Plausible Factual Allegations Concerning Inventive Concepts Preclude Motion to Dismiss
In Cooperative Entertainment, Inc. v. Kollective Technology, Inc. Appeal No. 21-2167, the Federal Circuit held that plausible allegations of an inventive concept in a complaint precluded a motion to dismiss for lack of patent eligibility because determining whether such a concept was well-understood, routine, or conventional was a question of fact that could not be resolved at the Rule 12(b)(6) stage.
Cooperative patented a system and method of structuring a peer-to-peer network for distributing large files and accused Kollective of infringement. Kollective moved to dismiss under Rule 12(b)(6), alleging that all claims were ineligible under § 101. Cooperative filed an amended complaint, which led Kollective to refile its motion to dismiss, which the district court granted. On appeal, the Federal Circuit reversed the district court’s dismissal and remanded for further proceedings.
Applying the Supreme Court’s two-step Alice framework to analyze patent eligibility, the Federal Circuit proceeded directly to step two to determine if the amended complaint plausibly alleged that the claims recited an inventive concept. The Federal Circuit concluded that there were at least two alleged inventive concepts that should have precluded dismissal for lack of eligibility: (1) the use of peer nodes to communicate outside of a content distribution network and (2) the use of trace routes in data content segmentation. Without determining whether these concepts were actually inventive, the Federal Circuit noted that Cooperative’s complaint alleged that these concepts were distinctions and improvements over the prior art and provided benefits to the technical field. The Federal Circuit also reasoned that the determination of whether the claimed network was well-understood, routine, or conventional was a question of fact that could not be resolved at the Rule 12(b)(6) stage. Accordingly, the Federal Circuit held that plausible factual allegations regarding inventive concepts precluded dismissal for lack of patent eligibility and remanded for further proceedings.
A Skilled Artisan Cannot “At Once Envisage” Each Member of a Large Class
In Mylan Pharmaceuticals Inc. v. Merck Sharp & Dohme Corp. Appeal No. 21-2121, the Federal Circuit held that a party arguing inherent anticipation cannot argue that a skilled artisan would “at once envisage” each member of the class where the class is large rather than limited.
Mylan petitioned for an inter partes review of a patent owned by Merck. The patent at issue claimed particular molecules. Mylan argued that the claims were expressly or inherently anticipated by a Merck-owned reference (Edmondson) or would have been obvious over Edmonson in view of additional references. The Board found that the claims would not be anticipated because Edmondson did not expressly disclose all the claimed limitations. “Mylan could not fill in the gaps by arguing that a skilled artisan would ‘at once envisage’ what is missing” because of the number of compounds in the class. The Board therefore rejected inherent anticipation. The Board also determined that Merck reduced its invention to practice prior to Edmondson, making Edmondson a Section 102(e) prior art reference, not a Section 102(a) reference. Because of the common ownership between Edmondson and the Challenged Patent, the Board held that Edmondson could not be used in an obviousness challenge for most claims under Section 103(c)(1). For the remaining claims, the Board found that Mylan failed to demonstrate a motivation to combine Edmondson with other references. Mylan appealed to the Federal Circuit.
The Federal Circuit affirmed the Board’s decision. The Federal Circuit affirmed the Board’s determination that Edmondson did not expressly disclose all the limitations of the challenged claims. The Federal Circuit also agreed that a class of 957 compounds, “some of which may not even form under experimental conditions,” is not a limited class such that the skilled artisan could “at once envisage each member.” Therefore, the Federal Circuit affirmed the determination of a lack of inherent anticipation.
The Federal Circuit also affirmed the determination that Edmondson was prior art under Section 102(e), not Section 102(a), and due to common ownership with the challenged patent, could not be used in an obviousness challenge for most claims under Section 103(c)(1). Finally, the Federal Circuit affirmed the Board’s finding of non-obviousness because substantial evidence supported the determinations that Mylan failed to demonstrate a motivation to combine the references, that Mylan advanced no expected or theoretical benefit from making the claimed invention, and that unexpected results undermined Mylan’s obviousness challenge.
Federal Circuit Denies Mandamus Regarding Venue Dispute with Remote Workers
In Re: Monolithic Power Systems, Inc. Appeal No. 22-153, the Federal Circuit denied mandamus for a factual-laden dispute on whether remote work employees met the requirement of a “regular and established place of business.”
Bel Power Solutions Inc. (“Bel Power”) sued Monolithic in the Western District of Texas for patent infringement by selling power modules to original equipment manufacturers. Monolithic moved to dismiss or transfer for lack of venue, arguing that as a Delaware corporation, it did not reside in the Western District. Monolith further argued it did not own or lease any property in the district, and that the presence of four fulltime remote employees in the Western District was not sufficient to constitute a “regular and established place of business” under Section 1400(b).
Judge Albright denied the motion to transfer, finding that Monolith had a “regular and established place of business” under Section 1400(b), noting that (1) Monolith solicited employment in the Western District to serve local customers and (2) Monolith provided and stored property in the Western District at the homes of remote employees that was used to service Monolith customers in the Western District.
The Federal Circuit denied mandamus, holding that “the district court’s ruling does not involve the type of broad, fundamental, and recurring legal question or usurpation of judicial power that might warrant immediate mandamus review.” Finding that venue analysis is necessarily a fact-specific inquiry, and that “this case may present an idiosyncratic set of facts,” the Federal Circuit held that Monolithic did not demonstrate the type of concerns that warranted mandamus review. Judge Lourie dissented, reasoning the Federal Circuit should have granted mandamus to prevent confusion regarding the significance of employee homes in the “regular and established place of business” analysis, particularly in view of the increased prevalence of remote work.