`for the Federal Circuit
`______________________
`
`INVENTOR HOLDINGS, LLC,
`Plaintiff-Appellant
`
`v.
`
`BED BATH & BEYOND, INC.,
`Defendant-Appellee
`______________________
`
`2016-2442
`______________________
`
`Appeal from the United States District Court for the
`District of Delaware in No. 1:14-cv-00448-GMS, Judge
`Gregory M. Sleet.
`______________________
`
`Decided: December 8, 2017
`______________________
`
`RICHARD CHARLES WEINBLATT, Stamoulis & Weinblatt
`LLC, Wilmington, DE, argued for plaintiff-appellant.
`
`RICARDO BONILLA, Fish & Richardson P.C., Dallas,
`TX, argued for defendant-appellee. Also represented by
`DAVID BRANDON CONRAD, NEIL J. MCNABNAY; JOHN A.
`DRAGSETH, Minneapolis, MN.
`______________________
`
`Before WALLACH, CHEN, and STOLL, Circuit Judges.
`CHEN, Circuit Judge.
`
`
`
`
`2
`
` INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`Inventor Holdings, LLC (IH) sued Bed Bath & Be-
`yond, Inc.
`(BBB)
`for
`infringement of U.S. Patent
`No. 6,381,582 (the ’582 patent) in April 2014. The Su-
`preme Court issued its decision in Alice Corp. v. CLS
`Bank International in June 2014. 134 S. Ct. 2347 (2014).
`BBB thereafter moved for judgment on the pleadings,
`contending that Alice rendered the asserted claims of the
`’582 patent invalid under 35 U.S.C. § 101. The district
`court granted BBB’s § 101 motion. See Inventor Holdings,
`LLC v. Bed Bath & Beyond Inc., 123 F. Supp. 3d 557, 563
`(D. Del. 2015). We affirmed the district court’s § 101
`decision without opinion under Federal Circuit Rule 36.
`See Inventor Holdings, LLC v. Bed Bath & Beyond, Inc.,
`643 F. App’x 1014, 1015 (Fed. Cir. 2016).
`BBB moved for an award of attorney fees pursuant to
`35 U.S.C. § 285, arguing that, once Alice issued, IH should
`have reevaluated its case and dismissed the action. The
`district court granted BBB’s fees motion, holding that,
`“following the Alice decision, IH’s claims were objectively
`without merit.” Inventor Holdings, LLC v. Bed Bath &
`Beyond Inc., No. 14-CV-448, 2016 WL 3090633, at *3 (D.
`Del. May 31, 2016). The district court awarded BBB its
`attorney fees beginning from the date of the Alice deci-
`sion, including fees incurred during the § 101 appeal. See
`id. at *4. IH appeals the district court’s fees decision. We
`affirm.
`
`BACKGROUND
`I. The ’582 Patent
`The claimed invention relates to a method of purchas-
`ing goods at a local point-of-sale system from a remote
`seller. Claims 8, 25, and 41, excerpted below, are repre-
`sentative of the claims of the ’582 patent:
`
`8. A method of processing a payment for a
`purchase of goods, comprising the steps of:
`
`
`
`INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`3
`
`receiving at a point-of-sale system a code relating
`to a purchase of goods;
`determining if said code relates to a local order or
`to a remote order from a remote seller;
`if said code relates to a remote order, then
`determining a price for said remote order,
`receiving a payment for said remote order,
`and
`transmitting to said remote seller data in-
`dicating that said payment has been re-
`ceived for said remote order.
`’582 patent col. 14 ll. 7–18.
`
`25. A method for a remote seller to process a
`payment for the sale of goods, comprising the
`steps of:
`receiving a remote order for a purchase of goods
`from a customer;
`generating a code and a purchase price for said
`remote order;
`transmitting said code and said purchase price to
`the customer;
`providing order data for use by a point-of-sale sys-
`tem of a local seller in receiving a payment for
`said remote order;
`receiving payment data confirming said payment
`has been received at said point-of-sale system of
`said local seller;
`initiating, responsive to said payment data, a
`shipment of said goods; and
`receiving a payment for said remote order from
`said local seller.
`
`
`
`
`4
`
` INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`Id. col. 15 ll. 7–25.
`
`41. A method [for] submitting a payment for a
`purchase of goods, comprising the steps of:
`transmitting an order for goods to a remote mer-
`chant;
`receiving a code and a purchase price for said or-
`der from said remote merchant;
`providing at least one of said code and said pur-
`chase price for use by a point-of-sale system of a
`local seller in processing a payment for said order;
`submitting said payment to said local seller at
`said point-of-sale system; and
`receiving said goods from said remote merchant.
`Id. col. 16 ll. 5–15.
`Figure 1 from the patent depicts the specification’s on-
`ly embodiment of a system used to perform the methods
`recited in claims 8, 25, and 41:
`
`
`The patent explains, using the system in Figure 1,
`that a buyer may place an order for goods with a remote
`
`
`
`INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`5
`
`seller, after which the remote seller generates an “order
`code.” Id. col. 5 ll. 54–56, col. 6 ll. 37–40. The buyer may
`then enter the order code at a point-of-sale (POS) termi-
`nal in a local retail store and pay for the order in person.
`See id. col. 11 ll. 10–57. According to the patent, paying
`at a local POS terminal distinguishes prior art systems
`because prior art “catalog purchases” were typically
`“conducted by telephone and paid for by credit card,” and
`“[m]any consumers . . . do not feel secure in providing
`their credit card number to a ‘stranger’ over a telephone.”
`Id. col. 1 ll. 45–48. Thus, the ’582 patent purports to
`disclose an improved way to “pay for remote purchases”
`using “payment options available at a local store.” Id.
`col. 13 ll. 34–39. In other words, the invention covers
`purchasing goods from a remote seller by placing an
`order, receiving an order code, entering the order code at
`a POS terminal, and paying for the order in person.
`The specification explains that the components in
`Figure 1 are implemented using conventional computer
`technology. Id. col. 5 ll. 36–38 (“[D]ata link 24 comprises
`an Internet connection, for example a conventional world-
`wide-web browser, established through a telephone line.”);
`id. col. 5 ll. 39–41 (“[P]oint-of-sale (POS) terminals 26A,
`26B, 26n are connected to local POS system 14, for exam-
`ple through a conventional computer data network.”); id.
`col. 5 ll. 46–48 (“Local POS system 14 with POS terminals
`26A–n comprise[] a conventional, commercially available
`POS processing system.”); id. col. 5 ll. 48–49 (“Remote
`processor system 16 comprises a conventional computer
`system . . . .”); id. col. 5 ll. 51–52 (“[B]uyer system 22
`comprises a conventional home computer . . . .”); id. col. 5
`ll. 64–65 (“[L]ocal POS system 14 comprises a convention-
`al POS processing system . . . .”); id. col. 5 ll. 32–34
`(“These systems are suitably interconnected by data links
`18, 20, comprising for example telephone connections or
`electronic network connections.”). The only physical
`
`
`
`
`6
`
` INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`components recited in the representative claims are a
`POS system and POS terminals.
`II. Procedural History
`IH’s predecessor-in-interest sued 7-Eleven, Inc. (7-
`Eleven), Amazon, Inc.
`(Amazon), PayNearMe, Inc.
`(PayNearMe), and Wal-Mart Stores, Inc. (Walmart)
`(collectively referred to hereinafter as “other defendants”)
`in the United States District Court for the District of
`Delaware in January 2013 for infringement of the ’582
`patent.1 7-Eleven, Amazon, and PayNearMe jointly filed
`a motion to dismiss IH’s complaints under Federal Rule of
`Civil Procedure 12(b)(6), arguing that IH’s patent was
`directed to patent-ineligible subject matter under § 101.
`Walmart filed a separate Rule 12(b)(6) motion, also argu-
`ing invalidity under § 101. The district court denied both
`motions without opinion on December 6, 2013.
`In April 2014, IH sued BBB for infringement of the
`’582 patent. BBB filed an answer on May 30, 2014. The
`Supreme Court issued its decision in Alice on June 19,
`2014. BBB did not immediately file its § 101 motion for
`judgment on the pleadings after the Supreme Court
`issued its decision in Alice, because, according to BBB,
`“[i]t interpreted the district court’s denial of the prior
`defendants’ motions as an indication that the court in-
`tended to give [IH] the discovery and claim construction
`opportunities it said it needed in its briefing” before
`deciding the § 101 issue. Appellee’s Br. 5.
`A. BBB’s § 101 Motion
`After IH submitted its proposed claim constructions to
`the district court, BBB filed its § 101 motion pursuant to
`
`
`1
`IH replaced its predecessor-in-interest as plaintiff
`in these suits pursuant to stipulations in January and
`February 2014.
`
`
`
`INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`7
`
`Federal Rule of Civil Procedure 12(c) on February 6, 2015.
`BBB argued that the ’582 patent’s claims are directed to
`the abstract idea of “paying for a remote purchase at a
`local retailer” and that the claims “do not include any
`meaningful limitations that would ensure that they
`amount to ‘significantly more’ than just the ineligible
`abstract idea.” J.A. 169 (quoting Alice, 134 S. Ct. at
`2360).
`IH opposed BBB’s motion by arguing that the claims
`are directed to “a unique solution to protect a person from
`having his or her credit card information stolen when
`making a remote purchase,” which IH argued is not an
`abstract idea. J.A. 205. IH also argued that the claims
`recite an “inventive concept” similar to the one found in
`the claims discussed in DDR Holdings, LLC v. Hotels.com,
`L.P., 773 F.3d 1245, 1256–57 (Fed. Cir. 2014). J.A. 208.
`Specifically, IH argued that “the use and processing of
`codes and communication between local and remote
`systems” is a “solution” that is “necessarily rooted in
`computer technology.”
` Id. (quoting DDR Holdings,
`773 F.3d at 1257). According to IH, this solution requires
`“complex programming,” although IH did not cite any
`complex programming in the patent or the record.
`J.A. 212. IH also argued that the claims satisfy the
`“machine-or-transformation test.” J.A. 208 (citing Bilski
`v. Kappos, 561 U.S. 593, 604 (2010)).
`The district court granted BBB’s § 101 motion on Au-
`gust 21, 2015. Inventor Holdings, 123 F. Supp. 3d at 558.
`The district court found that the asserted claims are
`directed to the abstract idea of “local processing of pay-
`ments for remotely purchased goods.” Id. at 561. Accord-
`ing to the district court, “[n]one of the ’582 patent’s claims
`are restricted to any specific, inventive ways of storing
`codes in databases or electronically applying them” under
`the second prong of Alice’s test for patent eligibility. Id.
`
`
`
`
`8
`
` INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`IH appealed the § 101 decision. We affirmed via Rule
`36 on April 7, 2016. See Inventor Holdings, 643 F. App’x
`at 1015.
`
`B. BBB’s Fees Motion
`BBB moved for an award of attorney fees under § 285
`on September 4, 2015. The district court did not rule on
`BBB’s fees motion until after the completion of IH’s § 101
`appeal. BBB argued that this case is exceptional under
`the standard articulated in Octane Fitness, LLC v. ICON
`Health & Fitness, Inc., 134 S. Ct. 1749 (2014), because IH
`should have reevaluated its case after Alice and dismissed
`the action, but did not. IH responded that the case was
`not exceptional because § 101 was an “evolving area of the
`law,” which made patent-eligibility analysis difficult and
`uncertain after Alice. J.A. 1083.
`The district court granted BBB’s fees motion, holding
`that the case was “exceptional” under § 285.2 Inventor
`Holdings, 2016 WL 3090633, at *1–2. The district court
`held that, even though it denied the other defendants’
`§ 101 motions before Alice, “following the Alice decision,
`IH’s claims were objectively without merit.” Id. at *3.
`The district court awarded BBB its post-Alice attorney
`fees, including fees incurred during the appeal of the
`district court’s § 101 decision,
`in the amount of
`$931,903.45. IH timely appealed. We have jurisdiction
`under 28 U.S.C. § 1295(a)(1).
`STANDARD OF REVIEW
`We review “all aspects of a district court’s § 285 de-
`termination” for abuse of discretion. Highmark Inc. v.
`Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1749
`(2014). “A district court would necessarily abuse its
`
`
`2 There is no dispute that BBB was the “prevailing
`party” under § 285.
`
`
`
`INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`9
`
`discretion if it based its ruling on an erroneous view of the
`law or on a clearly erroneous assessment of the evidence.”
`Id. at 1748 n.2 (quoting Cooter & Gell v. Hartmarx Corp.,
`496 U.S. 384, 405 (1990)).
`DISCUSSION
`I. Exceptional Case
`Section 285 states: “The court in exceptional cases
`may award reasonable attorney fees to the prevailing
`party.” 35 U.S.C. § 285. “District courts may determine
`whether a case is ‘exceptional’ in the case-by-case exercise
`of their discretion, considering the totality of the circum-
`stances.” Octane Fitness, 134 S. Ct. at 1756. An excep-
`tional case under § 285 is “simply one that stands out
`from others with respect to the substantive strength of a
`party’s litigating position (considering both the governing
`law and the facts of the case) or the unreasonable manner
`in which the case was litigated.” Id.
`The district court determined that this case was ex-
`ceptional based solely on the weakness of IH’s post-Alice
`patent-eligibility arguments and the need to deter future
`“wasteful litigation” on similarly weak arguments. Inven-
`tor Holdings, 2016 WL 3090633, at *3 (“[W]hatever merit
`IH’s claims had at the outset of litigation, by the time of
`the Alice decision, the business method claims in the ’582
`Patent were objectively ineligible under § 101.”); Id.
`(“These facts alone . . . support a finding that the case
`‘stands out from others’ and is exceptional under § 285.
`The court is convinced that an award of attorneys’ fees in
`this case is necessary to deter wasteful litigation in the
`future.” (citation and footnote omitted)). We conclude
`that the district court acted within the scope of its discre-
`tion in finding this case to be exceptional based on the
`weakness of IH’s § 101 arguments and the need to deter
`similarly weak arguments in the future. See Octane
`Fitness, 134 S. Ct. at 1757
`(“[A] case present-
`ing . . . exceptionally meritless claims may sufficiently set
`
`
`
`
`10
`
` INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`itself apart from mine-run cases to warrant a fee award.”);
`id. at 1756 n.6 (noting “the need in particular circum-
`stances to advance considerations of compensation and
`deterrence” as part of a “‘nonexclusive’ list of ‘factors’”
`district courts may consider when determining whether to
`award fees under § 285 (quoting Fogerty v. Fantasy, Inc.,
`510 U.S. 517, 534 n.19 (1994))).
`Under Alice, the claims of the ’582 patent are mani-
`festly directed to an abstract idea, which the district court
`accurately described as “local processing of payments for
`remotely purchased goods.” Inventor Holdings, 123 F.
`Supp. 3d at 561 (citing ’582 patent col. 1 ll. 6–10). The
`idea that a customer may pay for items ordered from a
`remote seller at a third-party’s local establishment is the
`type of fundamental business practice that, when imple-
`mented using generic computer technology, is not patent-
`eligible under Alice. 134 S. Ct. at 2355 (quoting Le Roy v.
`Tatham, 55 U.S. 156, 175 (1852) (“A principle, in the
`abstract, is a fundamental truth; an original cause; a
`motive; these cannot be patented, as no one can claim in
`either of them an exclusive right.”)). As we explained in
`Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir.
`2012), the abstract idea exception to patent eligibility
`disallows the patenting of “basic concept[s],” such as
`“processing information through a clearinghouse,” be-
`cause no entity is entitled to “wholly preempt” such
`concepts. Id.; see also Alice, 134 S. Ct. at 2354.
`Under Alice’s second step, the only components dis-
`closed in the specification for implementing the asserted
`method claims are unambiguously described as “conven-
`tional.” See supra Background § I. These components do
`not supply an inventive concept. See Alice, 134 S. Ct. at
`2359 (holding that the implementation of an abstract idea
`using computer functions that are “‘well-understood,
`routine, conventional activit[ies]’ previously known to the
`industry” did not supply an inventive concept (quoting
`Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566
`
`
`
`INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`11
`
`U.S. 66, 79 (2012))). Moreover, here, as in Alice, consider-
`ing the method steps of the representative claims as an
`“ordered combination” reveals that they “amount to
`‘nothing significantly more’ than an instruction to apply
`[an] abstract idea” using generic computer technology.
`See Alice, 134 S. Ct. at 2359–60 (quoting Mayo, 566 U.S.
`at 79).3
`IH argues that it was reasonable for it to believe that
`the ’582 patent was patent-eligible post-Alice based on the
`district court’s denials of the other defendants’ § 101
`motions before Alice issued. Appellant’s Br. 15. IH
`contends that a “necessary prerequisite” to the district
`court’s ruling was that “Alice changed the law on § 101
`and did so so clearly and definitively as to render the ’582
`patent clearly invalid.” Id. at 15–16. IH then argues that
`Alice did not fundamentally change § 101 law, noting that
`the Supreme Court applied the same test in Alice that it
`previously set out in Mayo. Id. at 16–18 (citing 566 U.S.
`at 77–80). IH further argues that § 101 was, and is, an
`evolving area of law and that the § 101 inquiry in this
`case was therefore difficult. Id. at 18.
`
`
`3
`IH argued before the district court, in opposition
`to BBB’s § 101 motion, that the representative claims’
`electronic handling of “codes” supplied an inventive
`concept. See, e.g., J.A. 203 n.5 (“A human, unassisted by
`the invention of the ’582 patent, cannot store codes in a
`database and electronically apply those codes to remote or
`local orders entered in a POS system.”); id. at 208 (“The
`solution – the use and processing of codes and communi-
`cation between local and remote systems – is necessarily
`rooted in computer technology.”). IH did not discuss these
`arguments in its briefing in opposition to BBB’s fees
`motion before the district court and does not raise them
`on appeal. See generally J.A. 1080–83.
`
`
`
`
`12
`
` INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`We find IH’s arguments to be meritless. First, as the
`district court correctly noted in its opinion, IH’s claims
`were “dubious even before the Alice decision” in light of,
`for example, Dealertrack and Bilski. Inventor Holdings,
`2016 WL 3090633, at *2 (observing that “[t]here is a
`strong argument that using a third-party intermediary to
`create a remote pay system is an abstract idea in light of
`Bilski[, 561 U.S. at 611–12]”). Although the district court
`did not give reasons for denying the other defendants’ pre-
`Alice § 101 motions, IH has cited no evidence that the
`district court ever endorsed the patent-eligibility of the
`asserted claims. Cf. Murr Plumbing, Inc. v. Scherer Bros.
`Fin. Servs. Co., 48 F.3d 1066, 1070 (8th Cir. 1995) (“[T]he
`denial of the motion to dismiss was not a decision on the
`merits of that motion, but was a means of postponing
`decision on the merits.”).
`Second, we find that Alice was a significant change in
`the law as applied to the facts of this particular case.
`Prior to Alice, the state of the law for computer-
`implemented business transaction inventions was less
`than clear, given this court’s divided en banc opinion in
`CLS Bank International v. Alice Corp., 717 F.3d 1269,
`1273 (Fed. Cir. 2013). As we later explained, post-Alice,
`in Mortgage Grader, Inc. v. First Choice Loan Services
`Inc., “a § 101 defense previously lacking in merit may be
`meritorious after Alice. This scenario is most likely to
`occur with respect to patent claims that involve imple-
`mentations of economic arrangements using generic
`computer technology, as the claims do here.” 811 F.3d
`1314, 1322 (Fed. Cir. 2016). Like the claims at issue in
`Mortgage Grader, the ’582 patent’s claims are directed to
`an “economic arrangement” implemented using “generic
`computer technology.” These issues were significant, if
`not determinative, of the Court’s holding in Alice.
`Finally, while we agree with IH as a general matter
`that it was and is sometimes difficult to analyze patent
`eligibility under the framework prescribed by the Su-
`
`
`
`INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`13
`
`preme Court in Mayo, there is no uncertainty or difficulty
`in applying the principles set out in Alice to reach the
`conclusion that the ’582 patent’s claims are ineligible.
`The ’582 patent’s alleged invention does not require us to
`engage in a difficult line-drawing exercise for a claimed
`invention resting on, or anywhere near, the margins of
`patent-eligibility; rather, the patent claims here are
`directed to a fundamental economic practice, which Alice
`made clear is, without more, outside the patent system.
`See, e.g., ’582 patent col. 2 ll. 35–46 (describing prior art
`“[w]arehouse type retailers” that permitted customers to
`order both “in-stock goods” and goods in “store catalogs”
`and pay for either type of goods at a store). In addition,
`here, as in Alice, the patentee is attempting to broadly
`monopolize an abstract idea as implemented using gener-
`ic computer technology. IH’s asserted claims were plainly
`invalid in view of Alice and its reasoning.
`It was IH’s responsibility to reassess its case in view
`of new controlling law. Taurus IP, LLC v. DaimlerChrys-
`ler Corp., 726 F.3d 1306, 1328 (Fed. Cir. 2013) (“[A] party
`cannot assert baseless infringement claims and must
`continually assess the soundness of pending infringement
`claims . . . .”). The district court did not abuse its discre-
`tion in awarding fees based on IH’s failure to reassess the
`weakness of its case under Alice and then confining the
`award to fees accrued after the Alice decision issued.
`II. Award of Appellate Fees Under § 285
`IH argues that the district court abused its discretion
`in awarding appellate attorney fees. Appellant’s Br. 24–
`27. We have previously held that § 285 “does not bar the
`trial court from awarding fees for the entire case, includ-
`ing any subsequent appeals.” Therasense, Inc. v. Becton,
`Dickinson & Co., 745 F.3d 513, 517 (Fed. Cir. 2014). The
`district court “live[d] with the case over a prolonged
`period of time,” Highmark, 134 S. Ct. at 1748, and was in
`the best position to award fees as an initial matter for the
`
`
`
`
`14
`
` INVENTOR HOLDINGS, LLC v. BED BATH & BEYOND, INC.
`
`entire case, including the § 101 appeal. There were
`obvious issues with the ’582 patent’s claims that IH
`should have recognized post-Alice, and these issues per-
`sisted throughout the § 101 appeal. The district court
`was in a position to readily assess these issues as a collec-
`tive whole and did not abuse its discretion in awarding
`BBB its appellate attorney fees.
`We have considered IH’s other arguments and find
`them to be unpersuasive.4
`CONCLUSION
`Because the district court did not abuse its discretion
`in awarding attorney fees under § 285, the district court’s
`decision is
`
`AFFIRMED
`
`
`4
`IH makes several arguments about general, un-
`settled issues in § 101 jurisprudence, relating to the
`appropriate burden of proof, whether evidence is neces-
`sary to invalidate a patent under § 101, what overlap
`there is between § 101 and 35 U.S.C. § 103, etc. But it
`makes no specific arguments regarding any of these
`issues to tie them to this particular case. We decline to
`address broad, theoretical arguments about § 101 law
`without any tethering of such arguments to the facts of
`this case.
`
`