Elec. Commc'n Techs. LLC v. ShoppersChoice.com LLC Archives

New or Not, Object-Oriented Simulation Patent Ineligible Under § 101

by Paul Devinsky | Jan 14, 2021 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court’s pleadings-stage determination that patent claims directed to an object-oriented simulation were subject matter ineligible under 35 USC § 101. Simio, LLC v. FlexSim Software Prod., Inc., Case No. 20-1171 (Fed. Cir. Dec 29, 2020) (Prost, C.J.).

Simio filed suit against FlexSim for infringement of patent claims directed to object-oriented simulations in which one instance of an object may have behaviors assigned to it without changing the generic object’s definition. FlexSim moved to dismiss the complaint under Fed. R. of Civ. P.12(b)(6), arguing that the patent was invalid under 35 USC § 101. The district court granted FlexSim’s motion to dismiss, finding that the asserted claims were directed to the ineligible abstract idea of substituting text-based coding with graphical processing and that FlexSim properly showed there was no inventive concept or alteration sufficient to make the system patent-eligible. Simio appealed.

The Federal Circuit reviewed the dismissal order and its underlying patent eligibility conclusions de novo. Under the two-step Alice/Mayo framework, the Court affirmed. Considering the first step of the Alice/Mayo framework, the Court agreed that the asserted claims were “directed to the abstract idea of using graphics instead of programming to create object-oriented simulations.” The Court rejected Simio’s argument that the “executable process to add a new behavior to an object instance” improved the functionality of the computer on which it ran, concluding that no improvement was made to the computer and that the claim limitation did not change the claim’s “character as a whole.” As to step two of the Alice/Mayo framework, whether the claim limited the abstract idea to an inventive concept, the Federal Circuit concluded that, while the claim may be directed to a new idea, it is still an abstract one lacking any inventive concept or application of the idea. The Court affirmed the district court’s dismissal.

The Federal Circuit next addressed whether the district court erred in denying Simio’s motion for leave to amend its complaint. The Court concluded that, after disregarding conclusory statements, Simio’s amended complaint just repackaged the same assertions of non-abstractness as the original complaint. Citing its holding in ShoppersChoice.com (IP Update, May 2020), the Court also rejected Simio’s argument that the district court should have conducted claim construction before determining eligibility. In ShoppersChoice.com, the Court held that pleadings-stage patent eligibility decisions may be proper when the patentee does not explain how a term’s construction could affect the analysis.

Finally, the Federal Circuit raised its own independent reasoning for denying Simio’s motion for leave to amend, explaining that it “may affirm on any grounds for which there is a record sufficient to permit conclusions of law, even grounds not relied upon by the district court.” The Court found that Simio failed to show good cause for seeking leave to amend after the scheduling order’s deadline. Namely, Simio’s amended complaint contained no facts that could not have been alleged before the deadline. Nor did Simio demonstrate any relevant [...]

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Patent Owners Beware: Serial Filings, Rent-Seeking May Be Grounds for Adverse Fee Award

by Paul Devinsky | Jul 15, 2020 | Patents

The US Court of Appeals for the Federal Circuit vacated and remanded a district court’s denial of attorney’s fees to an accused infringer, finding the district court did not properly consider the Patent Owner’s manner of litigation, including the history of plaintiff’s actions in other jurisdictions and the broader context of its litigation practices. Elec. Commc’n Techs., LLC v. ShoppersChoice.com, LLC, Case No. 19-2087 (Fed. Cir. July 1, 2020) (Wallach, J.).

Following a finding by a Florida district court that a patent asserted by Electronic Communication Technologies (ECT) was ineligible under 35 U.S.C. § 101, ShoppersChoice filed a motion for attorney’s fees, citing ECT’s use of standardized demand letters and repeated infringement actions seeking nuisance-value settlements. ShoppersChoice also informed the district court of a recent award of attorney’s fees against ECT in the Central District of California (the True Grit decision) for conduct relating to the same asserted patent. The district court denied ShoppersChoice’s motion, finding that the case was not exceptional and that ECT’s litigation position was not so obviously weak. ShoppersChoice appealed.

The Federal Circuit reviewed the district court’s denial of attorney’s fees under the abuse of discretion standard, analyzing whether the district court made “a clear error of judgment in weighing relevant factors or in basing its decision on an error of law or on clearly erroneous factual findings” and whether it provided a “concise but clear explanation of its reason[ing].” The Court explained that “a pattern of litigation abuses characterized by the repeated filing of patent infringement actions for the sole purpose of forcing settlements, with no intention of testing the merits of one’s claims, is relevant to a district court’s exceptional case determination under § 285.” The Court found that the district court failed to conduct this analysis and erred by not considering ECT’s manner of litigation and the broader context of ECT’s litigation practices. Addressing the True Grit decision, the Federal Circuit noted that the California district court provided a detailed account of the nuisance value rent-seeking practices of ECT (and other affiliated shell companies), but ultimately found that the court failed to conduct an adequate inquiry into ECT’s litigation conduct.

The Federal Circuit thus vacated the attorney’s fee award and remanded the case, directing the district court to consider both ECT’s manner of litigation and the objective unreasonableness of its claims.

Practice note: While the California District Court’s decision is not binding in the Florida court, the Federal Circuit made clear that a court cannot ignore developments in other jurisdictions in connection with § 285 fee determinations.

Verdict Delivered: Shipment Notification Claims are Patent Ineligible—Even with Security Flair

by Paul Devinsky | May 28, 2020 | Patents

The US Court of Appeals for the Federal Circuit affirmed a district court’s pleadings-stage determination that a patent claim directed to a delivery notification system was subject matter ineligible under 35 U.S.C. § 101. Elec. Commc’n Techs., LLC v. ShoppersChoice.com, LLC, Case No. 19-1587 (Fed. Cir. May 14, 2020) (Prost, C.J.).

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