AlexSam, Inc. v. Aetna, Inc., Appeal No. 2022-2036 (Fed. Cir. Oct. 8, 2024)

In the Court’s only precedential patent opinion last week, a panel of the Federal Circuit granted appellant AlexSam a second chance to hold health-care giant Aetna accountable for alleged infringement of its patent claims concerning the use of payment cards in connection with health-care charges. Specifically, AlexSam alleged that certain MasterCard and Visa systems marketed by Aetna in connection with health savings accounts infringed certain claims of AlexSam’s U.S. Patent No. 6,000,608. The district court had dismissed AlexSam’s claims with prejudice on the pleadings, finding the accused MasterCard products had been licensed under a prior agreement between AlexSam and MasterCard International Inc. As to the Visa products, the court found that AlexSam had failed to plausibly allege that Aetna—as opposed to its subsidiaries or third parties—was responsible for the alleged acts of infringement.

The Federal Circuit vacated those aspects of the dismissal which were challenged on appeal, and found that the license agreement was not dispositive with regard to AlexSam’s claims at the pleading stage. The higher court also disagreed with the district court that AlexSam had failed to plausibly allege infringement by Aetna itself. In the process, the Court expressly held for the first time that a district court’s determination of whether a complaint allegation is “conclusory” for pleading purposes is subject to de novo review, without deference to the lower court’s findings.

The Court began with the accused MasterCard products, finding that the district court had misconstrued the scope of the 2005 AlexSam/MasterCard license agreement. Though it was undisputed that Aetna necessarily had a sublicense for any activity licensed under the agreement, the agreement had expressly defined “Licensed Transactions” to be “each process of activating or adding value to” certain accounts or subaccounts. Because the asserted claims of the ’608 patent were not limited to transactions that involved “activating” or “adding value” steps, “[c]onsequently, not every act that infringes these claims will necessarily be licensed.” The Court distinguished its own precedent that had interpreted the same AlexSam/MasterCard license agreement, and explained that in the prior case, the only accused processes involved card activation; while the license had provided a complete defense in that case, here, it had not. On remand, the panel suggested the district court might wish to consider other issues associated with the license agreement, such as whether it had terminated prior to issuance of the ’608 patent, or what effect a 2007 amendment may have had on the viability of AlexSam’s claims.

Next, the Federal Circuit addressed the sufficiency of AlexSam’s pleading with respect to alleged infringement by Aetna. AlexSam’s Complaint had been supported by claim charts explaining how the asserted claims read on the accused products, but Aetna had argued—and the district court had agreed—that other documents attached to the pleadings established such steps had actually been performed by Aetna’s subsidiaries or third parties, and that Aetna itself was simply a holding company. Reviewing the allegations de novo, the panel disagreed with the district court that AlexSam’s allegations were “contradicted” by these materials, and therefore conclusory and/or implausible. Instead, the Federal Circuit found that, viewed in the light most favorable to AlexSam, “all that the exhibits establish is that Aetna Inc.’s subsidiaries are responsible for allegedly infringing actions. This is not the same thing as establishing that Aetna Inc. is not responsible for such actions,” which “is the conclusion Aetna would need us to reach to sustain the district court’s dismissal.” Although it expressed skepticism about AlexSam’s factual allegations and suggested the district court might wish to conduct preliminary summary judgment proceedings to resolve them, the Court found the allegations sufficient to survive Aetna’s motion to dismiss. The panel similarly vacated the court’s dismissal of AlexSam’s induced and contributory infringement claims.

Certain other facets of the district court’s dismissal orders—such as that AlexSam had failed to plausibly allege willful or divided infringement—were not challenged on appeal. Accordingly, the case was affirmed in part, vacated in part, and remanded for further proceedings.

The full opinion can be found here.

By Jason A. Wrubleski