Immediate Appeal of Denied Dismissal

The pending appeal in AlexSam, Inc. v. HealthEquity, Inc., Docket No. 20-00146 (Fed. Cir. 2020), offers some interesting questions for the Federal Circuit.

As Patently-O readers are aware, lots of patent infringement lawsuits have been ending very quickly – with courts ruling that plaintiffs patents are directed to ineligible subject matter and therefore cannot support a patent infringement claim.  In this case, the patentee AlexSamwanted to ensure that it stated-a-claim and so added page-after-page to its initial complaint explaining inventiveness of its asserted US6000608. (Excerpt below).

Despite the full explanation, the defendant (HealthEquity) moved to dismiss on eligibility grounds and as a matter of law.  The district court sided with the patentee and denied the motion to dismiss — finding that the complaint included “plausible factual allegations” sufficient to avoid dismissal at such a preliminary stage.

[E]ven if the claims here are directed toward an abstract idea, the court cannot find as a matter of law at this early stage of the litigation that the claims are ineligible for patent protection. . . .

[The court then found that none of the the individual claim limitations included anything new, and then continued:] When considering the elements as “an ordered combination,” however, the court cannot find as a matter of law that the claims reflect “conventional, routine, and well understood applications in the art.” To be sure, the ordered combination of elements described by the claims may seem conventional today, but inventiveness is determined “at the time of the patent,” Berkheimer—not a generation later. The court finds it plausible that, even if each element of the claims was itself conventional, the ordered combination and specific arrangement of these conventional pieces described by claims was “non-conventional and nongeneric” at the time of invention. Bascom (holding that “an inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces”).

AlexSam Dismissal Denial Utah.

The district court case is ongoing, and the defendant does not have a right to immediate appeal.  However, it went ahead and filed its petition for interlocutory appeal. That petition was supported by the district court who explained:

If this court’s ruling is erroneous, it would welcome reversal by the Federal Circuit. It is likely that such a ruling would promptly and efficiently resolve litigation not only in this case, but also in two other district courts where similar lawsuits and “nearly identical” motions to dismiss are pending. The court accordingly finds that this “order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b).

Id.  Apparently, the District Court’s call for immediate appeal was sua sponte.

Although Section 1292(b) allows a judge to certify an interlocutory question for immediate appeal, the appellate panel need not actually hear the appeal.  Rather, the court of appeals is then given “its discretion” to permit an appeal.

Here, HealthEquity petitioned for interlocutory appeal [HealthEquity Petition Interlocutory Appeal], and the Federal Circuit has ordered briefing from AlexSam within 7 days.

AlexSam, Inc. is directed to respond to the petition no later than 7 days from the date of filing of this order. Any reply in support of the petition is due 3 days thereafter.

Fed. Cir. Docket.

In a prior case, Judge Mayer would have held some of the claims of the asserted patent ineligible. Alexsam, Inc. v. IDT Corp., 715 F.3d 1336 (Fed. Cir. 2013). In that case, Judge Mayer dissented — apparently the eligibility issue had not been appealed and so the other two judges did not see it appropriate as the decision point.

38 thoughts on “Immediate Appeal of Denied Dismissal

  1. 5

    When the treatment of litigants based on local flavor is massively different across district courts even in the same appellate circuits, it becomes a due process problem. In one court a litigant can save massive dollars by having eligibility resolved on appeal before spending much on discovery etc. In another, it’s depositions & experts plus years-long eligibility arguments.

    This case is another easy one if information inventions are understood in relation to what abstraction really means.

    Abstraction means a human mind. No human mind, no abstraction. The distinction between medical spending and non-medical spending is a meaning only important to human beings. It should not be subject matter for a patent.

    When machines use information for machine purposes, it’s another story.

    1. 5.1

      Another easy one of Marty ignoring what utility means in the patent sense.

    2. 5.2

      When machines use information for machine purposes,

      Like a traffic light.

      1. 5.2.1

        Yes because a driver knowing when to stop is a machine purpose.

        1. 5.2.1.1

          You missed the point there, Marty.

          And not by a little.

  2. 4

    Regardless of your view of the current state of Section 101 jurisprudence, as practitioners, I think we can all agree that this wasn’t a close call on the merits. This patent should have fallen under 101, even at the motion to dismiss stage. Here is the asserted claim:

    32. A multifunction card system comprising:

    a. at least one debit/medical services card having a unique identification number
    encoded on it comprising a bank identification number approved by the American
    Banking Association for use in a banking network;

    b. a transaction processor receiving card data from an unmodified existing
    standard point-of-sale device, said card data including a unique identification
    number;

    c. a processing hub receiving directly or indirectly said card data from said
    transaction processor; and

    d. said processing hub accessing a first database when the card functions as a
    debit card and said processing hub accessing a second database when the card
    functions as a medical card.

    **

    Zero dispute in the record that everything here was well-known in transaction processing. The twist here was limitation (d), using different databases based on whether the card is used as a “debit card” or a “medical card.” It’s hard to imagine how the district court got faked out by this feature. Using different databases for different types of transactions, or enabling a single “processing hub” to handle two different types of transactions, this is plainly an abstract idea. The medical context makes this claim even more abstract, as the separation of medical databases from financial databases was (and still is) mandated by law. There is no way you could have legally implemented the alleged invention using a single database.

    The allegations in the Complaint should not have blocked dismissal, as the supposed technological benefits aren’t claimed in a way that distinguishes the abstract idea. Nevertheless, the defendants should take another run at this through summary judgment. The district court opinion is thoughtful and reasoned, but it does reflect inexperience in handling Section 101 issues, which might be helped by a more developed factual record.

    1. 4.1

      Well, I suppose if you agree that the nonsense that Scotus has been issuing on section 101 lately is correct, you may have a point.

      But if you have a sense of reality, you know that a card having a unique identification number encoded on it is a manufacture, which Congress said in section 101 is eligible subject matter.

      It may be that the claimed invention would have been obvious, and if that is the case, the patent challenger is supposed to prove it by clear and convincing evidence.

      1. 4.1.1

        Read 101 a little closer, and you will see that whatever was invented must be an article manufacture (or other category), not whatever is claimed. That is, 101 does not say that “the claimed invention” must be an article of manufacture.

        Thus, the first step is to determine what was actually invented. Here, do you think that the applicant invented a card having a unique identification number? Certainly, they did not invent this and dont claim they do.

        Think about this: I discover there is oil in the hudson river. Do you think: “I claim an oil rig located in the hudson river” is patentable? An oil rig is clearly an aricle of manufacture– but I did not invent it. My discovery (that there is oil in hte hudson river) is not a process, machine, manufacture, or composition of matter. So its ineligible, even though my claim recites an article of manufacture.

        1. 4.1.1.1

          Please distinguish patent eligible from patentable.

          An oil rig — anywhere — is patent eligible.

          Clearly.

          And just as clearly, that alone as your claim is not patentable.

          But this is not germane to the point at hand (and you should know that).

          1. 4.1.1.1.1

            Anon, again what stops:

            “An oil rig located in the hudson river” from being a valid claim, provided I discover oil there?

            Assume: (1) Nobody knew there was oil in the hudson river before (so its novel to put an oil rig there, and non-obvious); (2) an “oil rig” is a well defined term of art; and (3) the hudson river is well defined in the spec.

            1. 4.1.1.1.1.1

              Again – distinguish between patent eligible and patentable.

              You can’t be that thick to not get this.

              1. 4.1.1.1.1.1.1

                But anyway, you arent going to answer my question, are you?

                “I claim an oil rig located in hte hudson river.”

                What makes this claim not valid to you? Its not 102 (there are no oil rigs in the hudson), its not 103 (wouldnt be obvious since nobody knew there was oil there), and its not 112 (oil rig is term of art). Anon are you with me? Are you going to answer the very straightforward question of what makes this claim invalid?

                (And as an aside: USC 101 falls under the chapter “patentability of inventions” and itself is titled “inventions patentable,” so I am not sure why you are so against the word “patentable” for 101 purposes, when its in the title itself).

                1. Your ‘question” is a self-defeating logical fallacy.

                  You want to apply a type of ‘common sense’ result but turn and ASSume that LEGAL obviousness is not reached.

                  Being ‘with you’ on this is being in the toilet.

        2. 4.1.1.2

          How else do you determine what was invented besides looking at the claims? Novelty, enablement, obviousness, and written description are all determined by considering the claimed subject matter, not some “I am a Federal Judge who thinks she is God and thinks the invention is something other than what the claims say.”

          There is no instruction from Congress to treat subject matter eligibility differently. The facts in your example may prove invalidity for lack or novelty or for obviousness, but it does not prove that a card is not a manufacture.

          1. 4.1.1.2.1

            USC 102 and 103 explicitly use the term “claimed invention.” USC 101 does not use the words “claimed invention.” USC 100 explicitly defines “invention” separately from the term “claimed invention.” So yes, there is instruction from congress to treat the invention for purposes of 101 as different than the “claimed invention” for purposes of 102 and 103.

            (Think about why the 101 reform a few months ago tried to introduce the term “claimed invention” into 101). S

            And again: if I discover oil in the hudson river, and nobody knew it was there before, do you think “I claim an oil rig located in the hudson river” is a valid claim? Its certainly novel and non-obvious (nobody knew there was oil there before), and it passes 112. So do you think congress intended for oil discoveries to be patentable?

          2. 4.1.1.2.2

            And to answer your question of “how do you determine what was invented”– you do a factual inquiry into what was known at the time in order to elucidate what discovery/invention underlies the claims. Its what courts do all the time in the 101 inquiry. It is a difficult inquiry, and you might not like it, but is certainly textually supported by the statute– at least until the reformers manage to change 101 to say “The claimed invention must recite a process, manufacture, or composition of matter” (which they tried and failed to do).

        3. 4.1.1.3

          Read 101 a little closer, and you will see that whatever was invented must be an article manufacture (or other category), not whatever is claimed.

          A pedantic fallacy.

          The name of the game is the claim.

          See: 35 USC 112(b). See also 35 USC 100(j).

          As to the difference between “patentable” and “patent eligible,” these are legal terms of art and YOU should recognize the difference (title or otherwise).

      2. 4.1.2

        Re: “a card having a unique identification number [magnetically] encoded on it is a [new?] manufacture..”
        I think that is not a closed issue absent a Sup. Ct. test of both “Beauregard claims” and the Fed. Cir. view of the “written matter” issue.

    2. 4.2

      LR,

      I hesitate to think of what you might think of the ‘point of novelty’ in the Diehr advance.

      If you are a ‘practitioner,’ you are not a practitioner in the relevant arts, and thus should probably NOT be making the assertions that you are asserting.

    3. 4.3

      I respectfully disagree Lode.

      You’re talking about a potential 102 / 103 problem; and / or possibly a 112 problem; but not a 101 problem.

      I haven’t read the briefs, but what is the specific abstract idea you believe the claims — including claim 32 — are directed to?

    1. 3.1

      The presumption of validity is alive and well, along with the requirement of “clear and convincing evidence” for litigation invalidity. That kind of old evidence is difficult to find and prove up when it would be the contents of more than 20 year old commercial software, as IBM found out the hard way in the i4i case. I doubt if this case would still be dragging on if the defendant had any?

      1. 3.1.1

        Oops, IBM filed an amicus brief in 2011 in the Sup. Ct. in this case, but the losing defendant was MS: “MICROSOFT CORPORATION, Petitioner, v. I4I LIMITED PARTNERSHIP AND INFRASTRUCTURE FOR INFORMATION, INC.”

      2. 3.1.2

        The presumption of validity is alive and well

        If you really believe that. then you have missed the point.

        As to the intersection of that point and your most beloved IPRs – I know that you have missed the point.

  3. 2

    This really has been dragging on for some time, and should that be a factor in granting an interlocutory appeal? I did not note when this U.S. Patent No. 6,000,608 was finally first asserted against this or other defendants, but it has a 1997 priority date, issued in what was then good PTO time, and has been expired for three years already.

    1. 2.1

      P.S. I did not count the entire application references dump by the applicant listed on the patent, but guess at least 700-800 or more? Somebody must have thought this was important way back in 1998?

  4. 1

    A side question re “..lots of patent infringement lawsuits have been ending very quickly – with courts ruling that plaintiffs patents are directed to ineligible subject matter and therefore cannot support a patent infringement claim.”
    Yes, with Alice-type 101 rejections, as here. But what is the actual percentage? Are not far more patent infringement lawsuits ended before trial [or substantial pre-trial expenses] still due to relatively low cost settlements, early Markmans and consequent S.J.s for non-infringement, or stays for IPRs and adverse IPR decisions?

    1. 1.1

      Decent questions, Paul.

      Add: how many situations are there where having to result to court or the other items you list not even necessary?

      1. 1.1.1

        Another good statistical question, but I am not aware of any way to count pre-SUIT settlements of patent infringement disputes. Just a personal impression that that was far more common in the past, and that then it became far more common to “sue first and ask questions afterwards.” One factor was the continuing increase in the percentage of patent suits on patents acquired by PAEs. Another was the licensing resistance of major software and smartphone companies. Another factor was to get the suit into EDTX. Now the Sup. Ct. enforcement of the patent venue statute removed the latter.

        1. 1.1.1.1

          Just a personal impression that that was…

          I am going to have to part ways with your “personal impressions,” given the lack of understanding of the depth and nature that you have shown of Efficient Infringement (including believing in the ‘0h no Tr011s’ propaganda).

          1. 1.1.1.1.1

            Anon, although it is a side issue to the main point I was agreeing with you on, the main ” ‘0h no Tr011s propaganda” has been propaganda that professional patent assertion companies [PAEs] do not exist. There have been law firm statistical reports [even on Gene’s blog] on the increasing percentage of patent suits that are filed by PAEs, their large funding sources, etc.

        2. 1.1.1.2

          Another reason for “sue first, talk later” is the ease with which DJ jurisdiction arises now. I forget which Scotus travesty gave us that, but the upshot is that if I write you a letter saying I think your conduct requires a license from me, that lets you sue me, even if all I want to do is talk and will walk away if you can convince me that a license is not needed.

          1. 1.1.1.2.1

            Yes, good point. MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007) plus Scan Disk and other Fed. Cir. decisions since make a licensing approach and licensing discussions which will not justify a D.J. suit in response much more difficult. But is that defense option someone affected by the subsequent Sup. Ct. enforcement of the patent suit venue statute, and the availability of IPRs where validity rather than infringement is disputed?

            1. 1.1.1.2.1.1

              IPR has offered NO amelioration (as you would suggest and cheer-lead).

              If anything, it has made matters worse.

            2. 1.1.1.2.1.2

              But also note that PAEs [the increasing % of patent suit initiators] have much less incentive to engage in pre-suit licensing negotiations than real companies with real products with potential mutual benefits from cross-licensing, and will also be subject to much larger litigation discovery burdens.

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