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ATS v. Coca-Cola: Federal Circuit Affirms Judgment that ATS’s Asserted Patent Claims Are Directed to Patent-Ineligible Subject Matter

Reports Patent

Automated Tracking Solutions, L.L.C. v. Coca-Cola Co., No. 17-1494 (Fed. Cir. Feb. 16, 2018) (non-precedential), slip opinion.

The U.S. Court of Appeals for the Federal Circuit affirmed a decision of the District Court for the Northern District of Georgia which had concluded in a judgment on the pleadings that patent claims asserted by Automated Tracking Solutions (“ATS”) in an alleged infringement suit against Coca-Cola were directed to patent-ineligible subject matter under 35 U.S.C. §101.

The Federal Circuit held that the judgment of the District Court was sound because ATS had failed to allege sufficient facts to create a dispute over whether the use of sensor technology as described in its patent claims was “anything but well-understood, routine, and conventional.” Such a finding is necessary to satisfy the second step of the Alice patent eligibility test. In its decision, the Federal Circuit cited its recent ruling in Berkheimer v. HP Inc., 881 F.3d 1360, (Fed. Cir. Feb. 8, 2018), where the court held that determinations of whether claim elements satisfy the second step of the Alice test is a question of fact. The Federal Circuit’s affirmation of the lower court’s decision against ATS is consistent with the ruling in Berkheimer, while demonstrating that Berkheimer does not requires all suits to proceed to trial for fact-finding to apply the second step of the Alice test. Patent infringement suits can still be dismissed before trial when a patent owner fails to assert sufficient evidence to allow a court, accepting all the patent owner’s evidence as true, to conclude that the patent adds an inventive concept as required under the second step of the Alice test.

Dennis Crouch at Patently-O describes the ATS ruling as “something of a backstop” to both Berkheimer and Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, (Fed. Cir. Feb. 14, 2018), another case where the Federal Circuit asserted that patent eligibility analysis involves questions of fact.

Both the Berkheimer and Aatrix decisions have attracted significant commentary. Mark Lemley of Stanford Law School and Durie Tangri LLP, described Berkheimer on Twitter as “blockbuster” for the potential that “patentable subject matter is now frequently going to be a question of fact that goes to trial.” Gene Quinn, writing at IPWatchdog, suggested that Berkheimer would make summary judgment for accused infringers more difficult and also make FRCP 12(b)(6) dismissal for failure to state a claim “exceptionally difficult (if not virtually impossible)” in patent infringement suits. Against this backdrop, ATS confirms that patent owners in infringement suits must still allege facts sufficient to create a material dispute on patent eligibility to proceed to trial.

Jennifer Esch is a 1L student at Harvard Law School.