On March 3, 2016, Administrative Law Judge Dee Lord granted summary determination of invalidity in Certain Activity Tracking Devices, Systems, and Components Thereof, Inv. No. 337-TA-963, Order No. 40 (Mar. 3, 2016), finding claims from two asserted patents invalid under Section 101.  This marks the first time since the Supreme Court's landmark decision in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014), that any ITC judge has found claims invalid for claiming ineligible subject matter, and only the second time since 2010.

In the last six years, the Supreme Court has issued a series of important decisions concerning 35 U.S.C. § 101, which defines patentable subject matter (a "new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof").  Patents that attempt to claim a law of nature, a natural phenomenon, or an abstract idea fail to comply with Section 101.

The Supreme Court's decision in Alice, heralded a new era of successful defenses based on Section 101.  There have been more than a dozen Federal Circuit decisions on Section 101 issues since Alice, and in all but one, the Federal Circuit found the asserted patents invalid.  Alice has been cited in more than two hundred district court cases, and many patents have been successfully invalidated based on Section 101 challenges in post-grant proceedings before the PTO.

Until now, this trend has had minimal impact at the ITC.  As discussed in an earlier post, since 2010, each of the seven previous motions for summary determination filed at the ITC based on Section 101 was denied, and only once had that defense succeeded after a full hearing.  In denying summary determination motions, ITC judges have typically concluded that Section 101 issues could not be resolved before claim construction.  Indeed, Judge Lord aptly summarized the judges' typical stance on this issue less than a year ago, when she stated that "[a]lthough claim construction is not a prerequisite to a validity determination under § 101, 'it will ordinarily be desirable—and often necessary—to resolve claim construction disputes prior to a § 101 analysis, for the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter.'"  Certain Communications or Computing Devices and Components Thereof, Inv. 337-TA-925, Order No. 32 at 5 (May 19, 2015), quoting Bancorp Servs., LLC v. Sun Life Assurance Co. of Can. (U.S.), 687 F.3d 1266, 1273-74 (Fed. Cir. 2012).

In the 963 Investigation (Certain Activity Tracking Devices, Systems, and Components Thereof), however, Judge Lord concluded that summary determination as to two patents was warranted because the patents were directed to ineligible subject matter and complainant had not established that a genuine issue of material fact existed because that precluded summary determination.   The patents were related to data used by wearable fitness trackers, like those allegedly manufactured by complainant Jawbone.  One patent claimed a "nutrition and activity management system that monitors energy expenditure through the use of a body-mounted sensing apparatus"; the second claimed methods for comparing values received from a wearable computer to a target score.  The Office of Unfair Import Investigations (OUII) agreed with respondents that these patents claimed only an abstract idea.

In an expansive, 32-page opinion, Judge Lord determined that the patents were invalid under Section 101.  Judge Lord first concluded that no presumption of eligibility applied to a Section 101 challenge.  Applying the two-part test articulated in Mayo Collaborative Services v. Prometheus Laboratories, Inc. 566 U.S. __, 132 S. Ct. 1289 (2012), and further explained in Alice, Judge Lord concluded that the disputed claims recited an abstract idea, and failed to add any inventive concept sufficient to transform the claim into patent-eligible subject matter.  Judge Lord held that "the subject matter of [one of the patents] is the collection and manipulation of information, not any specific, innovative technological means for performing these functions," and the other challenged patent was much the same.

Perhaps most significantly for ITC practitioners, Judge Lord also discussed why the Section 101 defense presented here was ripe for summary determination.  Citing two recent Federal Circuit opinions in Wireless Media Innovations v. Maher Terminals, Nos. 2015-1634, 2015-1635, 2016 WL 463218 (Fed. Cir. Feb. 8, 2016), and Mortgage Grader v. First Choice Loan, No. 2015-1415, 2016 WL 362415, at *8 (Fed. Cir. Jan. 20, 2016), Judge Lord noted that "several courts have held . . . that patent eligibility can be decided as early as the pleadings stage."  Judge Lord concluded that nothing prevented her from deciding the Section 101 issue now, rather than after a hearing on the full merits.

It bears not that there was no argument that claim construction precluded summary determination in this Investigation, which is unusual.  As Judge Lord explained, claim construction in the 963 Investigation was complete; a claim construction order issued on February 17.  There was therefore "no disputed claim construction" and no other "genuinely disputed facts that need to be resolved in order to determine patentability."  This is not often the case; in previous summary determination proceedings, including Judge Lord's decision last year in the 925 Investigation, ALJs have held that disputed claim construction issues precluded early resolution of Section 101 defenses.

Jawbone has petitioned the Commission for review of Judge Lord's Initial Determination (ID).  Respondents and the Staff have responded to that petition, and the Commission should decide whether to review the ID by May 2.  As Judge Lord observed in a footnote in her ID, the full Commission has not addressed Section 101 issues since Alice.  Meanwhile, respondents have moved for summary determination of Section 101 invalidity for all claims of the two remaining patents in the case, both of which are family members of one of the patents already held invalid.  However, on March 15 the parties jointly requested an extension of time to conduct settlement negotiations, highlighting the possibility that the dispute may be resolved before the Commission rules upon Judge Lord's ID.

This decision is only one more data point–it will be some time before a clear picture emerges of how the Commission views Section 101 defenses in this post-Alice era.  In particular, it will be interesting to see whether any ITC judge is willing to resolve a Section 101 issue before claim construction occurs or if other ALJs are also willing to resolve the issue after claim construction but before the evidentiary hearing, as Judge Lord did in the 963 Investigation.

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP. All rights reserved