Case 6:12-cv-00375-LED Document 38 Filed 03/27/13 Page 1 of 10 PageID #: 732
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
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`UNILOC USA, INC., AND UNILOC
`LUXEMBOURG S.A.,
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`Plaintiffs,
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`v.
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`RACKSPACE HOSTING, INC., AND
`RACKSPACE US, INC.,
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`Defendants.
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`CASE NO. 6:12-CV-375
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`MEMORANDUM OPINION AND ORDER
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`Before the Court is Defendants’ Motion to Dismiss Plaintiffs’ Complaint for Failure to
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`Allege Infringement of a Patentable Claim Under 35 U.S.C. § 101 (Dkt. No. 16). After
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`considering the parties’ briefing and arguments, the Court GRANTS the motion and ORDERS
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`that the above-styled and numbered cause is hereby dismissed.
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`BACKGROUND
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`Plaintiffs, Uniloc USA, Inc. and Uniloc Luxembourg S.A. (collectively, “Uniloc”), filed
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`suit against Defendants Rackspace Hosting, Inc., and Rackspace US, Inc. (collectively,
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`“Rackspace”), alleging infringement of U.S. Patent No. 5,892,697 (“the ‘697 patent”). The ‘697
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`patent is directed to a method for processing floating-point numbers. ‘697 Patent, Col. 1:8–9.
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`Floating-point numbers are numbers in a computer that have digits to the right of the decimal
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`point. The floating-point numbers described in the ‘697 patent have at least three fields: (i) a sign
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`to indicate positive or negative; (ii) an exponent; and (iii) a mantissa, which is the body of the
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`number. Id. at 1:28–32. For a computer, processing floating-point numbers is more complex than
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`processing integers, which do not require computation of these additional fields. To unify the
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`methods for computing floating-point numbers, the Institute of Electrical and Electronics
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`Engineers (“IEEE”) implemented the IEEE Standard 754. This standard has since been broadly
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`implemented and is now found in PCs around the world.
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`The ‘697 Patent purports to increase computational efficiencies compared to the IEEE
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`Standard 754. Under the standard, the floating-point number to be processed is loaded into a
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`memory register and undergoes the necessary arithmetic operation with all its fields. At the end
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`of the process, the result is rounded. The invention, in contrast, optimizes the floating-point
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`number for processing by rounding it before the arithmetic operation.
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`Rackspace argues that the invention is not patentable subjet matter and asks the Court to
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`dismiss Uniloc’s complaint under Federal Rule of Civil Procedure 12(b)(6). Although the ‘697
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`patent in suit has twenty-seven claims, Uniloc only asserts Claim 1 against Rackspace. Dkt. No.
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`23 at 2. Therefore, only Claim 1 is at issue for the instant motion. Claim 1 reads as follows:
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`Claim 1. A method for processing floating-point numbers, each floating-point number
`having at least a sign portion, an exponent portion and a mantissa portion, comprising the
`steps of:
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`converting a floating-point number memory register representation to a floating-point
`register representation;
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`rounding the converted floating-point number;
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`performing an arithmetic computation upon said rounded number resulting in a new
`floating-point value;
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`converting the resulting new floating-point register value to a floating-point memory
`register representation.
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`‘697 Patent, Col. 14:46–56.
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`APPLICABLE LAW
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`A complaint must “state a plausible claim for relief” to survive a motion to dismiss.
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`Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009). “When the allegation in a complaint, however true,
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`could not raise an entitlement to relief, ‘this basic deficiency should . . . be exposed at the point
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`of minimum expenditure of time and money by the parties and the court.’” Bell Atlantic Corp. v
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`Twombly, 550 U.S. 544, 558 (2007) (quoting 5 WRIGHT & MILLER § 1216, at 233–34).
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`Section 101 questions of patentability may be resolved before claim construction. See Bancorp
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`Services, L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1273–74 (Fed. Cir.
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`2012) (affirming invalidation of a patent under 35 U.S.C. § 101 without claim construction).
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`Invalidity under section 101 is a question of law. In re Bilski, 545 F.3d 943, 951 (Fed. Cir. 2008).
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`In determining whether a claim is drawn to patentable subject matter, the court considers the
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`claim as a whole rather than dissecting and evaluating some elements separately from the rest.
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`Diamond v. Diehr, 450 U.S. 175, 188 (1981).
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`Section 101 of the Patent Act defines the four broad categories of patentable subject
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`matter as “any new and useful process, machine, manufacture, or composition of matter, or any
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`new and useful improvement thereof . . . .” 35 U.S.C. § 101 (2006). “In choosing such expansive
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`terms . . . modified by the comprehensive ‘any,’ Congress plainly contemplated that the patent
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`laws would be given wide scope.” Bilski v. Kappos, 561 U.S. __, 130 S. Ct. 3218, 3225 (2010)
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`(“Bilski II”) (quoting Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980)).
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`Although section 101 encompasses a broad domain of patentable subject matter, the
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`Supreme Court has recognized three exceptions: “laws of nature, physical phenomena, and
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`abstract ideas.” Chakrabarty, 447 U.S. at 309. Laws of nature and physical phenomena are not
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`patentable subject matter “because those categories embrace ‘the basic tools of scientific and
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`technological work.’” Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 868 (Fed.
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`Case 6:12-cv-00375-LED Document 38 Filed 03/27/13 Page 4 of 10 PageID #: 735
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`Cir. 2010) (quoting Gottschalk v. Benson, 409 U.S. 63, 67, 93 S. Ct. 253 (1972)). The
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`application of such laws and formulae, however, may fall within the bounds of patentability
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`marked by section 101. Diehr, 450 U.S. at 187. Furthermore, while abstractness places subject
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`matter outside the statutory categories, “inventions with specific applications or improvements to
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`technologies in the marketplace are not likely to be so abstract that they override the statutory
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`language and framework of the Patent Act.” Research Corp., 627 F.3d at 868–69.
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`ANALYSIS
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`Defendants argue that Claim 1 is unpatentable subject matter because it fails the Federal
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`Circuit’s “machine-or-transformation” test and violates the Supreme Court’s bright-line
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`prohibition against patenting mathematical formulas and abstract ideas. Although Uniloc
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`originally questioned the timing of Defendants’ section 101 validity arguments, Uniloc agrees to
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`resolution of this issue on the merits at this stage to advance the litigation. Dkt. No. 23 at 1–2.
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`Machine-or-Transformation Test
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`The machine-or-transformation test is “a useful and important clue” for determining
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`patent eligibility of inventions. Bilski II, 130 S. Ct. at 3227. According to the machine-or-
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`transformation test, a process may be patentable if it “(1) is tied to a particular machine or
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`apparatus, or (2) it transforms a particular article into a different state or thing.” Id. at 3225–26.
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`However, The Supreme Court has clarified that it “is not the sole test” of patent eligibility. Id.
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`Thus, Claim 1 is analyzed under the machine-or-transformation test, as a useful clue to determine
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`patentability, but that does not end the inquiry.
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`Defendants argue that Claim 1 fails the machine prong because it recites no machine
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`whatsoever. Dkt. No. 16 at 15. They also argue that, under Benson, the transformation portion of
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`the test is not satisfied by the conversion of a number from one format to another. Id. (citing
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`Benson, 409 U.S. at 70). Defendants contend that the floating-point-register representations in
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`Claim 1 are simply formats in which certain numbers are presented, thus there is no meaningful
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`transformation. Id. Plaintiffs cursorily respond that Information Age inventions are less suited
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`than Industrial Age inventions for analysis under the machine-or-transformation test, but do not
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`present further argument on this point. Dkt. No. 23 at 11.
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`Claim 1 of the ’697 patent does not recite a machine. It only recites steps to manipulate a
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`floating-point number, to perform an arithmetic computation with it, and to produce another
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`representation of a number. Therefore, the claim fails the machine prong of the test.
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`Claim 1 also fails the transformation prong of the test. Mere manipulation of data does
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`not result in a meaningful transformation. See Cybersource Corp. v. Retail Decisions, Inc., 654
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`F.3d 1366, 1375 (Fed. Cir. 2012) (“mere manipulation or reorganization of data . . . does not
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`satisfy the transformation prong”); see also Bancorp, 687 F. 3d at 1273 (affirming invalidity of
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`patent that failed the transformation test because it did “not transform the raw data into anything
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`other than more data”). Claim 1 involves converting the floating-point number into a different
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`format, performing an arithmetic operation, and converting the result back to the original
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`floating-point number format. This is merely manipulating data. Thus, Claim 1 does not satisfy
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`the transformation prong either.
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`However, the fact that Claim 1 does not pass the machine-or-transformation test does not,
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`alone, render it patent-ineligible. See Bilski II, 130 S. Ct. at 3227.
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`Exceptions to Patentability
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`The pertinent question to determine patent eligibility is whether the claim at issue is
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`drawn to one of “three specific exceptions to section 101’s broad patent-eligibility principles:
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`laws of nature, physical phenomena, and abstract ideas.” Bilski II, 130 S. Ct. 3218, 3225 (2010)
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`(internal quotations omitted). Specifically, the question is whether Claim 1 recites a
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`mathematical formula and therefore falls under the “law of nature” exception to patentability.
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`Patentability of mathematical formula
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`Defendants argue that Claim 1 covers unpatentable subject matter under Benson because
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`it recites nothing more than mathematical steps for a numerical conversion. Dkt. No. 16 at 8–9.
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`Defendants note that in Benson, the claims recited a general method for converting numbers
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`between different representations, and the Supreme Court found them unpatentable as a
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`mathematical formula. Id. (citing Benson, 409 U.S. at 64, 67–68). Defendants contend that Claim
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`1 likewise processes a type of number by converting it from one numerical representation to
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`another, then subjects it to an arithmetic operation to arrive to a new value, which is then
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`converted back to the original numerical representation. Id. Thus, Defendants argue that Claim 1,
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`similar to the Benson claims, is drawn to an unpatentable process to convert a number from one
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`numerical representation to another. Id. at 9.
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`Plaintiffs argue that, unlike the claims in Benson, Claim 1 is not a mathematical formula.
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`Dkt. No. 23 at 8. Plaintiffs argue that in Benson, the method claim recited specific steps of
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`mathematical operations, such as shifting and adding. Dkt. No. 27 at 3 (citing Benson, 409 U.S.
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`at 64). Plaintiffs contend that Claim 1, by contrast, recites no identifiable mathematical formula.
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`Id. Instead, Plaintiffs note that Claim 1 merely contemplates rounding a number, followed by any
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`type of mathematical operation. Id., at 3–4. Thus, Plaintiffs contend that Claim 1 is not directed
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`to a specific mathematical operation, and is not barred by the Supreme Court’s Benson decision.
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`Id.
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`In Benson, the Supreme Court determined the patent claims were directed to a
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`“generalized formulation for programs to solve mathematical problems of converting one form
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`of numerical representation to another.” Benson, 409 U.S. at 65. Specifically, the claims
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`involved a method for converting binary-coded-decimal numerals into pure binary numerals for
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`use with a computer, through a series of shifting and adding steps. Id. at 64. This method differed
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`from “ordinary arithmetic steps” only by “changing the order of the steps, changing the
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`symbolism or writing the multiplier used in some steps, and by taking subtotals after each
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`successive operation.” Id. at 67. The Court held that granting a patent on such claims would
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`“wholly pre-empt the mathematical formula and in practical effect . . . be a patent on the
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`algorithm itself.” Id. at 72. Therefore, the Court held that the claimed process was unpatentable.
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`Id. at 65.
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`Claim 1 is, in essence, a formula to “solve mathematical problems of converting one form
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`of numerical representation to another.” Benson, 409 U.S. at 65. Claim 1 recites a four-step
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`method for processing floating-point numbers: (1) convert the floating-point number from a
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`“memory register representation” to a “register representation”; (2) round the result; (3)
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`“perform[] an arithmetic computation” on the rounded result to obtain a new floating-point
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`number; and (4) convert[] the result back to a “memory register representation.” ‘697 Patent,
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`Col. 14:46–56. Plaintiffs argue that the arithmetic operation is not restricted to a specific addition
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`or subtraction. Dkt. No. 23 at 8. Although the type of computation that can fulfill the computing
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`step is not specified, it is limited to an arithmetic operation. The previous step, which involves
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`rounding a number, is also an arithmetic operation. Essentially, Claim 1 uses numeric
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`conversions and arithmetic operations in a prescribed procedure to solve a mathematical
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`problem. Therefore, just as in Benson, Claim 1 discloses a “procedure for solving a given type of
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`mathematical problem.” Benson, 409 U.S. at 65. Consequently, granting a patent on Claim 1
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`would “pre-empt the mathematical formula and in practical effect . . . be a patent on the
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`algorithm itself.” Id. at 72. Under Benson, Claim 1 is a mathematical formula that is unpatentable
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`under section 101.
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`Patentability of improvement on a mathematical formula
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`Defendants further argue that Claim 1 is unpatentable even if it is an improvement of the
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`IEEE Standard 754. Dkt. No. 25 at 8. In Flook, the Supreme Court found unpatentable claims
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`directed to an improved method for calculating, using a generalized formulation for converting
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`numbers. Id. at 10 (citing Parker v. Flook, 437 U.S. 584, 585 (1978)). Defendants argue that
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`Claim 1 is similar to the Flook claims because it is only an improvement to a known method for
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`processing floating-point numbers. Id. Further, because Claim 1 is not drawn to a specific type of
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`arithmetic computation or specific applications, Defendants contend that the exclusionary rights
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`from such a patent would reach across broad realms. Id. at 8. Thus, Defendants argue that Claim
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`1 is unpatentable under section 101. Id. at 10.
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`Plaintiffs contend that Claim 1 differs from the claims found unpatentable in Flook,
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`because those claims disclosed a mathematical formula and defined a specific set of variables.
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`Dkt. No. 23 at 8–9. Plaintiffs reiterate that Claim 1 recites no particular mathematical formula.
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`Id. Further, Plaintiffs argue that the ‘697 Patent claims improvements to the IEEE 754 standard,
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`which has already been implemented in many processors. Id. Thus, Plaintiffs contend that Claim
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`1 is patentable as “a definite and substantive advancement to a concrete industry standard.” Id.
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`at 10.
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`The Flook claims involved a process for updating alarm limits during a catalytic-
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`conversion process. Flook, 437 U.S. at 585. The process entailed gathering current temperature
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`values, using an algorithm to calculate an updated alarm limit value based on these temperatures,
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`and adjusting the alarm limit to the newly calculated value. Id. The respondent conceded that the
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`algorithm for computing the alarm limit was the only novel feature of the claimed method. Id. at
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`588. Thus, the process of gathering temperature data, calculating an alarm limit, and updating the
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`alarm limit was already known in the art. Id. The Flook claimants had merely devised a better
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`algorithm for calculating the alarm limit. Id. The Court noted that the algorithm had a practical
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`and limited application—“computerized calculations producing automatic adjustments in alarm
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`settings”—but determined that this specific purpose was insufficient to validate an otherwise
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`unpatentable claim. Id. at 595. Thus, the Court determined that “a claim for an improved method
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`of calculation . . . is unpatentable subject matter under § 101.” Id. at 595 n.18.
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`“[I]nventions with specific applications or improvements to technologies in the
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`marketplace [may not] be so abstract that they override the statutory language and framework of
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`the Patent Act.” Research Corp., 627 F.3d at 869. However, according to the patent itself, the
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`claims’ novelty and improvement over the standard is the rounding of the floating-point number
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`before, rather than after, the arithmetic computation. ‘697 Patent Col. 4:32–48. So, as in Flook,
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`Claim 1 merely constitutes an improvement on the known method for processing floating-point
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`numbers. Id. at 595 n.18. Claim 1, then, is merely an improvement on a mathematical formula.
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`Even when tied to computing, since floating-point numbers are a computerized numeric format,
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`the conversion of floating-point numbers has applications across fields as diverse as science,
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`math, communications, security, graphics, and games. Thus, a patent on Claim 1 would cover
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`vast end uses, impeding the onward march of science. Benson, 409 U.S. at 68. Under Flook, the
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`improvement over the standard is insufficient to validate Claim 1’s otherwise unpatentable
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`subject matter.
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`CONCLUSION
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`For the reasons stated herein, the Court GRANTS Defendants’ Motion to Dismiss
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`Plaintiffs’ Complaint for Failure to Allege Infringement of A Patentable Claim Under 35 U.S.C.
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`§ 101.
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`__________________________________
`LEONARD DAVIS
`UNITED STATES DISTRICT JUDGE
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`So ORDERED and SIGNED this 27th day of March, 2013.
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