must review for clear error district court determinations on factual inquiries underlying the obviousness analysis); Alfred E. Mann Found. for Sci. Research v. Cochlear Corp., 841 F.3d 1334, 1341 (Fed. Cir. 2016) (Federal Circuit must review for clear error district court’s subsidiary factual findings regarding indefiniteness).

PrismBrief.    This issue will continue to percolate.

The court also recently denied a somewhat similar petition in GoDaddy.com v. RPost Communications.  That losing patentee’s petition asked whether eligibility a proper invalidity defense even though it is not codified as a defense in 35 U.S.C. §282(b) and whether, at the summary judgment stage, must the district court weigh evidence underlying the eligibility question in the non-movant’s favor?

Finally, the court has also denied the petition in RecogniCorp v. Nintendo Co.  That petition focused on the eligibility of patents relating to the encoding and decoding of data.

72 thoughts on “Reviewing Factual Findings that Support a Legal Conclusion (of Eligibility)

  1. This case illustrates the importance for someone being sued for patent infringement to not just depend on the unpredictable odds of getting off inexpensively with an Alice 101 based motion. If allegations in the 101 motion about everything claimed being well known are really true there may well also be a basis for a prompt IPR.

  2. In a related case against Sprint by Prism, the trial judge recently granted a 60(b) motion based upon collateral estoppel and vacated a $30 million verdict that was affirmed by CAFC before the T Mobile appellate case was decided.

    I was very surprised by the timing. District judge should have waited until this Order.

    1. Same patents in both cases but not all the same claims.

      Judge Lyle Strom presiding in both cases.

      Order on Sprint motion vacating the verdict and affirmed judgment is interesting.

  3. Has the meaning of “discovery” in the constitution and law been misunderstood? From the following quoted from Rex v. Arkwright, 1 WPC 64, 66 (K.B. 1785), it means “disclosure” as in disclosure of the invention in a specification. The patent is in exchange for disclosures of inventions. It is not in exchange for finding something new.

    “[T]hat a man to entitle himself to the benefit of a patent for a monopoly, must disclose his secret and specify his invention in such a way that others might be taught by it to do the thing for which the patent is granted, for the end and meaning of the specification is, to teach the public, after the term for which the patent is granted, what the art is, and it must put the public in possession of the secret in as ample and beneficial a way as the patentee himself uses it. This I take to be clear law, as far as it respects the specification; for the patent is the reward, which, under the act of parliament, is held out for a discovery; and, therefore unless the discovery be true and fair, the patent is void. If the specification, in any part of it, be materially false all or defective, the patent is against the law against law, and cannot be supported.”

    1. The constitutional convention took place in May-September 17, 1787, very shortly after this famous English case was reported.

      1. The constitutional convention took place in May-September 17, 1787, very shortly after this famous English case was reported.

        Presumably there is zero evidence of this “famous case” being pondered for more than 0.1 seconds by anyone associated with the convention. Happy to see evidence to the contary. Otherwise, I’m not sure what the point is here.

        1. I suspect that the founding fathers would have used anonymous pamphlets to comment on patent law so evidence will be hard to find.

          1. I suspect that the founding fathers would have used anonymous pamphlets to comment on patent law so evidence will be hard to find.

            Okay, that was good for a Friday laugh. Thank you.

        2. Maybe he was just expressing his feelings…

        3. The point, MM, is that English by this time looked at a patent for invention in terms of quid pro quo. If the Founders knew this, then “patents” in exchange for “Discoveries” takes on new light.

          1. In terms of Quid Pro Quo…

            That’s not new.

            1. anon, it is not. But that the English used the term “discovery” as the legal requirement for a sufficient disclosure is new.

              1. It appears that you are conflating the act of revealing with what is being revealed.

                1. I am going by your comments here Ned.

                  Chances are that my reading the case may only show that your comments here are off.

  4. It seems like the court could have just let the factual findings stand and just tossed them out as irrelevant to the question o lawl. However, I don’t know, I think this might be a good case to test whether the subsidiary factual findings have to be considered and get difference.

  5. JCD: In suggesting that the claim merely recites generic computer components performing conventional activities, the Examiner has offered no evidence that these activities are indeed conventional

    LOLOLOL

    What are these fantastic non-conventional activities, I wonder?

    Please share.

  6. Who was on the panel that did not give any deference to the factual underpinnings of the court of first instance?

    1. To answer my own question, there appear to be multiple cases…

      A non-precedential case (and one referenced in the brief***): v T-Mobile
      link to cafc.uscourts.gov

      has a panel of:
      PROST, Chief Judge, LOURIE and SCHALL

      A precedential case (not mentioned in the brief): v Sprint Spectrum LP
      link to cafc.uscourts.gov
      (on different grounds)

      has a panel of
      TARANTO, LINN, and CHEN

      *** the brief provides additional views than just the topic here, including an interesting contesting of using a single claim (claim 1) as dispositive.

  7. “whether this Court should apply a clear error standard of review to a district court’s underlying factual findings regarding patent eligibility under 35 U.S.C. § 101.”

    At least the CAFC seems to agree that factual findings are REQUIRED.

    The PTAB is insisting that NO evidence is required to issue a 101 rejection. Its a theme they’ve been using since July last year to rubber stamp crappy Examiner rejections; for a recent example see

    Ex parte STEPHEN DICKSON and PELHAM TEMPLE

    “…we are aware of no controlling precedent that requires the Office to provide factual evidence to support a finding that a claim is directed to an abstract idea”

    link to e-foia.uspto.gov

    This has been going on, unabated, for several months, with hundreds of decisions repeating the same nonsense. The CAFC should address this before deciding what KIND of discretion to give said “factual findings.”

    1. JNG,

      Thanks for highlighting this. I know that originally at least some PTAB panels were issuing some decisions going in the other direction. Although PTAB panels don’t always give deference to each other’s decisions (a PTAB judge confirmed to me at the recent PTAB judicial conference that they see no problem with different panels reaching different results), you could try citing Ex Parte Poisson: “absent supporting evidence in the record – of which there is none, [an] Examiner’s opinion is an inadequate finding of fact on which to base the Alice analysis”. Ex parte Poisson, Appeal No. 2012-011084, p. 5, lines 9-11 (P.T.A.B. Feb. 27, 2015).

      I personally have not yet received a decision in which this is an issue, but I am not surprised to see it treated this way. For my client’s sake, I hope I don’t get anything similar, but I wouldn’t be upset at the chance to appeal the issue to the CAFC.

      Here’s a genericized version of some arguments I’ve been making:

      In suggesting that the claim merely recites generic computer components performing conventional activities, the Examiner has offered no evidence that these activities are indeed conventional. Applicant notes in this regard that although a judge or jury acting as trier of fact may be able to hold activities as routine and conventional without offering any evidence, there is a large difference between a judge or jury acting as a trier of fact, and a patent examiner who also acts as a party with a burden of establishing a prima facie case of patent ineligibility.

      Applicant further notes that, with respect to an inquiry regarding whether certain functionality represents conventional functionality, the relevant inquiry is not whether such functionality is currently conventional, but instead requires determining whether such functionality was conventional at the time of filing. In this regard, although examiners may be experts in their field with great knowledge of what is conventional, it is too much to ask to expect them to also be able to remember when something became conventional. This is why prior art references are utilized to establish a prima facie case of anticipation or obviousness, and it makes no sense that evidence would not also be required to establish that functionality was conventional at the time of filing.

      Applicant still further notes in this regard that an allegation that a feature is conventional is in some ways akin to taking of Official Notice. Notably, however, the Examiner has not even taken Official Notice of any specific activities that were conventional at the time of filing, instead simply asserting in a conclusory manner suggesting hindsight reconstruction that the claims recite conventional activities. Further, this isn’t even the type of thing that the Examiner could take Official Notice of, as the courts have “reject[ed] the notion that judicial or administrative notice may be taken of the state of the art.” In re Eynde, 480 F.2d 1364, 1370, 178 USPQ 470, 474 (CCPA 1973). This is because “[t]he facts constituting the state of the art are normally subject to the possibility of rational disagreement among reasonable men and are not amenable to the taking of such notice.” Id.

      Similarly, it has been established that the Office “cannot simply reach conclusions based on its own understanding or experience—or on its assessment of what would be basic knowledge or common sense.” In re Zurko, 258 F.3d 1379, 1385, 59 USPQ2d 1693, 1697 (Fed. Cir. 2001). Instead, the Office “must point to some concrete evidence in the record in support of these findings.” Id.

      Here, there is simply no evidence in the record to support the Examiner’s allegation that recited features are conventional.

      1. JCD – thanks for the many points and citations – its good to share intel… I can tell you that this language has spread like a virus through HUNDREDS of PTAB decisions, all affirming (often very bad) 101 rejections. I’ve personally probably read 200-300 decisions already from the PTO portal site, and they all recite the same magical “we don’t need evidence” incantation. Its absolute BS that they borrowed from some flunky who wrote the original PTO 101 guidelines/memo back in 2015, pontificating that because some district Courts said they did not require facts or evidence to find a claim ineligible, the PTO didnt either. They want to be article II jurists with article III powers but none of the responsibility. Again, we have the Alice nonsense to thank for all of this.

        1. Thanks for the heads up; I guess I will need to take a look at some of these decisions at some point. It seems really weird for PTAB panels to take this approach, as it seems easily appealable to me, unless you just have really bad claims/facts.

          1. Weird?

            The PTAB reports into the Director, not so? If the Director says that no evidence is needed, and there is no contrary Federal Circuit precedent, the PTAB’s hands are tied.

      2. AlexO should appreciate these pointers…

      3. After reading your note about Ex Parte Poisson I got curious because the case looked familiar, and sure enough it was in my library of “stuff” – I’ve even cited it in one of my pending appeals. But here is an interesting twist, I can tell you that I looked for it online at the PTAB website, and it is NOWHERE TO BE FOUND. I tried looking for it under the appeal number, the inventor name, serial no., ….. NADA.

        IMO the PTAB has tried to make this opinion disappear from the public record because they can’t square it the current nonsense they are writing. If this true (and I invite others to see if they can find the decision at the PTAB site) this little sleight of hand is really slimy if not unethical.

        1. Nice catch. My own searching turns up the same result. I even looked at all of the decisions issued on 02/27/2015, and it still doesn’t show up. Seems weird. If I have the time, I might try to ask the PTO about it.

            1. The decision is also still available under the IFW for the case.

              1. Right, I noticed that too – but there is no reason for it to be missing from the main decision database. It makes me wonder how many other opinions (101 related or otherwise)have been pulled, because that one was pretty important.

                1. The decision was not individually pulled. There’s a fairly involved backstory here, but for now suffice it to say that I raised this issue personally with the PTAB last year and again just last month. It is an error in the filtering scheme used by the Reading Room, which currently prevents the viewing of opinions when there was ever a nonpublication request filed in the corresponding application. Poisson had a nonpublication request, although Poisson subsequently issued which is why it is currently available in PAIR but not the Reading Room.

                2. Easwaran – Awesome info. Thanks for the heads up. I’m always more inclined to believe there is a reasonable, if weird, explanation for something rather than thinking there is some grand scheme at work.

                3. Easwaran – much appreciate your info – now I’m trying to figure out where I got a copy of the case if it was not in the Reading Room… must have been a link in an article

                4. I also was using Ex parte Poisson. However, IMO it is for naught because the case has not been designated as informative, much less precedential in PTAB world. However, federal circuit cases, such as, In re Oetiker; Ethicon, Inc. v. Quigg; In re Dembriczak, etc. speak to the necessity of evidence in support of factual findings.

                  Ex parte Hong Xiao (August 17, 2017) and Ex parte Craske are examples of recent PTAB cases where the judges assert that no evidentiary showing is necessary for a 101 determination, while relying on the 101 Guidelines as authoritative. Unbelievable.

                5. The examiner is taken to the mat and the examiner was reversed, but look at the examiner’s next action: a notice of allowance.

                  Tellingly, look at the examiner’s rationale for notice of allowance.

                  NOT A WORD on patent eligible subject matter.

                  It would be interesting to take a peek at further rejections (of the 101 nature) by that same examiner to see if he learned any lessons.

                  Surprisingly, the particular examiner has an 80% allowance rate (dating back to circa 1983), and ALSO has a “mysterious” bump up in abandonments in the “Just Say No – Reject Reject Reject” era:

                  link to examiner.ninja

                6. D, those are good cases, but I believe the key case on the evidentiary requirement is In re Zurko from 2001. It applies a requirement to provide “some concrete evidence” for any factual finding made by the USPTO. Even though this standard is deferential (and subsequently decisions suggest that nearly any evidence will do), the PTAB routinely fails to provide any evidence at all for many factual findings (for what its worth, I believe Zurko technically eliminates the authority of the USPTO to use Official Notice in any capacity).

                  And this statement from In re Zurko even has apparent Supreme Court endorsement in KSR v. Teleflex, via In re Sang-Su Lee and In re Kahn (the latter of which is cited specifically to quote its famous line that “there must be some articulated reasoning with some rational underpinning to support the legal conclusion of obviousness,” which Kahn clarifies is a requirement “as much rooted in the Administrative Procedure Act, which ensures due process and nonarbitrary decisionmaking, as it is in § 103”).

                  In reality, the problem here, like in many other areas, is caused by poor examination. Examiners very rarely provide evidence to support factual findings they make, and this is almost a universal phenomenon for 101 rejections because of the misguided examiner guidance issued by the Office that essentially tells them not to support their findings with evidence.

                  But because the PTAB doesn’t itself produce evidence and merely rules on the record before it, if a panel were to acknowledge a requirement for evidence supporting subsidiary factual findings underpinning a 101 rejection, the panel would almost always need to conclude that no evidence exists in the record to support the underlying factual findings, and by extension must reverse the 101 rejection, regardless of their intuition on the merits.

                  I believe PTAB judges are very hesitant to reverse on procedural grounds like this, because on remand everyone knows it is more likely that the application will be allowed than that the Examiner will prove up the rejection (Poisson is a perfect example of this phenomenon). This dynamic is, I speculate, the basis for the PTAB judges to ignore the requirement to provide evidence entirely (at least with regard to 101 rejections). It’s not a defensible practice, but I think it’s the reality we face.

                7. Easwaran, since Bilski provided no explanation as to why the claims before it were Abstract, why is the PTO forbidden from following along? The most important determination remain in Alice step 2.

  8. Asserted Claim 1 of Prism’s U.S. Patent No. 8,127,345. link to google.com

    1. A method for controlling access, by at least one authentication server, to protected computer resources provided via an Internet Protocol network, the method comprising:

    receiving, at the at least one authentication server from at least one access server, identity data associated with at least one client computer device, the identity data forwarded to the at least one access server from the at least one client computer device with a request from the at least one client computer device for the protected computer resources;

    authenticating, by the at least one authentication server, the identity data received from the at least one access server, the identity data being stored in the at least one authentication server;

    authorizing, by the at least one authentication server, the at least one client computer device to receive at least a portion of the protected computer resources requested by the at least one client computer device, based on data associated with the requested protected computer resources stored in at least one database associated with the at least one authentication server; and

    permitting access, by the at least one authentication server, to the at least the portion of the protected computer resources upon successfully authenticating the identity data and upon successfully authorizing the at least one client computer device.

    1. With the excess verbiage removed:

      1. A method for controlling access comprising the step of authenticating a request, wherein the authentication comprises analyzing data relevant to the identification of the requester.

      Everything else is just a context. Could be three “servers”, could be ten zillion “servers”, could be “one server and a passenger pigeon”. It’s just abstract junk.

      Programmable computers can be instructed to compare input data to stored data for the purpose of assigning some “meaning” (e.g., “authentic”; “copyrighted”; “false”; etc) to the input data. That concept is ancient.

      What on earth is going on here, other than the handing out of entitlements to the people who least need them just so they can increase the costs of for everybody else of using a computer for its intended purpose? Serious question.

      1. Your “that concept is ancient” is nothing more than the concept that items are composed of protons, neutrons and electrons.

        Maybe reflect on the patent doctrine of inherency and how you want all future improvements to somehow “already be in there” with a programmable computer.

        House/Morse fallacy in full bloom.

        (and yes, Malcolm, this short script “argument” of yours is ancient. and banal.)

        1. Your “that concept is ancient” is nothing more than the concept that items are composed of protons, neutrons and electrons.

          Nobody tries to claim that concept anymore and the PTO never ever even comes close to granting it.

          Not true with logic patents. Did you ever wonder why?

          1. “Logic patents”

            How is that copyright project coming along?

          2. …and you STILL appear to be too eager to miss the point that it is the different configurations that are being claimed – and certainly, compositions of those different configurations ARE still being claimed.

            (cue Malcolm’s fallacy reliance on one optional claim form as somehow NOT being optional…)

            1. different configurations that are being claimed –

              THE BIG L I E.

              What’s being claimed is “anything under the sun that renders a computer capable of performing [insert your favorite logic here]”.

              That’s not how chemicals are claimed.

              The fact that you continue to tell this L I E is disgusting. The fact that Dennis “TOTALLY BIASED AGAINST ANON’ Crouch lets you continue to do it without making any comment whatsoever is equally disgusting. That’s on Dennis. What his motivations are is a mystery to me but he obviously has some pity for you.

              1. You use that word (“L I E”) inappropriately.

                Just because you do not like something and claims may not resemble your preference in a different art field, does NOT a l i e make.

                In fact, your assertion itself – as you know it to be untrue – is a l i e itself.

                But what would it be like with Malcolm and without his number one meme…?

      2. “With the excess verbiage removed”

        Nice.

        1. That’s just the “Gist” blade edge of the “Gist/Abstract” sword…

          1. Actually it’s called removing the admitted prior art so we can see what the invention is. It’s a necessary step and it will always be necessary.

            1. Lol – you joining Ned on his Windmill Chase of “Point of Novelty” in the 101 sense.

              Another ancient script item…

            2. Do you practice in the EPO? We don’t remove APA unless it’s actually APA. You’re the only one that considers what you removed as “admitted”. Also, every element in a claim can be admitted prior art and still the claim can be allowable in combination (the whole) when the claimed combination is non-obvious.

        1. Note the judgemental “who least need them,” clearly Malcolm playing the self-appointed guardian of the fields of patent rye yet again…

      3. Words have meaning. When you remove words from something, you change the meaning.

        Besides, you don’t have to cut all the “context” to justify the outcome. Claim 1 is clearly not novel. Use of a server to authenticate a client request? Old. Authorizing the client based on the requested resource and data about same in a database? Old. The hardest part of invalidating this patent would be sifting through the thousands of pieces of anticipatory art to find the best one. It’s patents like this one that make me sympathetic to IPRs.

        Right outcome, wrong body of law.

        1. Words have meaning. When you remove words from something, you change the meaning.

          That’s not necessarily an accurate statement of what is true, nor is it an accurate statement of what is not untrue.

          My gob but I have to explain this to an attorney???????

          1. Here is your actual reply with a few words removed. “That’s an accurate statement of what is true.”

            Here is what you do. You take a claim. You remove words. Then you say here is all it really means. How silly is that.

            1. Here is your actual reply with a few words removed. “That’s an accurate statement of what is true.”

              Nice moving of the goalposts. The issue wasn’t whether removing words CAN change the meaning of sentence. Nobody is disputing that.

              The issue is whether the act of removing words ALWAYS changes the meaning of the sentence. And the answer is “Of course it doesn’t.” And that’s why you’re not only a big crybaby about this “gist” nonsense, but you also plainly lack the intellect to hold a discussion about the issues. It’s too nuanced for you. Stay in the shallow end of the pool with your crocodile tears and your kleenex.

              1. Resorting to insult is more clear than raising a white flag.

      4. MM, totally, absolutely agree.

        I have no idea whether there was something new described in the application, but there is nothing new in this claim.

        Claimed at the level of an idea as well.

        And it really bothers me that so-called bonafide patent attorneys would file claims like this.

        1. there is absolutely nothing about this claim that could not have been addressed through 102/103, mostly by ignoring labels of what is doing what and when

          but it is by no means an “abstract idea”

          1. it is by no means an “abstract idea”

            What is “it” that you refer to?

            Take away the old junk and what’s left is abstraction. That’s a problem.

            The fact is that if you put a competent attorney on defense against this kind of junk, the junk will get tanked, every time. If not by the CAFC, then by the Supremes.

        2. Attorneys aren’t prior art databases. It’s the Patent Office’s job to refuse applications for old technology. The Office often fails at that job.

          1. H, this statement does not even begin to pass the smell test. The claim at this level of abstraction claims only stuff that has been done for generations, if not centuries. (You want to get into my fort, give me the password.) The attorneys filing this know what they are about and it is not about being open kimono.

            So long as we impose no penalties for this kind of prosecution, it will continue.

            1. Notice that you are talking about prior art, not subject matter eligibility? That’s what I’m saying too. You think we should continue to pervert the patent system so that we can efficiently get to arguably correct outcomes? That’s fine on easy cases. But the law is all about the hard cases. And on the closer, harder cases, patentees who have paid good money to the patent office for their service and approval deserve to have their patents invalidated (if they are invalid) for the _right_ reasons, not the convenient ones.

  9. These dependent claim limitations are based on inventive concepts

    Using data “for billing purposes” is an inventive concept? Really?

    that provide tangible benefits and solve real-world problems

    As opposed to those intangible benefits? And the fantasy world problems?

    Grow up, for cripes sake.

  10. As set forth in Prism’s briefing, the other dependent claims include additional meaningful and specific limitations

    “for billing purposes” is a “meaningful” and “specific” limitation?

    LOL

    I guess when you’re in the basement everything looks big.

  11. Dependent Claim 37 of ‘155 Patent requires that an access server or
    authentication server tracks usage of the protected computer resources
    for billing purposes

    Abstraction. The content of the data or the “purpose” of the data is utterly irrelevant to patentability. Whether it’s “for billing purposes” or “for the purpose of figuring out how much to charge grandma’s rubber boy doll” makes no difference. Does it affect the value of the claim? Sure? That’s why these dirt sniffers are always putting limitations about “billing information” and “medical information” and “stock price information” in their claims.

    It’s pure junk. It’s not “technology.” It’s lawyering.

    1. It’s not “technology.” It’s lawyering.

      Based on your rampant shared feelings, you don’t know either.

      😉

  12. Prism’s invention also recognized the risk that the component identifying itself as an access server could itself be bogus, and the dependent claim’s novel idea of the authentication server authenticating the access server provided additional security.

    There is nothing — absolutely nothing — novel or inventive about the “idea” that a device capable of “authenticating” information based on its source can …. “authenticate” information based on its source.

    On top of that, “authenticating” is an abstraction. Here’s some information: 1010010101001001001111. Is it “authentic”? Yes, it is. Here’s some other information: 1010010101001001001111. Is it “authentic”? Nope.

    G@ rb age in, g@ rb age out. Trying to play procedural games isn’t going to work because at the end of the day nobody except for a tiny, tiny, tiny handful of rich entitled attorneys and their miserable clients wants this g@ rb age in the system.

    1. Your feelings are noted.

    2. Define “abstraction”.

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