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

Allegations in Post-Dismissal Proposed Amended Complaint Preclude Rule 12 § 101 Dismissal

Aatrix Software, Inc. v. Green Shades Software, Inc., F.3d, 2018 WL 843288 (Fed. Cir. Feb. 14, 2018) (MOORE, Reyna (CIP/DIP), Taranto) (M.D. Fla.: Schlesinger) (4 of 5 stars)

Fed Cir vacates Rule 12 dismissal under § 101, and reverses denial of Aatrix’s motion for leave to file a second amended complaint. Aatrix’s patents related to methods and systems for importing data into a computer to support the creation of forms and reports. The district court erred by basing its dismissal on a conclusion that Aatrix’s claims were not directed to any “tangible embodiment.” Aatrix’s claims recited a computer system, and means for viewing and changing data, and means for viewing forms and reports. “This is very much a tangible system.” Op. at 7. Cases barring patentability of “pure data and transitory signals embedded with data” as failing to recite subject matter within one of the four statutory categories (e.g., Digitech, 758 F.3d 1344 (Fed. Cir. 2014), and Nuitjen, 500 F.3d 1346 (Fed. Cir. 2007)), are therefore inapplicable. Since Aatrix’s independent claim was “tangible,” the district court erred in failing to apply an Alice/Mayo analysis for that claim. While the district court did apply an Alice/Mayo analysis for other claims, that analysis was without the benefit of the allegations in Aatrix’s later-filed proposed second amended complaint.

The opinion goes on to analyze the proposed second amended complaint, and concludes that it contained factual allegations that “when accepted as true, prevent dismissal pursuant to Rule 12(b)(6).” It was thus abuse of discretion for the district court to deny Aatrix’s motion to amend the complaint, and legal error to dismiss the case. The opinion discusses how Aatrix’s second amended complaint made specific allegations that a “data file” claimed by Aatrix was neither well understood nor routine. “In light of the allegations made by Aatrix, the district court could not conclude at the Rule 12(b)(6) stage that the claimed elements were well-understood, routine, or conventional,” per Affinity Labs, 838 F.3d 1266 (Fed. Cir. 2016), and Content Extraction, 776 F.3d 1343 (Fed. Cir. 2014). Op. at 11.

The opinion expresses further concern about the district court’s resolution of Green Shades’ § 101 motion without a claim construction hearing. The Fed Cir does not reach the issue of whether such a hearing was necessary on the record at the time of the district court’s dismissal order. In view of the issues raised in the proposed second amended complaint, however, the district court should conduct a claim construction hearing on remand. Op. at 12.

Partial concurrence: Judge Reyna agrees that the district court’s reliance on the absence of a “tangible embodiment” for Aatrix’s claims was erroneous, and warrants vacatur and remand. He takes the view that such reasoning was also the basis for the district court’s denial of Aatrix’s motion to further amend its complaint, and so would vacate and remand for further consideration of the motion to amend.

Judge Reyna writes to “respectfully disagree with the majority’s broad statements on the role of factual evidence in a § 101 inquiry.” Reyna Op. at 2. In his view the § 1010 inquiry is legal, and he criticizes the majority’s “attempt[] to shoehorn a significant factual component into the Alice § 101 analysis.” Id.

KEYWORDS: SUBJECT-MATTER ELIGIBILITY; MOTION TO DISMISS; MOTION TO AMEND COMPLAINT; CLAIM CONSTRUCTION