Lead Article: U.S. District Judge Alan Albright Grants First Two Section 101 Motions

Since his appointment in 2018, U.S. District Judge Alan Albright of the Western District of Texas has become one of the Nation’s most influential judges for patent litigation.  Last December, he granted his first two motions under Section 101 of the Patent Act after denying many such motions during his first three years on the bench.  Those rulings give crucial insights into how Judge Albright will approach Section 101 issues in future cases.

Judge Albright’s Busy Patent Docket

In his short time on the bench, Judge Albright, who sits in Waco, Texas, has attracted the largest patent docket in the country.  In 2021, Judge Albright had 931 patent cases pending in his court (up from 792 in 2020), far exceeding the second most active judge in the country, who had 329 cases.  Fully one-fifth of new patent-infringement actions are filed in Waco.  

A variety of factors have contributed to Judge Albright’s outsized docket.  In the 2017 decision in TC Heartland LLC v. Kraft Foods Grp. Brands LLC, 137 S. Ct. 1514 (2017), the Supreme Court construed the patent-venue statute, 28 U.S.C. § 1400(b), to make it more difficult for patent-infringement plaintiffs to bring suit in the Eastern District of Texas, a traditional hotbed of patent litigation, because few large technology companies have significant presences there.  In contrast, the Western District of Texas includes the business hub of Austin, a growing metropolis that hosts many major technology companies, and it is therefore easier to secure venue in the district under TC Heartland.  In addition, Judge Albright has instituted a number of rules that encourage parties asserting patent-infringement claims to file in Waco, a mid-sized city 100 miles north of Austin, where they are guaranteed to have their cases assigned to him.  For example, his rules delay discovery until after the Markman hearing and impose certain procedures designed to resolve disputes more quickly.  Judge Albright has also been notably reluctant to grant motions to transfer venue, at times provoking writs of mandamus from the Federal Circuit.  And as particularly relevant here, until December 2021, Judge Albright had never granted a defendant’s motion under Section 101 of the Patent Act arguing that the patent claims were directed to ineligible subject matter. 

Section 101 and Alice 

Section 101 identifies patent-eligible subject matter as any “new and useful process, machine, manufacture, or composition of matter, or any new useful improvement thereof.”  35 U.S.C. § 101.  The Supreme Court has long construed the provision to mean that “laws of nature, natural phenomena, and abstract ideas are not patentable.”  Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014).  But it has proved challenging to apply that limitation in practice.  In its 2014 decision in Alice, the Supreme Court established a two-part test for determining whether a patent’s subject matter is ineligible.  The first step requires a court to determine whether a patent claim is “directed to one of [the] patent-ineligible concepts” held that a claim falls outside of Section 101.  Id. at 217.  If not, the patent satisfies Section 101.  But if the claim is directed to one of those concepts, the court must then determine at Alice’s second step whether the claim elements contain an “inventive concept” sufficient to “transform the nature of the claim into a patent-eligible application.”  Id.  Such an inventive concept must amount to “an element or combination of elements” that is “sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.”  Id. at 217–18.  

In the eight years since Alice, parties and lower courts have often struggled with how to apply its standard, particularly in the context of software patents.  Retired Federal Circuit Chief Judge Paul Michel has expressed concern that “recent cases are unclear, inconsistent with one another and confusing,” and that he himself “cannot reconcile the cases” despite having served on the Federal Circuit for 22 years.  Testimony of Hon. Paul R. Michel Before the Subcommittee on Intellectual Property of the S. Comm. on the Judiciary, 116th Cong. 2 (June 4, 2019).

Given the difficulty of applying the Alice standard and the substantial number of plaintiffs filing suit in Waco, Judge Albright’s approach to Section 101 is a critical question for patent enforcement.  Until last December, Judge Albright was viewed as highly skeptical of Section 101 arguments, at least at any early stage of a case.  He had denied every Section 101 motion to dismiss filed in his court.  He has explained that he sees the Markman hearing and fact development as integral to resolving a Section 101 argument in the typical case.  E.g., Kajeet, Inc. v. Trend Micro, Inc., No. 6:21-cv-00389-ADA, 2021 Dkt. 45 at 9-10 (W.D. Tex. Jan. 14, 2022).  In his view, claim construction can significantly affect a Section 101 analysis, and the lack of fact discovery can make it difficult to determine whether the claims contain an “inventive concept,” which often depends on what a person of ordinary skill in the art would perceive as well-understood, routine, and conventional.  Id. at 10.

USC IP v. Facebook 

On December 6 of last year, Judge Albright granted his first dispositive motion under Section 101—a motion for summary judgment rather than a motion to dismiss—and issued an opinion two weeks later setting out the legal basis for his ruling.  In USC IP Partnership, L.P. v. Facebook, Inc., No. 6:20-CV-00555-ADA, 2021 WL 6690275 (W.D. Tex. Dec. 20, 2021), the patent claims disclosed a system for collecting and analyzing a webpage-user’s “intent data” to predict the user’s navigation during browsing.  Id. at *3.  The defendant, the social-media giant Facebook, contended that the claims were directed to the abstract idea of collecting and analyzing  data about users’ intent.  Id. at *4.

Judge Albright agreed.  At Alice’s first step, he held that the patent was “directed to the abstract idea of ‘collecting, analyzing and using intent data,’” which “is a longstanding problem that existed long before the advent of computers and is not unique to the Internet.”  Id. at *5.  The patent claims, he further explained, were not directed to improving “the functionality of the computer or network platform itself.”  Id. (internal quotation marks omitted).  Turning to Alice’s step two, Judge Albright found that the claims did not “contain anything significantly more than the abstract idea itself,” because the claims required nothing more than “off-the-shelf, conventional computer, network and display technology for gathering, sending and presenting the desired information.”  Id. at *6. (internal quotation marks omitted).  The software component of the claims was “a purely functional ‘black box’ implemented using standard cloud platforms from well-known vendors like Google, Microsoft, and Amazon.”  Id.  He accordingly granted Facebook’s motion for summary judgment.

Health Discovery Corporation v. Intel Corp.

A few weeks later, Judge Albright issued a second order under Section 101—this time granting a defendant’s motion to dismiss, albeit after the Markman hearing.  In Health Discovery Corp. v. Intel Corp., No. 6:20-CV-666-ADA, 2021 WL 6116891 (W.D. Tex. Dec. 27, 2021), the four asserted patents related to the ability of so-called “learning machines” to identify patterns in datasets that best enable the classification of data, a process known as “Recursive Feature Elimination.”  Id. at *1.  The defendant, Intel Corporation, argued that the suit should be dismissed because the patent claims were directed only to an abstract mathematical analysis. 

After an extensive discussion of the challenge of applying the Federal Circuit’s seemingly inconsistent post-Alice precedents, Judge Albright agreed with Intel’s position, observing that although “accused infringers invoking § 101 in a Rule 12(b)(6) motion face an uphill scrabble . . . Intel has been able to surmount these procedural obstacles.”  Id. at *4, *11.  At step one of Alice, Judge Albright viewed the claims as “merely produc[ing] data with improved quality relative to that produced by conventional mathematical models,” and so “merely improv[ing] or enhanc[ing] an abstract idea.”  Id. at *11 (internal quotation marks omitted).  At step two, Judge Albright held that the complaint had “fail[ed] to allege an inventive concept.”  Id. at *12.  Apart from what he regarded as the abstract idea of improving a mathematical model, the patent claims did not entail any further concept “capable of moving the claims out of the realm of abstract ideas.”  Id. (internal quotation marks omitted).  It was not sufficient, he explained, that “some asserted claims are limited to a particular field of invention or input data, like ‘gene expression data’ or ‘biologic data.’”  Id.  Nor did “requir[ing] a generic computer to perform” the mathematical process salvage the claims.  Id.

Significantly, Judge Albright dismissed the plaintiff’s claims without prejudice, echoing the views of Eastern District of Texas Judge Rodney Gilstrap that “‘[t]here is a wide gulf between a Defendant affirmatively showing by clear and convincing evidence that claims are ineligible under both steps of the Alice inquiry and a Plaintiff failing to plead adequate facts addressing the analytical steps called for in Alice.”  Id. at *12–*13 (quoting Mad Dogg Ath., Inc. v. Peloton Interactive, Inc., No. 2:20-CV-00382-JRG, 2021 WL 4206175, at *7 (E.D. Tex. Sept. 15, 2021)). 

Conclusion

Judge Albright’s rulings under Section 101 provide useful insight into his approach to Section 101 arguments on a number of issues.  First, he remains unlikely to grant a Section 101 motion until after the Markman hearing and the close of fact discovery.  Second, if he grants a motion to dismiss under Section 101, the dismissal is likely to be without prejudice.  Third, in conducting the substantive Alice analysis for software patents, Judge Albright has focused on whether the patent claims solve problems “rooted in computer technology,” USC IP, 2021 WL 6690275, at *5, or otherwise involve an improvement to the functionality of the computer systems or processes themselves.  As a result, so-called “black box” patents that fail to recite steps that software must perform to accomplish the specified results are vulnerable to invalidation.  Finally, Judge Albright has recognized “the difficulty in applying Alice with any consistency” and the “inconsistency riddling § 101 jurisprudence.”  Health Discovery Corp., 2021 WL 6116891, at *10.  For that reason, he has made clear that in individual cases he will take his cues from Federal Circuit precedents “analyzing patents most like those under review.”  Id.