Aatrix Software, Inc. v. Green Shades Software, Inc.

• Decision Date: 14 February 2018
• Docket Number: 2017-1452
• Citation: 882 F.3d 1121
• Parties: AATRIX SOFTWARE, INC., Plaintiff-Appellant v. GREEN SHADES SOFTWARE, INC., Defendant-Appellee
• Court: U.S. Court of Appeals — Federal Circuit

882 F.3d 1121

AATRIX SOFTWARE, INC., Plaintiff-Appellant

v.GREEN SHADES SOFTWARE, INC., Defendant-Appellee

2017-1452

United States Court of Appeals, Federal Circuit.

Decided: February 14, 2018

John Bentley Lunseth, II, Briggs & Morgan, PA, Minneapolis, MN, argued for plaintiff-appellant.

Joseph W. Bain, Shutts & Bowen LLP, West Palm Beach, FL, argued for defendant-appellee. Also represented by Harold Timothy Gillis, Jacksonville, FL.

Before Moore, Reyna, and Taranto, Circuit Judges.

Opinion concurring-in-part, dissenting-in-part filed by Circuit Judge REYNA .

Moore, Circuit Judge.

Aatrix Software, Inc. ("Aatrix") appeals the United States District Court for the Middle District of Florida's dismissal under Rule 12(b)(6), in which the district court held claims 1, 2, and 22 of U.S. Patent No. 7,171,615 ("'615 patent") and claims 1, 13, and 17 of U.S. Patent No. 8,984,393 ("'393 patent") invalid as directed to ineligible subject matter under 35 U.S.C. § 101. Aatrix also appeals the district court's denial of its motion for leave to file a second amended complaint. We vacate the district court's grant of the motion to dismiss, reverse its denial of Aatrix's motion for leave to file a second amended complaint, and remand for further proceedings.

BACKGROUND

The '615 and the '393 patents have essentially the same specification and are directed to systems and methods for designing, creating, and importing data into a viewable form on a computer so that a user can manipulate the form data and create viewable forms and reports. '615 patent at Abstract. The preferred embodiment in the specification describes a data processing system, which has three main components: a form file, a data file, and a viewer. Id. at 3:4–31, Fig. 1. The form file is created using in-house form development tools and is designed to model the physical characteristics of an existing form, including the calculations and rule conditions required to fill in the form. Id. at 3:5–14. The data file, referred to as the Aatrix Universal File ("AUF"), allows data from third-party applications to be "seamlessly imported" into the form file program to populate the form fields. Id. at 3:14–22. The viewer generates a report by merging the data in the AUF file with the fields in the form file, performing calculations on the data, and allowing the user to review and change the field values. Id. at 3:24–31. Claim 1 of the '615 patent is representative (emphases added):

1. A data processing system for designing, creating, and importing data into, a viewable form viewable by the user of the data processing system, comprising:

(a) a form file that models the physical representation of an original paper form and establishes the calculations and rule conditions required to fill in the viewable form;

(b) a form file creation program that imports a background image from an original form, allows a user to adjust and test-print the background image and compare the alignment of the original form to the background test-print, and creates the form file;

(c) a data file containing data from a user application for populating the viewable form; and

(d) a form viewer program operating on the form file and the data file, to perform calculations, allow the user of the data processing system to review and change the data, and create viewable forms and reports.

Aatrix sued Green Shades Software, Inc. ("Green Shades") for infringement of the '615 and '393 patents. Green Shades moved to dismiss the complaint under Rule 12(b)(6). It argued all claims in the asserted patents were ineligible under § 101. Aatrix argued the motion should be denied "to permit claim construction to go forward and for the [district court] to acquaint itself with the actual inventions." J.A. 198; see also J.A. 5, 204. Aatrix also filed declarations discussing the claimed invention, which the district court did not consider in its analysis.

The district court granted Green Shades' motion and held every claim ineligible under § 101. J.A. 33 (holding "the '615 and '393 Patents to be drawn to ineligible subject matter"). Though not argued by the parties, the district court concluded claim 1 is not directed to any tangible embodiment and therefore not directed to eligible subject matter under § 101. The district court applied the Alice / Mayo two-step analysis to the remaining claims at issue. The court held that '615 patent claim 2 is directed to the abstract idea of "collecting, organizing, and performing calculations on data to fill out forms: a fundamental human activity that can be performed using a pen and paper." J.A. 23. It found that the claim elements do not supply an inventive concept. It concluded '615 patent claim 22 and '393 patent claims 1, 13, and 17 are substantively the same as '615 patent claim 2 and similarly directed to abstract ideas without inventive concepts.

Aatrix moved to modify and vacate the judgment, for reconsideration, and for leave to amend the complaint. It sought reconsideration of the district court's tangible embodiment analysis and leave to file a second amended complaint that it argued supplied additional allegations and evidence that would have precluded a dismissal under § 101 at the Rule 12(b)(6) stage. The district court denied these motions, stating that "[u]pon consideration of the filings and the relevant case law, the [district court] sees no reason to reconsider its prior determination. Accordingly, [Aatrix's] motions will be denied." J.A. 34.

Aatrix timely appealed. We have jurisdiction under 28 U.S.C. § 1295(a).

DISCUSSION

I.

"We review a district court's dismissal for failure to state a claim under the law of the regional circuit." Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n , 776 F.3d 1343, 1346 (Fed. Cir. 2014). The Eleventh Circuit reviews the grant of Rule 12(b)(6) motions de novo, accepting as true the complaint's factual allegations and construing them in the light most favorable to the plaintiff. Speaker v. U.S. Dep't of Health & Human Servs. Ctrs. for Disease Control & Prevention , 623 F.3d 1371, 1379 (11th Cir. 2010).

We have held that patent eligibility can be determined at the Rule 12(b)(6) stage. See, e.g. , Genetic Techs. Ltd. v. Merial L.L.C. , 818 F.3d 1369, 1373 (Fed. Cir. 2016) ; Content Extraction , 776 F.3d at 1346, 1351. This is true only when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law. Indeed, we have explained that "plausible factual allegations may preclude dismissing a case under § 101 where, for example, ‘nothing on th[e] record ... refutes those allegations as a matter of law or justifies dismissal under Rule 12(b)(6).’ " FairWarning IP, LLC v. Iatric Sys., Inc. , 839 F.3d 1089, 1097 (Fed. Cir. 2016) (quoting BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC , 827 F.3d 1341, 1352 (Fed. Cir. 2016) ). If there are claim construction disputes at the Rule 12(b)(6) stage, we have held that either the court must proceed by adopting the non-moving party's constructions, BASCOM , 827 F.3d at 1352 ; Content Extraction , 776 F.3d at 1349, or the court must resolve the disputes to whatever extent is needed to conduct the § 101 analysis, which may well be less than a full, formal claim construction. Genetic Techs., 818 F.3d at 1373.

This is not a case where patent ineligibility was properly adjudicated with finality at the Rule 12(b)(6) stage. The district court erred to the extent it determined that claim 1 of the '615 patent is ineligible because it is not directed to a tangible embodiment. The district court granted this Rule 12(b)(6) motion without claim construction. We have some doubt about the propriety of doing so in this case, but need not reach that issue because it did err when it denied leave to amend without claim construction and in the face of factual allegations, spelled out in the proposed second amended complaint, that, if accepted as true, establish that the claimed combination contains inventive components and improves the workings of the computer.

As a preliminary matter, the district court erred to the extent it held that claim 1 of the '615 patent is ineligible solely because it is directed to an intangible embodiment. We have held that claims to pure data and claims to transitory signals embedded with data are directed to ineligible subject matter under § 101. Digitech Image Techs., LLC v. Elecs. for Imaging, Inc. , 758 F.3d 1344, 1348–50 (Fed. Cir. 2014) ; In re Nuijten , 500 F.3d 1346, 1353–57 (Fed. Cir. 2007). But the rationale of those decisions—failure of the claimed matter to come within any of the four statutory categories: process, machine, manufacture, composition of matter—does not apply here. It remains true after Alice Corp. Pty. v. CLS Bank International , ––– U.S. ––––, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014), that "[a] § 101 analysis begins by identifying whether an invention fits within one of the four statutorily provided categories of patent-eligible subject matter." Ultramercial, Inc. v. Hulu, LLC , 772 F.3d 709, 713–14 (Fed. Cir. 2014) (post- Alice ); Digitech , 758 F.3d at 1348–50 (post- Alice ). Claim 1 of the '615 patent meets that requirement. Like many claims that focus on software innovations, it is a system claim. It claims a data processing system which clearly requires a computer operating software, a means for viewing and changing data, and a means for viewing forms and reports. This is very much a tangible system.¹ The district court erred in holding claim 1 ineligible because it was directed to intangible matter and should have instead performed an Alice / Mayo analysis of claim 1.

The district court did perform an Alice / Mayo analysis on the remaining claims and dismissed pursuant to Rule 12(b)(6), concluding that the claims are ineligible. The subsequent refusal to permit an amended complaint was erroneous because at that stage there certainly were allegations of fact that, if Aatrix's position were...