Can’t Have Layered Architecture Cake and Eat It Too: No Importing Limitations from Specification in § 101 Analysis

By on April 30, 2020
Posted In Patents

Addressing both the availability of appeal in the absence of a Rule 50(b) motion and the appropriateness of importing limitations from the specification in a 35 USC § 101 analysis, the US Court of Appeals for the Federal Circuit reversed a district court’s ruling that a patent was not invalid under § 101. Ericsson Inc. v. TCL Commc’n Tech. Holdings Ltd., Case No. 18-2003 (Fed. Cir. Apr. 14, 2020) (Prost, CJ.) (Newman, J., dissenting).

Ericsson sued TCL for infringement of a patent directed to a method and system for limiting and controlling access to resources in a telecommunications system. The claims recite an access controller for accessing software services comprising an interception module, a decision entity and a security access manager, among other claim elements. Prior to trial, TCL moved for summary judgment of invalidity, arguing that the asserted claims were ineligible for patenting under § 101. The district court denied the motion, concluding at step one of the two-step Alice analysis that “as a matter of law” the challenged claims were not directed to an abstract idea. The case proceeded to trial, which was void of any § 101 issues, the matter having been decided on summary judgment. The jury found the asserted claims infringed and awarded damages to Ericsson.

Post-trial, TCL moved for renewed judgment as a matter of law (JMOL) and a new trial on the damages issues under Fed. R. Civ. P. 50(b), but did not raise any § 101 issues. The district court ultimately denied TCL’s motion and enforced the jury’s verdict on damages. TCL appealed the district court’s denial of its motion for a new trial on damages and denial of its motion for summary judgment of invalidity under § 101.

On appeal, the Federal Circuit confronted two issues:

  • Whether, by failing to raise the issue in its post-trial JMOL, TCL waived its right to an appeal on the issue of 101 eligibility
  • If not, whether the asserted claims were invalid under 101.

The Court concluded that despite not filing a Rule 50(b) motion, TCL had not waived its right to appeal the § 101 issue based in part on the circumstance that the trial court’s decision to deny summary judgment was not dependent on any factual issues that would have played out during the trial. In this instance, “the district court did not merely deny summary judgment, [rather] it effectively granted summary judgment in favor of the non-moving party by deciding the issue and leaving nothing left for the jury to decide.” Accordingly, a Rule 50(b) motion would have been frivolous. “Once the district court held that the patent was not directed to an abstract idea at step one, there was no set of facts that TCL could have adduced at trial to change that conclusion.” The Federal Circuit further relied on its own discretion to hear the issue, regardless of whether it had been waived, explaining that “[w]hile there is ‘no general rule’ for when we exercise our discretion to reach waived issues, we have done so where, among other factors ‘the issue has been fully briefed by the parties,’” as was the case here.

Moving on to the substance of the § 101 issue, the Federal Circuit reversed, finding that the asserted claims were invalid. At step one of the Alice analysis, the Court concluded that the claims were directed to the abstract idea of controlling access to, or limiting permission to, resources. More specifically, the Court determined that the access controller, security access manager, decision entity and interception module elements, as claimed, are actually one and the same. Therefore, “all four components collapse into simply ‘an access controller for controlling access’ by ‘receiving a request’ and then ‘determining if the request should be granted.’”

Having found that the claims were directed to an abstract idea, the Federal Circuit moved to Alice step two, to determine whether the claimed elements transformed the claims into a patent-eligible application. The Court concluded that they did not. Ericsson argued that the “layered architecture” provided the necessary inventive concept. Specifically, the novelty in the claims was that, in part, the “arrangement of horizontally partitioned functional software units [] differs from the standard model, which uses vertical layers only.” The Court did not address whether this would have saved the claims from ineligibility under §101, because “this allegedly novel aspect of the invention is wholly missing from [the asserted claims].” Although this aspect was described in detail in the specification, the specification “cannot be used to import details [] if those details are not claimed. [A]ny reliance on the specification in the §101 analysis must always yield to the claim language.”

In dissent, Judge Newman decried the majority for announcing new law and disrupting Supreme Court precedent requiring that “in the absence of [a Rule 50(b) motion] an appellate court is without power to direct the district court to enter judgment contrary to the one it had permitted to stand.” Newman argued that a Rule 50(b) motion is necessary in order to obtain the views of “the judge who saw and heard the witnesses and has the feel of the case which no appellate printed transcript can impart.”

Practice Note: Both the majority and dissent looked to Federal Circuit precedent and the precedent of the regional circuit to inform the decision regarding waiver. Although the majority ultimately found that no waiver had occurred, both the majority and dissent acknowledged that compelling circumstances are required in order for a circuit court to disregard the rule of waiver in order to hear an issue on appeal. Thus, in the majority of circumstances, it is still necessary to file a Rule 50 motion in order to properly preserve issues for appeal.

Thomas DaMario
Thomas DaMario focuses his practice on intellectual property litigation and transactions. Thomas has experience in all phases of litigation—from pre-filing investigations and discovery through trial and appeal. He has been involved in patent infringement cases in various United States district courts, the International Trade Commission and the Patent Trial and Appeal Board. Thomas is experienced in various technical areas, including Internet technologies, wireless and cellular communications, semiconductor chip design and fabrication, power tools, computer and networking systems and mechanical devices. Read Thomas DaMario's full bio.