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Utility and Eligibility

by Dennis Crouch

In re Smith, 22-1301 (Fed. Cir. Sept 9, 2022) (nonprecedential). 

Smith is a short opinion affirming the USPTO’s refusal to issue Jason Smith’s patent on eligibility grounds.  The invention is a software method that allows customers to purchase assets from multiple vendors.  The Board rejected the claims as directed to the abstract idea of “storage, organization, and display (e.g., retrieval) of data, which has consistently been held . . . to constitute an abstract idea.”  The Appellate panel then found Smith’s arguments to the contrary unpersuasive.   In his 2011 post-Bilski article, Prof Risch wrote some about the overlap between utility and eligiblity and suggested merger of the two doctrines. “The cleanest test would replace the current patentable-subject-matter test altogether with eligibility utility.” Michael Risch, A Surprisingly Useful Requirement, 19 Geo. Mason L. Rev. 57 (2011).  The problem  for Smith though is that the courts have not accepted Prof. Risch’s suggestions.

Perhaps the most interesting argument by Smith was his statement that “[t]he starting point for the Board’s analysis of should have been to determine whether the claims complied with the useful requirement.” The brief goes on to argue that: “If it is useful, it is by law patent eligible.”  On appeal, the Federal Circuit noted first that Smith’s argument is “without citation” and then found that it is also without merit.  In particular, the court concluded that utility and eligibility are separate and distinct doctrines: “utility is not the test for patent eligibility.” The Supreme Court alluded to this distinction in its Myriad Genetics decision. Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 591 (2013) (isolation of “important and useful gene [is] not an act of invention”).  Further, utility is not a prong of the Alice/Mayo analysis.

Per Curiam Opinion by Judges Lourie, Dyk, and Hughes
James Mitchell (Mitchell IP) represented Mr. Smith; Sarah Craven (USPTO Associate Solicitor) was on the other side.

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Another Reason to File an Answer: Voluntary Dismissal Does not Make Defendant Prevailing Party

By David Hricik, Mercer Law School

In Haynes Holding Group LLC v. ESR Performance Corp. et al (C.D. Cal. 8:21-cv-02033 JVS (JDEx) (I can’t find a free version of the opinion), after the patentee sued, the defendant served a motion to dismiss for lack of personal jurisdiction.  The defendant did not file an answer and then move to dismiss for lack of personal jurisdiction, leaving the patentee free to file a notice of voluntary dismissal, which it did, since the defendant had not answered.

The defendant then argued it was a prevailing party under Section 285 and entitled to fees. Judge Selna (correctly in my view) reasoned that because the dismissal by operation of the Federal Rules of Civil Procedure was without prejudice, and so the patentee could sue on the same claim, the defendant had not prevailed and denied the motion. In part, the court reasoned:

Cases across multiple districts align in holding that voluntarily dismissing a case without prejudice does not render the other party the “prevailing party,” whereas dismissing with prejudice or filing for the dismissal of previously-voluntarily-dismissed claims. See, e.g., Realtime Adaptive Streaming LLC v. Netflix, Inc., 2020 WL 7889048 at *4-5 (C.D. Cal. Nov. 23, 2020) (holding that filing for the dismissal of previously- voluntarily-dismissed claims constitutes an adjudication on the merits); Mixing & Mass Transfer Tech., LLC v. SPX Corp., 2020 WL 6484180 at *3 (D. Del., Nov. 4, 2020) (finding that neither a party’s voluntary dismissal or the court’s dismissal without prejudice would materially alter the legal relationship of the parties because “neither dismissal would prevent Plaintiff from reasserting those same claims against Defendants in another action”); Internet Media Interactive Corp. v. Shopify, Inc., 2020 WL 6196292 at *3 (D. Del. Oct. 22, 2020) (holding that plaintiff’s voluntary dismissal with prejudice rendered the defendant the prevailing party because “Defendant can no longer be subject to the particular claim of infringement asserted in Plaintiff’s Complaint”).

Of course, there are reasons (e.g., the cost of investigation) to not answer but only to move to dismiss, but taking that path and then moving for prevailing party status  is not a viable option.

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Prior Articles:
Action and Inaction: Either way, Hyatt loses at the Federal Circuit
Duplicative-Litigation Doctrine Stalls Avoidance of Discovery Penalty
Personal Jurisdiction: Is it Still Federal Circuit Law?
Musical Chairs and Corporate Love Triangles
Patent Law and the False Claims Act.

Happy to talk through interesting cases -- Dennis Crouch

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