The Supreme Court’s decision in the patent fee shifting case, Octane Fitness, LLC v. Icon Health & Fitness, Inc., No. 12-1184, has literally nothing to do with patent eligibility.  However, it does demonstrate an approach to statutory interpretation that the Court could readily apply to Section 101 in its upcoming decision in Alice Corp. v. CLS Bank.

In Octane Fitness, the issue before the Court was the standard for awarding “reasonable attorney fees to the prevailing party” in “exceptional cases” under the fee shifting provisions of 35 U.S.C. § 285.  The question was what counts as an exceptional case.  The Federal Circuit had adopted a rule requiring “material inappropriate conduct” by a party or that the case was both “objectively baseless” and “brought in subjective bad faith.” Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378, 1381 (Fed. Cir. 2005).  The Supreme Court characterized the Brooks Furniture test as “unduly rigid” and “so demanding that it would appear to render § 285 largely superfluous” in view of the inherent power of courts to make exceptions to the general American rule against fee-shifting. Octane Fitness, Slip Op. at 7, 11.  The Court held than an exceptional case is “one that stands out from others with respect to the substantive strength of a party’s litigating position . . . or the unreasonable manner in which the case was litigated.” Id.

The nexus to patent eligibility is not in the holding, but in the methodology that the Court used to get there.  It’s amazingly short and to the point, and worth quoting at length:

Our analysis begins and ends with the text of §285: "The court in exceptional cases may award reasonable attorney fees to the prevailing party." This text is patently clear. It imposes one and only one constraint on district courts' discretion to award attorney's fees in patent litigation: The power is reserved for "exceptional" cases.

The Patent Act does not define “exceptional,” so we construe it “‘in accordance with [its] ordinary meaning.’” Sebelius v. Cloer, 569 U.S. ___, ___ (2013) (slip op., at 6); see also Bilski v. Kappos, 561 U.S. 593, ___ (2010) (slip op., at 6) (“In patent law, as in all statutory construction, ‘[u]nless otherwise defined, “words will be interpreted as taking their ordinary, contemporary, common meaning”’”). In 1952, when Congress used the word in §285 (and today, for that matter), “[e]xceptional” meant “uncommon,” “rare,” or “not ordinary.” Webster's New International Dictionary 889 (2d ed. 1934); see also 3 Oxford English Dictionary 374 (1933) (defining “exceptional” as “out of the ordinary course,” “unusual,” or “special”); Merriam-Webster's Collegiate Dictionary 435 (11th ed. 2008) (defining “exceptional” as “rare”); Noxell Corp. v. Firehouse No. 1 Bar-B-Que Restaurant, 771 F. 2d 521, 526 (CADC 1985) (R. B. Ginsburg, J., joined by Scalia, J.) (interpreting the term “exceptional” in the Lanham Act's identical fee-shifting provision, 15 U. S. C. §1117(a), to mean “uncommon” or “not run-of-the-mill”). 

We hold, then, that an “exceptional” case is simply one that stands out from others with respect to the substantive strength of a party's litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated. District courts may determine whether a case is “exceptional” in the case-by-case exercise of their discretion, considering the totality of the circumstances.7 As in the comparable context of the Copyright Act, “‘[t]here is no precise rule or formula for making these determinations,’ but instead equitable discretion should be exercised ‘in light of the considerations we have identified.’” Fogerty v. Fantasy, Inc., 510 U.S. 517, 534 (1994).

That’s it.  Take the words of the statute, look them up in a couple of dictionaries from the relevant historical period of the legislation, create a new gloss, and you’re done.  No need to delve in the mysteries of the legislative history: indeed in a unanimous opinion, Justice Scalia joined all but three footnotes that discussed the legislative history.  No need to worry about whether patent litigators will engage in “clever pleading” or the “advocate’s art” to avoid having a losing position deemed exceptional.  No postulating worrisome hypotheticals involving famous courtroom battles from Inherit the Wind or Dog Day Afternoon as proxies for the potential evils being warded off.

If only the Court would handle Section 101 this way.  Let’s pretend this is what happens in the upcoming decision in Alice Corp.  Here is how the opinion would be written, simply by marking up the Octane Fitness decision:

Our analysis begins and ends with the text of § 101: “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.” This text is patently clear. It imposes only a minimal constraint on the scope of patent eligible subject matter, that what is invented is new, useful, and is either a machine, process, manufacture, composition of matter, or an improvement thereof, and subject to the further requirements of the Patent Act.

The Patent Act does not define “machine,” so we construe it “‘in accordance with [its] ordinary meaning.’” Sebelius v. Cloer, 569 U.S. ___, ___ (2013) (slip op., at 6); see also Bilski v. Kappos, 561 U.S. 593, ___ (2010) (slip op., at 6) (“In patent law, as in all statutory construction, ‘[u]nless otherwise defined, “words will be interpreted as taking their ordinary, contemporary, common meaning”’”). In 1952, when Congress used the word in § 101 (and today, for that matter), “machine” meant “a structure or constructed thing whether material or immaterial,” “an assemblage of parts that are usually solid bodies but  in some cases fluid bodies or electricity in conductors and that transmit forces, motion, and energy one to another in a predetermined manner and to some desired end (2) :  an instrument (as a lever) designed to transmit or modify the application of power, force, or motion,” “a mechanically, electrically, or electronically operated device for performing a task.” Webster's Third New International Dictionary 1353. 

The Patent Act, however, did define “process” in § 100(b) as “The term “process” means process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material.”  Again, turning to the aforementioned source, “process” means “a particular method or system of doing something, producing something, or accomplishing a specific result;” or “an artificial or voluntary progressively continuing operation that consist of a series of controlled actions or movements systematically directed towards a particular result or end.”  “Art” means “the power of performing certain actions, esp. as acquired by experience, study, or observation;” “skill in the adaptation of things in the natural world to the uses of human life;” “system application of knowledge or skill in effecting a desire outcome.”  Id.

We hold, then, that a machine is simply any material or immaterial artificial (i.e., man-made) thing that performs a task.  We hold further that a “process” is any artificial series of actions or operations that produce a specific result or thing. 

District courts may determine whether a claim is patent eligible following these straight-forward definitions. As in the comparable context of the Copyright Act, “‘The law then in force was that of 1831, and specified only books, maps, charts, musical compositions, prints, and engravings. An account-book, consisting of ruled lines and blank columns, cannot be called by any of these names unless by that of a book.’” Baker v. Selden, 101 U.S. 99, 101 (1879).

What of all the concerns about patenting laws of nature, abstract ideas, about clever drafting, of course the sub-silentio angst over patent trolls asserting lousy patents?  It’s not for the courts to impose restrictions that Congress did not expressly indicate.  Congress could have easily provided further statutory language setting forth exceptions to and restrictions on eligible subject matter to address these concerns.  It did not. 

Again, the Court’s opinion does the necessary jurisprudential work, with a few minor corrections:

The Federal Circuit's formulations of the tests for patent eligible subject matter have been overly rigid. Under the standard crafted in by the plurality opinion below, a claim is patent eligible only if it survives a complicated four step test with multiple sub-tests and exceptions (“The first question is whether the claimed invention fits within one of the four statutory classes set out in § 101”; the next step is determining “whether the claim raises § 101 abstractness concerns at all;” the next “step in that analysis requires identifying the abstract idea represented in the claim”; finally the last step is to “determine whether it contains additional substantive limitations that narrow, confine, or otherwise tie down the claim so that, in practical terms, it does not cover the full abstract idea itself”;). This formulation superimposes an inflexible framework onto statutory text that is inherently flexible.

If Octane Fitness represents the correct methodology for interpreting the statute for § 285, it should equally apply to § 101.  In short, Court could stay true to this methodology, and simply follow the recommendation of Chief Justice Rader, as set forth in his “Reflections”:  “When all else fails . . . consult the statute.” CLS Bank v. Alice Corp., 717 F.3d 1269, 1334 (Fed. Cir. 2013) (en banc) (Rader, J., reflecting).

Oh, would the world be so.

Topics:  Brooks Furniture, Exceptional Case, Octane Fitness v. ICON, Patent Litigation, Patent-Eligible Subject Matter, Patents, SCOTUS, Section 101

Published In: Civil Procedure Updates, Civil Remedies Updates, Intellectual Property Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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