A Federal Circuit panel (Judges Lourie, Newman, and Reyna) has rejected a district court’s statement that Alice Corp. v. CLS Bank Int'l., was “an intervening change in the law” that would “exempt a potential application of issue preclusion.” However, after finding that patent-eligibility was not previously litigated, the court held that issue preclusion did not prevent a determination that claims directed to “’auto-verification’ of a voter’s ballot” are patent-ineligible under 35 U.S.C. § 101. Voter Verified, Inc. v. Election Systems and Software, LLC., No. 2017-1930 (Fed. Cir. April 20, 2018) (precedential).
The patent at issue was U.S. RE40449, directed to a voting system including “auto-verification whereby the voter has the opportunity and the responsibility to inspect the computer-printed ballot with his or her votes.”
The procedural history of the prior litigation involving this patent, which has 94 claims, was complex. Saliently, a district court had entered summary judgment of non-infringement of claims 1-93, and invalidity under 35 U.S.C. § 112, of claim 94. The first district court also entered summary judgment “concluding that all the claims of the ’449 patent, except for claim 94, were not invalid under §§ 101 and 112, because Election Systems failed to present any arguments or evidence regarding invalidity of these claims.” After a 2012 appeal of the prior litigation, the Federal Circuit concluded that “claims 1–48, 50–84, and 86–92 were not proven invalid because” Election Systems failed “to respond to [the invalidity] arguments in its summary judgment briefing,” and “had not met its burden to prove its invalidity counterclaims.”
In the subsequent litigation now on appeal, a second district court found claims of the ’449 patent invalid under Section 101. There was no issue preclusion from the first litigation, according to the second district court, because Alice was a substantial intervening change in the law. The Federal Circuit disagreed on this point because the Supreme Court in Alice “applied the same two-step framework it created in Mayo [v. Prometheus] in its § 101 analysis.” Although Alice was intervening, Mayo was not.
Nonetheless, applying the de novo review mandated by Eleventh Circuit law, the court agreed that there was no issue preclusion because patent-eligibility was not “actually litigated” in the first suit, and because “a determination of invalidity under § 101 was not critical or necessary to the ultimate judgment of noninfringement” in the first litigation. The “§ 101 issue” in fact was “barely considered” in the first litigation because the accused infringer “chose not to respond” to the patent owner’s allegation of patent-eligibility. Moreover, questions of infringement and invalidity are legally independent of one another.
On the merits, the court easily agreed that the claims at issue are patent-ineligible under § 101. The claims were drawn to the “fundamental concept,” practiced for “hundreds of years,” of “voting, verifying the vote, and submitting the vote for tabulation.” There was no inventive concept; neither party disputed that the claims recited anything more than generic computers.