Prepared by Cislo & Thomas LLP Attorney Mark D. Nielsen, Ph.D.
1. In a recent Federal Circuit case, the Federal Circuit reversed a district court’s grant of a motion to dismiss on a Alice/Section 101 issue, as well as the associated fee award by the district court. The opinion is here. The district court’s analysis, in part, sounded more like an obviousness analysis, than a 101 analysis, which is a major concern with the current state of Section 101 jurisprudence. The Federal Circuit agreed with the district court that the claims were directed to an “abstract idea” under Section 101, but found that “the district court erred with respect to the inventive concept inquiry, however, by ignoring allegations that, when properly accepted as true, preclude the grant of a motion to dismiss.” Slip Op. at 15. One aspect of the opinion that offers some potentially useful guidance is the Court’s comments regarding alleging the unconventionality and benefits relative to the prior art. Slip. Op. at 18. While that gets close to blurring the line between 101 and 103, it is nonetheless helpful in terms of withstanding a motion to dismiss by pleading such matters. The district court by not taking such matters as true, as it is required to do on a motion to dismiss. On page 20 of the opinion, the Federal Circuit stated, “While we do not read Aatrix to say that any allegation about inventiveness, wholly divorced from the claims or the specification, defeats a motion to dismiss, plausible and specific factual allegations that aspects of the claims are inventive are sufficient. Id. As long as what makes the claims inventive is recited by the claims, the specification need not expressly list all the reasons why this claimed structure is unconventional. In this case, Cellspin made specific, plausible factual allegations about why aspects of its claimed inventions were not conventional, … [t]he district court erred by not accepting those allegations as true.” One additional item of significant note in the opinion is on page 23 in which the Federal Circuit stated that the presumption of validity accorded patents extends to Section 101.
2. The STRONGER Patents Act has been introduced in the Senate (S. 2082). It is bi-partisan. This bill, in substantial part, was introduced although there are a few provisions that have been removed. The bill is quite hostile towards inter partes review (IPR), which has become popular amount big tech and those who can otherwise afford it. Significantly, the bill seeks to make injunctive relief easier to obtain after a finding of infringement, and to federalize state laws regarding so-called patent “troll” bad faith demand letters. With some bi-partisan momentum in Congress to address Alice/101 issues that persist, it may be time to look at other issues with our patent system (difficulty of obtaining injunctive relief, serial IPRs, and more), and balance the playing field. As a patent litigator, I understand the need to weed out weak patents in a relatively inexpensive way. I also understand the need to give small- to mid-sized patent owners the ability to enforce their rights without being subject to serial IPRs, and if they prevail, with an injunction that has teeth. The pendulum swung very far to the side of the infringer ca. 2012-2016, and now things are hopefully swinging back to the middle. A weak patent system is not good for the U.S.
3. In a recent case out of the Southern District of New York, the Court ruled that works owned by the Andy Warhol Foundation modifying a portrait of Prince a fair use and not an infringement of the photographer’s copyright in the photograph. The opinion is here. The Court found the alterations to the works made by the Foundation were “transformative,” and that “[t]hese alterations result in an aesthetic and character different from the original.” This is not an unusual situation – artists, at times, may begin with another’s work (e.g., a photograph), and substantially embellish, alter, or modify the pre-existing work to create a new work of art. This opinion seems to indicate that if the modifications are sufficient enough, that it is a fair use, and that there is no liability for copyright infringement.