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Voter Verified, Inc. v. Election Systems & Software LLC

United States Court of Appeals, Federal Circuit

April 20, 2018

VOTER VERIFIED, INC., Plaintiff-Appellant
v.
ELECTION SYSTEMS & SOFTWARE LLC, Defendant-Appellee

          Appeal from the United States District Court for the Northern District of Florida in No. 1:16-cv-00267-MW-GRJ, Judge Mark E. Walker.

          Anthony Italo Provitola, DeLand, FL, argued for plaintiff-appellant.

          Robert M. Evans, Jr., Senniger Powers LLP, St. Louis, MO, argued for defendant-appellee. Also represented by Kyle G. Gottuso.

          Before Newman, Lourie, and Reyna, Circuit Judges.

          LOURIE, CIRCUIT JUDGE.

         Voter Verified, Inc. ("Voter Verified") appeals from the United States District Court for the Northern District of Florida's dismissal under Fed.R.Civ.P. 12(b)(6) of its claim for patent infringement, holding that the claims of U.S. Reissue Patent RE40, 449 ("the '449 patent") are directed to patent-ineligible subject matter and are thus invalid under 35 U.S.C. § 101. See Voter Verified, Inc. v. Election Sys. & Software LLC, No. 1:16-cv-267, 2017 WL 3688148, at *2 (N.D. Fla. Mar. 21, 2017) ("Voter Verified NDFL"). For the reasons that follow, we affirm.

         Background

         The '449 patent, assigned to Voter Verified, was reissued on August 5, 2008 from U.S. Patent 6, 769, 613, and is directed to voting methods and systems that provide for "auto-verification" of a voter's ballot. See '449 patent Abstract. Generally, the patent discloses a process in which a voter enters a vote into a voting system; the system generates a corresponding printed ballot; and the voter verifies the printed ballot for accuracy and submits it for tabulation. See id. col. 1 l. 64-col. 2 l. 40, col. 2 l. 53-col. 3 l. 11.

         Before we address the issues in the current appeal, an overview of relevant events from a prior litigation is necessary. In November 2009, Voter Verified sued the predecessors of Election Systems & Software LLC ("Election Systems")[1] in the Middle District of Florida alleging infringement of the '449 patent. Election Systems, which produces and markets automated voting systems, counterclaimed that the claims of the '449 patent were invalid under §§ 101, 102, 103, and 112. In a series of summary judgment orders, the district court made various validity and infringement decisions. The court determined that claims 1-93 were not infringed and claim 94 was invalid as indefinite under § 112. The court then entered summary judgment in favor of Voter Verified 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. See Summ. J. Order at 18- 19, Voter Verified, Inc. v. Premier Election Sols., Inc., No. 6:09-cv-1968 (M.D. Fla. Sept. 15, 2010), ECF No. 155; Summ. J. Order at 20, Voter Verified, Inc. v. Election Sys. & Software, Inc., No. 6:09-cv-1969 (M.D. Fla. Sept. 29, 2010), ECF No. 114; J.A. 239. No further analysis of § 101 was provided. Finally, the court dismissed without prejudice the claim of invalidity of claims 85 and 93 under § 102, having already determined that they were not infringed, but held that claim 49 was invalid under § 103, even though the court had also already determined that it was not infringed. The court additionally held that the remaining claims 1-48, 50-84, and 86-92 were not invalid under §§ 102 and 103.

         Voter Verified appealed the holding of invalidity of claim 49, but not of claim 94. See Voter Verified, Inc. v. Premier Election Sols., Inc., 698 F.3d 1374, 1379 (Fed. Cir. 2012). Election Systems cross-appealed the upholding of the validity of the remaining claims 1-48, 50-84, and 86-92. Id.

         After briefing and oral argument, we affirmed the district court's invalidity judgment of claim 49 under § 103. Id. at 1379-81. We also determined that the district court did not err in holding that claims 1-48, 50-84, and 86-92 were not proven invalid because, in failing to respond to these arguments in its summary judgment briefing, Election Systems had not met its burden to prove its invalidity counterclaims by clear and convincing evidence. Id. at 1381-82. Therefore, only claims 49 and 94 remain invalid.

         This brings us to the present case on appeal. In July 2016, Voter Verified again sued Election Systems, this time in the Northern District of Florida, alleging that certain voting systems and equipment made or operated by Election Systems infringed the '449 patent. Election Systems filed a motion to dismiss the complaint under Rule 12(b)(6) arguing that Voter Verified failed to state a claim upon which relief could be granted because all the claims of the '449 patent are invalid under § 101. In response, Voter Verified argued that issue preclusion, or collateral estoppel, precludes Election Systems from relitigating the § 101 issue, which it argues had already been decided in the prior litigation. Election Systems countered that issue preclusion should not apply in this case because there was an intervening change in the law. Regardless, Election Systems contended that under Eleventh Circuit law, issue preclusion would still not apply because two of the four required elements of issue preclusion were not met. Specifically, Election Systems argued that the § 101 issue was not "actually litigated" and it was not "a critical and necessary part of the judgment" in the first litigation. See CSX Transp., Inc. v. Bhd. of Maint. of Way Emps., 327 F.3d 1309, 1317 (11th Cir. 2003).

         The district court granted Election Systems's motion to dismiss. See Voter Verified NDFL, 2017 WL 3688148, at *2. The court concluded that the "two-step analysis" recited in Alice Corp. v. CLS Bank International, 134 S.Ct. 2347 (2014), constituted a "substantial change" in the law such that "the issue of patent validity is not precluded from further litigation." Voter Verified NDFL, 2017 WL 3688148, at *1-2. The district court therefore did not reach an issue preclusion analysis under Eleventh Circuit law. The court then proceeded to analyze the claims of the '449 patent under the two-step § 101 framework. First, the court determined that the patent was based on the abstract idea of "vote collection and verification." Id. at *2. Second, the court determined that the voting system was made up of "generic computer components performing generic computer functions, " and that this was insufficient to transform the abstract idea into patent-eligible subject matter. Id. As a result, the court held that all the claims of the '449 patent were directed to patent-ineligible subject matter and thus invalid under § 101. Id.

         Voter Verified timely appealed. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

         Discussion

         We review a district court's dismissal under Rule 12(b)(6) under the law of the regional circuit. Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343, 1346 (Fed. Cir. 2014). The Eleventh Circuit reviews the grant of a Rule 12(b)(6) motion de novo, accepting as true the complaint's factual allegations and construing them in the light most favorable to the plaintiff. Speaker v. U.S. Dep't of Health & Human Servs. Ctrs. for Disease Control & Prevention, 623 F.3d 1371, 1379 (11th Cir. 2010).

         Before we reach the merits of the § 101 issue, we must first determine whether the district court properly concluded that the § 101 judgment from the prior litigation does not have preclusive effect in this case for the reason that Alice was an intervening change in the law. See Wright et al., 18 Fed. Prac. & Proc. Juris. § 4425 (3d ed.) ("Preclusion is most readily defeated by specific Supreme Court overruling of precedent relied upon in reaching the first decision."); see also Dow Chem. Co. v. Nova Chems. Corp. (Can.), 803 F.3d 620, 628-29 (Fed. Cir. 2015); Wilson v. Turnage, 791 F.2d 151, 157 (Fed. Cir. 1986) (determining that issue preclusion was inapplicable when there was an "intervening change in the legal atmosphere"). If there were a change in the law, then issue preclusion would not apply, which would allow us to reach the merits of the § 101 issue. If, however, there were not a change in the law, then issue preclusion would still be a viable issue that we need to evaluate.

         I. Intervening Change in the Law

         The district court held that Alice was a "substantial change" in the law such that issue preclusion does not apply here. See Voter Verified NDFL, 2017 WL 3688148, at *1. On appeal, Voter Verified argues that issue preclusion should apply because there was no change in the law, and Alice merely applied a rule from Bilski v. Kappos, 561 U.S. 593 (2010), which it states was the controlling law at the time the district court in the prior litigation entered summary judgment on the § 101 issue. Election Systems counters that there was a change in the law, because "the two-step analysis [was] established in Mayo and further refined in Alice." Appellee's Br. 23; see also Oral Arg. at 23:34-25:25, Voter Verified, Inc. v. Election Sys. & Software LLC, No. 17-1930 (Fed. Cir. Feb. 9, 2018), http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20 17-1930.mp3.

         We agree with Voter Verified to the extent that it argues that Alice was not an intervening change in the law, so that it does not exempt a potential application of issue preclusion. However, we ultimately conclude for the reasons that follow that issue preclusion does not apply in this case.

         For the change of law exception to issue preclusion to apply, three conditions must be satisfied. First, "the governing law must have been altered." Dow Chem., 803 F.3d at 629 (citations omitted). Second, "the decision sought to be reopened must have applied the old law." Id. (citations omitted). Third, the change in the law "must compel a different result under the facts of the particular case." Id. (citations omitted). Additionally, in order to be intervening, the change in the law must have occurred after the first case was finally decided. See Wilson, 791 F.2d at 157 ("[A] judicial declaration intervening between the two proceedings may so change the legal ...


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