Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 1 of 17 PageID #: 1761
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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` Plaintiff,
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`Defendants.
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`
`
`C.A. No. 17-1692 (CFC) (SRF)
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`REALTIME ADAPTIVE STREAMING
`LLC,
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`NETFLIX, INC. and
`NETFLIX STREAMING SERVICES, INC.,
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`
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`v.
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`
`
`ANSWERING BRIEF OF NETFLIX, INC. AND NETFLIX STREAMING SERVICES,
`INC. IN OPPOSITION TO MOTION OF PLAINTIFF REALTIME ADAPTIVE
`STREAMING LLC FOR LEAVE TO FILE AN AMENDED COMPLAINT
`
`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
`Jack B. Blumenfeld (#1014)
`Brian P. Egan (#6227)
`1201 North Market Street
`P.O. Box 1347
`Wilmington, DE 19899
`(302) 658-9200
`jblumenfeld@mnat.com
`began@mnat.com
`
`Attorneys for Defendants
`
`
`
`
`
`OF COUNSEL:
`
`J. David Hadden
`Saina S. Shamilov
`Ravi Ranganath
`FENWICK & WEST LLP
`801 California Street
`Mountain View, CA 94041
`(650) 988-8500
`
`Todd R. Gregorian
`Dargaye Churnet
`Earl W. Mah
`Sapna S. Mehta
`FENWICK & WEST LLP
`555 California Street, 12th Floor
`San Francisco, CA 94104
`(415) 875-2300
`
`July 10, 2019
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`
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`

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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 2 of 17 PageID #: 1762
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`TABLE OF CONTENTS
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`Page
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`NATURE AND STAGE OF THE PROCEEDINGS ......................................................................1
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`SUMMARY OF ARGUMENT .......................................................................................................1
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`STATEMENT OF FACTS ..............................................................................................................2
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`ARGUMENT ...................................................................................................................................3
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`I.
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`THE COURT SHOULD DENY REALTIME’S REQUEST TO AMEND
`BECAUSE IT UNDULY DELAYED IN SEEKING TO AMEND. .......................4
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`II.
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`REALTIME’S PROPOSED AMENDMENTS ARE FUTILE. ...............................6
`
`A.
`
`B.
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`Neither Aatrix nor Berkheimer requires granting Realtime’s motion. .........7
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`None of Realtime’s proposed amendments changes Judge Fallon’s
`analysis and conclusion of § 101 invalidity. ................................................8
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`CONCLUSION ..............................................................................................................................13
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`i
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`

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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 3 of 17 PageID #: 1763
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`CASES
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`TABLE OF AUTHORITIES
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`Page(s)
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`Aatrix Software, Inc. v. Green Shades Software, Inc.,
`882 F.3d 1121 (Fed. Cir. 2018)........................................................................................ passim
`Ashcroft v. Iqbal,
`556 U.S. 662 (2009) ...................................................................................................................8
`Berkheimer v. HP Inc.,
`881 F.3d 1360 (Fed. Cir. 2018)................................................................................................12
`Berkheimer v. HP Inc.,
`890 F.3d 1369 (Fed. Cir. 2018)........................................................................................ passim
`Cellspin Soft, Inc. v. Fitbit, Inc.,
`--- F.3d ---, 2019 WL 2588278 (Fed. Cir. June 25, 2019) ........................................................ 8
`Delaware Display Grp. LLC v. Lenovo Grp. Ltd.,
`No. 13-2108-RGA, 2016 WL 720977 (D. Del. Feb. 23, 2016) .........................................3, 4, 6
`Glasswall Sols. Ltd. v. Clearswift Ltd.,
`754 F. App’x 996 (Fed. Cir. 2018) ..........................................................................................11
`Lorenz v. CSX Corp.,
`1 F.3d 1406 (3d Cir. 1993).........................................................................................................6
`Search & Social Media Partners v. Facebook, Inc.,
`No. 17-1120-LPS-CJB, 2019 WL 581616, slip op. (D. Del. Feb. 13, 2019).......................8, 10
`TriPlay, Inc. v. WhatsApp Inc.,
`No. 13-1703-LPS-CJB, 2018 WL 3545500 (D. Del. July 24, 2018), aff’d, ---
`Fed. App’x ---, 2019 WL 2564092 (Fed. Cir. June 21, 2019) .................................................11
`Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC,
`874 F.3d 1329 (Fed. Cir. 2017), cert. denied, 139 S. Ct. 378 (2018) ......................................10
`USX Corp. v. Barnhart,
`395 F.3d 161 (3d Cir. 2004).......................................................................................................4
`STATUTES
`
`35 U.S.C. § 101 ...................................................................................................................... passim
`OTHER AUTHORITIES
`
`Federal Rule of Civil Procedure 15 .................................................................................................3
`
`ii
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`

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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 4 of 17 PageID #: 1764
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`NATURE AND STAGE OF THE PROCEEDINGS
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`This patent case has been pending since 2017, for more than a year and a half.
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`Defendants Netflix, Inc. and Netflix Streaming Services, Inc. (collectively, “Netflix”) moved to
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`dismiss plaintiff Realtime Adaptive Streaming LLC’s (“Realtime”) complaint on February 5,
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`2018 because, among other things, four of the six asserted patents claim ineligible subject matter
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`under § 101. (D.I. 11.) On December 12, 2018, Judge Fallon issued a report concluding that
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`those patents were invalid under § 101 and recommending that the Court grant Netflix’s motion
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`as to those patents. (D.I. 48.) Realtime filed objections on December 26, 2018 (D.I. 49), and
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`Netflix responded to the objections on January 9, 2019 (D.I. 50). The Court has not yet ruled on
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`those objections. Yet now, a year and a half into the case, over a year after filing its opposition
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`to Netflix’s motion to dismiss, and six months after filing objections to Judge Fallon’s Report
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`and Recommendation, Realtime seeks to amend its complaint to “address” its failed claims,
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`challenged by Netflix and rejected by Judge Fallon in the Report and Recommendation.
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`SUMMARY OF ARGUMENT
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`Now is not the appropriate time for Realtime to amend its complaint, nor would it do any
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`good. The Court should deny Realtime’s motion for leave to file an amended complaint for at
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`least two reasons. First, Realtime unduly delayed in seeking to amend, waiting until a year and a
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`half after it filed its original complaint and seven months after the recommended dismissal of its
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`claims. It offers no explanation for its belated request, which only serves to burden both the
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`Court and Netflix by unnecessarily relitigating Netflix’s motion to dismiss. Second, Realtime’s
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`proposed amendments cannot change Judge Fallon’s analysis and legal conclusion that the
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`patents are ineligible under § 101. The additional allegations in Realtime’s proposed amended
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`complaint consist of irrelevant statements, conclusory allegations, or legal argument that in many
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`cases contradict the patents themselves. Such allegations cannot change the four corners of the
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`1
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 5 of 17 PageID #: 1765
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`
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`patents or Judge Fallon’s conclusion that the patents are ineligible. Realtime’s proposed
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`amended complaint is futile and its motion for leave to amend should be denied.
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`STATEMENT OF FACTS
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`Realtime filed its complaint (D.I. 1) against Netflix on November 21, 2017 alleging
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`infringement of six patents: four related patents with substantially identical specifications—U.S.
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`Patent Nos. 7,386,046 (the “’046 patent”), 8,934,535 (the “’535 patent”), 9,762,907 (the “’907
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`patent”), and 9,769,477 (the “’477 patent”) (collectively, the “Fallon patents”)—and two
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`others—Nos. 8,634,462 and 9,578,298. Netflix moved to dismiss Realtime’s complaint because,
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`among other things, the Fallon patents claim unpatentable subject matter under § 101. (D.I. 11.)
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`Realtime filed its opposition to the motion on February 20, 2018, after the Federal Circuit’s
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`decisions in Aatrix and Berkheimer. (D.I. 14.) In its opposition, Realtime did not identify any
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`facts that, if properly alleged in an amended complaint, could remedy the deficiencies raised in
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`Netflix’s motion. Nor did it propose any amendments to its complaint when Judge Fallon heard
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`argument on the motion on October 2, 2018.
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`On December 12, 2018, Judge Fallon issued a Report and Recommendation concluding
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`that the Fallon patents claim ineligible subject matter and recommending that the Court grant
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`Netflix’s motion to dismiss Realtime’s claims asserting the Fallon patents. (D.I. 48.) At step
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`one of the Alice test, Judge Fallon concluded that “the Fallon patents are directed to the abstract
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`idea of encoding and decoding data, and the digital compression of data.” (Id. at 10.) At step
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`two of the Alice test, Judge Fallon found that Realtime’s claims did not recite an inventive
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`concept sufficient to confer patent eligibility, particularly in light of the patents’ concession that
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`the claimed inventions can be implemented using conventional technologies the patents did not
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`purport to invent. (Id. at 23, 25, 27.) In its opposition brief and at argument, Realtime did not
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`“identify any claim construction issues that need resolution or any facts in dispute.” (Id. at 11.)
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`2
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 6 of 17 PageID #: 1766
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`
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`Judge Fallon considered and recommended denial of Realtime’s request for leave to amend,
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`buried in a footnote in Realtime’s opposition brief, because Realtime had failed to “provide
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`examples of additions to the complaint that could change the recommended outcome.” (Id. at
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`20.)
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`Realtime lodged its objections to the Report and Recommendation on December 26,
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`2018. (D.I. 49.) It did not challenge nor contend that Judge Fallon’s recommended denial of
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`leave to amend amounted to legal error. Now, six months later, Realtime seeks leave to amend
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`its complaint. Realtime proposes adding five categories of allegations to its complaint:
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`(1) quotes from third-party “technology companies” in unrelated patent filings about “the need
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`for a more efficient compression system” (e.g., D.I. 52-2 ¶¶ 34-36); (2) proposed constructions
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`of claim terms in the asserted patents (e.g., id. ¶ 15); (3) statements that certain claimed elements
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`are inventive (e.g., id. ¶¶ 20, 30); (4) allegations that claims are not representative (e.g., id.
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`¶¶ 31-32); and (5) citations to other district court decisions (e.g., id. ¶¶ 16-18). (D.I. 52 at 5-9.)
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`Realtime does not explain why it waited a year and a half after Netflix’s motion and more than
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`six months after Judge Fallon’s Report and Recommendation—in which Judge Fallon
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`recommended denial of Realtime’s request to amend its complaint, which Realtime failed to
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`challenge—to add these allegations.
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`ARGUMENT
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`The district court has discretion to deny leave to amend under Federal Rule of Civil
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`Procedure 15 due to “undue delay, bad faith or dilatory motive on the part of the movant,
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`repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the
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`opposing party by virtue of the allowance of the amendment, [or] futility of amendment . . . .”
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`Delaware Display Grp. LLC v. Lenovo Grp. Ltd., No. 13-2108-RGA, 2016 WL 720977, at *7
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`(D. Del. Feb. 23, 2016) (citing Foman v. Davis, 371 U.S. 178, 182 (1962)). Realtime’s motion
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`3
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 7 of 17 PageID #: 1767
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`should be denied at least because of its undue delay and the futility of the proposed amended
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`complaint.
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`I.
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`THE COURT SHOULD DENY REALTIME’S REQUEST TO AMEND BECAUSE
`IT UNDULY DELAYED IN SEEKING TO AMEND.
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`Courts may properly deny leave to amend when a plaintiff unduly delays in seeking
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`amendment—that is, when the requested amendment “places an unwarranted burden on the court
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`or when the plaintiff has had previous opportunities to amend.” Delaware Display, 2016 WL
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`720977, at *9 (internal quotation marks and citations omitted). In assessing delay, courts “focus
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`on the movant’s reasons for not amending sooner.” Id. at *7 (internal quotation marks and
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`citation omitted). They may also consider “[i]nterests in judicial economy and finality of
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`litigation.” USX Corp. v. Barnhart, 395 F.3d 161, 169 (3d Cir. 2004) (affirming denial for undue
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`delay).
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`Realtime’s delay in moving to amend “places an unwarranted burden on the court.”
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`Delaware Display, 2016 WL 720977 at *9. Indeed, Realtime offers no explanation for its
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`decision to wait a year and half into the case to add its proposed allegations despite several
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`opportunities to do so. Netflix’s motion to dismiss was fully briefed well over a year ago, by
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`February 27, 2018. Judge Fallon invested time to prepare for oral argument, heard argument on
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`October 2, 2018, and issued a thorough 36-page Report and Recommendation. Realtime could,
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`and should, have proposed its amendments in February 2018, when it filed its opposition to
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`Netflix’s motion to dismiss. At that time, Realtime had notice of Netflix’s arguments regarding
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`the invalidity of the Fallon patents and the deficiencies of Realtime’s complaint. Realtime had
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`yet another opportunity to propose amendments at the October 2, 2018 hearing on the motion to
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`dismiss, after hearing Judge Fallon’s questions and the serious concerns she raised regarding the
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`eligibility of the Fallon patent claims. Realtime also did not propose amendments to its
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`4
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 8 of 17 PageID #: 1768
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`
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`complaint when it filed its December 26, 2018 objections to Judge Fallon’s Report and
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`Recommendation. Now, long after filing its complaint, its opposition to Netflix’s motion, and its
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`objections to Judge Fallon’s Report and Recommendation, Realtime inexplicably seeks a fourth
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`attempt to identify a plausible cause of action.
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`There is no reason Realtime should be awarded a “do over” six months after Judge
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`Fallon’s Report and Recommendation. Its proposed amended complaint contains no new
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`information that it could not have included in its original complaint or raised in any of the prior
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`briefing. Indeed, Realtime admits that the allegations it seeks to add predate its original
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`complaint. (D.I. 52 at 5-9.) Its additional allegations comprise statements about the patents,
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`including quotes from the patents and file histories, that have been in Realtime’s possession from
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`the time it filed this case. (See, e.g., D.I. 52-2 ¶¶ 20-25.) It proposes new claim constructions,
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`purportedly based on the “intrinsic record” that it could have, but failed to, raise while opposing
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`Netflix’s motion to dismiss. (See, e.g., id. ¶ 15; D.I. 52 at 6.) Its legal argument that the claims
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`it asserted in its original complaint are not “representative” could also have been raised during
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`the earlier proceedings. (See, e.g., D.I. 52-2 ¶¶ 32, 71, 108, 145.) And the third-party statements
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`made long before its original complaint (see, e.g., id. ¶¶ 34-35) and the other district court
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`opinions from 2015, 2016, and 2017 (see, e.g., id. ¶¶ 17-18) all could also have been raised
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`earlier. Realtime’s citation to an October 25, 2018 opinion from the Central District of
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`California is the only addition that does not predate Realtime’s original complaint. (Id. ¶ 16.)
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`But Realtime already filed a notice of supplemental authority to address that opinion (D.I. 45),
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`which Judge Fallon considered when ruling on Netflix’s motion to dismiss (D.I. 48 at 12).
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`None of Realtime’s proposed additions add new facts. Nor has there been a change in the
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`applicable law that justifies Realtime’s belated additions. Realtime relies on Aatrix and
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`5
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 9 of 17 PageID #: 1769
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`
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`Berkheimer in its motion (D.I. 52 at 1), but those opinions issued in February 2018, before
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`Realtime filed its opposition to Netflix’s motion to dismiss, and Realtime cited them in its
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`opposition brief. (D.I. 14 at 11, 12.) Realtime thus has no valid reason for not amending sooner.
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`The Court should not condone Realtime’s unwarranted delay. See Lorenz v. CSX Corp., 1 F.3d
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`1406, 1414 (3d Cir. 1993) (affirming denial based on “unreasonable” delay where the allegations
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`“were available” to the plaintiff for two to three years before she sought leave to amend). Had
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`Realtime proposed amendments in a timely fashion, Netflix and the Court could have addressed
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`them while briefing the motion to dismiss, at the hearing on the motion, or in considering the
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`objections to the Report and Recommendation. Realtime’s unwarranted delay burdens the Court
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`and prejudices Netflix through needless time and expense spent re-litigating arguments that were
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`or could have been made the first time around.
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`Realtime’s reliance on an assumed future scheduling order (D.I. 52 at 10) does not
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`excuse its delay. The fact that the Court has not yet entered a scheduling order does not mean
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`that Realtime can amend its complaint without making the required showing of diligence and
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`lack of prejudice: “The Court’s discretion to grant or deny leave to amend is not limited in such
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`mechanistic ways.” Delaware Display, 2016 WL 720977, at *8. In Delaware Display, Judge
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`Andrews denied leave to amend, even though the plaintiffs moved by the court-ordered deadline,
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`because the plaintiffs offered no explanation “as to why they waited until nearly two years after
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`filing the complaint” to add the allegations. Id. The same is true here. The Court should deny
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`Realtime’s motion on this basis alone.
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`II.
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`REALTIME’S PROPOSED AMENDMENTS ARE FUTILE.
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`The Court should also reject Realtime’s proposed amendments because they cannot
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`remedy the deficiencies in the patents themselves and are therefore futile. Leave to amend
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`6
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`should be denied if the proposed amended complaint would not survive a motion to dismiss.
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`Delaware Display, 2016 WL 720977, at *7 (citation omitted). That is the case here.
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`A.
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`Neither Aatrix nor Berkheimer requires granting Realtime’s motion.
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`Contrary to Realtime’s contention, the Federal Circuit’s decisions in Aatrix and
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`Berkheimer do not require granting of leave to amend. See Berkheimer v. HP Inc., 890 F.3d
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`1369, 1373 (Fed. Cir. 2018); Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d
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`1121, 1126 (Fed. Cir. 2018). Those cases stand for the narrow proposition that patent eligibility
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`analysis at step two may require findings of fact as to whether a claim element is well-
`
`understood, routine, and conventional. Berkheimer, 890 F.3d at 1370, 1374. But where, as here,
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`“the specification admits the additional claim elements are well-understood, routine, and
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`conventional, it will be difficult, if not impossible, for a patentee to show a genuine dispute.” Id.
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`at 1371. Even in resolving motions at the pleading stage, the Court should not accept as true
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`allegations that contradict the patent claims or specification. Id. at 1372. Indeed, the Federal
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`Circuit cautioned in Berkheimer that its decision should not “be viewed as casting doubt on the
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`propriety of our previous cases resolving patent eligibility on motions to dismiss or summary
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`judgment,” and noted that the court continues “to uphold decisions concluding that claims were
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`not patent eligible at these stages.” Id. at 1373 (citations and internal quotation marks omitted).
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`Thus, “Berkheimer and Aatrix leave untouched the numerous cases from this court which have
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`held claims ineligible because the only alleged ‘inventive concept’ is the abstract idea.” Id. at
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`1374.
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`In Aatrix, the Federal Circuit vacated a decision where the district court denied the
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`plaintiff’s motion to amend “without explanation.” Aatrix, 882 F.3d at 1126. The plaintiff
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`proposed adding “numerous allegations” directed to the inventiveness of claimed elements. Id.
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`at 1127. Taken as true, these allegations supported a finding that the claims may be directed to
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`7
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`

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`
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`specific improvements in computer technology. Id. at 1127-28. Unlike in this case, the district
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`court in Aatrix could accept the factual allegations pled in the amended complaint as true
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`because they were supported by the patents themselves. Id. at 1129.
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`More recently, in Cellspin, the Federal Circuit reiterated that Aatrix does not hold that
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`“any allegation about inventiveness, wholly divorced from the claims or the specification,” can
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`defeat a motion to dismiss. Cellspin Soft, Inc. v. Fitbit, Inc., --- F.3d ---, 2019 WL 2588278, at
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`*8 (Fed. Cir. June 25, 2019). The patentee in Cellspin “did more than simply label” claim
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`elements as inventive, but instead, “specifically alleged” evidence of their inventiveness. Id. at
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`*8-9. And unlike here, where Realtime delayed over a year in seeking amendment, the patentee
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`in Cellspin amended its pleading before the hearing on the defendants’ motion to dismiss and as
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`explicitly permitted by the district court’s order. Id. at *4.
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`While these cases suggest that amendment may be proper in some cases, they also make
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`clear that leave to amend should be denied in cases such as this, where the proposed amendments
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`are either irrelevant or contradict the disclosures of the patents themselves.
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`B.
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`None of Realtime’s proposed amendments changes Judge Fallon’s analysis
`and conclusion of § 101 invalidity.
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`Realtime’s amendments consist of conclusory statements or legal arguments, not factual
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`allegations. The Court need not accept them as true. See Ashcroft v. Iqbal, 556 U.S. 662, 678-79
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`(2009). Nor can the Court credit Realtime’s allegations that various elements of the claims are
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`not well-understood, routine, and conventional because they contradict the admissions in the
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`patents themselves. “Under Twombly, Iqbal, [and] Berkheimer, pleadings, as to [the
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`inventiveness] of the claims are not entitled to the assumption of truth where the[y] are
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`conclusory or contradict[ ] [the] intrinsic evidence.” Search & Social Media Partners v.
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`Facebook, Inc., No. 17-1120-LPS-CJB, 2019 WL 581616, slip op. at *4 (D. Del. Feb. 13, 2019)
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`8
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 12 of 17 PageID #: 1772
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`(footnote and internal quotation marks omitted, alterations in original). Each of the five
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`categories of “additions” that Realtime proposes thus fail to save its claims.
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`First, quotes from third-party “technology companies” in unrelated patent filings are
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`entirely irrelevant to the eligibility of the Fallon patents. Even accepted as true, these third-party
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`statements about a technological field generally do not establish “that the Fallon patent claims
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`improve computer functionality,” as Realtime contends. That third-parties purportedly
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`recognized a need to improve computer storage systems (D.I. 52 at 6) does not show that
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`Realtime’s claimed data compression was not conventional. As described in Netflix’s motion to
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`dismiss, and acknowledged in the asserted patents themselves, data compression was well-
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`known and widely used at the time of the purported inventions. (D.I. 13 at 3.)
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`Second, Realtime’s proposed constructions of claim terms in the asserted patents do not
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`change Judge Fallon’s analysis. Realtime proposes constructions of the following terms, which
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`in Realtime’s view limit the claims to “a technical sub-species of digital data compression”:
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`access
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`profile,
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`data
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`profile,
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`asymmetric
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`compression,
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`data
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`block,
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`and
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`compressing/compressed/compression. (D.I. 52-2 ¶ 15.) Even if correct, however, those
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`constructions do not show that the claim elements were not well-understood, routine, and
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`conventional. To the contrary, they support Judge Fallon’s finding that the claims recite
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`functional steps performed by conventional components. For example, Realtime asks the Court
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`to construe “access profile” as “information that enables the controller to select a suitable
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`compression algorithm that provides a desired balance between execution speed (rate
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`compression) and efficiency (compression ratio).” (D.I. 52-2 ¶ 15a.) As Judge Fallon found,
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`however, “[r]eciting limitations using such broad functional language without adequately
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`explaining ‘how the desired result is achieved’ is not enough . . . .” (D.I. 48 at 25 (citations
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`9
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 13 of 17 PageID #: 1773
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`
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`omitted) (emphasis in original).) Realtime’s proposed construction of “access profile” neither
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`describes how the purported inventive concept enables selection of a compression algorithm nor
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`discloses any non-conventional implementation of this idea. Realtime’s other constructions are
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`the same; they recite broad functions without specifying any non-conventional solution to
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`perform them. (D.I. 52-2 ¶ 15.)1 Realtime still fails to identify a specific solution in its patent
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`claims. See, e.g., Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC, 874 F.3d 1329, 1337,
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`1339 (Fed. Cir. 2017) (focusing on whether the claims disclosed an inventive concept), cert.
`
`denied, 139 S. Ct. 378 (2018). In any event, Realtime also waived its right to propose
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`constructions as part of the § 101 analysis because it failed to “identify any claim construction
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`issues that need resolution or any facts in dispute” before Judge Fallon. (D.I. 48 at 11); see
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`Search & Social Media Partners, 2019 WL 581616, slip op. at *3 (finding ineligibility where the
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`plaintiff “waived the opportunities . . . provided to make the claim construction argument it
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`seems belatedly to suggest that it may want to make”).
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`Third, Realtime’s statements in the amended complaint regarding the purported
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`inventiveness of certain claimed elements or combinations are conclusions, not factual
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`allegations. For example, it states for each asserted patent that “[t]he novel and unconventional
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`aspects are further confirmed by the intrinsic patent file histories,” and cites the Patent Office’s
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`1 Realtime proposes construing “data profile” as “information associating data with a
`compression algorithm” without specifying how or what information is used to select a
`compression algorithm. Its proposes a construction for “asymmetric compression”—“a
`compression algorithm in which the execution times for compression and decompression differ
`significantly”—but “[t]he use of asymmetric data compression does not significantly add to the
`abstract idea . . . .” (See, e.g., D.I. 48 at 25.) For “data block,” it proposes “a single unit of data,
`which may range in size from individual bits through complete files or collection of multiple
`files,” which suffers from
`the same defect by covering any data unit.
` And for
`“compressing/compressed/compression” it proposes “[representing/represented/representation]
`of data with fewer bits,” which simply describes operations inherent in the underlying abstract
`idea with no specific solution. None of these proposed constructions disclose a specific means of
`data compression, as Realtime contends. (D.I. 52-2 ¶ 15.)
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 14 of 17 PageID #: 1774
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`allowance of the claims over prior art. (E.g., D.I. 52-2 ¶¶ 27, 66, 103, 140.) Judge Fallon
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`already, correctly, rejected the argument that the allowance of the claims—which shows only
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`their purported “novelty”—affected the eligibility of the claims under § 101. (D.I. 48 at 21.)
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`And as to whether the claimed elements were unconventional, Realtime’s conclusory assertions
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`cannot defeat a motion to dismiss for failure to allege a patentable claim. See Glasswall Sols.
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`Ltd. v. Clearswift Ltd., 754 F. App’x 996, 999 (Fed. Cir. 2018) (holding conclusory assertions of
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`technological improvements were “not factual in nature” and did not save complaint from
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`dismissal). To create a factual dispute precluding dismissal on the pleadings based on § 101
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`invalidity, a plaintiff must allege plausible facts showing that the claimed features were
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`unconventional. Realtime alleges no such facts. But even if it had made such allegations, the
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`Court should reject them because they contradict the patents themselves. (Compare D.I. 52-2
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`¶¶ 30, 69, 106, 143 (“The limitations highlighted above are inventive over prior art and not well-
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`understood, routine or conventional.”), with ’535 patent at 14:50-52 (“It is to be appreciated that
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`the present invention may be implemented in any data processing system, device, or apparatus
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`using data compression.”); and id. at 20:1-4 (“It is to be understood that the systems and methods
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`described herein may be implemented in various forms of hardware, software, firmware, special
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`purpose processors, or combinations thereof.”); and ’907 patent at 20:20-23, ’477 patent at
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`20:29-32, and ’046 patent at 19:54-56 (same).) Amendments to the complaint cannot “replace
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`what is lacking in the intrinsic record” because the purported inventive concept must still be
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`supported by the patent claims. TriPlay, Inc. v. WhatsApp Inc., No. 13-1703-LPS-CJB, 2018
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`WL 3545500, at *2 (D. Del. July 24, 2018) (collecting cases) (distinguishing Aatrix because the
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`plaintiff failed to provide “concrete allegations” and instead broadly alleged that claim elements
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`improved inefficiencies in prior art), aff’d, --- Fed. App’x ---, 2019 WL 2564092 (Fed. Cir.
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 15 of 17 PageID #: 1775
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`June 21, 2019). Rather than adding facts, Realtime raises the same purportedly inventive
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`elements and combinations that it previously raised as legal arguments, and that Judge Fallon
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`already considered and found “conventional and generic” based on the patent disclosures.
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`(Compare D.I. 52 at 7, with D.I. 48 at 22-23.)
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`Fourth, Realtime’s attempt to avoid the representativeness of the analyzed claims are not
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`factual allegations. They are legal arguments that Judge Fallon purportedly erred in analyzing
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`certain claims as representative of the asserted patents, not plausible facts supporting the
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`eligibility of the claims. They are entitled no weight. But even as legal arguments, they fail.
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`Realtime simply cites different claim limitations with no “meaningful argument for the
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`distinctive significance of any claim limitations not found in the representative claim.”
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`Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018). (E.g., D.I. 52-2 ¶¶ 32 (“Claim 1 is
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`not representative of all claims of the ’046 patent.”), 71, 108, 145.) And it cannot seek to add
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`through amendment legal arguments it waived in briefing Netflix’s motion to dismiss. Netflix
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`argued that the Court could treat certain claims as representative, noting that Realtime’s own
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`complaint focused on a representative claim and alleged Netflix infringed additional claims “for
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`similar reasons.” (E.g., D.I. 13 at 3.) In response, Realtime did not “explain why the court
`
`should not consider the claims representative . . . .” (D.I. 48 at 10.) Realtime’s arguments now
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`are too little, too late.
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`Finally, citations to non-binding decisions from other district courts are also legal
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`argument, not factual allegations that the Court must accept as true. Realtime provides no
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`authority for the proposition that the Court must accept a non-binding decision of another district
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`court as true simply because a plaintiff copies it into a pleading. Notably, the cited decisions
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`predate Judge Fallon’s Report and Recommendation. Realtime relied on them in its opposition
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`Case 1:17-cv-01692-CFC-SRF Document 53 Filed 07/10/19 Page 16 of 17 PageID #: 1776
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`(D.I. 14 at 6-7) and Judge Fallon considered them as non-binding authority (D.I. 48 at 12). They
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`cannot save Realtime’s claims.
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`Realtime’s proposed amendment is futile, and its motion for leave to amend should be
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`denied.
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`CONCLUSION
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`Netflix respectfully requests that the Court deny Realtime’s motion for leave to file an
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`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
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`/s/ Jack B. Blumenfeld
`
`
`
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`Jack B. Blumenfeld (#1014)
`Brian P. Egan (#6227)
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