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This article was by Law 360 on November 4, 2022 and is republished with permission.

Since the U.S. Supreme Court’s 2014 Alice Corp. v. CLS Bank International ruling, patentees attempting to enforce their patents in the software arts have encountered a more significant hurdle for patent eligibility that has led to invalidation of many patents for software-based inventions.

In a district court case for patent infringement, an alleged infringer may file a Rule 12(b)(6) motion to invalidate the patent as being directed to ineligible subject matter under Title 35 of the U.S. Code, Section 101. The U.S. Court of Appeals for the Federal Circuit recently published a precedential opinion that may open the door a little wider for a successful defense against such Rule 12(b)(6) motions.

This article discusses the Federal Circuit’s reasoning in the opinion as well as a few key takeaways for patentees and practitioners regarding guideposts for surviving challenges to eligibility.

U.S. Patent No. 9,432,452

In the Sept. 28 Cooperative Entertainment Inc. v. Kollective Technology Inc. , the Federal Circuit reversed a U.S. District Court for the Northern District of California ruling that invalidated asserted U.S. Patent No. 9,432,452 on a Rule 12(b)(6) motion for lacking eligibility.

The Federal Circuit did not rule on the eligibility of the claims. Instead, the Federal Circuit found it was at least plausible that the claims recited an inventive concept, and, therefore, it was at least plausible that the claims are eligible.

The Federal Circuit therefore held that the dismissal for ineligibility under the Rule 12(b)(6) motion was in error. This decision provides patent drafters with guidance for surviving Rule 12(b)(6) motions on the eligibility of their patents in litigation.

The ‘452 patent is directed to a peer-to-peer (P2P) dynamic network for distributing large data files — e.g., videos and video games — to different devices. The ‘452 patent recites a dynamic P2P network in which content is distributed outside of any static network of a controlled system, and peer nodes distribute the same content between each other, not a single server that distributes content to each device.

The ‘452 patent explains this novel process provides the technical benefits of increased reliability, more redundancy, and more efficient delivery than prior art systems. The ‘452 patent explicitly explains that prior art video streaming was controlled by content distribution networks. A server of the content distribution in such prior art systems would directly distribute the content to different devices.

The district court found the claims ineligible under the two-step Alice test outlined by the U.S. Supreme Court. In Step 1, the district court found the claims directed to the abstract idea of the preparation and transmission of content to peers through a computer network.

In Step 2, the district court characterized the claims of the ‘452 patent as “merely implement[ing] the abstract idea of preparing and transmitting data over a computer network with generic computer components using conventional technology.”

Because the district court found the claims of the ‘452 patent to be ineligible under both Step 1 and Step 2 of the Alice test, the district court found the claims ineligible and dismissed Cooperative’s complaint for patent infringement.

On appeal, Cooperative asked the Federal Circuit to reverse the lower court’s ruling, focusing the appeal on the relatively low plausibility threshold that must be met to survive a Rule 12(b)(6) motion. Cooperative argued that the amended complaint for infringement plausibly alleges that the claims of the ‘452 patent recite inventive concepts under Alice Step 2, precluding any dismissal under a Rule 12(b)(6) motion.

Specifically, Cooperative’s amended complaint alleged two inventive concepts are recited in the claims:

• A dynamic P2P network including nodes that are designed to consume the same content within a predetermined time and that are configured to communicate outside a content distribution network; and
• The use of trace routes in content segmentation.

The Federal Circuit agreed with Cooperative and reversed the district court’s ruling for remand. In the opinion, U.S. Circuit Judge Kimberly A. Moore stated:

At a minimum, the district court should have denied the motion to dismiss because Cooperative’s allegations in the complaint regarding the claims and the ‘452 patent’s written description create a plausible factual issue regarding the inventiveness of the dynamic P2P configuration of claim 1.¹

The Federal Circuit stated that trace route segmentation is an inventive concept when taking all of the facts in the non-movant’s favor, as is required in a Rule 12(b)(6) motion.

In doing so, the Federal Circuit focused on language in the specification that specifically states how delivering P2P content using content segmentation through trace routing is not taught in the prior art and is what provides the technical advantages provided by the claimed invention.

The Federal Circuit also used the examiner’s statement for reasons of allowance, which indicated that both of the alleged inventive concepts were not present in the prior art, as a basis for ruling the claims in the ‘452 plausibly recite inventive concepts.

Kollective unsuccessfully argued that the claims in the ‘452 patent do not provide an inventive step because P2P networks and CDNs are conventional. The Federal Circuit shrugged off this argument, stating:

This argument misses the point — useful improvements to computer networks are patentable regardless of whether the network is comprised of standard computing equipment.

The Federal Circuit noted that Kollective did not argue that the alleged inventive concepts in the complaint were not inventive. However, the Federal Circuit seems to argue that such assertions would fail anyway, stating:

The record here contains concrete allegations in the complaint and the specification that the segmentation limitation was not well-understood, routine, or conventional and “recit[es] a specific technique for improving computer network” functioning.”

Impact

Cooperative v. Kollective provides patentees and practitioners with some guideposts for overcoming challenges to ineligibility of software inventions. Typical guidance for preserving patent eligibility in court may be to recite implementation details describing how a technical improvement is realized by the claimed invention rather than simply the abstract idea of the technical improvement.

Here, the Federal Circuit provides tangential guidance to this wisdom by illustrating the benefits of accurately identifying and describing the relevant prior art in the specification. If a patent drafter can describe how the claimed invention is a technical improvement over the prior art in the specification and recite the steps or components that realize the technical improvement in the claims, the patent may present at least a plausible recitation of an inventive concept. Accordingly, such a patent may be more likely to survive early challenges to eligibility in a patent infringement case.

The court’s decision in Cooperative v. Kollective could prove to illustrate a shift in the court’s willingness to give weight to the inventive concept analysis under Step 2 of the Alice test. Decisions regarding eligibility often hinge on whether the court determines claims are directed to an abstract idea or recite application. It is rare for the court to determine claims are eligible based on an inventive concept analysis. However, the court here provides an example as to how a patent can survive an eligibility challenge based on the contents of its specifications and whether the patent describes an improvement over the prior art.

With the increased attention to the inventive concept analysis, patentees may have increased confidence that patents in their patent portfolio will survive challenges to eligibility and are enforceable.