Inventor Holdings, LLC v. Bed Bath & Beyond, Inc.
876 F.3d 1372
Fed. Cir.2017Background
- Inventor Holdings (IH) sued Bed Bath & Beyond (BBB) alleging infringement of U.S. Patent No. 6,381,582, which claims methods for paying for remotely ordered goods at a local point-of-sale (POS) using order codes and conventional computer/POS systems.
- The patent’s specification describes conventional computer components (POS terminals, networks, processors) and the only physical recitations in the claims are POS systems/terminals.
- After the Supreme Court decided Alice (June 2014), BBB moved for judgment on the pleadings under 35 U.S.C. § 101 (patent-eligibility). The district court granted BBB’s motion (Aug. 2015); the Federal Circuit affirmed under Rule 36.
- BBB then sought attorneys’ fees under 35 U.S.C. § 285, arguing IH should have dismissed after Alice; the district court awarded fees for time after Alice, including appellate fees, finding the case "exceptional." IH appealed the fee award.
- The Federal Circuit reviewed the § 285 determination for abuse of discretion and affirmed the district court’s award of fees, holding IH’s post-Alice positions were objectively weak and that Alice made the claims plainly ineligible.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the ’582 patent claims are patent-eligible under § 101 after Alice | IH: Claims implement a computer-rooted, non-abstract solution (use/processing of codes; inventive concept akin to DDR) and thus are patent-eligible | BBB: Claims are directed to the abstract idea of paying for remote purchases at a local retailer and use only conventional computer technology, so they are ineligible | Court: Claims are directed to an abstract economic practice implemented with conventional technology and are ineligible under Alice |
| Whether the case is "exceptional" under 35 U.S.C. § 285 warranting fee award | IH: § 101 law is evolving; district court’s prior denials of pre-Alice § 101 motions made dismissal post-Alice not clearly required | BBB: After Alice, IH should have reassessed and dismissed; litigation was objectively without merit post-Alice | Court: District court did not abuse discretion — IH’s post-Alice positions were objectively weak and the case was exceptional; fees awarded for post-Alice time |
| Whether appellate fees may be included in a § 285 award | IH: Trial court abused discretion by including appellate fees | BBB: § 285 allows fees for entire case, including appeals; district court in best position to assess | Court: Affirmed award of appellate fees; district court did not abuse discretion in awarding fees for the appeal |
| Whether Alice constituted a clear change requiring reassessment | IH: Alice did not fundamentally change § 101 and uncertainty remained | BBB: Alice clarified that fundamental business practices implemented with generic computers are ineligible | Court: Alice materially changed application of § 101 to these facts; IH had responsibility to reassess and failed to do so |
Key Cases Cited
- Alice Corp. v. CLS Bank Int'l, 134 S. Ct. 2347 (2014) (Supreme Court holding that abstract ideas implemented with generic computer functions are not patent-eligible)
- Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012) (established framework for assessing inventive concept under § 101)
- Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014) (standard for awarding attorney fees under 35 U.S.C. § 285 is discretionary and flexible)
- Dealertrack, Inc. v. Huber, 674 F.3d 1315 (Fed. Cir. 2012) (discusses abstract-idea exclusion for basic concepts like processing information through a clearinghouse)
- DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014) (example of claims that survived § 101 where claim solved a problem particular to the Internet)
- Bilski v. Kappos, 561 U.S. 593 (2010) (recognizes limits on patenting abstract business methods)
- Highmark Inc. v. Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744 (2014) (standard of review for § 285 rulings by district courts)
- Therasense, Inc. v. Becton, Dickinson & Co., 745 F.3d 513 (Fed. Cir. 2014) (district court may award fees for the entire case, including appeals)
- Mortgage Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314 (Fed. Cir. 2016) (post-Alice context: some § 101 defenses gain merit where claims are economic arrangements implemented with generic computers)