Down the Alice Rabbit Hole: Miller Mendel’s Software Patent Faces § 101 Reality Check

In Miller Mendel, Inc. v. City of Anna, Texas, the Federal Circuit ruled that claims directed to a software system for managing pre-employment background investigations were ineligible for patent protection under 35 U.S.C. § 101. [1]

Miller Mendel sued the City of Anna, Texas, for infringement of US Patent No. 10,043,188, which describes a software system designed to assist in background investigations by automating many of the tasks involved in the hiring process.[2] The City of Anna moved for judgment on the pleadings, arguing that the claims were directed to an abstract idea and therefore ineligible for patenting under 35 U.S.C. § 101. The district court granted the motion, ruling that the claims were not patent-eligible.[3]

Miller Mendel appealed the district court’s decision, and the City of Anna cross-appealed on other issues, leading to three primary questions before the Federal Circuit. First, whether the district court properly applied Federal Rule of Civil Procedure (F.R.C.P.) 12(c) in granting judgment on the pleadings. Second, whether the patent claims were ineligible under 35 U.S.C. § 101. Third, whether the City was eligible for attorneys’ fees under 35 U.S.C. § 285 as the case was exceptional.[4]

In its appeal, Miller Mendel contended that in reaching its ruling under F.R.C.P. 12(c), the district court improperly relied on extraneous evidence, e.g., external declarations, beyond the pleadings. The Federal Circuit ruled that any reference to external declarations was harmless, as the lower court reached the same conclusion regardless of such references.[5]

The court then applied the two-step Alice/Mayo test to determine patent eligibility. In the first step, it concluded that the claims were directed to the abstract idea of conducting a background check.[6] In the second step, the Federal Circuit found that the claims did not include an inventive concept that transformed the abstract idea into a patent-eligible application. The steps outlined in the claims were deemed well-understood, routine, and conventional computer functions. The court also noted that the patent specification described the invention as automating pre-existing manual processes rather than providing a technological improvement. Given these findings, the Federal Circuit affirmed the district court’s ruling that the asserted claims were patent-ineligible.[7]

In seeking attorneys’ fees, the City contended that Miller Mendel’s case was exceptionally weak. The district court denied the motion, and the Federal Circuit affirmed the decision, reasoning that Miller Mendel had a legitimate, albeit unsuccessful, basis for believing its patent was valid. Additionally, there was no evidence of litigation misconduct that would warrant fee-shifting.[8]

This case underscores the challenges of patenting software-based inventions and enforcing such patents in court. A software-based patent must go beyond automating manual tasks and demonstrate a technical improvement. Claims should not merely recite well-known processes executed on a computer. Providing a clear technical problem and solution can help in overcoming § 101 challenges. When drafting the specification, it is important to emphasize the technical advancements while refraining from discussing how certain features were implemented prior to the invention. Given the potential for fee-shifting in weak cases, companies should also evaluate the strength of their claims before filing suit.

The Federal Circuit’s decision in Miller Mendel, Inc. v. City of Anna, Texas highlights the ongoing scrutiny software patents face under § 101. Patent eligibility requires more than just digitizing traditional processes. As software patents continue to be challenged in court, applicants should ensure that their patent applications adequately describe technological advancements to withstand legal scrutiny.

[1] Miller Mendel, Inc. v. City of Anna, Texas, 107 F.4th 1345, 1352 (Fed. Cir. 2024).
[2] Id. at 1349.
[3] Id. at 1349-50.
[4] Id. at 1350-52, and 1356.
[5] Miller Mendel, Inc. at 1351.
[6] Id. at 1352-53.
[7] Id. at 1353-54.
[8] Id. at 1356-57.