Aatrix Software, Inc. v. Green Shades Software, Inc.
882 F.3d 1121
Fed. Cir.2018Background
- Aatrix sued Green Shades alleging infringement of U.S. Patents Nos. 7,171,615 and 8,984,393, which claim a data processing system (form file, data file/AU F, viewer) for creating and populating viewable electronic forms from third-party applications.
- Green Shades moved to dismiss under Rule 12(b)(6), arguing all asserted claims were patent-ineligible under 35 U.S.C. § 101; the district court granted the motion and held the claims ineligible under the Alice/Mayo framework and also concluded claim 1 was not a tangible embodiment.
- Aatrix sought reconsideration and leave to file a proposed second amended complaint that alleged factual details about the invention’s development and specific improvements (e.g., improved data import from proprietary third-party applications, reduced memory use, faster processing, reduced thrashing), which the district court denied without explanation.
- On appeal, the Federal Circuit vacated the Rule 12(b)(6) dismissal and reversed the denial of leave to amend, holding the district court erred in (a) treating claim 1 as ineligible because it lacked a tangible embodiment and (b) denying leave to amend when the proposed allegations, if accepted, could show inventive concepts and computer-function improvements preventing dismissal.
- The court emphasized that Section 101 determinations can be appropriate at the 12(b)(6) stage only when no factual disputes preclude a legal ruling; here, Aatrix’s proposed factual allegations raised disputed issues (e.g., whether the “data file” and claimed combination were conventional) that barred dismissal without further proceedings (and likely claim construction).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether asserted claims are directed to patent-eligible subject matter under § 101 | The claims recite a tangible data processing system and, per the proposed amended complaint, include inventive concepts and specific improvements to computer functionality (e.g., improved data import, reduced memory use) | Claims are abstract and merely use generic computer components; amendment would be futile because claims are invalid on their face | Vacated dismissal; court held claim 1 is a system (tangible) and that Aatrix’s proposed factual allegations could preclude dismissal under Alice/Mayo, so remand and leave to amend required |
| Whether claim 1 is ineligible for lack of a tangible embodiment | Claim 1 recites a data processing system with software and viewer components—i.e., tangible system claim | District court below had concluded claim 1 was intangible and thus ineligible | Reversed district court’s tangible-embodiment rationale; claim 1 meets a statutory category (system) and needed Alice analysis |
| Whether the district court properly applied Alice/Mayo step two at Rule 12(b)(6) without resolving factual disputes | Aatrix: factual allegations (in proposed amendment and specification) show inventive concept and computer-technology improvement, precluding a step-two dismissal | Green Shades: limitations (e.g., “data file”) are routine and conventional computer functions | Court: factual disputes about whether limitations are well-understood, routine, conventional precluded dismissal at 12(b)(6); remand for further proceedings and likely claim construction |
| Whether denial of leave to file the proposed second amended complaint was proper | Amendment alleged facts showing inventive concepts and improvements; not futile; leave should be freely given | Denial appropriate because claims invalid on face; amendment would be futile | Reversed: district court abused discretion by denying leave without explanation where the proposed allegations could affect § 101 analysis |
Key Cases Cited
- Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343 (Fed. Cir.) (Rule 12(b)(6) § 101 dismissal proper only when no factual allegations preclude eligibility analysis)
- BASCOM Global Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir.) (patentee may survive § 101 at pleading stage by alleging inventive concepts)
- FairWarning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089 (Fed. Cir.) (plausible factual allegations can preclude § 101 dismissal)
- Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347 (U.S.) (established two-step § 101 framework)
- Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (U.S.) (principal for assessing inventive concept under § 101)
- Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir.) (claims directed to improvements in computer functionality can be patent eligible)
- Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir.) (similar principle: eligibility where claims improve computer operations)
- Digitech Image Techs., LLC v. Electronics for Imaging, Inc., 758 F.3d 1344 (Fed. Cir.) (claims to pure data/transitory signals may be ineligible; distinguishes system claims)
- Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253 (Fed. Cir.) (claims improving computer memory/operation can be eligible)