Federal Circuit avoids "murky morass" of Section 101 jurisprudence, proceeds directly to Sections 102 and 103
On March 2, 2012, in MySpace, Inc. v. GraphOn Corp., 2011-1149 (Fed. Cir. 2012), the United States Court of Appeals for the Federal Circuit upheld a district court ruling invalidating four GraphOn Corp. patents directed to various aspects of allowing a user to create, modify, and search for database records over a computer network. MySpace, Fox Audience Network, and Craigslist had filed a declaratory judgment action against GraphOn in the United States District Court for the Northern District of California seeking to invalidate GraphOn’s patents under 35 U.S.C. §§ 102 and 103, based on prior art, which the district court granted. The Federal Circuit affirmed the district court’s claim construction and concluded that it was outcome determinative for prior-art-based invalidity.
The remainder of the decision involved the panel majority sparring with the dissent on whether the court should have first determined, under Section 101, that the subject matter of the claims was patent eligible. The dissent (Judge Mayer) argued that Section 101 was a threshold issue that must be resolved before prior-art-based defenses. The dissent relied on language in the Supreme Court’s Bilski v. Kappos, 130 S.Ct. 3218, 3225 (2010) characterizing Section 101 as a “threshold test” and Federal Circuit precedent calling statutory subject matter an “antecedent question,” In re Comiskey, 554 F.3d 967, 975 n. 7 (Fed. Cir. 2009). Dissent at 1-2. After quickly stating its case for addressing Section 101 first, the dissent spent considerable time denouncing the claims in GraphOn’s patents as overly broad, “potentially extend[ing] to most online advertising and social networking sites,” having “the potential to wield far greater preemptive power than those at issue in Bilski,” and directed to a “fundamental and widely understood concept.” Dissent at 3-4. The dissent’s concern centered on the fact that “[m]any software and business method patents simply describe a basic, well-known concept that has been implemented or applied using conventional computer technology.” Dissent at 7. “[A]llowing a process to become patentable simply because it is computer-implemented or invokes the use of the Internet would render the subject-matter eligibility criteria contained in section 101 virtually meaningless.” Dissent at 8.
The majority (Judges Newman and Plager) declined to rule on Section 101 at all. Despite the dissent’s concerns, the majority ruled that Section 101 should come last, after attempting to resolve the dispute under more “well developed” and “well understood” Section 102, 103, and 112 principles. Quite simply, the majority found Section 101 jurisprudence too unpredictable and too difficult to apply as a matter of routine. Majority at 16. Rather than entering the “murky morass that is § 101 jurisprudence,” courts should “avoid the swamp of verbiage that is § 101 by exercising their inherent power to control the processes of litigation.” Majority at 17. Avoiding the difficult questions posed by Section 101 would “conserve judicial resources, and bring a degree of certainty to the interests to both patentees and their competitors in the marketplace.” Id.
According to the majority, Section 101 is difficult because the “answer in each case requires the search for a universal truth.” Majority at 13. And the Supreme Court has not helped bring certainty (“we tried the ‘machine or transformation’ formula—the Supreme Court was not impressed.”). Id. at 15. The majority was concerned that application of the Supreme Court’s principles is entirely subjective (“reminiscent of the oenologists trying to describe a new wine”). Id.
The court suggests that Section 101 should be raised far less often in litigation and that “courts should avoid reaching for interpretations of broad provisions, such as § 101, when more specific statutes, such as §§ 102, 103, and 113, can decide the case.” Id. at 18. Instead, courts should “put aside the § 101 defense on whatever grounds seem applicable in the case,” leaving the parties to litigate prior-art-based invalidity defenses. Id. at 20. The court wanted to avoid § 101 becoming “the next toss-in for every defendant’s response” now that the court has attempted to “fashion the stopper” on inequitable conduct claims through Therasense, Inc. v. Becton, Dickenson & Co., 649 F.3d 1267 (Fed. Cir. 2011). Majority at 19. The majority expressed the belief that the Patent Office should be the “initial forum for understanding what can and cannot be patented.”
- The court rejected the notion that there are competing theories of claim construction where in one approach the court tries to ascertain the invention and fits the meaning of the claims to that invention and in the other approach focuses first on the meaning of the claims and applies claim construction tools to those words. Rather, those approaches are “complementary.” Majority at 8. “[I]n construing a claim there are two limiting factors—what was invented, and what exactly was claimed.” Id. The claim construction discussion in this decision is noteworthy but beyond the scope of this alert. [Back to reference]
- Judge Mayer had also dissented in the Federal Circuit’s en banc ruing in In re Bilski, 545 F3d 943, 998-1011 (Fed. Cir. 2008), arguing that business methods should not be patentable under Section 101. [Back to reference]