In early August, the Federal Circuit issued its opinion in Realtime Data LLC v. Array Networks Inc., a patent case we have been following because it attracted an amicus brief. In this case, the Federal Circuit reviewed a district court’s grant of a motion to dismiss for invalidity under 35 U.S.C. § 101. In an opinion by Judge Reyna joined by Judge Taranto, the Federal Circuit agreed with the district court. Judge Newman, however, filed a dissenting opinion. This is our opinion summary.
Judge Reyna began by highlighting the factual and procedural background of the case:
This case returns to us for the second time. Appellant Realtime sued several companies, including some of the Appellees, in the District of Delaware for infringing various combinations of five patents related to methods and systems for data compression. Some of the Appellees moved to dismiss under Federal Rule of Civil Procedure 12(b)(6) for, among other things, failure to state a claim, arguing that the claims of the patents were patent ineligible under 35 U.S.C. § 101. The district court held a hearing and orally announced that all of the claims from the five patents were invalid under § 101. On appeal, this court vacated and remanded for the district court to provide a more detailed § 101 analysis. . . . On remand, the district court issued a written opinion that found that the claims from all eight asserted patents (by then, Realtime had asserted three more patents and had added more parties) were invalid under § 101 because the claims were directed to an abstract idea. . . . The court dismissed Realtime’s complaints but allowed Realtime to amend them, which it did— adding material and dropping a patent. On renewed motions to dismiss, the district court reaffirmed its prior analysis and dismissed the amended complaints—this time, without leave to amend. . . . Realtime appeals.
After a more detailed retelling of the factual and procedural background of the case, Judge Reyna reviewed the district court’s grant of the motion to dismiss based on invalidity of representative claims under § 101. He first analyzed the claims under step one of the test set forth in Alice Corp. v. CLS Bank International. As part of this analysis, he “consider[ed] whether the claims are directed to an abstract idea.” Judge Reyna agreed with the district court that the claims are directed to an abstract idea. He emphasized that, “to avoid ineligibility, ‘a claim must have the specificity required to transform the claim from one claiming only a result to one claiming a way of achieving it.’” Judge Reyna explained how the “claims at issue here fail to do this.” In particular, he noted that “none of the claims at issue specif[y] any particular technique to carry out the compression of data— the particular rules for producing a smaller set of data out of a larger starting set.” He also emphasized how “the claims are directed to only abstract ideas, calling for unparticularized analysis of data and achievement of general goals.”
Judge Reyna then moves on to review the specifications of the patents at issue. For example, for one set of patents he concluded that “that neither the claim nor the specification ever explains how that data is to be analyzed or compressed.” He also described how a representative claim “does not recite whether it analyzes data to determine the data’s length, complexity, type, or structure” and that “minimal narrowing does not make the claim less abstract.” In the course of the opinion, he repeatedly emphasized how neither the claims nor the specifications of the patents explain how the relevant data compression is achieved.
With respect to step one, he concluded that “the claims of the asserted patents are ‘data manipulation’ claims that are recited at a high ‘level of result-oriented generality’ and that lack ‘sufficient recitation of how the purported invention[s]’ accomplish the results.”
Judge Reyna proceeded to analyze the claims under step two of the test set forth in Alice. In particular, he identified the relevant task as “determin[ing] if the claims are transformed into subject matter beyond the abstract ideas themselves.” Judge Reyna agreed with the district court, finding “that the claims from the asserted patents ‘simply apply an abstract idea on generic computers with generic techniques.’” He emphasized how a “’a claimed invention’s use of the ineligible concept to which it is directed cannot supply the inventive concept’ required to cross the line into eligibility.” Judge Reyna ultimately concluded that “nothing in the individual limitations or their ordered combination . . . transform the claims into patent-eligible subject matter.”
Thus, Judge Reyna ultimately agreed with the district court that “the claims of all seven patents at issue are directed to abstract ideas and that they do not recite elements that transform the subject matter into an eligible application of the abstract ideas.”
As a result of its analysis, the Federal Circuit affirmed the district court’s dismissal under Rule 12(b)(6) based on subject-matter ineligibility under 35 U.S.C. § 101.
As mentioned, Judge Newman dissented. Her dissent emphasized her view that the case is “properly an enablement case.” In her view, “§ 101 was never intended to bar categories of invention” in the way the majority did in this case. Further, Judge Newman stated, the “judicial exception to eligibility is an unnecessary and confusing creation of the courts.” She indicated “[t]his case is an example” of this confusion, “for the enablement requirement of § 112 is better suited to determining validity of these claims than is the distortion of § 101.” She went on to explain how she believes eligibility law has diverged from its original purpose and has hurt innovation in the United States. Judge Newman quoted Representative Doug Collins and Senator Chris Coons to emphasize her view that patent eligibility requirements harm American innovation and make it difficult to protect particular technologies, such as medical devices and artificial intelligence. Judge Newman ultimately suggested the case should be remanded for the district court to apply § 112 and, in particular, to consider enablement. She also indicated other patentability requirements under 35 U.S.C. §§ 102 and 103 may be relevant.