Amicus Curiae Brief — Evolutionary Intelligence LLC, Petitioner v. Sprint Nextel Corporation, et al.

No. 17-609

IN THE

Supreme Court of the United States

_________

EVOLUTIONARY INTELLIGENCE, LLC,

Petitioner,

v.

SPRINT NEXTEL CORPORATION, ET AL.,

Respondent.

_________

On Petition for Writ of Certiorari to

the United States Court of Appeals

for the Federal Circuit

_________

BRIEF FOR AMICI CURIAE

RAYMOND A. MERCADO, PH.D., RPOST

COMMUNICATIONS LIMITED, RMAIL

LIMITED, RPOST INTERNATIONAL LIMITED,

AND RPOST HOLDINGS INCORPORATED,

IN SUPPORT OF PETITIONER

_________

LEWIS E. HUDNELL, III

Counsel of Record

HUDNELL LAW GROUP P.C.

800 West El Camino Real, Suite 180

Mountain View, California 94040

(650) 564-7720

lewis@hudnelllaw.com

Counsel for Amici Curiae

ii

TABLE OF CONTENTS

TABLE OF AUTHORITIES..............................

iv

STATEMENT OF INTEREST OF AMICI

CURIAE........................................................

1

SUMMARY OF ARGUMENT ...........................

2

ARGUMENT .....................................................

7

I. THIS COURT’S CURRENT TEST FOR

ELIGIBILITY UNDER MAYO/ALICE IS

DEPENDENT ON ISSUES OF FACT

THAT

MAKE

“PLEADING

INVALIDATIONS” UNDER RULE 12

INAPPROPRIATE IN ALL BUT THE

RAREST OF CASES ....................................

7

A. Mayo Requires Courts to Decide Whether

Claims Involve “Conventional Activity,

An Historical Inquiry Requiring Evidence

As to the State of the Art At the Time of

Invention and Resolution of Underlying

Factual Issues……………………………… ...

7

B. Fact-Findings Made During Post-Grant

Proceedings Before the PTAB May be

Highly Relevant to the Eligibility Analysis Under § 101, Yet Courts Are Divided

As to Their Admissability……………… ......

12

iii

TABLE OF CONTENTS—Continued

Page

C. Mayo’s Eligibility Analysis Under § 101

Must Be Conducted from the Perspective

of the Skilled Artisan At the Time of Invention, Which Will Often Require Evidence Outside the Pleadings, Such as Expert Testimony…………………… ................

14

D. This Court Should Overrule the Federal

Circuit’s Characterization of § 101 as a

“Pure Question of Law” and Clarify That

Eligibility Under the Test Set Forth in

Mayo is a Question of Law Dependent on

Underlying Factual Determinations,

Which is Inappropriate for Resolution at

the Rule 12 Stage………………………….. ...

16

II.

THIS COURT SHOULD GRANT

CERTIORARI BECAUSE “PLEADING

INVALIDATIONS” STRAY FROM THIS

COURT”S DECISION IN MAYO AND

POSE

AN

IMPORTANT

AND

RECURRING

THREAT

TO

THE

VITALITY OF THE PATENT SYSTEM,

WHICH THIS CASE IS AN EXCELLENT

VEHICLE FOR RESOLVING………….. .....

18

CONCLUSION ..................................................

23

iv

TABLE OF AUTHORITIES

Cases: ................................................................. Pages

Alice Corp. Pty. Ltd. v. CLS Bank Intern., 134 S.Ct. 2347 (2014)…………….. ..... passim

Ameritox, Ltd. v. Millennium Health,

LLC, 88 F.Supp.3d 885 (W.D. Wis. Feb.

19, 2015)… .................................................. 8, 9, 10

Appistry, Inc. v. Amazon.com, Inc., 195

F.Supp.3d 1176 (W.D. Wash. Jul. 19,

2016), aff’d, Appistry, LLC v. Amazon.com, Inc., 676 Fed.Appx. 1008 (Fed.

Cir. Feb. 10, 2017)… ........................................... 15

CG Technology Development, LLV v.

Bwin.Party (USA), Inc., 2017 WL 58575

(D. Nev. Jan. 4, 2017)…………………… ............... 4

Diamond v. Diehr, 450 U.S. 175 (1981)… ............ 20

Finjan, Inc. v. Blue Coat Systems, LLC,

2016 WL 7212322 (N.D. Cal. Dec. 13,

2016)… ................................................................ 21

GoDaddy.com, LLC v. RPost Communs.

Ltd., 2016 WL 3165536, (D. Ariz. 2016)

aff’d, GoDaddy.com, LLC v. RPost Communs. Ltd., 685 Fed.Appx. 992 (Fed.

Cir. May 5, 2017), petition for cert. pending, No. 17-695 (filed Nov. 6, 2017)…. ............... 14

v

TABLE OF AUTHORITIES—Continued

Page

Graham v. John Deere Co. of Kansas City,

383 U.S. 1 (1966)… ............................................. 14

IBQ LLC v. Trading Technologies International, Inc., 2017 WL 3394060 (PTAB

Aug. 7, 2017)… .................................................... 16

Kaavo Inc. v. Amazon.com Inc., 2016 WL

6562038 (D. Del. Nov. 3, 2016)… ....................... 10

Mayo Collaborative Servs. v. Prometheus

Laboratories, Inc., 566 U.S. 66

(2012)……………………………………… ...... passim

Nautilus, Inc. v. Biosig Instruments, Inc.,

134 S. Ct. 2120 (2014)… .................................... .14

Oil States Energy Services LLC v.

Greene’s Energy Group, LLC, cert.

granted, 137 S.Ct. 2239 (Jun. 12,

2017)……. ........................................................ 6, 21

Papst Licensing Gmbh & Co. KG v. Xilinx

Inc., 2016 WL 4398376 (N.D. Cal. Aug.

18, 2016)…. ......................................................... 13

vi

TABLE OF AUTHORITIES—Continued

Page

Secured Mail Solutions LLC v. Universal

Wilde, Inc., 873 F.3d 905 (Fed. Cir.

2017)…. ............................................................... 16

Shatterproof Glass Corp. v. Libbey-Owens

Ford Co., 758 F.2d 613, 619 (Fed. Cir.),

cert. dismissed, 474 U.S. 976 (1985).. .................. 8

Smart Systems Innovations, LLC v. Chicago Transit Authority, 873 F.3d 1364

(Fed. Cir. Oct. 18, 2017)………….. ....................... 5

Sophos Inc. v. RPost Holdings, Inc., 2016

WL 3149649 (D. Mass. Jun. 3, 2016)….............. 13

Tatcha, LLC v. Landmark Technology

LLC, 2017 WL 951019 (N.D. Cal. Mar.

10, 2017).. ............................................................ 21

Teva Pharmaceuticals USA, Inc. v.

Sandoz, Inc., 135 S. Ct. 831 (2015) ........ 14, 15, 17

TNS Media Research LLC v. TIVO Research and Analytics, Inc., 2016 WL

6993768 (S.D. N.Y. Nov. 29, 2016)…… ................ 4

vii

TABLE OF AUTHORITIES—Continued

Page

Ultramercial, Inc. v. Hulu, LLC, 722 F.3d

1335 (Fed. Cir. 2013), vacated by

WildTangent, Inc. v. Ultramercial, LLC,

134 S.Ct. 2870 (2014)… .......................... 11, 12, 17

Verint Systems Inc. v. Red Box Recorders

Ltd., 2016 WL 7156768 (S.D.N.Y. Dec.

7, 2016)… ............................................................ 18

Virginia Innovation Sciences Inc. v. Amazon.com, Inc., 2017 WL 64147 (E.D. Va.

Jan. 5, 2017)… .................................................... 13

Statutes:

35 U.S.C. § 101…………….............................. passim

35 U.S.C. § 102…. .................................................... 8

35 U.S.C. § 103…. ........................................ 9, 14, 17

35 U.S.C. § 112…. .................................................. 14

35 U.S.C. § 282….. ................................................. 15

Miscellaneous:

viii

TABLE OF AUTHORITIES—Continued

Page

John R. Allison et al., Understanding the

Realities of Modern Patent Litigation,

92 Tex. L. Rev. 1769 (2014)…............................. 20

Bernard Chao, Moderating Mayo, 107

Nw. U. L. Rev. 423 (2012)................................... 11

J. Cole & E. Bucklo, A Life Well Lived: An

Interview with Justice John Paul Stevens, 32 Litigation 8 (Spring 2006).. .................. 21

Eugene Gressman, et al., Supreme Court

Practice (9th ed. 2007)…..................................... 21

Paul R. Gugliuzza, Quick Decisions in Patent Cases, 106 Georgetown L.J. __,

(forthcoming 2018), available at

https://ssrn.com/abstract=2987289

.................................................................................

..............................................3, 8, 11, 16, 17, 18, 19

Paul R. Gugliuzza & Mark A. Lemley,

Can a Court Change the Law by Saying

Nothing?, 71 Vand. L. Rev. __, at *43

(forthcoming 2018), available at

https://ssrn.com/abstract=3015459 ................ 4, 5

ix

TABLE OF AUTHORITIES—Continued

Page

Timothy R. Holbrook & Mark D. Janis,

Patent-Eligible Processes: An Audience

Perspective, 17 Vand. J. Ent. & Tech. L.

349 (2015).. ................................................ 2, 16, 17

Raymond A. Mercado, Resolving Patent

Eligibility and Indefiniteness in Proper

Context: Applying Alice and Aristocrat,

20 Va. J.L. & Tech. 240 (2016)…2, 3, 11, 16, 17, 20

Plaintiff-Appellant’s Corrected Reply

Brief, Evolutionary Intelligence, LLC v.

Sprint Nextel Corporation, No. 16-1188,

2016 WL 5415937, at *21 (Fed. Cir. Sep.

20, 2016)….. ........................................................ 20

Robert Sachs, #Alicestorm: April Update

and the Impact of TC Heartland on Patent Eligiblity, BILSKIBLOG (Jun. 1,

2017) available at http://www.bilskiblog.com/blog/2017/06/alicestorm-aprilupdate-and-the-impact-of-tc-heartland.html ....................................................... 3, 19

x

TABLE OF AUTHORITIES—Continued

Page

Jesse D.H. Snyder, Have We Gone Too

Far: Does the Seventh Amendment Compel Fact-Finding Before Reaching a Decision on Patent-Eligible Subject Matter?, 14 Chi.-Kent J. Intell. Prop. 436

(2015)…. .......................................................... 6, 16

1

No. 17-609

IN THE

Supreme Court of the United States

_________

EVOLUTIONARY INTELLIGENCE, LLC,

Petitioner,

v.

SPRINT NEXTEL CORPORATION, ET AL.,

Respondent.

_________

On Petition for Writ of Certiorari to

the United States Court of Appeals

for the Federal Circuit

_________

BRIEF FOR AMICI CURIAE

RAYMOND A. MERCADO, PH.D., RPOST

COMMUNICATIONS LIMITED, RMAIL

LIMITED, RPOST INTERNATIONAL LIMITED,

AND RPOST HOLDINGS INCORPORATED,

IN SUPPORT OF PETITIONER

_________

STATEMENT OF INTEREST OF AMICI

CURIAE1

Amicus Raymond A. Mercado, Ph.D., is a political

scientist and patent law scholar who has written on

1 Pursuant to Supreme Court Rule 37.2(a), amici curiae file

this brief with consent from all parties. Counsel of record for

2

the law of patentable subject matter under 35 U.S.C.

§ 101 at issue in this case, and is interested in the

wholesome development of the law. See Raymond A.

Mercado, Resolving Patent Eligibility and Indefiniteness in Proper Context: Applying Alice and Aristocrat,

20 Va. J.L. & Tech. 240 (2016).

Amici RPost Communications Limited, Rmail Limited, RPost International Limited, and RPost Holdings Incorporated are patent holders who have been

subject to improper pleadings-stage eligibility challenges such as the one in this case, and join this brief.

SUMMARY OF ARGUMENT

No sooner had Petitioner stepped through the courthouse doors than it was thrown back out again, its patents declared invalid on the pleadings. The phenomenon of “pleading invalidations” raised by Petitioner

in this case is by now familiar to the patent community and to inventors throughout the nation, as patents are being routinely held invalid under § 101 at

the pleadings stage, without any factual basis to support such rulings beyond the ipse dixit of the judge.2

Petitioner granted blanket consent to all amici, and Respondent

also consented, although Respondent received notice fewer than

10 days before the due date for this brief. Pursuant to Supreme

Court Rule 37.6, the undersigned further affirms that no counsel

for a party authored this brief in whole or in part, and no person

or entity other than amici curiae or its counsel made a monetary

contribution specifically for the preparation or submission of this

brief.

2 See, e.g., Timothy R. Holbrook & Mark D. Janis, Patent-Eligible Processes: An Audience Perspective, 17 Vand. J. Ent. &

Tech. L. 349, 362, 382 (2015) (observing that courts are deciding

eligibility with “virtually nothing to guide and focus the judicial

imagination,” a “dynamic [that] becomes particularly salient

when considering the procedural posture of these cases – motions

3

According to one scholar, “[t]he number of pleadingsstage dismissals on eligibility grounds has dramatically increased” in recent years.3 By one count, more

than 70% (278 out of 392) of district court decisions on

eligibility have been rendered on the pleadings or on

motions to dismiss.4 The consequence of such “early

resolution of validity via the eligibility requirement

may” be the “decreased accuracy” of judicial rulings on

patent validity—“[s]pecifically, courts may be using

the eligibility requirement of § 101 to invalidate meritorious inventions,” as here.5 More importantly—as

a number of district courts, PTAB judges, and commentators have all recognized—the practice of holding patents invalid under § 101 on the pleadings is

flatly inconsistent with this Court’s decision in Mayo

to dismiss under Rule 12(b)(6) or 12(c)” and arguing against the

courts’ “problematic” practice of “kick[ing] the hypothetical person of ordinary skill in the art to the curb in favor of a discretionary analysis [by the court] that need not be constrained to establish qualifying prior art evidence”); Raymond A. Mercado, Resolving Patent Eligibility and Indefiniteness in Proper Context: Applying Alice and Aristocrat, 20 Va. J.L. & Tech. 240, 250, 257

(2016) (observing that “[s]ince Alice, the trend has been for eligibility to be resolved on the pleadings or via motions to dismiss”

and arguing that “[c]ourts are improperly resolving these cases

in a vacuum, substituting their own perspective for that of the

skilled artisan and ignoring critical fact issues.”).

3 Paul R. Gugliuzza, Quick Decisions in Patent Cases, 106

Georgetown L.J. __, at *36, (forthcoming 2018), available at

https://ssrn.com/abstract=2987289

4 See Robert Sachs, #Alicestorm: April Update and the Impact

of TC Heartland on Patent Eligiblity, BILSKIBLOG (Jun. 1,

2017) available at http://www.bilskiblog.com/blog/2017/06/alicestorm-april-update-and-the-impact-of-tc-heartland.html

5 Gugliuzza, supra note 3, at 39.

4

Collaborative Servs. v. Prometheus Laboratories, Inc.,

566 U.S. 66 (2012), which articulated a test for eligibility requiring significant factual inquiries.

While one might imagine that appellate review

would somewhat ameliorate the danger of poor decision-making by district courts, the Federal Circuit has

been unable to provide reasonable guidance in this

area. See, e.g., CG Technology Development, LLV v.

Bwin.Party (USA), Inc., 2017 WL 58575, at *2 (D.

Nev. Jan. 4, 2017) (“Commentators have noted the

lack of clarity in the test for abstractness challenges

under § 101.”) (citing authorities); TNS Media Research LLC v. TIVO Research and Analytics, Inc.,

2016 WL 6993768, at *1 (S.D. N.Y. Nov. 29, 2016) (referring to caselaw interpreting this Court’s current

test under § 101 as “somewhat confused”). According

to one study, 51.9% of the Federal Circuit’s decisions

on § 101 have been by summary affirmance, giving

rise to what the authors of that study call a “silent jurisprudence of patentable subject matter.”6

The Federal Circuit’s “silent jurisprudence” has

proven a poor way to flesh out the nuances of this

Court’s new test for eligibility in Mayo Collaborative

Servs. v. Prometheus Laboratories, Inc., 566 U.S. 66

(2012) and Alice Corp. Pty. Ltd. v. CLS Bank Intern.,

134 S.Ct. 2347 (2014). Indeed, the Federal Circuit’s

high rate of invalidating patents on eligibility

grounds—above 90%—suggests that the “reality

might be even worse for patentees than our data sug-

6 Paul R. Gugliuzza & Mark A. Lemley, Can a Court Change

the Law by Saying Nothing?, 71 Vand. L. Rev. __, at *43 (forthcoming 2018), available at https://ssrn.com/abstract=3015459

5

gest, as it seems possible that the high rates of invalidity could be deterring appeals in some cases.”7 As

guideposts for district courts undertaking § 101 analyses, the Federal Circuit’s precedential decisions have

fared little better. “[D]espite the number of cases that

have faced these questions and attempted to provide

practical guidance [on eligibility doctrine],” Federal

Circuit Judge Linn recently wrote, “great uncertainty

yet remains. And the danger of getting the answers to

these questions wrong is greatest for some of today's

most important inventions in computing, medical diagnostics, artificial intelligence, the Internet of

Things, and robotics, among other things.” Smart

Systems Innovations, LLC v. Chicago Transit Authority, 873 F.3d 1364, 1378 (Fed. Cir. Oct. 18, 2017)

(Linn, J., dissenting in part and concurring in part).

This Court should grant certiorari in this case to

provide badly needed guidance as to the nature of the

§ 101 inquiry—in particular, that under the test this

Court set forth in Mayo, § 101 analysis necessarily involves factual determinations that make eligibility inappropriate for resolution on the pleadings in all but

the rarest of cases.

As argued below, under any fair reading of Mayo,

the current trend of pleading invalidations is untenable and a misapplication of the law. Mayo necessarily

raises historical questions regarding the state of the

art at the time of invention that simply cannot be resolved on the pleadings, or in the absence of factual

evidence of various kinds. Rather, courts will need a

well-developed record to decide these issues. They

will need evidence of the state of the art to compare

7 Id. at 33.

6

with the claimed invention, and they will often need

expert testimony so that they can understand such evidence from the perspective of the person of ordinary

skill in the art, long the objective baseline in patent

law. Mayo’s search for what was “well-understood,

routine, [and] conventional” to “researchers in the

field” at the time of invention is a quintessentially factual inquiry, and requires proper evidentiary support.

Mayo, 566 U.S. at 73. The current explosion of “pleading invalidations,” which evades this inquiry entirely

or substitutes judicial hindsight for historical evidence, is inconsistent with Mayo. Indeed, by preventing patent owners from presenting factual evidence in

support of validity, deciding eligibility on the pleadings also raises serious Seventh Amendment issues of

the sort this Court is currently considering in Oil

States Energy Services LLC v. Greene’s Energy Group,

LLC, cert. granted, 137 S.Ct. 2239 (Jun. 12, 2017).8

As set forth more fully below, this Court should

grant certiorari to elucidate the factual underpinnings

of § 101 analysis under the test set forth in Mayo, and

clarify that pleadings-stage invalidations on § 101

grounds are improper.

8 See generally Jesse D.H. Snyder, Have We Gone Too Far:

Does the Seventh Amendment Compel Fact-Finding Before

Reaching a Decision on Patent-Eligible Subject Matter?, 14 Chi.Kent J. Intell. Prop. 436 (2015) (arguing that “threshold factfinding is necessary before rendering a patent invalid” on eligibility grounds).

7

ARGUMENT

I. THIS COURT’S CURRENT TEST FOR

ELIGIBILITY UNDER MAYO/ALICE IS

DEPENDENT ON ISSUES OF FACT THAT

MAKE “‘PLEADING INVALIDATIONS”

UNDER RULE 12 INAPPROPRIATE IN ALL

BUT THE RAREST OF CASES.

A. Mayo Requires Courts to Decide Whether

Claims Involve “Conventional” Activity, An Historical Inquiry Requiring Evidence As to the

State of the Art At the Time of Invention and

Resolution of Underlying Factual Issues.

Under this Court’s current two-part test for § 101

eligibility in Mayo/Alice, “[f]irst, we determine

whether the claims at issue are directed to one of

those patent-ineligible concepts,” such as an “abstract

idea.” Alice, 134 S.Ct. at 2355. Then, “[a]t Mayo step

two, we must examine the elements of the claim to determine whether it contains an ‘inventive concept,” or

whether the claims merely cover “well-understood

routine, and conventional activit[ies] previously

known to the industry.” Id. at 2257-2259 (quotation

omitted).

While amici focus primarily on the factual issues underlying Step Two of the analysis, they agree with Petitioner that factual issues may also be at play at Step

One. For example, amici also argue that PTAB factfindings may be relevant at Step One. See infra Sec

I.B.

Step Two of this Court’s current test for eligibility

necessarily involves issues of fact because it is impossible to determine whether a claim recites “well-understood, routine, [and] conventional” activity without

8

knowing what was “conventional” at the time of invention. Mayo itself “recognize[d] that “the § 101 patenteligibility inquiry and” the “§ 102 novelty inquiry

might sometimes overlap.” Mayo, 132 S.Ct. at 1304.

Of course, the § 102 novelty inquiry said to overlap

with § 101 has long been understood to be a “question

of fact for the jury.” Shatterproof Glass Corp. v. Libbey-Owens Ford Co., 758 F.2d 613, 619 (Fed. Cir.),

cert. dismissed, 474 U.S. 976 (1985).

As one district court thoughtfully applying Step Two

of Mayo explained, “it is the state of the art [at the

time of invention] that provides the objective baseline

for the analysis,” “[l]ike other provisions of the statute,” and “Section 101 should be no exception.”9 The

court warned of the potential for “hindsight bias”

about the supposed “conventionality” of an invention

with which we have come to be familiar.10 If a defendant challenging eligibility wishes to argue that a “combination of elements is conventional, [that party]

must supply some evidence to convince the trier of fact

to accept its version of events,” for “[t]o ignore this concern would provide a ‘blank check’ to all those who

challenge patents without sufficient legal or evidentiary basis.”11 Given the overlap between novelty and

Step Two of Mayo, the court observed that “the concern of hindsight bias has as much relevance to a §

9 Ameritox, Ltd. v. Millennium Health, LLC, 88 F.Supp.3d 885,

915 (W.D. Wis. Feb. 19, 2015).

10 Id. at 914.

11 Id.

9

101 challenge as it does a § 103 challenge.”12 Needless to say, in that case the district court operating on

these principles deferred its decision on § 101 until the

summary judgment stage, by which time it had developed a substantial record.13

Here, the courts below substituted their own “hindsight bias” for a properly developed factual record, as

is occurring in many other cases. In order to determine whether the patents in this case claimed an “inventive concept” at Step Two, the court in this case

would have had to ascertain what was “well-understood, routine, [and] conventional” in the prior art as

of 1998, the year to which Petitioners’ patents claim

priority. Cert Pet. at 5, n. 1. Having done so, the court

would have been in a position to ascertain whether the

patents claim “building blocks of human ingenuity” or

“integrate the building blocks into something more.”

Alice, 134 S.Ct. at 2354. Unfortunately, here the

courts below did not even mention the state of the art

at the time of invention. Rather, they misapprehended Petitioner’s argument as to the “unconventionality” of its patents, which in any event should not

have been resolved until a better record had been developed. See infra Sec. II.

With the benefit of a full factual record, a district

court may regard itself as “well versed in the state of

the art at the time of the invention.”14 If after such a

12 Id.

13 Id. (“having had the benefit of claims construction and viewing the claims through the lens of the skilled addressee, the court

is well versed in the state of the art at the time of the invention.”)

14 Id.

10

record has been developed, “there is nothing in the art

that demonstrates that such a combination [of

claimed structures or method steps] was well-known”

and if a defendant “failed to offer any evidence that

someone in the scientific community would even have

‘thought’ to combine the claimed elements,” “[t]his

provides indicia” that the patent is “inventive for § 101

purposes.”15 But in the absence of such a record, no

indicia of inventiveness, or lack thereof, are to be

found. As one district court faced with a motion challenging eligibility on the pleadings asked, “how, on

this record, would the Court be in a position to conclusively determine” whether the claim involved merely

“conventional activities?”16 There, the court realized

it simply was not in a position to do so, and properly

deferred that decision. Unfortunately, that is the exception to current practice, not the rule. The posture

of the current case is by far the most common,17 and

this Court must grant certiorari to curb this growing

trend, which is inconsistent with Mayo.

Commentators reacting to this Court’s reformulation of the test for eligibility in Mayo realized early

that it requires factual inquiries, which was one reason why the current trend of “pleading invalidations”

was not immediately foreseen. For example, one commentator writing soon after Mayo remarked: “The

fear is that Mayo has opened a Pandora’s Box of patentable subject matter defenses. I believe those fears

15 Id. at 915.

16 Kaavo Inc. v. Amazon.com Inc., 2016 WL 6562038, at *11

(D. Del. Nov. 3, 2016).

17 See supra note 4 and accompanying text.

11

are unwarranted.”18 That confidence, however, was

premised on a reading of Mayo recognizing that the

new test for eligibility “requires that courts view

evidence of prior art as part of the patentable subject matter analysis.”19 More recently, another writer

has echoed the same interpretation, noting that

“[d]etermining the prevailing practices of a particular

community [under Mayo] would seem to be a factual

inquiry, not a legal one.”20

The factual nature of the inquiry required by Mayo

was made clear in the Federal Circuit’s decision in Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335 (Fed. Cir.

2013), vacated by WildTangent, Inc. v. Ultramercial,

LLC, 134 S.Ct. 2870 (2014). However, the Federal

Circuit seems to have interpreted this Court’s GVR in

Ultramercial as impugning the entirety of that decision, and made no attempt to resurrect its reasoning.

Yet there is no reason to interpret that vacatur as anything but an admonishment from this Court for further consideration in light of Alice. Ultramercial had

made clear, through a careful reading and reflection

on the implications of Mayo, that “the analysis under

§ 101, while ultimately a legal determination, is rife

with underlying factual issues” and that “[a]lmost by

definition, analyzing whether something was ‘conventional’ or routine’ involves analyzing facts.” Id. at

1339. Ultramercial’s expectation, reading Mayo, was

that “it will be rare that a patent infringement suit

18 Bernard Chao, Moderating Mayo, 107 Nw. U. L. Rev. 423,

432 (2012) (emphasis added).

19 Id. at 435; see also Mercado, supra note 2, at 326.

20 Gugliuzza, supra note 3, at 44.

12

can be dismissed at the pleading stage for lack of patentable subject matter . . . Rule 12[] dismissal for lack

of eligible subject matter will be the exception, not the

rule.” Id. at 1338-39. None of these things was contradicted by this Court’s decision in Alice. Thus, this

Court should grant certiorari to clarify the fact-laden

nature of the § 101 inquiry mandated by Mayo, and it

may find the decision in Ultramercial a helpful starting point in elaborating on these issues.

B. Fact-Findings Made During Post-Grant Proceedings Before the PTAB May be Highly Relevant to the Eligibility Analysis Under § 101, Yet

Courts Are Divided As to Their Admissibility.

District courts are divided on the relevance that

PTAB fact-findings may have for § 101 analysis, and

badly need this Court’s guidance. PTAB decisions

have potential relevance for eligibility analysis at

both Step One and Step Two of the Mayo. For example, at Step One, PTAB decisions that find the claims

“directed to” a technological invention should be

highly persuasive authority when a court considers

whether claims are “directed to” an abstract idea or

some other exception to eligible subject matter. This

is particularly true given that the PTAB reads the

claims under a broader standard than district courts

(the so-called “broadest reasonable interpretation” or

“BRI” standard); thus, if a PTAB panel looking at a

patent’s claims finds them to be non-abstract, this is

an even stronger indication that the claims are eligible than a prior district court decision on the same

claims might be.

Second, given Mayo’s recognition of “overlap” between eligbility and novelty, PTAB holdings relating

13

to novelty are relevant to Step Two of the § 101 analysis. While some courts have heeded Mayo in this respect, others have ignored it entirely, and decided that

claims recite “conventional” activity without any factual evidence in the record. Compare Sophos Inc. v.

RPost Holdings, Inc., 2016 WL 3149649, at *12 n. 6

(D. Mass. Jun. 3, 2016) (holding that the PTAB’s finding that patents were “technological inventions” and

the PTAB’s denial of CBM review served as evidence

that “tends to support [the] conclusion” that the patents were eligible under Step Two of Alice), with

Papst Licensing Gmbh & Co. KG v. Xilinx Inc., 2016

WL 4398376, at *20 n. 11 (N.D. Cal. Aug. 18, 2016)

(refusing to give weight to a PTAB decision declining

to institute IPR because “[n]either a Section 101 challenge generally nor the more specific question articulated by the U.S. Supreme Court [at] the second step

of the Alice framework was before the PTAB”). The

court in Virginia Innovation Sciences Inc. v. Amazon.com, Inc., 2017 WL 64147, at *11 (E.D. Va. Jan. 5,

2017) essentially rejected this Court’s recognition of

“overlap” in Mayo, stating that “[a]lthough there is

some caselaw to suggest that obviousness, novelty,

and eligibility inquiries overlap, the most recent persuasive opinions conduct the eligibility inquiry in isolation.”

As the decisions involving the RPost amici illustrate, even with factual evidence in the record, the

courts are confused on the relevance that PTAB factfindings may have for § 101 analysis—even on the exact same patents. Compare Sophos Inc. v. RPost

Holdings, Inc., No. 2:14-cv-126, 2016 WL 3149649, at

*12 n. 6 (D. Mass. Jun. 3, 2016) (holding that the

PTAB’s finding that patents were “technological inventions” and the PTAB’s denial of CBM review

14

served as evidence that “tends to support [the] conclusion” that the patents were eligible under Step Two of

Alice), with GoDaddy.com, LLC v. RPost Communs.

Ltd., 2016 WL 3165536, at *26 n. 23 (D. Ariz. 2016)

(rejecting the findings underlying the PTAB’s decision

not to institute CBM review in § 101 analysis and stating “PTAB merely determined that the petitioner

failed to meet its burden of proof to institute a CBM

patent review”), aff’d, GoDaddy.com, LLC v. RPost

Communs. Ltd., 685 Fed.Appx. 992 (Fed. Cir. May 5,

2017), petition for cert. pending, No. 17-695 (filed Nov.

6, 2017).

In this case, Petitioner submitted evidence from an

instituted PTAB trial, including fact-findings determinative to the PTAB’s final ruling upholding the validity of Petitioner’s patents after examining testimony from conflicting experts. That evidence was

highly relevant to both Steps One and Two of the §

101 analysis, yet it was not considered by the courts

below, and indeed was contradicted by their decisions.

Cert. Pet. at 32. This Court should grant certiorari to

clarify that such evidence is relevant to the factual underpinnings of the test for eligibility in Mayo, and

must be considered.

C. Mayo’s Eligibility Analysis Under § 101 Must

Be Conducted from the Perspective of the

Skilled Artisan At the Time of Invention, Which

Will Often Require Evidence Outside the Pleadings, Such as Expert Testimony

Expert testimony will often be necessary in § 101

cases, given that this Court has traditionally read patent claims from the perspective of the skilled artisan

when assessing them under other parts of the statute.

See, e.g., Nautilus, Inc. v. Biosig Instruments, Inc., 134

15

S. Ct. 2120, 2128-30 (2014) (holding that definiteness

under § 112 “is to be evaluated from the perspective of

someone skilled in the relevant art” and “the definiteness inquiry trains on the understanding of a skilled

artisan at the time of the patent application, not that

of a court viewing matters post hoc); Graham v. John

Deere Co. of Kansas City, 383 U.S. 1, 36-37 (1966)

(holding claims obvious under § 103 after comparing

them to “the prior art as it stood at the time of the

invention” and concluding that “the differences between them and the pertinent prior art would have

been obvious to a person reasonably skilled in the

art.”).

Indeed, as this Court stressed recently in Teva, “[i]n

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 background science or the meaning of a

term in the relevant art during the relevant time period . . . [for] a patent may be ‘so interspersed with

technical terms and terms of art that the testimony of

scientific witnesses is indispensable to a correct understanding of its meaning.’” Teva Pharmaceuticals

USA, Inc. v. Sandoz, Inc., 135 S. Ct. 831, 841 (2015).

(citation omitted). Yet here, as in the more general

trend of pleading invalidations under § 101, expert

testimony, like other forms of evidence, is being excluded. Pet. App. 26a–27a n.5. In another case, the

patent owner apparently expected an attack on eligibility to be made on the pleadings and attempted to

attach expert testimony to its complaint in order to

get it before court—but there, too, the court excluded

the testimony as “inapplicable to legal conclusions,”

failing to recognize the factual underpinnings of § 101

under Mayo. Appistry, Inc. v. Amazon.com, Inc., 195

16

F.Supp.3d 1176, 1183 (W.D. Wash. Jul. 19, 2016),

aff’d, Appistry, LLC v. Amazon.com, Inc., 676

Fed.Appx. 1008 (Fed. Cir. Feb. 10, 2017) (summary affirmance). Patent owners should not be forced to cram

their complaints with evidence more properly presented over the course of litigation in some desperate

attempt to evade an improper attack on the pleadings.

To force patent owners to adduce extrinsic evidence in

support of eligibility at the pleadings stage runs counter to the statutory presumption of a patent’s validity

in 35 U.S.C. § 282.

Here, Petitioner attempted to present expert testimony in support of validity, but the courts below improperly excluded it. Pet. App. 26a–27a n.5. This

Court should grant certiorari to clarify that expert testimony is relevant to the factual underpinnings of the

§ 101 analysis under Mayo.

D. This Court Should Overrule The Federal

Circuit’s Characterization of § 101 as a “Pure

Question of Law” and Clarify That Eligibility

Under the Test Set Forth in Mayo is a Question

of Law Dependent On Underlying Factual Determinations, Which is Inappropriate for Resolution at the Rule 12 Stage.

This Court should clarify what Mayo implied

through its recognition of “overlap” between eligibility

and novelty: that eligibility under the current twopart test is dependent on underlying factual determinations, and is therefore inappropriate for resolution

at the Rule 12 stage.

The Federal Circuit continues to approve the practice of deciding eligibility at the Rule 12 stage on the

basis that eligibility is a pure question of law. See,

17

e.g., Secured Mail Solutions LLC v. Universal Wilde,

Inc., 873 F.3d 905, 912-13 (Fed. Cir. 2017). However,

as a panel of judges from the PTAB recently recognized, “if the question of patent-eligibility is a question of law based on underlying facts, then underlying

facts have the potential of controlling the ultimate determination.” IBQ LLC v. Trading Technologies International, Inc., 2017 WL 3394060, at *12-13 (PTAB

Aug. 7, 2017) (disagreeing with “the view that the

question of patent-eligiblity is a pure question of law”

and basing its decision on factual “evidence of what

was routine and conventional”).

Numerous commentators agree that § 101 analysis

under Mayo requires a factual inquiry.21 According

to one, “a more coherent way forward might be for the

Federal Circuit to explicitly recognize the factual underpinnings of the eligibility inquiry, rather than

simply reciting that ‘[p]atent eligibility under § 101 is

an issue of law,’ as is the court’s current habit.”22

“[E]xplicitly acknowledging the factual components of

the eligibility analysis would nudge courts to more

carefully apply the Twombly and Iqbal framework,”

and “dismissal would be appropriate only if there is no

plausible argument that the patent satisfies the eligibility requirement.”23 Another scholar has compared

eligibility to claim construction—regarding which this

21 See, e.g., Gugliuzza, supra note 3, at 44-45; Holbrook &

Janis, supra note 2, at 377 n. 143; Mercado, supra note 2, at 33031; Snyder, supra note 8, at 450-54.

22 Gugliuzza, supra note 3, at 44 (citation omitted).

23 Id. at 45.

18

Court has recognized “subsidiary fact-finding is sometimes necessary”24—and to obviousness under §

103.25 Two others have questioned “the designation

of the eligibility inquiry as a question of law” and suggested that “courts might be better off recognizing

that eligibility determinations as well may turn on

matters that are best deemed to be underlying technical facts.”26

All of these considerations were present in the Federal Circuit’s now-vacated Ultramercial opinion,

which may serve as a fruitful starting point for this

Court’s decision in this case. There is no reason to interpret this Court’s GVR in Ultramercial as a repudiation of that decision in its entirety—particularly

when it is more consistent with Mayo than the Federal

Circuit’s present approach.

“[T]he current fad of ineligibility motions has . . . gotten ahead of itself,” one district court has observed,

and “courts should make such determinations on a

proper record.” Verint Systems Inc. v. Red Box Recorders Ltd., 2016 WL 7156768, at *1 (S.D.N.Y. Dec. 7,

2016). To ensure this, the Court must grant certiorari, and clarify that eligibility under Mayo is dependent on underlying factual determinations that cannot

be resolved on the pleadings.

II.

THIS

COURT

SHOULD

GRANT

CERTIORARI BECAUSE “PLEADING

INVALIDATIONS” STRAY FROM THIS

24 Teva, 135 S. Ct. at 838 (2015).

25 Mercado, supra note 2, at 330-31.

26 Holbrook & Janis, supra note 2, at 377 n. 143.

19

COURT”S DECISION IN MAYO AND

POSE AN IMPORTANT AND RECURRING

THREAT TO THE VITALITY OF THE

PATENT SYSTEM, WHICH THIS CASE IS

AN

EXCELLENT

VEHICLE

FOR

RESOLVING.

The problem of pleading invalidations is an important and recurring one for the patent system. As

may be seen from the chart below from a forthcoming

paper by Professor Paul Gugliuzza, the number of

pleadings-stage eligibility decisions has risen from 5

in 2013 (the year after Mayo) to 75 in 2016 alone—an

increase of 1500%:

Source: Gugliuzza, supra note 3, at 37.

20

Another source, counting eligibility challenges

brought as both motions for judgment on the pleadings as well as motions to dismiss,27 has tallied 278

such early-stage challenges since this Court’s decision

in Alice in mid-2014.28

Eligibility itself was, as a defense, “virtually unknown twenty years ago,” but today it is easily the

“most successful” way to challenge a patent’s validity.29 When decided on the pleadings, without the

benefit of factual evidence that Mayo’s own test for eligibility requires, “judges are improperly resolving

these cases in a vacuum, substituting their own perspective for that of the skilled artisan and ignoring

critical fact issues.”30

This case presents an excellent vehicle for resolving

these issues, since Petitioner attempted below to present factual evidence from both the PTAB and testimonial evidence from its expert, each of which would

have been decisive in its favor and in any event is the

sort of evidence necessary to the § 101 inquiry under

Mayo. See Cert. Pet. 26, n. 20 & 32.

Contrary to the suggestion of the Federal Circuit below, Petitioner did not concede the conventionality of

27 Given that there is little practical difference between challenges to eligbility under Rule 12(c) or as motions to dimiss under

Rule 12(b)(6)—since both are to be decided solely on the pleadings—there seems no reason not to group them together.

28 See Sachs, supra note 4 and accompanying text.

29 John R. Allison et al., Understanding the Realities of Modern Patent Litigation, 92 Tex. L. Rev. 1769, 1785 & 1801 (2014).

30 Mercado, supra note 2, at 250.

21

its claims. Pet. App. 5a. Rather, Petitioner specifically argued that the “arrangements” of known components “were unconventional,” an argument that

was improperly determined—without a factual basis

in contravention of Mayo—on the pleadings. See

Plaintiff-Appellant’s Corrected Reply Brief, Evolutionary Intelligence, LLC v. Sprint Nextel Corporation,

No. 16-1188, 2016 WL 5415937, at *21 (Fed. Cir. Sep.

20, 2016). Petitioner’s point below was that its claims,

like those in Diamond v. Diehr, 450 U.S. 175, 177-178

(1981), may have employed “well-known” components,

but they did so in an “unconventional” way and were

therefore eligible under Mayo. Variants of Petitioner’s argument have been approved in many cases

finding patents eligible under § 101, and should been

here—or else deferred until a fuller factual record had

been developed. See, e.g., Finjan, Inc. v. Blue Coat

Systems, LLC, 2016 WL 7212322, at *11 (N.D. Cal.

Dec. 13, 2016) (finding inventive concept in “spatial”

advance over prior art, where known structure was

arranged unconventionally “in between” other components); Tatcha, LLC v. Landmark Technology LLC,

2017 WL 951019, at *3-6 (N.D. Cal. Mar. 10, 2017)

(denying motion on the pleadings because “a more developed record and claim construction will be helpful”

in deciding whether patent claims “an unconventional

arrangement” of known hardware).

Finally, although the Federal Circuit’s decision below was non-precedential, this should not stop this

Court from granting certiorari because this case is an

example of an important and recurring trend that is

being recapitulated daily by district courts and the

Federal Circuit. “[This] Court grants certiorari to review unpublished and summary decisions with some

frequency.” Eugene Gressman, et al., Supreme Court

22

Practice 4.11 (9th ed. 2007) (citing decisions). Indeed,

this Court recently granted certiorari in Oil States

where the Federal Circuit did not even issue a written

opinion, much less a precedential one. See Oil States

Energy Services, LLC v. Greene’s Energy Group, LLC,

137 S.Ct. 2239 (Jun. 12, 2017). And one former Justice

of this Court has wisely “tend[ed] to vote to grant more

on unpublished opinions, on the theory that occasionally judges will use the unpublished opinion as a device to reach a decision that might be a little hard to

justify.” J. Cole & E. Bucklo, A Life Well Lived: An Interview with Justice John Paul Stevens, 32 Litigation

8, 67 (Spring 2006). All these things counsel a grant

of certiorari here.

In sum, the decision in this case has strayed from a

proper interpretion of Mayo, and cannot be justified.

Neglect of this Court’s jurisprudence has led to an explosion of pleadings-stage patent invalidations that

have no basis in a factual record, as required by Mayo.

This Court should grant certiorari to clarify the factual underpinnings of § 101 analysis under the test set

forth in Mayo, and put an end to this disturbing trend.

23

CONCLUSION

For the foregoing reasons, the Court should grant

the petition.

Respectfully submitted,

/s/Lewis E. Hudnell, III

LEWIS E. HUDNELL, III

Counsel of Record

HUDNELL LAW GROUP P.C.

800 West El Camino Real, Suite 180

Mountain View, California 94040

(650) 564-7720

lewis@hudnelllaw.com

Counsel for Amici Curiae