Patent Owner Asserts 101 Ineligibility Is Not a Defense That Can Be Raised in Litigation

Patent Owner Asserts 101 Ineligibility Is Not a Defense That Can Be Raised in Litigation

Summary

On September 26, 2016, RPost Communications Limited (“RPost”) filed a brief in the United States Court of Appeals for the Federal Circuit (“Federal Circuit”), arguing that the district court did not have statutory authority to decide an alleged infringer’s eligibility challenge under 35 U.S.C. §101. In particular, RPost argued, inter alia, that “[s]ection 101 is not one of the defenses enumerated in 35 U.S.C. §282(b) that Congress allowed to be raised in a patent infringement action.” According to RPost, the express language and legislative history of the Patent Act, and the Supreme Court’s and Federal Circuit’s precedent, support the proposition that the only grounds for an invalidity defense in a patent litigation are “novelty under §102 and obviousness under §103, not eligibility under §101.” Though not yet decided, a favorable decision for RPost could be a boon to patentees defending their patents in litigation. This case will be watched closely by patent practitioners.

The Patents at Issue

The patents at issue relate to “email tracking of and/or reports of delivery, email delivery failure, and/or determining opening of emails using SMTP, ESMTP, HTTP, or other data protocols.”

The District Court Decision

GoDaddy.com, LLC (“GoDaddy”) brought a declaratory judgment action in the United States District Court for the District of Arizona (“district court”) in January 2014 after numerous communications between RPost and GoDaddy regarding the patents at issue. In June 2016, the district court granted GoDaddy’s summary judgment motion and invalidated all of the asserted claims under §101. RPost appealed from the district court’s grant of summary judgment, raising the issue of whether “the district court err[ed] in deciding that it had jurisdiction to determine whether the patents-in-suit claim eligible subject matter, thereby exceeding its congressionally delineated authority.”

RPost Arguments in the Brief

RPost first pointed to the language of the Patent Act and argued that “[t]he district court erroneously determined that it had jurisdiction over GoDaddy’s §101 eligibility challenge . ...”  According to RPost, “Congress never authorized [Section 101] ineligibility as a defense that can be raised in patent litigation. Patent defenses are statutory. If a patent defense is not denominated within the Patent Act, then the Court lacks jurisdiction to address it.”

RPost argued that “[s]ection 282(b) of the Act enumerates the defenses that may be raised in a patent infringement action.” RPost then cited 35 U.S.C. §282(b)(2), the only paragraph pertinent to this case according to RPost, which states a defense of “(2) Invalidity of the patent or any claim in suit on any ground specified in part II as a condition for patentability” (emphasis added). RPost further argued that the “plain language of §282(b)(2) does not authorize ineligibility as a defense.”

Looking at the structure of the title 35, RPost asserted that only Sections 102 and 103 (novelty and non-obviousness) are labeled with the heading “condition for patentability.” According to RPost, Section 101 is labeled with the heading “Inventions patentable” and “[n]o other section contained in part II is specified as or includes the phrase ‘condition for patentability,’ either in the title or in the body.” Thus, RPost asserted that “[t]he [only] two sections of part II that Congress has denominated as ‘conditions of patentability’ are §102 (‘novelty and loss of right to patent’) and §103 (‘nonobvious subject matter’).” RPost then argued that the district court erred in its jurisdiction ruling, namely that the district court failed to address “the evidence in the actual text of §282(b)(2) that it does not apply to §101,” and “ignored evidence in the text of §101 that eligibility is not a condition of patentability.”

Second, RPost argued that the district court’s reliance on Versata was inapposite, asserting that the Federal Circuit “did not hold that a district court has authority to decide eligibility challenges” in Versata v. SAP America, Inc. RPost distinguished this case from Versata, stating that “Versata addressed whether the PTAB, not a district court, exceeds the scope of its congressionally delineated authority in deciding a §101 challenge in a CBM review under the AIA.” RPost further identified that “Versata relies on the legislative history of the AIA to conclude that the PTAB has the authority to consider §101 challenges.” RPost asserted that the district court should similarly follow the 1952 Patent Act’s legislative history with respect to whether Congress intended ineligibility to be a defense in litigation.

Following this reasoning, RPost discussed the 1952 Patent Act’s legislative history, and noted the Federico Commentary, which does not recite ineligibility as one of the defenses under §282(b)(2).

RPost drew further support for its position in Supreme Court and the Federal Circuit cases, arguing that “[t]he Supreme Court has never held that ineligibility is a litigation defense.” Rather, “Supreme Court decisions actually addressing patent eligibility under §101 contradict the notion ... that §101 defines any conditions for patentability.” While the Supreme Court addressed the eligibility of an issued patent in three cases arising from litigation, RPost argued that “[t]hese decisions, however, are not binding because they do not address whether a district court has jurisdiction to decide an eligibility challenge.”

RPost then asserted that the Federal Circuit has never held that ineligibility is a litigation defense. Once again, RPost argued that the Federal Circuit “acknowledged that Congress specified the defenses in any action involving the validity of a patent as ‘any ground specified in part II of this title as a condition of patentability’ and named only two Patent Act sections ‘conditions for patentability’ – §§102 and 103.”

Thus, RPost argued the district court did not have statutory authority to decide a patent’s eligibility under 35 U.S.C. §101 on five grounds, namely: 1) the statutory scheme of the Patent Act; 2) the Federal Circuit’s Versata holding; 3) the legislative history of the Patent Act; 4) Supreme Court decisions; and 5) Federal Circuit decisions. 

RPost further argued that the claims at issue are patent eligible even if the district court had jurisdiction to consider §101 issues.

Challenging Patent Eligibility in Litigation

After the Supreme Court’s 2014 decision in Alice Corp. v. CLS Bank International, which held that abstract ideas implemented using a computer are not patent-eligible under 35 U.S.C. §101, many court decisions have found patents invalid as ineligible under Section 101. RPost has argued to the Federal Circuit that district courts can decide invalidity challenges based only on obviousness and anticipation, and that patent eligibility can't be raised as a defense because it is not a “condition of patentability” under the statute. If the Federal Circuit rules for RPost on this point, this case will provide patentees with a powerful procedural tool for defending their patents in litigation. This case will be watched closely by patentees and the patent practitioner community.

Saul Ewing attorneys regularly assist clients with drafting and prosecuting patent applications in the software field. If you have any questions about this Client Alert or would like more information, please contact Greg Bernabeo, Weiguo (Joe) Zhou, one of the other attorneys in our Intellectual Property Practice, or the attorney in the firm with whom you are regularly in contact.

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