7/21/2019 definiteness- Nautilusdocument-49 http://slidepdf.com/reader/full/definiteness-nautilusdocument-49 1/54 1 THE LAW OF PATENTS(3D ED 2014) Craig Allen Nard 2015-2016 Case Law Supplement Chapter Two Replace Datamize (p. 142) and Star Scientific (p. 147) cases and commentswith the following NAUTILUS, INC., v. BIOSIG INSTRUMENTS, INC. 134 S.Ct. 2120 (2014) G INSBURG , J., delivered the opinion for a unanimous Court. The Patent Act requires that a patent specification “conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as [the] invention.” 35 U.S.C. § 112, ¶ 2 (2006 ed.) (emphasis added). This case, involving a heart-rate monitor used with exercise equipment, concerns the proper reading of the statute's clarity and precision demand. According to the Federal Circuit, a patent claim passes the § 112, ¶ 2 threshold so long as the claim is “amenable to construction,” and the claim, as construed, is not “insolubly ambiguous.” 715 F.3d 891, 898–899 (2013). We conclude that the Federal Circuit's formulation, which tolerates some ambiguous claims but not others, does not satisfy the statute's definiteness requirement. In place of the “insolubly ambiguous” standard, we hold that a patent is invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the scope of the invention. Expressing no opinion on the validity of the patent-in-suit, we remand, instructing the Federal Circuit to decide the case employing the standard we have prescribed. I Authorized by the Constitution “[t]o promote the Progress of Science and useful Arts, by se- curing for limited Times to ... Inventors the exclusive Right to their ... Discoveries,” Art. I, § 8, cl. 8, Congress has enacted patent laws rewarding inventors with a limited monopoly. “Th[at] monopoly is a property right,” and “like any property right, its boundaries should be clear.” Fes- to Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 730 (2002). See also Mark- man v. Westview Instruments, Inc., 517 U.S. 370, 373 (1996) (“It has long been understood that a patent must describe the exact scope of an invention and its manufacture....”). Thus, when Con- gress enacted the first Patent Act in 1790, it directed that patent grantees file a written specifica-
Chapter TwoReplace Datamize (p. 142) and Star Scientific (p. 147) cases and comments with the following
NAUTILUS, INC., v. BIOSIG INSTRUMENTS, INC.
134 S.Ct. 2120 (2014)
GINSBURG, J., delivered the opinion for a unanimous Court.
The Patent Act requires that a patent specification “conclude with one or more claims
particularly pointing out and distinctly claiming the subject matter which the applicant regards
as [the] invention.” 35 U.S.C. § 112, ¶ 2 (2006 ed.) (emphasis added). This case, involving a
heart-rate monitor used with exercise equipment, concerns the proper reading of the statute's
clarity and precision demand. According to the Federal Circuit, a patent claim passes the § 112, ¶
2 threshold so long as the claim is “amenable to construction,” and the claim, as construed, is not
“insolubly ambiguous.” 715 F.3d 891, 898–899 (2013). We conclude that the Federal Circuit's
formulation, which tolerates some ambiguous claims but not others, does not satisfy the statute's
definiteness requirement. In place of the “insolubly ambiguous” standard, we hold that a patent is
invalid for indefiniteness if its claims, read in light of the specification delineating the patent, and
the prosecution history, fail to inform, with reasonable certainty, those skilled in the art about the
scope of the invention. Expressing no opinion on the validity of the patent-in-suit, we remand,
instructing the Federal Circuit to decide the case employing the standard we have prescribed.
I
Authorized by the Constitution “[t]o promote the Progress of Science and useful Arts, by se-
curing for limited Times to ... Inventors the exclusive Right to their ... Discoveries,” Art. I, § 8,
cl. 8, Congress has enacted patent laws rewarding inventors with a limited monopoly. “Th[at]monopoly is a property right,” and “like any property right, its boundaries should be clear.” Fes-
to Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 730 (2002). See also Mark-
man v. Westview Instruments, Inc., 517 U.S. 370, 373 (1996) (“It has long been understood that a
patent must describe the exact scope of an invention and its manufacture....”). Thus, when Con-
gress enacted the first Patent Act in 1790, it directed that patent grantees file a written specifica-
tion “containing a description ... of the thing or things ... invented or discovered,” which “shall
be so particular” as to “distinguish the invention or discovery from other things before known
and used.” Act of Apr. 10, 1790, § 2, 1 Stat. 110.
The patent laws have retained this requirement of definiteness even as the focus of patent
construction has shifted. Under early patent practice in the United States, we have recounted, it
was the written specification that “represented the key to the patent.” Markman, 517 U.S., at 379.
Eventually, however, patent applicants began to set out the invention's scope in a separate sec-
tion known as the “claim.” The Patent Act of 1870 expressly conditioned the receipt of a patent
on the inventor's inclusion of one or more such claims, described with particularity and distinct-
ness. See Act of July 8, 1870, § 26, 16 Stat. 201 (to obtain a patent, the inventor must “particu-
larly point out and distinctly claim the part, improvement, or combination which [the inventor]
claims as his invention or discovery”).
The 1870 Act's definiteness requirement survives today, largely unaltered. Section 112 of the
Patent Act of 1952, applicable to this case, requires the patent applicant to conclude the specifi-cation with “one or more claims particularly pointing out and distinctly claiming the subject mat-
ter which the applicant regards as his invention.” 35 U.S.C. § 112, ¶ 2 (2006 ed.). A lack of defi-
niteness renders invalid “the patent or any claim in suit.” § 282, ¶ 2(3).
II
A
The patent in dispute, U.S. Patent No. 5,337,753 ('753 patent), issued to Dr. Gregory Lekht-
man in 1994 and assigned to respondent Biosig Instruments, Inc., concerns a heart-rate monitorfor use during exercise. Previous heart-rate monitors, the patent asserts, were often inaccurate in
measuring the electrical signals accompanying each heartbeat (electrocardiograph or ECG sig-
nals). The inaccuracy was caused by electrical signals of a different sort, known as electromyo-
gram or EMG signals, generated by an exerciser's skeletal muscles when, for example, she
moves her arm, or grips an exercise monitor with her hand. These EMG signals can “mask” ECG
signals and thereby impede their detection.
Dr. Lekhtman's invention claims to improve on prior art by eliminating that impediment. The
invention focuses on a key difference between EMG and ECG waveforms: while ECG signals
detected from a user's left hand have a polarity opposite to that of the signals detected from her
right hand, EMG signals from each hand have the same polarity. The patented device works by
measuring equalized EMG signals detected at each hand and then using circuitry to subtract the
identical EMG signals from each other, thus filtering out the EMG interference.
As relevant here, the '753 patent describes a heart-rate monitor contained in a hollow cylin-
drical bar that a user grips with both hands, such that each hand comes into contact with two
electrodes, one “live” and one “common.” The device is illustrated in [the] figure [below].
Claim 1 of the '753 patent, which contains the limitations critical to this dispute, refers to a
“heart rate monitor for use by a user in association with exercise apparatus and/or exercise pro-
cedures.” The claim “comprise[s],” among other elements, an “elongate member” (cylindrical
bar) with a display device; “electronic circuitry including a difference amplifier”; and, on each
half of the cylindrical bar, a live electrode and a common electrode “mounted ... in spaced rela-
tionship with each other.”3 The claim sets forth additional elements, including that the cylindrical
bar is to be held in such a way that each of the user's hands “contact[s]” both electrodes on eachside of the bar. Further, the EMG signals detected by the two electrode pairs are to be “of sub-
stantially equal magnitude and phase” so that the difference amplifier will “produce a substan-
tially zero [EMG] signal” upon subtracting the signals from one another.
B
The dispute between the parties arose in the 1990's, when Biosig allegedly disclosed the pa-
tented technology to StairMaster Sports Medical Products, Inc. According to Biosig, StairMaster,
without ever obtaining a license, sold exercise machines that included Biosig's patented technol-
ogy, and petitioner Nautilus, Inc., continued to do so after acquiring the StairMaster brand. In
2004, based on these allegations, Biosig brought a patent infringement suit against Nautilus in
the U.S. District Court for the Southern District of New York.
3 As depicted in figure 1 of the patent, the live electrodes are identified by numbers 9 and 13, and the
With Biosig's lawsuit launched, Nautilus asked the U.S. Patent and Trademark Office (PTO)
to reexamine the '753 patent. The reexamination proceedings centered on whether the patent was
anticipated or rendered obvious by prior art—principally, a patent issued in 1984 to an inventor
named Fujisaki, which similarly disclosed a heart-rate monitor using two pairs of electrodes and
a difference amplifier. Endeavoring to distinguish the '753 patent from prior art, Biosig submit-
ted a declaration from Dr. Lekhtman. The declaration attested, among other things, that the '753
patent sufficiently informed a person skilled in the art how to configure the detecting electrodes
so as “to produce equal EMG [signals] from the left and right hands.” Id., at 160. Although the
electrodes' design variables—including spacing, shape, size, and material—cannot be standard-
ized across all exercise machines, Dr. Lekhtman explained, a skilled artisan could undertake a
“trial and error” process of equalization. This would entail experimentation with different elec-
trode configurations in order to optimize EMG signal cancellation.4 In 2010, the PTO issued a
determination confirming the patentability of the '753 patent's claims.
Biosig thereafter reinstituted its infringement suit, which the parties had voluntarily dis-
missed without prejudice while PTO reexamination was underway. In 2011, the District Courtconducted a hearing to determine the proper construction of the patent's claims, including the
claim term “in spaced relationship with each other.” According to Biosig, that “spaced relation-
ship” referred to the distance between the live electrode and the common electrode in each elec-
trode pair. Nautilus, seizing on Biosig's submissions to the PTO during the reexamination, main-
tained that the “spaced relationship” must be a distance “greater than the width of each elec-
trode.” App. 245. The District Court ultimately construed the term to mean “there is a defined
relationship between the live electrode and the common electrode on one side of the cylindrical
bar and the same or a different defined relationship between the live electrode and the common
electrode on the other side of the cylindrical bar,” without any reference to the electrodes' width.
Nautilus moved for summary judgment, arguing that the term “spaced relationship,” as con-
strued, was indefinite under § 112, ¶ 2. The District Court granted the motion. Those words, the
District Court concluded, “did not tell [the court] or anyone what precisely the space should be,”
or even supply “any parameters” for determining the appropriate spacing.
The Federal Circuit reversed and remanded. A claim is indefinite, the majority opinion stat-
ed, “only when it is ‘not amenable to construction’ or ‘insolubly ambiguous.’” 715 F.3d 891, 898
(2013). Under that standard, the majority determined, the '753 patent survived indefiniteness re-
view. Considering first the “intrinsic evidence”— i.e., the claim language, the specification, and
4 Dr. Lekhtman's declaration also referred to an expert report prepared by Dr. Henrietta Galiana, Chair of
the Department of Biomedical Engineering at McGill University, for use in the infringement litigation.
That report described how Dr. Galiana's laboratory technician, equipped with a wooden dowel, wire, met-
al foil, glue, electrical tape, and the drawings from the '753 patent, was able in two hours to build a moni-
tor that “worked just as described in the ... patent.”
the prosecution history—the majority discerned “certain inherent parameters of the claimed ap-
paratus, which to a skilled artisan may be sufficient to understand the metes and bounds of
‘spaced relationship.’” 715 F.3d, at 899. These sources of meaning, the majority explained, make
plain that the distance separating the live and common electrodes on each half of the bar “cannot
be greater than the width of a user's hands”; that is so “because claim 1 requires the live and
common electrodes to independently detect electrical signals at two distinct points of a hand.” Ibid. Furthermore, the majority noted, the intrinsic evidence teaches that this distance cannot be
“infinitesimally small, effectively merging the live and common electrodes into a single elec-
trode with one detection point.” Ibid. The claim's functional provisions, the majority went on to
observe, shed additional light on the meaning of “spaced relationship.” Surveying the record be-
fore the PTO on reexamination, the majority concluded that a skilled artisan would know that she
could attain the indicated functions of equalizing and removing EMG signals by adjusting design
variables, including spacing.
In a concurring opinion, Judge Schall reached the majority's result employing “a more lim-
ited analysis.” Id., at 905. Judge Schall accepted the majority's recitation of the definiteness
standard, under which claims amenable to construction are nonetheless indefinite when “the con-
struction remains insolubly ambiguous.” Ibid . The District Court's construction of “spaced rela-
tionship,” Judge Schall maintained, was sufficiently clear: the term means “there is a fixed spa-
tial relationship between the live electrode and the common electrode” on each side of the cylin-
drical bar. Ibid. Judge Schall agreed with the majority that the intrinsic evidence discloses inher-
ent limits of that spacing. But, unlike the majority, Judge Schall did not “presum[e] a functional
linkage between the ‘spaced relationship’ limitation and the removal of EMG signals.” Id., at
906. Other limitations of the claim, in his view, and not the “ ‘spaced relationship’ limitation it-
self,” “included a functional requirement to remove EMG signals.” Ibid.
III
A
Although the parties here disagree on the dispositive question—does the '753 patent with-
stand definiteness scrutiny—they are in accord on several aspects of the § 112, ¶ 2 inquiry. First,
definiteness is to be evaluated from the perspective of someone skilled in the relevant art. See,
e.g., General Elec. Co. v. Wabash Appliance Corp., 304 U.S. 364, 371 (1938). See also § 112, ¶
1 (patent's specification “shall contain a written description of the invention, and of the manner
and process of making and using it, in such full, clear, concise, and exact terms as to enable any
person skilled in the art to which it pertains, or with which it is most nearly connected, to make
and use the same” (emphasis added)). Second, in assessing definiteness, claims are to be read in
light of the patent's specification and prosecution history. Third, “[d]efiniteness is measured from
the viewpoint of a person skilled in [the] art at the time the patent was filed .”
THE NOT SO WILD, WILD WEST 206 (2004) (stating “[w]ell-defined and secure property rights
for intellectual property are a key to economic growth in the modern world”). As the Nautilus
Court wrote, a less demanding definiteness requirement will lead to “[a] zone of uncertainty
which enterprise and experimentation may enter only at the risk of infringement claims.” Moreo-
ver, the Court was cognizant of the potential for strategic behavior that accompanies a loose def-
initeness standard. Without requiring a “reasonable degree” of delineation of one’s proprietary
rights, “patent applicants face powerful incentives to inject ambiguity into their claims.” After
expressing the desire to “[e]liminat[e] that temptation,” the Court signaled a devolution of re-
sponsibility, noting “‘the patent drafter is in the best position to resolve the ambiguity in ... patent
claims.’”
On the other hand, the notice-centric policy of definiteness must be balanced against the
realization that language is a blunt instrument, and requiring absolute certainty is not only unre-
alistic, but arguably inconsistent with patent law’s incentive dynamic. As the Court noted, “some
modicum of uncertainty is the price of ensuring the appropriate incentives for innovation.” Nau-
tilus, 134 S.Ct. at 2128 (quoting Festo Corp., 535 U.S. at 741 (2002)). Why should patent lawtolerate paying this “price”? One way to think about this question is to appreciate how difficult it
is to describe with words the most common of objects (e.g., pencil), let alone complex technolo-
gy. Linguistic precision can elude even the most gifted draftsman; so patent law allows for some
ambiguity. Nautilus reflected this balance — thus the modifier “reasonable” in the test adopted
by the Court.
2. Plus ça Change…? The Nautilus case was remanded to the Federal Circuit, where the parties
presented different positions on “whether the Supreme Court articulated a new, stricter standard
[as Nautilus argued] or [as Biosig asserted,] whether, in rejecting the phrases ‘insolubly ambigu-
ous’ and ‘amendable to construction,’ the Court was primarily clarifying that a patent’s claimsmust inform those skilled in the art with ‘reasonable certainty’ of what is claimed.”
The Federal Circuit noted that the Court “found too imprecise” the ‘insolubly ambiguous’
standard … [and] accordingly modified the standard.” Consequently, wrote the Federal Circuit,
“we may now steer by the bright star of ‘reasonable certainty,’ rather than the unreliable compass
of ‘insoluble ambiguity.” In finding that its prior decision was correct (i.e., Biosig’s claim lan-
guage, “spaced relationship,” is not indefinite), the Federal Circuit noted that “reasonable cer-
tainty” is a “familiar standard, … defined in broad spectra of law.”
Does this familiarity of “reasonable certainty” imply that the Supreme Court did not cre-
ate a new test, but rather injected greater precision into the extant definiteness standard? Or has
the definiteness bar been raised? Perhaps the answer can be found in how the Federal Circuit has
treated words of degree in the light of Nautilus. See Comment 3.
3. Words of Degree and Context . Words of degree (e.g., “substantial” or “about”) are commonly
used in patent claims. Are these types of words more vulnerable to a finding of indefiniteness in
the light of the Supreme Court’s Nautilus decision? The answer is no according to the Federal
Circuit, which recently noted, “[w]e do not understand the Supreme Court to have implied in
[ Nautilus] , and we do not hold today, that terms of degree are inherently indefinite.” Interval
Licensing LLC v. AOL, Inc., 766 F.3d 1364, 1370 (Fed. Cir. 2014). Indeed, “[c]laim language
employing terms of degree has long been found definite where it provided enough certainty to
one of skill in the art when read in the context of the invention.” Id.
Context and the role of the artisan are particularly important in this regard. See BJ Ser-
vices Co. v. Halliburton Energy Services, Inc., 338 F.3d 1368, 1372 (Fed. Cir. 2003) (noting that
when words of degree are employed, the “question becomes whether one of ordinary skill in the
art would understand what is claimed when the claim is read in light of the specification”); Enzo
Biochem, Inc. v. Applera Corp., 599 F.3d 1325, 1332 (Fed. Cir. 2010) (when words of degree are
used, “some standard for measuring that degree” is required).
Does the Federal Circuit’s treatment of words of degree post- Nautilus suggest the appel-
late court does not think the Supreme Court raised the bar for satisfying the definiteness stand-ard?
4. Written Description Requirement and Definiteness. The Federal Circuit has distinguished the
definiteness requirement from the written description requirement based on both historical and
policy grounds. The Vas-Cath court offered a historical explanation, noting “the ‘written descrip-
tion’ requirement was a part of the patent statutes at a time before claims were required.” 935
F.2d at 1560. But understanding the persistence of the written description requirement in the
light of §!112, ¶2 is more challenging. The Vas-Cath court, quoting Rengo Co. v. Molins Mach.
Co., noted the “subtle” and “complementary” relationship between the policies of the written de-
scription and definiteness requirements, but also stressed how these two requirements “approach
a similar problem from different directions.” According to the court, the written description re-
quirement “guards against the inventor's overreaching by insisting that he recount his invention
in such detail that his future claims can be determined to be encompassed within his original cre-
ation,” whereas the “definiteness requirement shapes the future conduct of persons other than the
inventor, by insisting that they receive notice of the scope of the patented device.” While the is-
sue of perspective may be accurate, perhaps a more convincing distinction is that the written de-
scription requirement is more informative than the claims. This point was made by Judge Lourie
in University of Rochester:
The separate written description requirement poses no conflict with the role of the claims.
It is well established that the specification teaches an invention, whereas the claims de-
fine the right to exclude. While claims must be supported by the written description, the
latter contains much material that is not in the claims. The written description contains an
elucidation of various aspects of an invention as well as material that is necessary for en-ablement. Moreover, the written description often contains material that an applicant in-
tended to claim that has been rejected in examination. Thus, the written description and
the claims do not duplicate each other.
University of Rochester , 373 F.3d 1303, 1306 (Fed. Cir. 2004) (refusal to hear en banc).
5. History of the Patent Claim. The claim is an early nineteenth-century innovation of patent
attorneys that was developed to assist clients in proving validity and infringement. See John F.Duffy, The Festo Decision and the Return of the Supreme Court to the Bar of Patents, 2002 SUP.
CT. R EV. 273, 309 (stating the claim “arose not from any administrative, judicial, or legislative
requirement. Instead, it was an innovation of patent attorneys, and it was formulated to protect
and to expand the rights of patentees”). See also Karl B. Lutz, Evolution of the Claims of U.S.
Patents, 20 J. PAT. OFF. SOC’Y 134 (1938); William Redin Woodward, Definiteness and Particu-
larity in Patent Claims, 46 MICH. L. R EV. 755 (1948).
————————
Chapter Three
Replace Bilski (page 215) with the following case and Comments
ALICE CORPORATION PTY. v. CLS BANK INTERNATIONAL
134 S.Ct. 2347 (2014)
Justice THOMAS delivered the opinion of the Court.
The patents at issue in this case disclose a computer-implemented scheme for mitigating “set-tlement risk” (i.e., the risk that only one party to a financial transaction will pay what it owes) by
using a third-party intermediary. The question presented is whether these claims are patent eligi-
ble under 35 U.S.C. § 101, or are instead drawn to a patent-ineligible abstract idea. We hold that
the claims at issue are drawn to the abstract idea of intermediated settlement, and that merely re-
quiring generic computer implementation fails to transform that abstract idea into a patent-
eligible invention. We therefore affirm the judgment of the United States Court of Appeals for
the Federal Circuit.
IA
Petitioner Alice Corporation is the assignee of several patents that disclose schemes to man-
age certain forms of financial risk. According to the specification largely shared by the patents,
the invention “enabl[es] the management of risk relating to specified, yet unknown, future
events.” The specification further explains that the “invention relates to methods and apparatus,
performing the method of exchanging obligations (the media claims). All of the claims are im-
plemented using a computer; the system and media claims expressly recite a computer, and the
parties have stipulated that the method claims require a computer as well.
B
Respondents CLS Bank International and CLS Services Ltd. (together, CLS Bank) operate aglobal network that facilitates currency transactions. In 2007, CLS Bank filed suit against peti-
tioner, seeking a declaratory judgment that the claims at issue are invalid, unenforceable, or not
infringed. Petitioner counterclaimed, alleging infringement. Following this Court's decision in
Bilski v. Kappos, 561 U.S. 593 (2010), the parties filed cross-motions for summary judgment on
whether the asserted claims are eligible for patent protection under 35 U.S.C. § 101. The District
Court held that all of the claims are patent ineligible because they are directed to the abstract idea
of “employing a neutral intermediary to facilitate simultaneous exchange of obligations in order
to minimize risk.” 768 F.Supp.2d 221, 252 (DC 2011).
A divided panel of the United States Court of Appeals for the Federal Circuit reversed, hold-
ing that it was not “manifestly evident” that petitioner's claims are directed to an abstract idea.
685 F.3d 1341, 1352, 1356 (2012). The Federal Circuit granted rehearing en banc, vacated the
panel opinion, and affirmed the judgment of the District Court in a one-paragraph per curiam
opinion. 717 F.3d, at 1273. Seven of the ten participating judges agreed that petitioner's method
and media claims are patent ineligible. See id., at 1274 (Lourie, J., concurring); id., at 1312–1313
(Rader, C. J., concurring in part and dissenting in part). With respect to petitioner's system
claims, the en banc Federal Circuit affirmed the District Court's judgment by an equally divided
vote. Id., at 1273.
Writing for a five-member plurality, Judge Lourie concluded that all of the claims at issue are
patent ineligible. In the plurality's view, under this Court's decision in Mayo Collaborative Ser-
vices v. Prometheus Laboratories, Inc., 566 U.S. –––– (2012), a court must first “identif[y] the
abstract idea represented in the claim,” and then determine “whether the balance of the claim
adds ‘significantly more.’” 717 F.3d, at 1286. The plurality concluded that petitioner's claims
“draw on the abstract idea of reducing settlement risk by effecting trades through a third-party
intermediary,” and that the use of a computer to maintain, adjust, and reconcile shadow accounts
added nothing of substance to that abstract idea. Ibid….
We granted certiorari, 571 U.S. –––– (2013), and now affirm.
II
Section 101 of the Patent Act defines the subject matter eligible for patent protection. It pro-
Whoever invents or discovers any new and useful process, machine, manufacture, or
composition of matter, or any new and useful improvement thereof, may obtain a patent
therefor, subject to the conditions and requirements of this title. 35 U.S.C. § 101.
“We have long held that this provision contains an important implicit exception: Laws of na-ture, natural phenomena, and abstract ideas are not patentable.” Association for Molecular Pa-
thology v. Myriad Genetics, Inc., 569 U.S. ––––, –––– (2013). We have interpreted § 101 and its
predecessors in light of this exception for more than 150 years. Bilski, supra, at 601–602; see
also O'Reilly v. Morse, 15 How. 62, 112–120 (1854); Le Roy v. Tatham, 14 How. 156, 174–175,
(1853).
We have described the concern that drives this exclusionary principle as one of pre-emption.
See, e.g., Bilski, supra, at 611–612 (upholding the patent “would pre-empt use of this approach
in all fields, and would effectively grant a monopoly over an abstract idea”). Laws of nature,natural phenomena, and abstract ideas are “‘“the basic tools of scientific and technological
work.”’” Myriad, supra, at ––––. “[M]onopolization of those tools through the grant of a patent
might tend to impede innovation more than it would tend to promote it,” thereby thwarting the
primary object of the patent laws. We have “repeatedly emphasized this ... concern that patent
law not inhibit further discovery by improperly tying up the future use of” these building blocks
of human ingenuity. Mayo, supra, at –––– (citing Morse, supra, at 113).
At the same time, we tread carefully in construing this exclusionary principle lest it swallow
all of patent law. Mayo, 566 U.S., at ––––. At some level, “all inventions ... embody, use, reflect,
rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id., at ––––. Thus, an
invention is not rendered ineligible for patent simply because it involves an abstract concept. See
Diamond v. Diehr, 450 U.S. 175, 187 (1981). “[A]pplication[s]” of such concepts “‘to a new and
useful end,’” we have said, remain eligible for patent protection. Gottschalk v. Benson, 409 U.S.
63, 67 (1972).
Accordingly, in applying the § 101 exception, we must distinguish between patents that
claim the “‘buildin[g] block[s]’” of human ingenuity and those that integrate the building blocks
into something more, Mayo, 566 U.S., at ––––, thereby “transform[ing]” them into a patent-
eligible invention, id., at ––––. The former “would risk disproportionately tying up the use of the
underlying” ideas, id., at ––––, and are therefore ineligible for patent protection. The latter pose
no comparable risk of pre-emption, and therefore remain eligible for the monopoly granted under
In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. –––– (2012), we
set forth a framework for distinguishing patents that claim laws of nature, natural phenomena,
and abstract ideas from those that claim patent-eligible applications of those concepts. First, we
determine whether the claims at issue are directed to one of those patent-ineligible concepts. Id.,
at ––––. If so, we then ask, “[w]hat else is there in the claims before us?” Id., at ––––. To answerthat question, we consider the elements of each claim both individually and “as an ordered com-
bination” to determine whether the additional elements “transform the nature of the claim” into a
patent-eligible application. Id., at ––––. We have described step two of this analysis as a search
for an “‘inventive concept’” — i.e., an element or combination of elements that is “sufficient to
ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible
concept] itself.” Id., at ––––.
A
We must first determine whether the claims at issue are directed to a patent-ineligible con-
cept. We conclude that they are: These claims are drawn to the abstract idea of intermediated set-
tlement.
The “abstract ideas” category embodies “the longstanding rule that ‘[a]n idea of itself is not
patentable.’” Benson, supra, at 67 (quoting Rubber–Tip Pencil Co. v. Howard, 20 Wall. 498,
507, 22 L.Ed. 410 (1874)); see also Le Roy, supra, at 175 (“A principle, in the abstract, is a fun-
damental truth; an original cause; a motive; these cannot be patented, as no one can claim in ei-
ther of them an exclusive right”). In Benson, for example, this Court rejected as ineligible patent
claims involving an algorithm for converting binary-coded decimal numerals into pure binary
form, holding that the claimed patent was “in practical effect ... a patent on the algorithm itself.”
409 U.S., at 71–72. And in Parker v. Flook, 437 U.S. 584, 594–595 (1978), we held that a math-
ematical formula for computing “alarm limits” in a catalytic conversion process was also a pa-
tent-ineligible abstract idea.
We most recently addressed the category of abstract ideas in Bilski v. Kappos, 561 U.S. 593
(2010). The claims at issue in Bilski described a method for hedging against the financial risk of
price fluctuations. Claim 1 recited a series of steps for hedging risk, including: (1) initiating a
series of financial transactions between providers and consumers of a commodity; (2) identifying
market participants that have a counterrisk for the same commodity; and (3) initiating a series of
transactions between those market participants and the commodity provider to balance the risk
position of the first series of consumer transactions. Id., at 599. Claim 4 “pu[t] the concept articu-
lated in claim 1 into a simple mathematical formula.” Ibid. The remaining claims were drawn to
examples of hedging in commodities and energy markets.
the claims at issue were abstract ideas in the understanding that risk hedging was a “‘fundamen-
tal economic practice.’” 561 U.S., at 611.
In any event, we need not labor to delimit the precise contours of the “abstract ideas” catego-
ry in this case. It is enough to recognize that there is no meaningful distinction between the con-
cept of risk hedging in Bilski and the concept of intermediated settlement at issue here. Both aresquarely within the realm of “abstract ideas” as we have used that term.
B
Because the claims at issue are directed to the abstract idea of intermediated settlement, we
turn to the second step in Mayo 's framework. We conclude that the method claims, which mere-
ly require generic computer implementation, fail to transform that abstract idea into a patent-
eligible invention.
1
At Mayo step two, we must examine the elements of the claim to determine whether it con-
tains an “‘inventive concept’” sufficient to “transform” the claimed abstract idea into a patent-
eligible application. 566 U.S., at ––––, ––––. A claim that recites an abstract idea must include
“additional features” to ensure “that the [claim] is more than a drafting effort designed to mo-
nopolize the [abstract idea].” Id., at ––––. Mayo made clear that transformation into a patent-
eligible application requires “more than simply stat[ing] the [abstract idea] while adding the
words ‘apply it.’” Id., at ––––.
Mayo itself is instructive. The patents at issue in Mayo claimed a method for measuring me-
tabolites in the bloodstream in order to calibrate the appropriate dosage of thiopurine drugs in the
treatment of autoimmune diseases. Id., at ––––. The respondent in that case contended that the
claimed method was a patent-eligible application of natural laws that describe the relationship
between the concentration of certain metabolites and the likelihood that the drug dosage will be
harmful or ineffective. But methods for determining metabolite levels were already “well known
in the art,” and the process at issue amounted to “nothing significantly more than an instruction
to doctors to apply the applicable laws when treating their patients.” Id., at ––––. “Simply ap-
pending conventional steps, specified at a high level of generality,” was not “enough” to supply
an “‘inventive concept.’” Id., at ––––, ––––, ––––.
The introduction of a computer into the claims does not alter the analysis at Mayo step two.
In Benson, for example, we considered a patent that claimed an algorithm implemented on “a
general-purpose digital computer.” 409 U.S., at 64. Because the algorithm was an abstract idea,
see supra, at 8, the claim had to supply a “‘new and useful’” application of the idea in order to be
patent eligible. 409 U.S., at 67. But the computer implementation did not supply the necessary
inventive concept; the process could be “carried out in existing computers long in use.” Ibid. We
accordingly “held that simply implementing a mathematical principle on a physical machine,
namely a computer, [i]s not a patentable application of that principle.” Mayo, supra, at –––– (cit-
ing Benson, supra, at 64).
Flook is to the same effect. There, we examined a computerized method for using a mathe-
matical formula to adjust alarm limits for certain operating conditions (e.g., temperature and
pressure) that could signal inefficiency or danger in a catalytic conversion process. Once again,
the formula itself was an abstract idea, see supra, at 8, and the computer implementation was
purely conventional. 437 U.S., at 594 (noting that the “use of computers for ‘automatic monitor-
ing-alarming’” was “well known”). In holding that the process was patent ineligible, we rejected
the argument that “implement[ing] a principle in some specific fashion” will “automatically fal[l]
within the patentable subject matter of § 101.” Id., at 593. Thus, “ Flook stands for the proposi-
tion that the prohibition against patenting abstract ideas cannot be circumvented by attempting to
limit the use of [the idea] to a particular technological environment.” Bilski, 561 U.S., at 610– 611.
In Diehr, 450 U.S. 175, by contrast, we held that a computer-implemented process for curing
rubber was patent eligible, but not because it involved a computer. The claim employed a “well-
known” mathematical equation, but it used that equation in a process designed to solve a techno-
logical problem in “conventional industry practice.” Id., at 177, 178. The invention in Diehr used
a “thermocouple” to record constant temperature measurements inside the rubber mold—
something “the industry ha[d] not been able to obtain.” Id., at 178, and n. 3. The temperature
measurements were then fed into a computer, which repeatedly recalculated the remaining curetime by using the mathematical equation. Id., at 178–179. These additional steps, we recently
explained, “transformed the process into an inventive application of the formula.” Mayo, supra,
at ––––. In other words, the claims in Diehr were patent eligible because they improved an exist-
ing technological process, not because they were implemented on a computer.
These cases demonstrate that the mere recitation of a generic computer cannot transform a
patent-ineligible abstract idea into a patent-eligible invention. Stating an abstract idea “while
adding the words ‘apply it’” is not enough for patent eligibility. Mayo, supra, at ––––. Nor is
limiting the use of an abstract idea “‘to a particular technological environment.’” Bilski, supra, at
610–611. Stating an abstract idea while adding the words “apply it with a computer” simply
combines those two steps, with the same deficient result. Thus, if a patent's recitation of a com-
puter amounts to a mere instruction to “implemen[t]” an abstract idea “on ... a computer,” Mayo,
supra, at ––––, that addition cannot impart patent eligibility. This conclusion accords with the
pre-emption concern that undergirds our § 101 jurisprudence. Given the ubiquity of computers,
wholly generic computer implementation is not generally the sort of “additional featur[e]” that
provides any “practical assurance that the process is more than a drafting effort designed to mo-
nopolize the [abstract idea] itself.” Mayo, 566 U.S., at ––––.
The fact that a computer “necessarily exist[s] in the physical, rather than purely conceptual,
realm” is beside the point. There is no dispute that a computer is a tangible system (in § 101terms, a “machine”), or that many computer-implemented claims are formally addressed to pa-
tent-eligible subject matter. But if that were the end of the § 101 inquiry, an applicant could
claim any principle of the physical or social sciences by reciting a computer system configured
to implement the relevant concept. Such a result would make the determination of patent eligibil-
ity “depend simply on the draftsman's art,” Flook, supra, at 593, thereby eviscerating the rule
that “‘[l]aws of nature, natural phenomena, and abstract ideas are not patentable,’” Myriad, 569
U.S., at ––––.
2
The representative method claim in this case recites the following steps: (1) “creating” shad-
ow records for each counterparty to a transaction; (2) “obtaining” start-of-day balances based on
the parties' real-world accounts at exchange institutions; (3) “adjusting” the shadow records as
transactions are entered, allowing only those transactions for which the parties have sufficient
resources; and (4) issuing irrevocable end-of-day instructions to the exchange institutions to car-
ry out the permitted transactions. Petitioner principally contends that the claims are patent eligi-
ble because these steps “require a substantial and meaningful role for the computer.” Brief for
Petitioner 48. As stipulated, the claimed method requires the use of a computer to create elec-
tronic records, track multiple transactions, and issue simultaneous instructions; in other words,
“[t]he computer is itself the intermediary.” Ibid.
In light of the foregoing, the relevant question is whether the claims here do more than simp-
ly instruct the practitioner to implement the abstract idea of intermediated settlement on a generic
computer. They do not.
Taking the claim elements separately, the function performed by the computer at each step of
the process is “[p]urely conventional.” Mayo, supra, at ––––. Using a computer to create and
maintain “shadow” accounts amounts to electronic recordkeeping—one of the most basic func-
tions of a computer. See, e.g., Benson, 409 U.S., at 65 (noting that a computer “operates ... upon
both new and previously stored data”). The same is true with respect to the use of a computer to
obtain data, adjust account balances, and issue automated instructions; all of these computer
functions are “well-understood, routine, conventional activit[ies]” previously known to the in-
dustry. Mayo, 566 U.S., at ––––. In short, each step does no more than require a generic comput-
Considered “as an ordered combination,” the computer components of petitioner's method
“ad[d] nothing ... that is not already present when the steps are considered separately.” Id., at ––.
Viewed as a whole, petitioner's method claims simply recite the concept of intermediated settle-
ment as performed by a generic computer. See 717 F.3d, at 1286 (Lourie, J., concurring) (noting
that the representative method claim “lacks any express language to define the computer's partic-
ipation”). The method claims do not, for example, purport to improve the functioning of the
computer itself. See ibid. (“There is no specific or limiting recitation of ... improved computer
technology...”). Nor do they effect an improvement in any other technology or technical field.
Instead, the claims at issue amount to “nothing significantly more” than an instruction to apply
the abstract idea of intermediated settlement using some unspecified, generic computer. Mayo,
566 U.S., at ––––. Under our precedents, that is not “enough” to transform an abstract idea into a
patent-eligible invention. Id., at ––––.
CPetitioner's claims to a computer system and a computer-readable medium fail for substan-
tially the same reasons. Petitioner conceded below that its media claims rise or fall with its
method claims. As to its system claims, petitioner emphasizes that those claims recite “specific
hardware” configured to perform “specific computerized functions.” Brief for Petitioner 53. But
what petitioner characterizes as specific hardware—a “data processing system” with a “commu-
nications controller” and “data storage unit,” for example, — is purely functional and generic.
Nearly every computer will include a “communications controller” and “data storage unit” capa-
ble of performing the basic calculation, storage, and transmission functions required by the
method claims. As a result, none of the hardware recited by the system claims “offers a mean-ingful limitation beyond generally linking ‘the use of the [method] to a particular technological
environment,’ that is, implementation via computers.” Id., at 1291 (quoting Bilski, 561 U.S., at
610–611).
Put another way, the system claims are no different from the method claims in substance.
The method claims recite the abstract idea implemented on a generic computer; the system
claims recite a handful of generic computer components configured to implement the same idea.
This Court has long “warn[ed] ... against” interpreting § 101 “in ways that make patent eligibility
‘depend simply on the draftsman's art.’” Mayo, supra, at –––– (quoting Flook, 437 U.S., at 593);
see id., at 590 ( “The concept of patentable subject matter under § 101 is not ‘like a nose of wax
which may be turned and twisted in any direction ...’”). Holding that the system claims are patent
eligible would have exactly that result.
Because petitioner's system and media claims add nothing of substance to the underlying ab-
Almost 63% of the petitions relate to electrical or computer technology (USPTO Technology
Centers 2100, 2400, 2600, and 2800); and 25% pertain to mechanical and business methods
(USPTO Technology Centers 3600 and 3700). The significant increase in CBM petitions from
2013 to 2014 is largely a result of the Alice opinion (decided on June 19, 2014).
The administrative board within the USPTO, the Patent Trial and Appeals Board
(PTAB), has been sympathetic to the CBM and IPR petitions. Approximately 75% IPR and
CBM petitions are granted by the PTAB, which means there is a “reasonable likelihood that the
petitioner would prevail with respect to at least one of the claims challenged.” And once the
PTAB decides to institute a petition, petitioners do in fact prevail a majority of the time. This
may be explained, in part, by the fact the PTAB is charged with interpreting claim language un-
der the “broadest reasonable interpretation standard,” a standard that diverges from the Phillips-
based framework employed by district court judges. (See Chapter 2.) These diverging claim in-
terpretation standards were affirmed by the Federal Circuit, but not without eliciting a five-judge
dissent in the court’s denial to hear en banc the panel decision’s affirmance. See In re CuozzoSpeed Technologies, 778 F.3d 1271 (Fed. Cir. 2015), reh’g en banc denied , (July 8, 2015). In
addition, the burden of proof for showing invalidity in PTAB proceedings is based on the pre-
ponderance of evidence standard, contrasted with the clear and convincing burden that accompa-
nies district court litigation.
3. DDR and a Temporary Pushback ? Amidst the uncertainty and patent skepticism in the wake
of Mayo and Alice, the Federal Circuit decided DDR Holdings, LLC. v. Hotels.com, 773 F.3d.
1245 (Fed. Cir. 2014). Of the precedential post- Alice Federal Circuit decisions relating to eligi-
bility of a software/business method invention, DDR is the only case to uphold validity. The pa-
tents-in-suit were “directed to systems and methods of generating a composite web page that
combines certain visual elements of a ‘host’ website with content of a third-party merchant. For
example, the generated composite web page may combine the logo, background color, and fonts
of the host website with product information from the merchant.” The court characterized the
patents as addressing a particular problem in the market:
The common specification of the patents-in-suit explains that prior art systems allowed
third-party merchants to “lure the [host website’s] visitor traffic away” from the host
website because visitors would be taken to the third-party merchant’s website when they
clicked on the merchant’s advertisement on the host site. The patents-in-suit disclose a
system that provides a solution to this problem (for the host) by creating a new web pagethat permits a website visitor, in a sense, to be in two places at the same time.
Id. at 1248. The court applied the Alice (à la Mayo) framework to determine eligibility. Alt-
hough recognizing the challenge of defining an “abstract idea,” the court concluded, unlike theclaims in Alice, the present “claims stand apart because they do not merely recite the perfor-
mance of some business practice known from the pre-Internet world along with the requirement
to perform it on the Internet. Instead, the claimed solution is necessarily rooted in computer
technology in order to overcome a problem specifically arising in the realm of computer net-works.” Id. at 1257. The court also found the claimed invention presented an “inventive con-
cept”:
[T]he claims at issue here specify how interactions with the Internet are manipulated to
yield a desired result—a result that overrides the routine and conventional sequence of
events ordinarily triggered by the click of a hyperlink. Instead of the computer networkoperating in its normal, expected manner by sending the website visitor to the third-party
website that appears to be connected with the clicked advertisement, the claimed system
generates and directs the visitor to the above described hybrid web page that presents
product information from the third-party and visual “look and feel” elements from the
host website. When the limitations of the … patent’s asserted claims are taken together as
an ordered combination, the claims recite an invention that is not merely the routine or
conventional use of the Internet. It is also clear that the claims at issue do not attempt to
preempt every application of the idea of increasing sales by making two web pages look
the same, or of any other variant suggested by NLG. Rather, they recite a specific way to
automate the creation of a composite web page by an “outsource provider” that incorpo-
rates elements from multiple sources in order to solve a problem faced by websites on the
Internet. As a result, the … patent’s claims include “additional features” that ensure theclaims are “more than a drafting effort designed to monopolize the [abstract idea].” Alice,
134 S. Ct. at 2357. In short, the claimed solution amounts to an inventive concept for re-
solving this particular Internet-centric problem, rendering the claims patent-eligible.
Id. at 1258-59.
4. Did Alice Tie Eligibility to a Technological Anchor? Similar to the risk hedging concept in
Bilski, the Court noted the claimed intermediated settlement concept is “a fundamental economic
practice long prevalent in our system of commerce.” These types of inventions that regulate hu-
man activity are captured by the abstract ideas filter, according to the Court, irrespective of the
inclusion of a computer. As the Court noted, “[t]aking the claim elements separately, the func-
tion performed by the computer at each step of the process is ‘[p]urely conventional.’” In con-
trast, the claimed invention in Diehr was found eligible under section 101 not because it em-
ployed a computer and a well-known mathematical equation, but because the claimed invention
was “a process designed to solve a technological problem in conventional industry practice.” As
such, “the claims in Diehr were patent eligible because they improved an existing technological
process, not because they were implemented on a computer.” Whereas in the method claims in
Alice Corp. “do not … purport to improve the functioning of the computer itself … [or] effect an
improvement in any other technology or technical field.”
Did the textualists on the Court, who have embraced a statutory basis for exclusion, findcomfort in the fact that anchoring patent eligbility in technology is more consistent with how the
“useful Arts” were understood in the 18th
century?
5. Bilski and the Machine-or-Transformation Test . Both Mayo and Alice cite and discuss Bilski
v. Kappos, which related to a process (held unpatentable under §101) for hedging risks of price
changes by, for example, contracting to purchase commodities from sellers at a fixed price. In
holding that the claimed invention was an unpatentable abstract idea, the Supreme Court ex-
pounded on the so-called “Machine-or-Transformation” (“MOT”) test, which has given way to
the Mayo two-step. See DDR, 773 F.3d at 1256 (“[I]n Mayo, the Supreme Court emphasized that
satisfying the machine-or-transformation test, by itself, is not sufficient to render a claim patent-
eligible, as not all transformations or machine implementations infuse an otherwise ineligible
claim with an "inventive concept”); Mayo, 132 S. Ct. at 1301 (“[S]imply implementing a math-
ematical principle on a physical machine, namely a computer, [i]s not a patentable application of
that principle.”). Indeed, as the DDR court noted, “after Alice, there can remain no doubt: recita-
tion of generic computer limitations does not make an otherwise ineligible claim patent-eligible.
134 S. Ct. at 2358. The bare fact that a computer exists in the physical rather than purely concep-
tual realm ‘is beside the point.’” Id.
Nonetheless, it is worth saying a few words about the MOT. This test holds that a process
is eligible for patent protection “(1) it is tied to a particular machine or apparatus, or (2) it trans-
forms a particular article into a different state or thing.” 545 F.3d at 954. The court added twoadditional filters in unpacking this test, namely that the claimed machine or transformation of an
article “must impose meaningful limits on the claim's scope” to satisfy § !101's eligibility re-
quirements, and the specific machine or transformation “must not merely be insignificant extra-
solution activity.” Accordingly, the machine-transformation test can be viewed as a rule-like
framework that is broad and inclusive, but not without underlying considerations that can inform
the subject matter analysis.
a. What Is a “Machine?” The Federal Circuit did not elaborate on the machine compo-
nent, but other case law have stated “a machine is a ‘concrete thing, consisting of parts, or of cer-
tain devices and combination of devices,’” which “‘includes every mechanical device or combi-
nation of mechanical powers and devices to perform some function and produce a certain effect
or result.’” See In re Nuijten, 500 F.3d 1346, 1355 (Fed. Cir. 2007) (denying patent eligibility for
a claim to an encoded signal used for reducing distortion in, for example, a digital audio file); In
re Ferguson, 558 F.3d 1359, 1364 (Fed. Cir. 2009) (denying patent eligibility based on Bilski for
a claim for marketing a product because “applicants' method claims are not tied to any concrete
parts, devices, or combination of devices”).
Bilski left open the question “whether or when recitation of a computer suffices to tie a
process claim to a particular machine.” In Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d
1366, 1375 (Fed. Cir. 2011), the Federal Circuit stated that programming a general purpose com- puter to perform an algorithm creates a new machine, because a general purpose computer in ef-
fect becomes a special purpose computer once it is programmed to perform particular functions
pursuant to instructions from program software. In contrast, reciting the use of a computer to ex-
ecute an algorithm that can be performed entirely in the human mind is not eligible. See also Ul-
tramercial, LLC v. Hulu, LLC , 657 F.3d 1323, 1329 (Fed. Cir. 2011) (stating “a programmed
computer contains circuitry unique to that computer” and a “new machine could be claimed in
terms of a complex array of hardware circuits, or more efficiently, in terms of the programming
that facilitates a unique function”).
b. What Is a “Transformation”? Regarding the transformation component, the Federal
Circuit made clear that the transformation “must be central to the purpose of the claimed pro-
cess” and must transform an “article.” It is hard to know what the court meant by the former oth-er than the transformation imposes “meaningful limits” on claim scope. Regarding the latter, the
court endeavored to clarify “what sorts of things constitute ‘articles.’” For instance, a claimed
process directed toward “a chemical or physical transformation of physical objects or substanc-
es” (emphasis in original). And a claimed process that employs electronic signals and electroni-
cally manipulated data are eligible if the data represents physical or tangible objects. As an ex-
ample, the court used the dependent claim in Abele wherein transformed data were represented in
the form of bone structure and organs. The court added the “electronic transformation of the data
itself into a visual depiction in Abele was sufficient.” But the issue becomes more difficult as you
move away from physicality. What about data transformations that do not represent physical or
tangible information on a computer screen; in other words, the transformation of data that results
in an intangible representation. Thus, the physicality of the representation seems to play an im-
portant role in the transformation test. See Cybersource, 654 F.3d at 1370 (stating “mere collec-
tion and organization of data regarding credit card numbers and Internet addresses is insufficient
to meet the transformation prong of the test”).
Needless to say, the machine-transformation test is an imperfect device to gauge eligibil-
ity. As several commentators have written, the test “contains a number of ambiguities, leads to
some bizarre results, and poorly tracks the stated goal of preventing the patenting of abstract ide-
as.” Mark A. Lemley, Michael Risch, Ted Sichelman & R. Polk Wagner, Life After Bilski, 63STAN. L. R EV. 1315, 1322 (2011). As you read Comment 3 and have an opportunity to read the
cases in full, ask your self if the courts have provided enough guidance in the eligibility space,
particularly with respect to what constitutes an abstract idea and mental process.
6. Software-Related Patents. As noted above, the Supreme Court refused to categorically pre-
clude software patents. As the Court noted, “it was once forcefully argued that until recent times,
‘well-established principles of patent law probably would have prevented the issuance of a valid
patent on almost any conceivable computer program.’ But this fact does not mean that unfore-
seen innovations such as computer programs are always unpatentable. Section 101 is a ‘dynamic
provision designed to encompass new and unforeseen inventions.’” J.E.M. Ag. Supply, Inc. v.
Pioneer Hi-Bred Int’l, Inc., 534 U. S. 124, 135 (2001).
The Federal Circuit’s Bilski opinion said very little about the patentability of software, or
more generally, computers—other than—like the Supreme Court — refuse to recognize a cate-
gorical exclusion. Prior to Alice, the Federal Circuit had been sympathetic to software patents,
noting that “[f]ar from abstract ideas, advances in computer technology—both hardware and
software—drive innovation in every area of scientific and technical endeavor.” Ultramercial,
Inc. v, Hulu, LLC , 657 F.3d 1325, 1329 (Fed. Cir. 2011).
Nonetheless, despite decades of case law and commentary, there remains a great deal of am-
biguity and controversy relating to the patentability and analytical framework of software. It was
thought that Alice Corp. would add clarity; we now know that is not the case. But we have a
glimpse of the Federal Circuit’s thinking on software patents. In the Federal Circuit’s Alice
Corp. – prior to the Supreme Court granting certiorari – some of the circuit court judges offered
thoughts on computer systems claims. Remarkably, this en banc decision yielded six separate
opinions, none of which having precedential value. A few remarks about the opinions of Judges
Lourie and Rader are in order.
Judge Lourie recognized that § 101’s “proper application to computer-implemented in-
ventions … has long vexed” the courts. While section 101 is inclusive, it must accommodate thethree traditional filters: laws of nature, natural phenomena, and abstract ideas. For Judge Lourie,
adding consistency and predictability to when these filters apply is paramount. As he noted,
what constitutes an abstract idea “can feel subjective and unsystematic, and the debate often
trends toward the metaphysical.” Indeed, the court has expressed frustration at the lack of clarity
in defining an “abstract idea,” noting “[t]he abstractness of the ‘abstract ideas’ test to patent eli-
gibility has become a serious problem, leading to great uncertainty and to the devaluing of inven-
tions of practical utility and economic potential;” and “[n]otwithstanding … well-intentioned ef-
forts and the great volume of pages in the Federal Reporters treating the abstract ideas exception,
the dividing line between inventions that are directed to patent ineligible abstract ideas and those
that are not remains elusive.” 685 F.3d at 1348-1349.
To add clarity regarding the application of the three filters, Judge Lourie identified sever-
al common themes among Supreme Court patent eligibility jurisprudence and constructed an
analysis that focuses on whether a claim preempts abstract ideas or, alternatively, whether the
claim contains “additional substantive limitations that narrow, confine, or otherwise ties down
the claim so that, in practical terms, it does not cover the full abstract idea itself.” Citing Mayo, a
substantive limitation “has ‘sometimes’ been referred to as an ‘inventive concept.’” An inventive
concept “refers to a genuine human contribution to the claimed subject matter,” an invention that
is “a product of human ingenuity.” Moreover, the human contribution “must represent more than
a trivial appendix to the underlying abstract idea,” beyond mere “tangential, routine, well-
understood, or conventional” limitations. An example, according to Judge Lourie, is the “admin-
istering” and “determining” steps in Mayo. While these steps could not be characterized as an
abstract idea, “they were necessary to every practical use of what [the Supreme Court] found to
be a natural law and therefore were not truly limiting.” In this regard, “the preemption analysis
centers on the practical, real-world effects of the claim.” Sensitive to the charge that “inventive
(Emphasis in original). Judge Rader expressed a divergent view of § 101, which he sees as broad
in scope and receptive to inventions that fit into one of the defined statutory categories. Turning
to the exceptions or filters, Judge Rader emphasized that courts must consider the claim language
as a whole, because “[a]ny claim can be stripped down, simplified, generalized, or paraphrased
to remove all of its concrete limitations, until at its core, something that could be characterized as
an abstract idea is revealed.” The key distinction is between a claim that seeks to patent an idea
(ineligible) itself or the application of that idea (eligible). To assist in drawing this distinction,
the “relevant inquiry must be whether a claim includes meaningful limitations restricting it to an
application.” (Emphasis in original). Meaningful limitations include reference to “material ob-
jects or specific examples.” For example, a claim that “merely describes an abstract idea” or
“covers all practical applications” of the idea is ineligible for patent protection because the claim
would preempt all uses of the idea. A claim will also be ineligible “if its purported limitations
provide no real direction, cover all possible ways to achieve the provided result, or are overly-
generalized.” In contrast, a meaningful limitation is, for example, one that “requires a particular
machine implementing a process or a particular transformation of matter.” In addition, eligibility
will obtain when a patent applicant adds “limitations which are essential to the invention.”
With respect to computer-implemented inventions, more than recitation of a general pur-
pose computer is needed to satisfy § 101. But a claim that “tie[s] the otherwise abstract idea to a
specific way of doing something with a computer, or a specific computer for doing something” is
likely patent eligible. Examples of meaningful limitations “may include the computer being part
of the solution, being integral to the performance of the method, or containing an improvement
in computer technology.” Accordingly,
[W]e must examine whether, despite falling within the plain language of Section 101,
clear and convincing evidence shows that a claim to a computer-implemented inventionis barred from patent eligibility by reason of the narrow judicial prohibition against
claiming an abstract idea. In Bilski the Court analyzed whether, and under what circum-
stances, a method claim's tie to a machine could make it a practical application of the un-
derlying idea, and thus patent-eligible. The Court explained that a machine tie, though not
required, is a “useful and important clue” that a method claim is patent-eligible. Bilski,
130 S.Ct. at 3227. If tying a method to a machine can be an important indication of pa-
tent-eligibility, it would seem that a claim embodying the machine itself, with all its
structural and functional limitations, would rarely, if ever, be an abstract idea.
Indeed, in theory, an inventor could claim a machine combination with circuitry, transis-
tors, capacitors, and other tangible electronic components precisely arrayed to accomplish
the function of translating Chinese to English. These complex interrelated machine com- ponents would squarely fit within the terms of Section 101 and involve nothing theoreti-
cal, highly generalized, or otherwise abstract. The fact that innovation has allowed these
machines to move from vacuum-tube-filled specialized mechanical behemoths, to gener-
alized machines changed by punch cards, to electronically programmable machines that
can fit in the palm of your hand, does not render them abstract.
(Emphasis in original). Prior to oral arguments, then USPTO Commissioner David Kappos gave
a keynote address to the Center for American Progress strongly defending software patents:
Software patents, like all patents, are a form of innovation currency. They are also
ecosystem enablers, and job creators. The innovation protected by software patents
is highly integrated with hardware. All of it must remain eligible for protection.…
You know, the history of software patents is not a perfect one, although things are
improving…. But it’s important to note that, during the so-called smartphone pa-tent wars, innovation continues at breakneck pace. A system like ours, in which in-
novation is happening faster than consumers can keep up, cannot fairly be charac-
terized as “broken”. The fact is, the explosion of innovation—and follow-on litiga-
tion—that we see across consumer electronics hardware and software is a direct re-
flection of how our patent system wires us for innovation. It's both natural and rea-
sonable that in a fast-growing, competitive market, innovators would seek to pro-
tect their breakthroughs using our patent system.
November 20, 2012. For a full version of the speech, see
7. Software and Patents: A Complex and Controversial Relationship. The patenting of software
has always been controversial. Software firms, especially during the 1980s, turned to copyright
law as a means of appropriating their innovations. Code was considered a form of expression.
But by the early 1990s, copyrights became less important as courts began narrowly interpreting
copyright law as applied to software. See, e.g., Apple Computer, Inc. v. Microsoft, Inc., 35 F.3d
1435 (9th Cir. 1994) (denying copyright protection for Apple's graphical user interface); Lotus
Development Corp. v. Borland International, Inc., 49 F.3d 807 (1st Cir. 1995) (holding no copy-
right protection for pulldown menus). As such, copyright doctrine was seen as an increasingly
poor fit for software. Copyright law protects the expression of the software code, not functional
elements of the software. And reverse engineering is a rather straightforward means of obtainingaccess to software's functionality. Unlike a patent, a copyright does not protect its owner against
reverse engineering, which is considered a form of fair use. See Sony Computer Entertainment,
Inc. v. Connectix Corp., 203 F.3d 596 (9th Cir. 2000). See also Robert J. Mann, Do Patents Fa-
cilitate Financing in the Software Industry, 83 TEX. L. R EV. 961, 1013, 1015 (2005) (stating
“[t]he most obvious problem with copyright protection for software relates to reverse engineer-
ing” by competitors, but copyright law does have an important role in preventing piracy by cus-
tomers and code “theft” from departing employees); Peter S. Menell, Envisioning Copyright
Law’s Digital Future, 36 N.Y.L. SCH. L. R EV. 63, 65-66 (2003) (“Copyright law provides a thin
layer of protection for computer software, effectively prohibiting wholesale piracy of computer
programs without affording control for interface specifications and other essential elements ofcomputer functionality.”). Thus, in many respects, patent law is a much more attractive option
for software firms.
Diehr was decided in 1981, but it was not until the 1990s that software patents became
more commonplace. See, e.g., Arrhythmia Research Technology Inc. v. Corazonix Corp., 958
F.2d 1053 (Fed. Cir. 1992). In fact, the number of software patent applications and issued patents
increased dramatically in the 1990s. See Stuart J.H. Graham & David C. Mowery, Intellectual
Property Protection in the U.S. Software Industry, in PATENTS IN THE K NOWLEDGE-BASED
ECONOMY 219 (Wesley A. Cohen & Stephen A. Merrill eds., 2003); James Bessen & Robert M.
Hunt, An Empirical Look at Software Patents, 16 J. ECON. & MGMT. STRATEGY 157 (2007). As
Julie Cohen and Mark Lemley write, “the past three decades have witnessed an about-face on the
question of software's eligibility for patent protection…[as] software's status as patentable sub-
ject matter was first doubted, then grudgingly admitted, and finally embraced.” Julie E. Cohen &
Mark A. Lemley, Patent Scope and Innovation in the Software Industry, 89 CAL. L. R EV. 1, 7
(2001).
But software patents remain controversial. Some economists have argued patents are not
needed to incentivize software innovation, and indeed, are harmful to software innovation be-
cause the sheer number of software patents makes it difficult for innovators to obtain permission
to pursue their research. See JAMES BESSEN & MICHAEL J. MEURER , PATENT FAILURE: HOW
JUDGES, BUREAUCRATS, AND LAWYERS PUT I NNOVATORS AT R ISK 96-146 (2008) (asserting thatwith the exception of chemical and pharmaceutical inventions, patents discourage innovation —
particularly in the IT industry — because of the number of patents and rising costs of litigation).
Software patents can present significant barriers to entry for small entities, imposing a tax of
sorts, either in the form of due diligence (e.g., money spent on infringement studies of existing
patents). As a group of economists recently wrote in opposition to the failed European Software
Directive, “[s]oftware patents damage innovation by raising costs and uncertainties in assem-
bling the many components needed for complex computer programs and constraining the speed
and effectiveness of innovation.” http://www.researchineurope.org/policy/patentdirltr.pdf. More-
over, large entities in the software industry have argued they are being plagued by low-quality
patents owned by smaller entities. For criticisms of software patents, see JAMES BESSEN & MI-
CHAEL J. MEURER , PATENT FAILURE: HOW JUDGES, BUREAUCRATS, AND LAWYERS PUT I NNOVA-
TORS AT R ISK (2007); James Bessen & Eric Maskin, Sequential Innovation, Patents and Imita-
tion, at http://ssrn.com/abstract=206189 (Jan. 2000); PATENTS IN THE K NOWLEDGE-BASED
ECONOMY 2 (Wesley M. Cohen & Stephen A. Merrill eds., 2003); James Bessen, Patent Thick-
ets: Strategic Patenting of Complex Technologies, available at
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=327760. The attitude within the IT industry
generally has been described as one of mutually assured destruction, meaning that Firm 1 arms
itself with patents because Firms 2, 3, and 4 have done the same. The first firm to sue another
will be hit with counter-infringement suits. Of course, this can give rise to cross-licensing oppor-
tunities, assuming transaction costs are not prohibitively.
But other commentators have contested these claims. See Ted Sichelman, Why Bilski
Benefits Start-Up Companies, at Patently-O Blog (June 29, 2010 at http://www.patentlyo.com/)
(stating “there is little evidence that these patent-holders required startups to license them in any
significant numbers. The Berkeley Patent Survey found that only 8% of the population of re-
spondent software companies and 12% of venture-backed software companies had licensed-in
even one patent. In sum total, a relatively low percentage, 0.6% and 3%, respectively, reported
licensing a patent solely to avoid a lawsuit.”) (The “Berkeley Patent Survey” can be found at
Stuart J.H. Graham, Ted Sichelman, Robert P. Merges & Pamela Samuelson, High Technology
Entrepreneurs and the Patent System: Results of the 2008 Berkeley Patent Survey, 24 BERKELEY
TECH. L.J. 1248 (2010)). See also John R. Allison & Robert J. Mann, The Disputed Quality ofSoftware Patents, at http://ssrn.com/abstract=970083 (March 2007) (disputing the notion that
software patents are of a lower quality than other types of patents, and also stating that “the data
substantially undermine the traditional story that large firms in the software industry are plagued
by a large number of low-quality patents obtained by the smaller firms in the industry”). See also
Mann, Facilitate Financing , supra, at 1004-09 (rejecting software thicket thesis); Robert P.
Merges, Patents, Entry and Growth in the Software Industry, at http://papers.
ssrn.com/sol3/papers.cfm?abstract_id=926204 (asserting that patents have not damaged the
software industry and new firm entry remains robust).
8. Defining Software and the Software Patent . It is common to think of software as part of a
CD-ROM or that which forms part of a computer and provides it with functional applications.
But it is more accurate to think of software as a series of instructions, known as source code and
object code, “that directs a computer to perform specified functions or operations.” Fantasy
Sports Props., Inc. v. Sportslines.com, Inc., 287 F.3d 1108, 1118 (Fed. Cir. 2002). Indeed, the
PTO's Manual of Patent Examination Procedure (MPEP) states “a computer program is merely a
set of instructions capable of being executed by a computer.” MPEP §!2106.IV.B.1(a) (8th ed.
2001).
It is particularly difficult to define a software patent and there is no universally accepted
definition. Perhaps the reason for this elusiveness has something to do with software's pervasive-
ness across many industries that make categorization quite difficult. See Stuart J.H. Graham &
David C. Mowery, Software Patents: Good News or Bad News,
http://tiger.gatech.edu/files/gt_tiger_software.pdf at 29 (May 2004) (stating “[o]ne of the thorni-
est problems in analyzing software patenting, of course, is defining and measuring software pa-
tents”).
———————
Chapter SevenInsert the following case immediately after Markman and before the Comments (p. 512)
Justice BREYER delivered the opinion of the Court.
In Markman v. Westview Instruments, Inc., 517 U.S. 370 (1996), we explained that a pa-
tent claim is that “portion of the patent document that defines the scope of the patentee’s
rights.” Id., at 372. We held that “the construction of a patent, including terms of art within
its claim,” is not for a jury but “exclusively” for “the court” to determine. Ibid. That is so
even where the construction of a term of art has “evidentiary underpinnings.” Id., at 390.
Today’s case involves claim construction with “evidentiary underpinnings.” See Part III,
infra. And, it requires us to determine what standard the Court of Appeals should use when
it reviews a trial judge’s resolution of an underlying factual dispute. Should the Court of
Appeals review the district court’s factfinding de novo as it would review a question of law?
Or, should it review that factfinding as it would review a trial judge’s factfinding in other
cases, namely by taking them as correct “unless clearly erroneous?” See Fed. Rule Civ.
Proc. 52(a)(6). We hold that the appellate court must apply a “clear error,” not a de novo,standard of review.
I
The basic dispute in this case concerns the meaning of the words “molecular weight” as
those words appear in a patent claim. The petitioners, Teva Pharmaceuticals (along with re-
lated firms), own the relevant patent. The patent covers a manufacturing method for Copax-
one, a drug used to treat multiple sclerosis. The drug’s active ingredient, called “copolymer–
1,” is made up of molecules of varying sizes. And the relevant claim describes that ingredi-
ent as having “a molecular weight of 5 to 9 kilodaltons.”
The respondents, Sandoz, Inc. (and several other firms), tried to market a generic ver-
sion of Copaxone. Teva sued Sandoz for patent infringement. Sandoz defended the suit by
arguing that the patent was invalid. The Patent Act requires that a claim “particularly poin[t]
out and distinctly clai[m] the subject matter which the applicant regards as his invention.”
35 U.S.C. § 112 ¶ 2 (2006 ed.); see Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct.
2120, 2125, n. 1 (2014). The phrase “molecular weight of 5 to 9 kilodaltons,” said Sandoz,
did not satisfy this requirement.
The reason that the phrase is fatally indefinite, Sandoz argued, is that, in the context ofthis patent claim, the term “molecular weight” might mean any one of three different things.
The phrase might refer (1) to molecular weight as calculated by the weight of the molecule
that is most prevalent in the mix that makes up copolymer–1. (The scientific term for mo-
lecular weight so calculated is, we are told, “peak average molecular weight.”) The phrase
might refer (2) to molecular weight as calculated by taking all the different-sized molecules
in the mix that makes up copolymer–1 and calculating the average weight, i.e., adding up
the weight of each molecule and dividing by the number of molecules. (The scientific term
for molecular weight so calculated is, we are told, “number average molecular weight.”) Or,
the phrase might refer (3) to molecular weight as calculated by taking all the different-sized
molecules in the mix that makes up copolymer–1 and calculating their average weight while
giving heavier molecules a weight-related bonus when doing so. (The scientific term for
molecular weight so calculated, we are told, is “weight average molecular weight.”) InSandoz’s view, since Teva’s patent claim does not say which method of calculation should
be used, the claim’s phrase “molecular weight” is indefinite, and the claim fails to satisfy
the critical patent law requirement.
The District Court, after taking evidence from experts, concluded that the patent claim
was sufficiently definite. Among other things, it found that in context a skilled artisan would
understand that the term “molecular weight” referred to molecular weight as calculated by
the first method, i.e., “peak average molecular weight.” See Nautilus, supra, at 2130 (“[T]he
definiteness inquiry trains on the understanding of a skilled artisan at the time of the patent
application”). In part for this reason, the District Court held the patent valid.
On appeal, the Federal Circuit held to the contrary. It found that the term “molecular
weight” was indefinite. And it consequently held the patent invalid. In reaching this conclu-
sion, the Federal Circuit reviewed de novo all aspects of the District Court’s claim construc-
tion, including the District Court’s determination of subsidiary facts. See Lighting Ballast
Control LLC v. Philips Electronics North Am. Corp., 744 F.3d 1272, 1276–1277
(C.A.Fed.2014) (en banc) (reaffirming de novo review of district court claim construction).
Teva filed a petition for certiorari. And we granted that petition. The Federal Circuit re-views the claim construction decisions of federal district courts throughout the Nation, and
we consequently believe it important to clarify the standard of review that it must apply
when doing so.
II
A
Federal Rule of Civil Procedure 52(a)(6) states that a court of appeals “must not ... set
aside” a district court’s “[f]indings of fact” unless they are “clearly erroneous.” In our view,
this rule and the standard it sets forth must apply when a court of appeals reviews a district
court’s resolution of subsidiary factual matters made in the course of its construction of a patent claim. We have made clear that the Rule sets forth a “clear command.” Anderson v.
Bessemer City, 470 U.S. 564, 574 (1985). “It does not make exceptions or purport to ex-
clude certain categories of factual findings from the obligation of a court of appeals to ac-
cept a district court’s findings unless clearly erroneous.” Pullman–Standard v. Swint, 456
U.S. 273, 287 (1982). Accordingly, the Rule applies to both subsidiary and ultimate facts.
Note on subd. (a) of Fed. Rule Civ. Proc. 52, 28 U.S.C.App., pp. 908–909; see also Ander-
son, supra, at 574–575, 105 S.Ct. 1504 (de novo review of factual findings “would very
likely contribute only negligibly” to accuracy “at a huge cost in diversion of judicial re-
sources”).
Our opinion in Markman neither created, nor argued for, an exception to Rule 52(a). The
question presented in that case was a Seventh Amendment question: Should a jury or a judge construe patent claims? We pointed out that history provides no clear answer. The
task primarily involves the construction of written instruments. And that task is better
matched to a judge’s skills. Id., at 388 (“The construction of written instruments is one of
those things that judges often do and are likely to do better than jurors unburdened by train-
ing in exegesis”). We consequently held that claim construction falls “exclusively within the
province of the court,” not that of the jury. Id., at 372.
When describing claim construction we concluded that it was proper to treat the ultimate
question of the proper construction of the patent as a question of law in the way that we treat
document construction as a question of law. But this does not imply an exception to Rule
52(a) for underlying factual disputes. We used the term “question of law” while pointing out
that a judge, in construing a patent claim, is engaged in much the same task as the judge
would be in construing other written instruments, such as deeds, contracts, or tariffs. Con-
struction of written instruments often presents a “question solely of law,” at least when the
words in those instruments are “used in their ordinary meaning.” Great Northern R. Co. v.
Merchants Elevator Co., 259 U.S. 285, 291 (1922). But sometimes, say when a written in-
strument uses “technical words or phrases not commonly understood,” id ., at 292, those
words may give rise to a factual dispute. If so, extrinsic evidence may help to “establish a
usage of trade or locality.” Ibid. And in that circumstance, the “determination of the matterof fact” will “preced [e]” the “function of construction.” Ibid .; see also 12 R. Lord, Williston
on Contracts §§ 34:1, p. 2, 34:19, p. 174 (4th ed. 2012) (In contract interpretation, the exist-
ence of a “usage”—a “practice or method” in the relevant industry—“is a question of fact”
(internal quotation marks omitted)). This factual determination, like all other factual deter-
Accordingly, when we held in Markman that the ultimate question of claim construction
is for the judge and not the jury, we did not create an exception from the ordinary rule gov-
erning appellate review of factual matters. Markman no more creates an exception to Rule
52(a) than would a holding that judges, not juries, determine equitable claims, such as re-
quests for injunctions. A conclusion that an issue is for the judge does not indicate that Rule
52(a) is inapplicable. See Fed. Rule Civ. Proc. 52 (setting the standard of review for “[Fac-tual] Findings and Conclusions by the Court ” (emphasis added)).
While we held in Markman that the ultimate issue of the proper construction of a claim
should be treated as a question of law, we also recognized that in patent construction, sub-
sidiary factfinding is sometimes necessary. Indeed, we referred to claim construction as a
practice with “evidentiary underpinnings,” a practice that “falls somewhere between a pris-
tine legal standard and a simple historical fact.” 517 U.S., at 378, 388, 390. We added that
sometimes courts may have to make “credibility judgments” about witnesses. Id., at 389. In
other words, we recognized that courts may have to resolve subsidiary factual disputes. And,
as explained above, the Rule requires appellate courts to review all such subsidiary factual
findings under the “clearly erroneous” standard.
Finally, practical considerations favor clear error review. We have previously pointed
out that clear error review is “particularly” important where patent law is at issue because
patent law is “a field where so much depends upon familiarity with specific scientific prob-
lems and principles not usually contained in the general storehouse of knowledge and expe-
rience.” Graver Tank & Mfg. Co. v. Linde Air Products Co., 339 U.S. 605, 610 (1950). A
district court judge who has presided over, and listened to, the entirety of a proceeding has a
comparatively greater opportunity to gain that familiarity than an appeals court judge whomust read a written transcript or perhaps just those portions to which the parties have re-
judges “lack the tools that district courts have available to resolve factual disputes fairly and
accurately,” such as questioning the experts, examining the invention in operation, or ap-
pointing a court-appointed expert).
B
Sandoz argues that claim construction mostly consists of construing a set of written doc-
uments that do not give rise to subsidiary factual disputes. It adds that separating “factual”from “legal” questions is often difficult. And Sandoz, like the Federal Circuit itself, argues
that it is simpler for that appellate court to review the entirety of the district court’s claim
construction de novo rather than to apply two separate standards.
But even were we free to ignore the Federal Rule (which we are not), we would not find
this argument convincing. Courts of appeals have long found it possible to separate factual
from legal matters. At the same time, the Federal Circuit’s efforts to treat factual findings
and legal conclusions similarly have brought with them their own complexities. See e.g.,
Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1454 (C.A.Fed.1998) (en banc)
(claim construction does not involve “factual evidentiary findings).
Finally, the Circuit feared that “clear error” review would bring about less uniformity.
Neither the Circuit nor Sandoz, however, has shown that (or explained why) divergent claim
construction stemming from divergent findings of fact (on subsidiary matters) should occur
more than occasionally. After all, the Federal Circuit will continue to review de novo the
district court’s ultimate interpretation of the patent claims. And the attorneys will no doubt
bring cases construing the same claim to the attention of the trial judge; those prior cases
will sometimes be binding because of issue preclusion, and sometimes will serve as persua-
sive authority. Moreover, it is always possible to consolidate for discovery different cases
that involve construction of the same claims. And, as we said in Markman, subsidiary fact-finding is unlikely to loom large in the universe of litigated claim construction.
C
The dissent argues that claim construction does not involve any “factfinding,” or, if it does,
claim construction factfinding is akin to the factfinding that underlies our interpretation of
statutes. Its first, broader contention runs contrary to our recognition in Markman that claim
construction has “evidentiary underpinnings” and that courts construing patent claims must
sometimes make “credibility judgments” about witnesses. Indeed, as discussed in Part III,
infra, this case provides a perfect example of the factfinding that sometimes underlies claim
construction: The parties here presented the District Court with competing fact-related
claims by different experts, and the District Court resolved the issues of fact that divided
those experts.
The dissent’s contention also runs contrary to Sandoz’s concession at oral argument that
claim construction will sometimes require subsidiary factfinding. It is in tension with our in-
terpretation of related areas of patent law, such as the interpretation of “obviousness,” which
we have said involves subsidiary factfinding subject to Rule 52(a)’s clear error review.
Neither do we find factfinding in this context sufficiently similar to the factfinding thatunderlies statutory interpretation. Statutes, in general, address themselves to the general
public; patent claims concern a small portion of that public. Statutes typically (though not
always) rest upon congressional consideration of general facts related to a reasonably broad
set of social circumstances; patents typically (though not always) rest upon consideration by
a few private parties, experts, and administrators of more narrowly circumscribed facts re-
lated to specific technical matters. The public, and often an adversarial public, typically con-
siders and discusses the relevant general facts before Congress enacts a statute; only private
parties, experts, and administrators likely consider the relevant technical facts before the
award of a patent. Given these differences, it is not surprising that this Court has never pre-
viously compared patent claim construction in any here relevant way to statutory construc-
tion. As discussed supra, at 837, however, the Court has repeatedly compared patent claim
construction to the construction of other written instruments such as deeds and contracts.
D
Now that we have set forth why the Federal Circuit must apply clear error review when
reviewing subsidiary factfinding in patent claim construction, it is necessary to explain how
the rule must be applied in that context. We recognize that a district court’s construction of a
patent claim, like a district court’s interpretation of a written instrument, often requires the
judge only to examine and to construe the document’s words without requiring the judge to
resolve any underlying factual disputes. As all parties agree, when the district court reviews
only evidence intrinsic to the patent (the patent claims and specifications, along with the pa-
tent’s prosecution history), the judge’s determination will amount solely to a determination
of law, and the Court of Appeals will review that construction de novo.
In some cases, however, the district court will need to look beyond the patent’s intrinsic
evidence and to consult extrinsic evidence in order to understand, for example, the back-
ground science or the meaning of a term in the relevant art during the relevant time period.
See, e.g., Seymour v. Osborne, 11 Wall. 516, 546 (1871) (a patent may be “so interspersed
with technical terms and terms of art that the testimony of scientific witnesses is indispensa-
ble to a correct understanding of its meaning”). In cases where those subsidiary facts are in
dispute, courts will need to make subsidiary factual findings about that extrinsic evidence.These are the “evidentiary underpinnings” of claim construction that we discussed in Mark-
man, and this subsidiary factfinding must be reviewed for clear error on appeal.
For example, if a district court resolves a dispute between experts and makes a factual
finding that, in general, a certain term of art had a particular meaning to a person of ordinary
skill in the art at the time of the invention, the district court must then conduct a legal analy-
sis: whether a skilled artisan would ascribe that same meaning to that term in the context of
the specific patent claim under review. That is because “[e]xperts may be examined to ex-
plain terms of art, and the state of the art, at any given time,” but they cannot be used to
prove “the proper or legal construction of any instrument of writing.” Winans v. New York& Erie R. Co., 21 How. 88, 100–101 (1859); see also Markman, supra, at 388 (“‘Where
technical terms are used, or where the qualities of substances ... or any similar data neces-
sary to the comprehension of the language of the patent are unknown to the judge, the testi-
mony of witnesses may be received upon these subjects, and any other means of information
be employed. But in the actual interpretation of the patent the court proceeds upon its own
responsibility, as an arbiter of the law, giving to the patent its true and final character and
force’” (quoting 2 W. Robinson, Law of Patents § 732, pp. 482–483 (1890)).
Accordingly, the question we have answered here concerns review of the district court’s
resolution of a subsidiary factual dispute that helps that court determine the proper interpre-
tation of the written patent claim. The district judge, after deciding the factual dispute, will
then interpret the patent claim in light of the facts as he has found them. This ultimate inter-
pretation is a legal conclusion. The appellate court can still review the district court’s ulti-
mate construction of the claim de novo. But, to overturn the judge’s resolution of an under-
lying factual dispute, the Court of Appeals must find that the judge, in respect to those fac-
tual findings, has made a clear error. Fed. Rule Civ. Proc. 52(a)(6).
In some instances, a factual finding will play only a small role in a judge’s ultimate legal
conclusion about the meaning of the patent term. But in some instances, a factual finding
may be close to dispositive of the ultimate legal question of the proper meaning of the term
in the context of the patent. Nonetheless, the ultimate question of construction will remain alegal question. Simply because a factual finding may be nearly dispositive does not render
the subsidiary question a legal one. “[A]n issue does not lose its factual character merely be-
cause its resolution is dispositive of the ultimate” legal question. Miller v. Fenton, 474 U.S.
104, 113 (1985). It is analogous to a judge (sitting without a jury) deciding whether a de-
fendant gave a confession voluntarily. The answer to the legal question about the voluntari-
ness of the confession may turn upon the answer to a subsidiary factual question, say
“whether in fact the police engaged in the intimidation tactics alleged by the defendant.” Id.,
at 112. An appellate court will review the trial judge’s factual determination about the al-
leged intimidation deferentially (though, after reviewing the factual findings, it will review a
judge’s ultimate determination of voluntariness de novo). An appellate court similarly
should review for clear error those factual findings that underlie a district court’s claim con-
struction.
III
We can illustrate our holding by considering an instance in which Teva, with the support
of the Solicitor General, argues that the Federal Circuit wrongly reviewed the District
Court’s factual finding de novo. Recall that Teva’s patent claim specifies an active ingredi-
ent with a “molecular weight of about 5 to 9 kilodaltons.” Recall Sandoz’s basic argument,
namely that the term “molecular weight” is indefinite or ambiguous. The term might refer tothe weight of the most numerous molecule, it might refer to weight as calculated by the av-
erage weight of all molecules, or it might refer to weight as calculated by an average in
which heavier molecules count for more. The claim, Sandoz argues, does not tell us which
way we should calculate weight. See Part I, supra.
The District Court did not accept Sandoz’s argument. Teva’s expert testified that a
skilled artisan would understand that converting data from a chromatogram to molecular
weight distribution curves like those in figure 1 would cause the peak on each curve to shift
slightly; this could explain the difference between the value indicated by the peak of the
curve (about 6.8) and the value in the figure’s legend (7.7). Sandoz’s expert testified that no
such shift would occur. The District Court credited Teva’s expert’s account, thereby reject-
ing Sandoz’s expert’s explanation. The District Court’s finding about this matter was a fac-
tual finding—about how a skilled artisan would understand the way in which a curve creat-
ed from chromatogram data reflects molecular weights. Based on that factual finding, the
District Court reached the legal conclusion that figure 1 did not undermine Teva’s argument
that molecular weight referred to the first method of calculation (peak average molecular
weight).
When the Federal Circuit reviewed the District Court’s decision, it recognized that the
peak of the curve did not match the 7.7 kilodaltons listed in the legend of figure 1. But theFederal Circuit did not accept Teva’s expert’s explanation as to how a skilled artisan would
expect the peaks of the curves to shift. And it failed to accept that explanation without find-
ing that the District Court’s contrary determination was “clearly erroneous.” The Federal
Circuit should have accepted the District Court’s finding unless it was “clearly erroneous.”
Our holding today makes clear that, in failing to do so, the Federal Circuit was wrong.
We vacate the Federal Circuit’s judgment, and we remand the case for further proceed-
ings consistent with this opinion.
Comments
1. The Markman Hearing . The Supreme Court’s Markman decision and subsequent Federal
Circuit case law led to the creation of what eventually became known as the Markman hearing, a
procedural device employed by district court judges designed to determine the meaning of the
claim language at issue. District court judges have broad discretion in how they structure the
hearing, and are faced with common procedural questions. For instance, (1) When during the tri-
al should the court construe the patent claim? (2) What input may the court properly receive to
help in claim construction? and (3) How may the court use this input? Questions 2 and 3 were
explored in Chapter 2. With respect to timing, then Judge McKelvie stated in Elf Atochem North
America, Inc. v. Libbey-Owens-Ford Co., Inc., 894 F. Supp. 844, 850 (D. Del. 1995): “The ‘ob-
ligation’ created by the Federal Circuit to instruct the jury on the meaning of the words used by
an inventor in a claim basically leaves a district court with three options. The court can attempt
to resolve these disputes on the paper record. Second, the court can hold a trial to resolve the dis-
putes. Finally, the court can wait until trial and attempt to resolve claim disputes the evening be-
fore the jury must be instructed.” Given the determinative nature of claim construction, most
courts opt to hold a pre-trial Markman hearing, typically followed by the “winning” party filing
summary judgment motions on validity and/or infringement.
It has been several years since the Markman decision, and courts have developed estab-
lished structures for Markman hearings, particularly in jurisdictions that have crowded patent
dockets (e.g., C.D. and N.D. California). For example, the Northern District of California (andseveral other jurisdictions) has adopted special local rules for patent cases, which, in effect, im-
pose more detailed pleading and disclosure requirements than are generally mandated by the
Federal Rules of Civil Procedure. (See the casebook website at http://law.case.edu/lawofpatents/
under Chapter 7 for the N.D. California’s “Patent Local Rules.”)
2. Standard of Appellate Review and Claim Interpretation: A Long Running Issue. The grant
of certiorari in Markman focused on the Seventh Amendment right to a jury trial in the context
of claim construction. While the Court held that claim construction “is an issue for the judge, not
the jury,” the Justices did not expressly discuss the proper standard of review of district court
judge claim interpretations, or rule whether an interpretive analysis is one of fact, law, or a mix-ture thereof.
But, in what turned out to be controversial dicta, the Court characterized claim construc-
tion as a “mongrel practice” that “falls somewhere between a pristine legal standard and a simple
historical fact.” 517 U.S. at 378, 388. This language is noteworthy because the categorization of
claim construction as one of law and/or fact may determine whether a claim construction ruling
is reviewed de novo (as a legal question), for clear error (as fact finding in a bench trial), or some
mixed review.
Failure to expressly address this issue prompted a minority of Federal Circuit judges,
sympathetic to a more deferential standard of review, to assert that de novo review was not en-
dorsed by the Supreme Court, and claim interpretation is a mixed question of law and fact. See,
e.g., Fromson v. Anitec Printing Plates, Inc., 132 F.3d 1437 (Fed. Cir. 1997). Other judges disa-
greed, and continued to stress that claim interpretation is a question of law subject to de novo re-
view. See, e.g., Phonometrics, Inc. v. N. Telecom, Inc., 133 F.3d 1359 (Fed. Cir. 1998). This in-
tra-circuit conflict led to Cybor Corp. v. FAS Technologies, Inc., 138 F.3d 1448, 1456 (Fed. Cir.
1998), an en banc decision that unequivocally held claim construction is “a purely legal ques-
tion” that is reviewed “de novo on appeal including any allegedly fact based questions relating to
claim construction.”
One could argue that Cybor is understandable if the predominant policy consideration is
uniformity. Consider the following hypothetical litigation scenario:
The ’123 patent is owned by patentee A. A files a patent infringement suit in the
Northern District of Ohio asserting that defendant B is infringing the ’123 patent.
Shortly thereafter, patentee A files another patent infringement action in the Northern District of California claiming that defendant C is infringing the ’123
patent. Each district court judge—allowing and relying on expert testimony— interpret the same claim language differently. These divergent interpretations lead
to the ’123 patent being held invalid by the Ohio judge, and not invalid by theCalifornia judge.
It is plausible that under a standard of review that is more deferential than de novo, the
Federal Circuit would affirm both district court interpretations, resulting in disuniformity.
But uniformity in claim representation is only one policy objective; certainty is another,
particularly early certainty. An appellate standard of review that is more deferential may lead to
greater affirmance rates of district court claim construction rulings. A higher affirmance rate will
inject certainty earlier in the litigation, and arguably promote more settlement activity. In his Cy-
bor dissent, Judge Rader wrote “this court’s enthusiastic assertion of its unfettered review au-
thority has the potential to undercut the benefits of Markman I ,” namely “early certainty about
the meaning of a patent claim,” which, “in turn, would prompt early settlement of many, if notmost, patent suits.” 138 F.3d at 1475.
Indeed, the de novo review standard has resulted in a relatively high reversal rate of district
court claim constructions. In a comprehensive study, Kimberly A. Moore (now Federal Circuit
Judge Moore) looked at Federal Circuit cases from 1996-2003 and found that the Federal Circuit
held district court judges wrongly construed 34.5 percent of claim terms; 29.7 percent led to re-
versals. See Kimberly A. Moore, Markman Eight Years Later: Is Claim Construction More Pre-
dictable?, 9 LEWIS & CLARK L. R EV. 231 (2005).
3. The Return of Deference. The Supreme Court in Teva held that factual determinations areentitled to deference (clear error standard of review), although the ultimate claim construction is
a question of law reviewed de novo. Driving this holding in part was what the court called
“practical considerations,” namely, the front-row seat district court judges have in determining
claim meaning. This point has been made by Judge Kathleen O’Malley, who prior to assuming
her role on the Federal Circuit, was a district court judge for many years. See Hon. Kathleen
O’Malley, The Past, Present and Future of the Federal Circuit , 54 CASE W. R ES. L. R EV. 671,
673 (2004) (discussing significance of standard of review and Federal Circuit claim construction
jurisprudence). See also Retractable Techs. v. Becton Dickinson & Co., 659 F.3d 1369, 1374
(Fed. Cir. 2011) (stating Cybor “was ill considered thirteen years ago and has not proven benefi-
cial to patent jurisprudence in the long run”) (O’Malley, J., dissenting from denial of petition for
rehearing en banc). And Judge Patti Saris of the U.S. District Court in Massachusetts has noted
that de novo review is “key legal development,” but is critical of the standard because it does not
reflect the comparative institutional advantages district court judges possess:
According to the literature, over fifty percent of all Markman hearings now involve the
taking of evidence. Even in those cases where I do not hear evidence, I see terrific
demonstratives. Because I am a visual learner, I understand evidence presented to me bet-
ter when I receive a tutorial by live or video testimony, rather than by a cold affidavit.
This is important because a de novo standard of review by definition is a fresh look by
three people on an appellate level who did not have an opportunity to attend the hear-
ing…. My perspective…is that there should be more deference given to the interpretation
of the trial judge who had the opportunity to see, hear, and look at evidence.
Construction from the Perspective of the District Judge, 54 CASE W. R ES. L. 671, 679 (2004).
Judge Marsha J. Pechman of the U.S. District Court for the Western District of Washington put it
this way: Given the high reversal rate on claim construction, “you might as well throw darts.”
BNA PTCJ Daily, Sept. 14, 2005.
In addition, some judges sit on courts with busy patent dockets, and therefore, hear con-
siderably more patent cases than judges in other districts. But according to a study by David
Schwartz, there is no correlation between various measures of experience and likelihood of af-
firmance at the Federal Circuit. See David L. Schwartz, Practice Makes Perfect? An Empirical
Study of Claim Construction Reversal Rates in Patent Cases, 107 MICH. L. R EV. 223 (2008). For
instance, the Central District of California — the second busiest district court in terms of patent
cases—had the highest claim construction reversal rate (43.5%), whereas the reversal rate of the
thirteenth busiest docket — the Western District of Wisconsin—was 21.1 percent. Id. at 246.
Schwartz also looked at experience levels of individual judges and found that the “claim con-
struction reversal rate varies little with the total number of patent lawsuits handled.” Id. at 256.
Possible explanations for these results, according to Schwartz, are the indeterminacy of lan-
guage, complexity of the patent cases, and de novo review. Id. at 259-266.
4. Will Teva Make a Difference? Of course this question is difficult to answer at this point withany sense of confidence, but two recent Federal Circuit cases applying Teva provide a glimpse.
In both cases, the Federal Circuit gave deference to the district court’s factual determinations re-
lating to claim construction, but reversed in one and affirmed in the other. The former was in
Teva v. Sandoz, — F.3d — (WL 3772402) (Fed. Cir. 2015) (on remand); and the latter was
On remand in Teva, the term “molecular weight” was subject to three different interpreta
tions with little guidance from the patent’s intrinsic record. The district court judge adopted the
expert’s testimony that, among the three possible interpretations, molecular weight means that
which “can be directly obtained from a chromatogram and calibration curve.” The other two in-terpretations would require “additional data manipulation and calculations not disclosed in the
specification.” According to the Supreme Court, the district court’s finding “about how a skilled
artisan would understand the way in which a curve created from chromatogram data reflects mo-
lecular weights” was a factual finding. Teva, 135 S.Ct. at 843. The Federal Circuit found no
clear error in the district court’s factual determination, but nonetheless reversed the court, noting
to “accept[] these fact findings does not … mean that there now exists a presumption regarding
the meaning of the claim term in the art in general or in the context of this patent.” *4 (emphasis
in original). The Federal Circuit continued:
A party cannot transform into a factual matter the internal coherence and context assess-
ment of the patent simply by having an expert offer an opinion on it. The internal coher-
ence and context of the patent … are questions of law. The meaning one of skill in theart would attribute to the term molecular weight in light of its use in the claims, the dis-
closure in the specification, and the discussion of this term in the prosecution history is a
question of law…. Teva cannot transform legal analysis about the meaning or signifi-
cance of the intrinsic evidence into a factual question simply by having an expert testify
on it.
The court emphasized that the claims do not indicate which of the three interpretations a
skilled artisan would adopt in measuring “molecular weight.” The specification and prosecution
history were equally unclear. Thus, despite the fact there was no clear error relating to the district
court’s factual findings, the claim term remained hopelessly ambiguous from an intrinsic evi-
dence perspective.
In Lighting Ballast , the claim term at issue was “voltage source means.” The district court
judge relied on expert testimony to discern what this term meant to the person of ordinary skill in
the art. The Federal Circuit affirmed the district court’s interpretation and gave deference to the
court’s reliance on expert testimony, because it “was not used to contradict claim meaning that is
unambiguous in light of the intrinsic record.” According to the court:
[T]he district court determined that “while the voltage source means term does not denote a spe-
cific structure, it is nevertheless understood by persons of skill in the lighting ballast design art to
connote a class of structures, namely a rectifier, or structure to rectify the AC power line into aDC voltage for the DC input terminals…. The district court further noted that “[i]t is clear to one
skilled in the art that to provide a DC voltage when the source is a power line, which provides an
AC voltage, a structure to rectify the line is required and is clear from the language of the “volt-
age source means” term.”
The difference between these two cases seems to reside in the relationship between the
expert testimony and intrinsic record. In Teva, the Federal Circuit viewed the expert testimony as
providing one of several possible interpretations, all of which experts agreed were plausible. The
problem in Teva was that the intrinsic evidence was significantly ambiguous, so even though the
Federal Circuit gave deference to the district court judge’s factual findings, these findings could
not remedy the intrinsic uncertainty. In contrast, expert testimony in Lighting Ballast was usedto supplement a silent specification. Perhaps more importantly, there was certainty among ex-
perts on the meaning of “voltage source means,” whereas the term “molecular weight” was sub-
ject to three plausible interpretations. There is a fine line between these two cases, but it is a line
Replace Akamai Technologies (p. 613) with the following
AKAMAI TECHNOLOGIES, INC. V. LIMELIGHT NETWORKS, INC. — F.3d — (Fed. Cir. 2015) (2015 WL 2216261)
LINN, CIRCUIT JUDGE.
This appeal returns to us following remand from the United States Supreme Court. See
Limelight Networks, Inc. v. Akamai Techs., Inc., 134 S.Ct. 2111 (2014). Because our prior
decisions in BMC Resources, Inc. v. Paymentech, L.P., 498 F.3d 1373 (Fed. Cir. 2007), and
Muniauction, Inc. v. Thomson Corp., 532 F.3d 1318 (Fed. Cir. 2008), directly apply to the
facts of this case and because the statutory framework of 35 U.S.C. § 271 does not admit to
the sweeping notions of common-law tort liability argued in this case, we again conclude
that because Limelight Networks, Inc. (“Limelight”) did not perform all of the steps of theasserted method claims of U.S. Patent No. 6,108,703 (the “"703 patent”) and because the
record contains no basis on which to impose liability on Limelight for the actions of its cus-
tomers who carried out the other steps, Limelight has not directly infringed the "703 patent
under § 271(a). Accordingly, we affirm the district court’s finding of noninfringement and
do not reach Limelight’s cross-appeal regarding damages.
I. BACKGROUND
A detailed description of the history of proceedings, the technology and the claims at is-
sue in this case is set forth in the prior reported opinions of this court and the Supreme Courtand will not be repeated except to the extent germane hereto. See Limelight, 134 S.Ct. 2111.
II. DIVIDED INFRINGEMENT UNDER § 271(a)
In the court’s view, and for the reasons set forth in more detail, infra, direct infringement
liability of a method claim under 35 U.S.C. § 271(a) exists when all of the steps of the claim
are performed by or attributed to a single entity—as would be the case, for example, in a
principal-agent relationship, in a contractual arrangement, or in a joint enterprise.1 Because
this case involves neither agency nor contract nor joint enterprise, we find that Limelight is
not liable for direct infringement.
Direct infringement under § 271(a) requires a party to perform or use each and every step
or element of a claimed method. For method patent claims, direct infringement only occurs
when a single party or a joint enterprise performs all of the steps of the process. See Joy
Techs., Inc. v. Flakt, Inc., 6 F.3d 770, 775 (Fed.Cir.1993) (“A method claim is directly in-
fringed only by one practicing the patented method.”). This holding derives from the statute
itself, which states “whoever without authority makes, uses, offers to sell, or sells any pa-
tented invention, within the United States or imports into the United States any patented in-
vention during the term of the patent therefor, infringes the patent.” § 271(a). Encouraging
or instructing others to perform an act is not the same as performing the act oneself and does
not result in direct infringement. This is evidenced by the fact that § 271 has separate sub-
sections addressing induced and contributory infringement. When a party participates in or
encourages infringement but does not directly infringe a patent, the normal recourse under
the law is for the court to apply the standards for liability under indirect infringement. How-
ever, indirect infringement requires, as a predicate, a finding that some party is directly lia-
ble for the entire act of direct infringement. Limelight, 134 S.Ct. at 2115. In circumstances
in which one party, acting as “mastermind” exercises sufficient “direction or control” over
the actions of another, such that those actions may be attributed to the mastermind, the com-
bined performance of the steps of a method claim will directly infringe under § 271(a).
BMC, 498 F.3d at 1382. “Under BMC, the control or direction standard is satisfied in situa-tions where the law would traditionally hold the accused direct infringer vicariously liable
for the acts committed by another party that are required to complete performance of a
claimed method.” Muniauction, 532 F.3d at 1330. This may occur in a principal-agent rela-
tionship, a contractual relationship or in circumstances in which parties work together in a
joint enterprise functioning as a form of mutual agency.
Akamai asserts that the Supreme Court’s Limelight decision “strongly implies that a
change in direction on § 271(a) is warranted.” It claims that in lieu of overruling Muniauc-
tion, this panel can decline to extend it to the facts of this case. According to Akamai, an ac-
cused infringer “directs or controls” a third party if the accused infringer goes beyond loose-
ly providing instructions and specifically tells a third party the step or steps to perform. In
its en banc briefing, Akamai cites joint tortfeasor principles as support. See, e.g., Principal
Br. for Pls.–Appellants at 21, (citing Restatement (Second) of Agency § 212, cmt. a (dis-
cussing the tort principle that “one causing and intending an act or result is as responsible as
if he had personally performed the act or produced the result”)); id. at 22 (quoting Restate-
ment (Second) of Torts § 877(a) (subjecting a party to liability for “order[ing]” conduct)).
Limelight responds that Akamai’s expansive attribution theory “would render both Section
271(b) and Section 271(c) meaningless.”
We begin by considering whether § 271(a) incorporates joint tortfeasor liability, as Aka-
mai and the dissent advocate. Unquestionably, it does not. As codified by Congress, §
271(a) includes only the principles of vicarious liability, as embodied in the single entity
rule. Presented with numerous conflicting theories of joint liability that existed in the com-
mon law prior to 1952, Congress enacted specific rules for inducement and contributory lia-
bility in § 271(b) and (c), respectively. While the dissent believes this leaves a “gaping
hole,” it is not our position to legislate or contravene Congress’ choice—right or wrong—by
importing other theories of joint liability into § 271(a).
The alternative—stretching § 271(a) to include joint tortfeasor liability—is flawed. To
make joint tortfeasor liability consistent with the well-established fact that direct infringe-
ment liability under § 271(a) is strict liability, Akamai and the dissent must abandon severalcore tenets of joint tortfeasor law. This position also leads to untenable results. For example,
the dissent advocates holding a customer jointly and severally liable for patent infringement
based on its performance of a single step of a claimed method, even when it has no
knowledge of the patent.
In the analysis that follows we address, in turn, three subjects: the statutory scheme of §
271, the divided infringement case law, and the errors in importing joint tortfeasor liability
into § 271(a).
A. The Statutory Scheme of § 271
Patent infringement is not a creation of common law. It is a tort defined by statute. See
Crown Die & Tool Co. v. Nye Tool & Mach. Works, 261 U.S. 24, 40 (1923) (“The monopo-
ly [granted to the patentee] did not exist at common law, and the rights, therefore, which
may be exercised under it cannot be regulated by the rules of the common law.” (quoting
Gayler v. Wilder, 51 U.S. (10 How.) 477, 494); 3D Sys., Inc. v. Aarotech Labs., Inc., 160
F.3d 1373, 1379 (Fed.Cir.1998) ( “Defining the contours of the tort of infringement, which
exists solely by virtue of federal statute, entails the construction of the federal statute and
not a state’s common or statutory law.”)
35 U.S.C. § 271(a) provides that:
Except as otherwise provided in this title, whoever without authority makes, us-
es, offers to sell, or sells any patented invention, within the United States or im-
ports into the United States any patented invention during the term of the patent
liability from the discretion of the courts, defining “infringement” in § 271(a) and expressly
outlining in § 271(b) and (c) the only situations in which a party could be liable for some-
thing less than an infringement. This was purposeful. At the time, the courts applied a myri-
ad of approaches to multi-actor infringement: some liberally allowed for multi-actor liabil-
ity. In enacting § 271(b) and (c), Congress cleared away the morass of multi-actor infringe-
ment theories that were the unpredictable creature of common law in favor of two infringe-
ment theories that it defined by statute. See Contributory Infringement in Patents—
Definition of Invention: Hearings on H.R. 5988, 4061, and 5248 Before the Subcomm. on
Patents, Trademarks, and Copyrights of the H. Comm. on the Judiciary, 80th Cong. 12
(1948) (statement of Giles S. Rich on behalf of the New York Patent Law Ass’n) (“contribu-
tory infringement is a specific application to patent law of the law of joint tort feasor”);
Hearing on H.R. 3866 Before Subcomm. No. 4 of the H. Comm. on the Judiciary, 81st Cong.
2 (1949) (statement of Giles S. Rich on behalf of the New York Patent Law Ass’n) (“Time
out of mind, under the old common law, there has been a doctrine of joint tort feasors to the
effect that people who jointly commit a tort are jointly and severally liable. This contributo-
ry infringement is nothing but the application of that doctrine to patent law.”); id. at 3, 6–7;Giles S. Rich, Infringement Under Section 271 of the Patent Act of 1952, 35 J. Pat. Off.
Soc’y 476, 480 (1953) (“Contributory infringement is an expression of the old common law
doctrine of joint tort feasors.” (emphases in original)).
Indeed, in this way, Congress carefully crafted subsections (b) and (c) to expressly define
the only ways in which individuals not completing an infringing act under § 271(a) could
nevertheless be liable. Therefore, to the extent that tort law’s contributory liability principles
are applicable at all, § 271(b) and (c) embody the application of contributory liability prin-
ciples to patent law. We must respect Congress’ deliberate choice to enact only certain
forms of contributory liability in § 271(b) and (c).2
2 Akamai and the dissent argue that the word “whoever” in § 271(a) (“whoever ... uses ... any pa-
tented invention”) undermines the single entity rule because it is plural. See 1 U.S.C. § 1 (“In de-
termining the meaning of any Act of Congress, unless the context indicates otherwise —words im-
porting the singular include and apply to several persons, parties, or things....” (emphasis added)).
The court agrees that “whoever” is plural, but Akamai and the dissent’s argument fails for two rea-
sons. First, the statute simply states the obvious: more than one entity can be independently liable
for direct patent infringement if each entity practices every element of the claim. Second, the statu-
tory context, with § 271(b) and (c) extending liability in limited circumstances to actors who do not
independently infringe, establishes that § 271(a) excludes joint liability.The dissent’s interpretation of “whoever” as “any person or persons” is also too sweeping for its
purposes. The plain meaning of § 271(a), as the dissent would have it, contains no requirement that
the parties “act in concert pursuant to a common plan or design,” and the dissent introduces it with
no statutory basis. The dissent’s analogy to joint inventors, only underscores this problem. That
joint inventors must have some connection derives from the word “jointly” found in § 116— see,
e.g., Bard Peripheral Vascular, Inc. v. W.L. Gore & Assocs., Inc., 776 F.3d 837, 846 (Fed.Cir.2015)
Furthermore, Akamai’s broad theory of attribution—in which a defendant would be liable
for “causing and intending an act or result,” would render § 271(b) redundant. Subsection
(b) states: “Whoever actively induces infringement of a patent shall be liable as an infring-
er.” The Supreme Court in Global–Tech, quoting Webster’s, explained that to induce
“means to lead on; to influence; to prevail on; to move by persuasion or influence.” Global–
Tech Appliances, Inc. v. SEB S.A., 131 S.Ct. 2060, 2065 (2011) (quoting Webster’s New In-
ternational Dictionary 1269 (2d ed.1945)). Webster’s contains several, somewhat overlap- ping, definitions for “induce,” one of which is “cause.” Webster’s at 1269. And even the
definitions expressly quoted in Global–Tech —namely: to lead on; to influence; to prevail
on; to move by persuasion or influence—are all ways to “cause.” The Supreme Court in
Global–Tech further explained that the adverb “actively” means that “the inducement must
involve the taking of affirmative steps to bring about the desired result.” 131 S.Ct. at 2065
(citing Webster’s at 27). This “obviously [requires] know[ing] the action that [the inducer]
wishes to bring about.” Id. Thus, a defendant actively induces patent infringement under §
271(b) if she causes infringement while intending the act or result to occur (along with cer-
tain other requirements). See Black’s Law Dictionary 1321 (8th ed.1999) (defining “active
inducement” as “[t]he act of intentionally causing a third party to infringe a valid patent”).
But if, as Akamai contends, there is liability under § 271(a) for “one causing and intend-
ing an act or result,” there is no need for a separate tort for induced infringement. This is
crystallized by the language of the Restatement (Second) of Torts § 877(a)—cited by Aka-
mai—which subjects a defendant to liability for tortious conduct of another if the defendant
“orders or induces the conduct” (emphasis added).
For essentially the same reasons, Akamai’s broad reading of § 271(a) would make §
271(c) redundant as well. Subsection (c), as originally enacted, stated:
(c) Whoever sells a component of a patented machine, manufacture, combi-
nation or composition, or a material or apparatus for use in practicing a pa-
tented process, constituting a material part of the invention, knowing the
same to be especially made or especially adapted for use in an infringement
of such patent, and not a staple article or commodity of commerce suitable
for substantial noninfringing use, shall be liable as a contributory infringer.
As with § 271(b), liability for § 271(c) requires knowledge or willful blindness of the patent,
Global–Tech, 131 S.Ct. at 2068, and requires direct infringement. Aro Mfg. Co. v. Converti-
ble Top Replacement Co. (Aro II), 377 U.S. 476, 484 (1964). Thus, § 271(c) also entails
causing customers to act as they did and intending the acts and/or results. There is no prin-
cipled reason why Akamai’s attribution theory should not apply to combination patents. But
it is well settled that the sale of an unpatented component will at most raise a question of in-
fringement under subsection (c), not subsection (a). See 35 U.S.C. § 271(c); Aro Mfg. Co. v.
the contract is responsible for the method steps for which it bargained. However, this type of
contractual arrangement will typically not be present in an arms-length seller-customer rela-
tionship.
Finally, in a joint enterprise, the acts of each participant are, by definition, imputed to
every member. All members of a joint venture may be jointly and severally liable to third
persons for wrongful acts committed in furtherance of the joint enterprise or venture. Thus,the negligence of one participant in the enterprise or venture, while acting within the scope
of agency created by the enterprise, may be imputed to another participant so as to render
the latter liable for the injuries sustained by third persons as a result of the negligence. 48A
C.J.S. Joint Ventures § 62; see also Restatement (Second) of Torts § 491 (1965) (“Any one
of several persons engaged in a joint enterprise, such as to make each member of the group
responsible for physical harm to other persons caused by the negligence of any member, is
barred from recovery against such other persons by the negligence of any member of the
group.”). A joint enterprise exists for the purposes of imposing vicarious liability when there
is:
(1) an agreement, express or implied, among the members of the group; (2) a
common purpose to be carried out by the group; (3) a community of pecuniary
interest in that purpose, among the members; and (4) an equal right to a voice in
the direction of the enterprise, which gives an equal right of control.
Restatement (Second) of Torts § 491, cmt. c.; see also 57B Am.Jur.2d Negligence § 1138
(2015).
***
III. THE FACTS OF THIS CASE
Akamai argues that the facts here are different from those in Muniauction, because Lime-
light provides more specific instructions and because it has a contract with its customers.
Limelight argues that the law has not changed since the original panel decision. The same
precedents that led to the original panel decision, most notably BMC and Muniauction, are
still binding on this court. In its original panel briefing, it argued that the district court was
correct that this case is “indistinguishable” from Muniauction. It further argues that even if
there is a contract between Limelight and its customers, which it contests, this contract
“does not compel the customer to do anything.”
In this case, there is nothing to indicate that Limelight’s customers are performing any of
the claimed method steps as agents for Limelight, or in any other way vicariously on behalf
of Limelight. To the contrary, Limelight’s customers direct and control their own use of
Limelight’s content delivery network (“CDN”). Limelight’s customers serve their own web
pages, and decide what content, if any, they would like delivered by Limelight’s CDN. Cus-
tomers sometimes even have Limelight’s CDN and competing CDNs simultaneously deliver
the same content. As such, customers—not Limelight—direct and control which CDN de-
livers each and every object of their content. Limelight’s customers do not become Lime-
light’s agents simply because Limelight provides its customers a written manual explaining
how to operate Limelight’s product.
Moreover, Limelight’s CDN is a service similar to Thomson’s on-line auction system in
Muniauction, and Limelight’s relationship with its customers is similar to Thomson’s rela-
tionship with the bidders. In both cases, customers are provided instructions on use of the
service and are required to perform some steps of the claimed method to take advantage of
that service. In Muniauction, the customers performed the step of bidding. Here, the cus-
tomers determine what website content should be delivered by Limelight’s CDN and then,
allegedly, perform the step of “tagging” that content. Limelight’s customers also perform
the step of “serving” their own web pages. As the district court found, there is “no material
difference between Limelight’s interaction with its customers and that of Thompson in Mu-niauction.”
Akamai also argues that the relationship between Limelight and its customers compels a
finding of infringement because Limelight “contracts out to content providers the claim
steps that it alone does not perform.” This assertion stems from Limelight’s standard form
contract that, according to Akamai, “obligates content providers to perform the claim steps
of tagging the embedded objects and serving the tagged page so that requests for the em-
bedded objects resolve to Limelight’s network instead of the content provider’s.” Id. For
this argument, Akamai relies on the statement in BMC that “[a] party cannot avoid in-
fringement ... simply by contracting out steps of a patented process to another entity,” 498
F.3d at 1381.
Akamai’s reliance on this statement is misplaced. As discussed above, Limelight’s cus-
tomers decide what content, if any, they choose to have delivered by Limelight’s CDN and
only then perform the “tagging” and “serving” steps. The form contract does not obligate
Limelight’s customers to perform any of the method steps. It merely explains that customers
will have to perform the steps if they decide to take advantage of Limelight’s service. Be-
cause the customers were acting for their own benefit, Limelight is not vicariously liable for
the customers’ actions. See BMC, 498 F.3d at 1379 (holding that liability exists only wherethe accused infringer has “someone else carry out one or more of the claimed steps on its
behalf”); Muniauction, 532 F.3d at 1329 (“mere ‘arms-length cooperation’ will not give rise
to direct infringement by any party”) (quoting BMC, 498 F.3d at 1381).
In the present case, the asserted claims were drafted so as to require the activities of both
Limelight and its customers for a finding of infringement. Thus, Akamai put itself in a posi-
tion of having to show that the allegedly infringing activities of Limelight’s customers were
attributable to Limelight. Akamai did not meet this burden because it did not show that
Limelight’s customers were acting as agents of or otherwise contractually obligated to
Limelight or that they were acting in a joint enterprise when performing the tagging and
serving steps. Accordingly, we affirm the district court’s grant of Limelight’s motion for
JMOL of non-infringement under § 271(a).
IV. CONCLUSION
For the foregoing reasons, this court affirms the district court’s grant of Limelight’s mo-
tion for JMOL of non-infringement of the "703 patent.
Comment
Multiple Actors and Direct Infringement of Method Claims. Direct infringement under section271(a) has been interpreted as requiring a single actor to perform all of the steps in a claimed
process. But what if there are multiple actors, each of whom does not perform all of the steps?
In this situation, as the Federal Circuit noted, direct infringement liability of a method claim un-
der 35 U.S.C. § 271(a) exists when all of the steps of the claim are performed by or attributed to
a single entity—as would be the case, for example, in a principal-agent relationship, in a contrac-
tual arrangement, or in a joint enterprise. The court rejected a joint-tortfeasor theory of liability.
Thus, absent one of the three identified situations (i.e., principal-agent relationship, contractual
arrangement, or joint enterprise), there is no liability for one who practices several steps of a
method claim and purposely encourages others to perform the remaining steps. In a dissent,
Judge Moore wrote the majority “divorces patent law from mainstream legal principles by refus-
ing to accept that § 271(a) includes joint tortfeasor liability. The majority’s rule creates a gaping
hole in what for centuries has been recognized as an actionable form of infringement.”
