Data Distribution Technologies, LLC v. BRER Affiliates, Inc., Slip Copy (2014)
`2014 WL 4162765
`
`2014 WL 4162765
`Only the Westlaw citation is currently available.
`United States District Court,
`D. New Jersey.
`
`DATA DISTRIBUTION
`TECHNOLOGIES, LLC, Plaintiff,
`v.
`BRER AFFILIATES, INC., et al., Defendants.
`
`Civil No. 12–4878 (JBS/
`KMW).
` | Signed Aug. 19, 2014.
`
`Attorneys and Law Firms
`
`Stephen F. Roth, Esq., Alexander Solo, Esq., Lerner, David,
`Littenberg, Krumholz & Mentlik, LLP, Westfield, NJ, for
`Plaintiff Data Distribution Technologies LLC.
`
`Michael P. Sandonato, Esq., Jason Dorsky, Esq., Fitzpatrick,
`Cella, Harper & Scinto, New York, NY, for Defendant
`Prudential Financial, Inc.
`
`John J. Murphy, III, Esq., Stradley, Ronon, Stevens & Young,
`LLP, Cherry Hill, NJ, for Defendant Prudential Financial, Inc.
`
`Christopher H. Strate, Esq., James June–Ho Kang, Esq.,
`David E. Delorenzi, Esq., Gibbons, PC, Newark, NJ, for
`Defendant Brer Affiliates Inc.
`
`OPINION
`
`SIMANDLE, Chief Judge.
`
`I. INTRODUCTION
`*1 Plaintiff Data Distribution Technologies LLC (“DDT”)
`brought this action against Defendants BRER Affiliates, Inc.,
`(“BRER”) 1 and Prudential Financial, Inc., (“Prudential”)
`alleging infringement of U.S. Patent No. 6,529,908 (“#908
`Patent”), which is titled “Web–Updated Database With
`Record Distribution By Email” and which DDT owns by
`assignment.
`
`Defendants filed a joint motion to dismiss [Docket Item 35]
`asserting that the ′908 Patent is ineligible for patent protection
`under 35 U.S.C. § 101 because it is directed at an abstract
`idea. The principal issues are whether the Court can assess
`invalidity under § 101 before formal claim construction, and,
`
`if so, whether the ′908 Patent is, in fact, ineligible for patent
`protection according to the abstractness test articulated in
`Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347
`(2014). For the reasons discussed herein, while Defendants
`persuasively argued that the ′908 Patent is ineligible, the
`Court will deny Defendants' motion without prejudice. At this
`procedural posture, the Court cannot hold, based on clear and
`convincing evidence, that there is no plausible construction
`of the ′908 Patent's claims that would satisfy the abstractness
`test. Defendants may resubmit their abstractness arguments
`at a later date, when there is a more complete record before
`the Court.
`
`II. BACKGROUND
`
`A. Factual Background
`
`1. The ′908 Patent
`The ′908 Patent was filed on May 28, 1998 and issued on
`March 4, 2003. (′908 Patent [Docket Item 29–1] at [22];
`Am. Compl. ¶ 5 .) DDT owns this patent by assignment
`and, on March 6, 2013, DDT sent notices of infringement to
`Defendants. (Am.Compl.¶¶ 6–7.)
`
`The ′908 Patent describes “[a] remotely updatable database
`system method and computer readable medium” that
`“includes a user interface, a database of information records,
`a database manager, and a message server.”(#908 Patent
`at [57].) The user interface communicates with subscriber
`systems to receive user input, associate records with users,
`amend records in response to user input, and send messages
`regarding the records. (Id.) Computer readable codes direct
`the computer to perform the method. (Id.) The invention
`“addresses the need for immediate access to database
`records and the need to notify users of changes to database
`records.”(Id. col. 1 ll. 46–48.) It “provide[s] real estate agents
`access to real estate information ....“ (Id. col. 8 ll. 35–36.)
`Subscribers use the system to produce and update building
`information records, and then the patented system sends
`messages, which include building records. (Id. col. 8 ll.
`41–44.) “[T]he invention is applicable whenever a dynamic
`database is to be disseminated down to a regular user group,
`on a frequent basis.” (Id. col. 1 ll. 56–58.)
`
`The invention remedies inefficiencies including: “real time
`limitations associated with the Internet,” “time lag,” “a
`relatively large amount of time” required for “the transfer of
`relatively large files to a user's browser,” and “frustrati[on]
`
` © 2015 Thomson Reuters. No claim to original U.S. Government Works.
`
`1
`
`Ocean Tomo Ex. 1022-001
`
`

`
`Data Distribution Technologies, LLC v. BRER Affiliates, Inc., Slip Copy (2014)
`2014 WL 4162765
`
`especially if the user is attempting to provide information ...
`while the customer or client is waiting.”(Id. col. 1 ll. 12–32.)
`
`amending information records in response to user input. (Id.
`¶ 15.)
`
`*2 The system uses a simple mail transfer protocol, which
`“allows the database system to send a message containing
`any type of file,”“allows users to receive and accumulate
`messages at a predefined message server and to retrieve such
`messages at any time or at their discretion,” and “allows a
`user to selectively review messages received over a period
`of time.”(Id. col. 6 ll. 43–51.) “[T]he use of the simple mail
`transfer protocol gives the database system the ability to
`target all users or as few as a single user, each with a unique
`message.”(Id. col. 6 ll. 52–54.)
`
`Plaintiff alleges the Prudential System directly infringes the
`′908 Patent by maintaining, updating, and emailing real
`estate information corresponding to buyers' profiles and saved
`searches. (Id. ¶ 16.)
`
`Plaintiff also alleges indirect patent infringement because
`Defendants encouraged potential buyers to violate the ′908
`Patent, including claim 22 specifically, by instructing users to
`create profiles, save searches, add comments, and sign up for
`email alerts. (Id. ¶ 21.)
`
`“[a] method of maintaining
`Claim 22 describes
`and distributing database information,” which includes
`“communicating with at least one subscriber system to
`receive user input ...”; “maintaining a database of information
`records”; “maintaining user records in said database and
`linking said user records with said information records”;
`“controlling said database such that each information record
`is associated with at least one user ...”; “amending said
`information records in response to user input ...”; “serving
`said message ... to said at least one user associated with said
`information record.”(Id. col. 26 ll. 1–19.)
`
`The ′908 Patent's “technology ... is adaptable to any number
`of software platforms.”(Id. col. 23 ll. 49–50.) The ′908
`Patent does not explain how a software platform would be
`programmed.
`
`2. Defendants' Alleged Conduct
`Plaintiff alleges
`that Defendant Prudential previously
`operated and Defendant BRER currently operates an online
`real estate system (“Prudential System”) that maintains
`records about real estate properties. (Am.Compl.¶ 10.) The
`Prudential System allows potential buyers to create profiles
`and to conduct searches, which are saved in a database. (Id.
`¶¶ 11–12.)The Prudential System emails potential buyers
`if a new real estate listing matches their profiles or their
`searches. (Id. ¶ 13.)It also permits users to make and save
`notes regarding listings. (Id. ¶ 14.)
`
`Plaintiff alleges that the Prudential System performs the
`patented method of maintaining and distributing database
`information, including communicating with systems to
`receive user input, maintaining user records, sending
`messages with information relating to users' records, and
`
`Plaintiff alleges that Defendants caused irreparable harm,
`their infringement is willful and deliberate, and this case is
`exceptional. (Id. ¶¶ 23–24.)
`
`*3 Plaintiff seeks an order adjudging Defendants to have
`infringed the ′ 908 Patent, a permanent injunction, damages,
`and costs, while in this motion the Defendants seek a
`declaration that the ′908 Patent, including its 100 claims, is
`directed at an abstract idea and therefore is not patentable
`under § 101.
`
`B. Jurisdiction
`The Court has original jurisdiction pursuant to 28 U.S.C. §
`1338(a).
`
`C. Procedural History
`After Defendants filed their motion [Docket Item 35],
`Plaintiff filed a letter [Docket Item 38] asking the Court to
`adjourn the motion to dismiss as premature and improper.
`Defendants responded via letter [Docket Item 39] that their
`motion was proper and meritorious and asked the Court to
`consider the two letters as the parties' respective opposition
`and reply briefs. The Court informed counsel that it would
`“adjudicate this motion on the merits as filed. If it is premature
`or otherwise meritless, then I will deny the motion ....
`“ [Docket Item 40 at 1.]
`
`The Court originally scheduled oral argument for January
`31, 2014. On December 6, 2013, the Supreme Court granted
`certiorari in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134
`S.Ct. 734 (2013), to address the question of “[w]hether claims
`to computer-implemented inventions-including claims to
`systems and machines, processes, and items of manufacture-
`are directed to patent-eligible subject matter within the
`
` © 2015 Thomson Reuters. No claim to original U.S. Government Works.
`
`2
`
`Ocean Tomo Ex. 1022-002
`
`

`
`Data Distribution Technologies, LLC v. BRER Affiliates, Inc., Slip Copy (2014)
`2014 WL 4162765
`
`meaning of 35 U.S.C. § 101....“ Petition for Writ of Certiorari,
`Alice, 2013 WL 4768483, at *i (No. 13–298). Plaintiff
`asked the Court to adjourn the oral argument pending the
`Supreme Court's decision in Alice.[Docket Item 49.] The
`Court granted Plaintiff's request and directed the parties to
`submit supplemental briefs discussing Alice 's import after the
`Supreme Court's decision. [Docket Item 52 at 6–7.]
`
`The Court's Order staying adjudication of the motion also
`noted that “a petition for certiorari has been filed in
`Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1342
`(Fed.Cir.2013),” and that, “[i]f the Supreme Court grants
`certiorari, it may clarify the circumstances under which a
`district court can adjudicate subject matter eligibility at the
`pleading stage.”[Docket Item 52 at 5–6.] The Court directed
`that, if the Supreme Court granted certiorari in Ultramercial,
`then the parties' supplemental briefs should also discuss that
`case.
`
`The Supreme Court issued Alice Corp. Pty. Ltd. v. CLS
`Bank Int'l, 134 S.Ct. 2347 (2014), on June 19, 2014. The
`Supreme Court granted certiorari in Ultramercial on June 30,
`2014, vacated the judgment, and remanded the case to the
`Federal Circuit. Because there was no substantive opinion, the
`vacating of Ultramercial did not impact the briefing schedule.
`
`The parties submitted supplemental briefs [Docket Items 63
`& 65], and the Court held oral argument on August 11, 2014.
`
`D. Parties' Arguments
`
`1. Original Briefing
`Defendants argue that: the Amended Complaint should be
`dismissed because the ′ 908 Patent covers an abstract idea;
`the ′908 Patent's use of a computer to implement the abstract
`idea does not render it eligible for protection; the ′908 Patent
`“is directed to nothing more scientific or technical than the
`abstract idea of sending an email message to users when
`changes in the database are made” and “does not describe how
`a computer might be programmed to carry-out the supposed
`invention,” (Def. Br. at 3); “once the generic computer jargon
`is stripped away, all that remains is an abstract idea that
`could be carried-out with paper, pen and human thoughts
`and motions,” (Def. Br. at 12); a 12(b)(6) motion is the
`proper procedural posture for determining whether the patent
`is ineligible; and the ′908 Patent fails both the machine and
`transformation prongs of the machine-or-transformation test.
`
`*4 In opposition [Docket Item 41], Plaintiff asserts that:
`Defendants' motion is premature and meritless; “[t]he ′908
`Patent includes 30 pages of figures, 12 pages of written
`description, and 100 claims of various scope that, together,
`describe in detail a computer system that is specifically
`programmed to perform useful functions,” (Pl. Opp'n at
`2); the ′908 Patent is a specific invention related to the
`computer science field, not an abstract idea implemented
`on a general purpose computer; the ′908 Patent describes
`exemplary algorithms, software, and hardware; Defendants'
`motion circumvents the Local Patent Rules by skipping the
`claim construction process; the Court can only find invalidity
`under § 101 if Defendants show by clear and convincing
`evidence that the only plausible construction renders the
`claimed subject matter ineligible; factual issues preclude
`determination of the ′908 Patent's validity at this procedural
`stage before claim construction; the factual disputes “need to
`be resolved with an assistance of an expert, or an individual
`with an appropriate level of skill in the art,” (Pl. Opp'n at 9); a
`human could not perform the patented system's tasks because
`the ′908 Patent specifically enables the sending of messages
`containing multiple records; and the ′908 Patent satisfies the
`machine prong of the machine-or-transformation test.
`
`2. Post-Alice Briefing
`Defendants argue that Alice supports their motion because the
`Supreme Court held that the Alice patents were directed to
`an abstract idea, that a generic computer cannot transform an
`ineligible abstract idea into a patent-eligible invention, and
`that elements such as data storage unit or data processing
`system cannot salvage a claim. Defendants also noted
`that Plaintiff relied extensively on the Federal Circuit's
`Ultramercial decision in its opposition brief and the Supreme
`Court vacated that decision. Defendants assert that the ′908
`Patent's claims are at least as expansive as those before
`the Supreme Court in Alice, if not more so because the
`claims in Alice recited “shadow credit records” and “shadow
`debit records.” Furthermore, Defendants assert that the ′908
`Patent recites generic computer elements without meaningful
`limitations.
`
`In response, Plaintiff argues that the Supreme Court's Alice
`decision supports the ′908 Patent's eligibility because the ′908
`Patent's claims are directed to a nonabstract technological
`improvement in the art of computer science. Plaintiff also
`argues that Defendants' motion is premature because the
`Court has not yet conducted claim construction. Plaintiff
`notes that the Court must assess the ′908 Patent's eligibility
`based on its claims, not Defendants' reworded version in
`
` © 2015 Thomson Reuters. No claim to original U.S. Government Works.
`
`3
`
`Ocean Tomo Ex. 1022-003
`
`

`
`Data Distribution Technologies, LLC v. BRER Affiliates, Inc., Slip Copy (2014)
`2014 WL 4162765
`
`which Defendants “stripped away” key language. The ′908
`Patent's inventor was not attempting to monopolize a broad
`abstract idea, which was the Supreme Court's primary
`concern in Alice, and, instead, the inventor claimed a specific
`and narrow technological improvement related to database
`management and electronic mail transfer protocol. 2
`
`III. STANDARD OF REVIEW
`*5 A complaint will survive a motion to dismiss if it contains
`sufficient factual matter to “state a claim to relief that is
`plausible on its face.”Ashcroft v. Iqbal, 556 U.S. 662, 678
`(2009) (quotation omitted). Although a court must accept
`as true all factual allegations in a complaint, that tenet is
`“inapplicable to legal conclusions,” and “[a] pleading that
`offers labels and conclusions or a formulaic recitation of
`the elements of a cause of action will not do.”Id. (quotation
`omitted).
`
`“A patent shall be presumed valid .... The burden of
`establishing invalidity of a patent or any claim thereof shall
`rest on the party asserting such invalidity.”35 U.S.C. § 282(a).
`In determining the § 101 eligibility of the ′908 Patent, “claims
`must be considered as a whole.”Diamond v. Diehr, 450 U.S.
`175, 188 (1981).“A party seeking to establish that particular
`claims are invalid must overcome the presumption of validity
`in 35 U .S.C. § 282 by clear and convincing evidence.”State
`Contracting & Eng'g Corp. v. Condotte Am., Inc., 346 F.3d
`1057, 1067 (Fed.Cir.2003).
`
`IV. ANALYSIS
`
`A. Claim Construction Is Not Mandatory, But Is
`Advisable Here
`While claim construction is not mandatory, the Court finds
`that it is advisable under the circumstances of this case and at
`this procedural posture.
`
`1. Claim Construction Is Not Required
`“[C]laim construction is not an inviolable prerequisite to a
`validity determination under § 101.”Bancorp Servs., L.L.C. v.
`Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1273.
`(Fed.Cir.2012).
`
`Where appropriate, district courts have adjudicated subject
`matter eligibility before claim construction. See, e.g.,
`DietGoal Innovations LLC v. Bravo Media LLC, Civ. 13–
`8391, ––– F.Supp.2d ––––, 2014 WL 3582914, at *16
`
`(S.D.N.Y. July 8, 2014) (“the computerized process disclosed
`in the ′516 Patent is invalid under § 101, under any reasonable
`construction. Claim construction would not assist the Court
`in resolving the § 101 claim of invalidity”); Sinclair–
`Allison, Inc. v. Fifth Ave. Physician Servs., LLC, Civ. 12–
`360–M, 2012 WL 6629561, at *2 (W.D.Okla. Dec. 19,
`2012), aff'd,530 F. App'x 939 (Fed.Cir.2013) (“there is no
`requirement that claims construction be completed before
`examining patentability”).
`
`Courts have indeed dismissed patent suits on the pleadings
`because the patents were ineligible under § 101. See,
`e.g., Lumen View Tech. LLC v. Findthebest.com, Inc., 984
`F.Supp.2d 189, 205 (S.D.N.Y.2013) (granting judgment on
`the pleadings because “[t]he claimed process elements of
`Claim 1 are straightforward. No components are opaque
`such that claim construction would be necessary to flush out
`its contours”); Cardpool, Inc. v. Plastic Jungle, Inc., Civ.
`12–04182, 2013 WL 245026, *3 (N.D.Cal. Jan. 22, 2013)
`(“[t]here is no authority for the proposition that a patent
`may not be deemed ineligible subject matter on a motion
`to dismiss”); OIP Technologies, Inc.i v. Amazon.com, Inc.,
`C–12–1233, 2012 WL 3985118, at *5 (N.D.Cal. Sept. 11,
`2012) (“the procedural posture of this case does not render
`Amazon's [12(b)(6) ] motion premature”).
`
`*6 Plaintiff also argues that the Local Patent Rules mandate
`a specific procedure that Defendants may not circumvent with
`their 12(b)(6) motion. This argument lacks merit. There is no
`provision in the Local Patent Rules precluding adjudication
`of of § 101 eligibility before formal claim construction.
`The Local Patent Rules of the District of New Jersey,
`codified at L. Civ. R. 9.3, specify the general ordering of
`procedures in patent cases. Significantly, the Local Patent
`Rules delineate procedures for the exchange of information
`and contentions. These procedures commence at the initial
`scheduling conference, see L. Civ. R. 2.1 et seq., which
`occurs after the filing of an initial answer, see L. Civ. R.
`16.1(a)(1). If a motion to dismiss is filed, the Court must
`adjudicate that motion before requiring Defendants to file an
`answer. SeeFed.R.Civ.P. 12. Thus, a Rule 12(b)(6) motion
`may be filed and adjudicated in a patent case before the
`special provisions of the Local Patent Rules are applied
`to the post-answer practice and procedure. Essentially, the
`Local Patent Rules are consistent with the Federal Rules
`of Civil Procedure and do not require claim construction
`before adjudicating a motion to dismiss addressing § 101
`eligibility. If, however, claim construction is necessary to
`a determination of patentability, then it must occur before
`
` © 2015 Thomson Reuters. No claim to original U.S. Government Works.
`
`4
`
`Ocean Tomo Ex. 1022-004
`
`

`
`Data Distribution Technologies, LLC v. BRER Affiliates, Inc., Slip Copy (2014)
`2014 WL 4162765
`
`the patentability issue can be determined, presumably as a
`summary judgment motion.
`
`Moreover, the Local Rules “supplement the Federal Rules of
`Civil Procedure ... and are applicable in all proceedings when
`not inconsistent therewith.”L. Civ. R. 1.1(a). The Federal
`Rules of Civil Procedure permit early dismissal of complaints
`that fail to state claims upon which relief can be granted,
`and before an answer has been filed or discovery has been
`exchanged. The Local Patent Rules do not supersede the
`Federal Rules of Civil Procedure.
`
`2. Claim Construction Is Advisable Here
`Even though neither the Federal Rules of Civil Procedure
`nor the Local Rules require claim construction before
`adjudicating subject matter eligibility, the Court still finds
`it advisable here. The Federal Circuit cautioned that “it
`will ordinarily be desirable—and often necessary—to resolve
`claim construction disputes prior to a § 101 analysis,
`for the determination of patent eligibility requires a full
`understanding of the basic character of the claimed subject
`matter.”Bancorp, 687 F.3d at 1273–74.
`
`If the Court is going to invalidate the ′908 Patent on
`subject matter eligibility grounds before claim construction,
`then Defendants must “establish that the only plausible
`construction [i]s one that, by clear and convincing evidence
`render[s] the subject matter ineligible (with no factual
`inquiries) ....“ Clear with Computers, LLC v. Dick's Sporting
`Goods, Inc., ––– F.Supp.2d ––––, Civ. 12–674, 2014 WL
`923280, *3 (E.D.Tex. Jan. 21, 2014). Alternatively, the
`Court may “adopt[ ] a construction most favorable to
`the patentee ....“ Id.(quotation omitted).See also Content
`Extraction & Transmission LLC v. Wells Fargo Bank, Nat.
`Ass'n, Civ. 12–2501, 2013 WL 3964909, at *5 (D.N.J.
`July 31, 2013) (in adjudicating 12(b)(6) motion, noting that
`“in the current procedural posture, the Court must adopt a
`construction of the claims most favorable to the patentee”)
`(quotation omitted).
`
`*7 In UbiComm, LLC v. Zappos IP, Inc., Civ. 13–1029,
`2013 WL 6019203 (D.Del. Nov. 13, 2013), the district
`court granted a 12(b) (6) motion to dismiss and rejected the
`plaintiff's argument that the “lack of an evidentiary record,
`together with the application of the strong presumption of
`patentability to claimed subject matter and the high bar
`required by Rule 12(b)(6) by themselves provide ample
`justification for denying Defendant's Motion.”Id. at *6
`(quotation omitted). The UbiComm case is different from the
`
`present case because the UbiComm plaintiff submitted its
`proposed claim constructions at the district court's request,
`and the district court used those proposed constructions in
`conducting the § 101 eligibility inquiry. Id. at *3 n. 2, *6 n. 6.
`Furthermore, “[a]t oral argument, ... Plaintiff stated that the
`case was ‘teed up for decision.’ “ Id. at *6.
`
`Some courts have chosen to deny motions to dismiss without
`prejudice to refiling the motion after claim construction. For
`example, in Zillow, Inc. v. Trulia, Inc., Civ. 12–1549, 2013
`WL 4782287, at *7 (W.D.Wash. Sept. 6, 2013), the district
`court held that “going through the claim construction process
`(although not always required) may assist the court” and
`“[i]t is entirely possible that following such a hearing, the
`court will be convinced that the claims at issue do recite
`patentable subject matter.”Admittedly, the Zillow court relied
`on the Ultramercial decision, which has since been vacated,
`but its reasoning was sound. In Sandborn v. Avid Tech., Inc.,
`Civ. 11–11472, 2013 WL 4784265, at *5 (D.Mass. Sept. 5,
`2013), the district court denied a motion for judgment on the
`pleadings because “Defendant has not clearly established, at
`least at this stage, that the only plausible construction of the
`patented claims results in an unpatentable mental process, nor
`has it clearly established that no construction of the term could
`provide sufficient limitations on the abstract concept. Taken
`in the light most favorable to the plaintiff, it is not clear that
`the claims necessarily constitute mental processes or abstract
`ideas.”The Sanborn court concluded that “[t]he question of
`what limitations are, or are not, included in the claim terms
`is ... inherently tied up with the process of claim construction.
`Because this Court has not engaged in any claim construction,
`it cannot make any final determination as to whether the terms
`of the claims are sufficiently restricted to an application of an
`abstract idea, rather than an abstract idea itself .”Id. at *6.
`
`Plaintiff asserts that claim construction will conclusively
`establish subject matter eligibility because “once this process
`is performed, it would be apparent that the claims of the ′908
`Patent are not abstract, are tied to a specifically programmed
`computer rather than a general-purpose computer, and are
`patenteligible.”(Pl. Opp'n at 6–7.) Plaintiff argues that the
`Court must construe many terms, such as program codes,
`compressed format, user transfer field, and message, to
`understand the basic character of the ′908 Patent before
`assessing subject matter eligibility. Plaintiff has not provided
`proposed constructions and has no obligation to do so at this
`time. 3 In Cyberfone Sys., LLC v. CNN Interactive Grp., Inc.,
`558 F. App'x 988, 992 n. 1 (Fed.Cir.2014), the Federal Circuit
`discarded the plaintiff's argument that “claim construction
`
` © 2015 Thomson Reuters. No claim to original U.S. Government Works.
`
`5
`
`Ocean Tomo Ex. 1022-005
`
`

`
`Data Distribution Technologies, LLC v. BRER Affiliates, Inc., Slip Copy (2014)
`2014 WL 4162765
`
`must precede the § 101 analysis” because the plaintiff “d[id]
`not explain which terms require construction or how the
`analysis would change.”In this case, Plaintiff has identified at
`least some terms that must be construed and, while Plaintiff
`has not offered much description of how construing those
`claims would change the analysis, this case is at a much earlier
`procedural posture than CyberFone was. In CyberFone, the
`subject matter eligibility inquiry occurred after discovery was
`“underway,” pursuant to a motion for summary judgment.
`CyberFone Sys., LLC v. Cellco P'ship, 885 F.Supp.2d 710,
`711 (D.Del.2012).
`
`*8 Fundamentally, to find lack of patent eligibility as a
`matter of law, the Court must ensure that Defendants have
`shown by clear and convincing evidence either that no
`plausible construction of Plaintiff's claims would satisfy the
`abstractness test or that the constructions most favorable to
`Plaintiff would not satisfy the test. It appears that, as in
`UbiComm, the best way for a court to apply constructions
`most favorable to the plaintiff is to apply the plaintiff's
`proposed constructions. See also, Gametek LLC v. Zynga,
`Inc., Civ. 13–2546, 2014 WL 1665090, at *3 (N.D.Cal. Apr.
`25, 2014) (“When a § 101 motion is brought, as here, before
`formal claim construction, the court will adopt the patentee's
`proffered construction.”)
`
`Here, Plaintiff has not submitted its proposed constructions,
`and the Court is reluctant to presume, sua sponte, the
`constructions that would be most favorable. As discussed
`further infra, Defendants forcefully argue that the ′908
`Patent would fail the Alice abstractness test, but Defendants'
`arguments rely on interpreting the ′908 Patent's claims and
`stripping away generic language. It is difficult to prove a
`negative, i.e., to show that no plausible construction exists,
`but that is the burden that Defendants bear at this procedural
`posture.
`
`Importantly, the parties have not agreed about claim
`constructions, in contrast to some of the core precedents
`regarding § 101 eligibility, discussed infra, in which there
`were no disputes about claim construction. See, e.g., In re
`Bilski, 545 F.3d 943, 951 (Fed.Cir.2008), aff'd but criticized
`sub nom.Bilski v. Kappos, 130 S.Ct. 3218 (2010) (“Although
`claim construction, ... is an important first step in a §
`101 analysis, ... there is no claim construction dispute in
`this appeal”); CLS Bank Int'l v. Alice Corp. Pty. Ltd., 717
`F.3d 1269, 1275 (Fed.Cir.2013) (“The district court did not
`conduct claim construction before reaching the merits of the
`§ 101 issue, but the parties agreed for purposes of deciding
`
`their summary judgment motions that Alice's claims should
`all be interpreted to require a computer including at least ‘a
`processor and memory.’ ”). 4
`
`Congress has mandated that “[a] patent shall be presumed
`valid ....“ 35 U.S.C. § 282(a).“A party seeking to establish that
`particular claims are invalid must overcome the presumption
`of validity in 35 U.S.C. § 282 by clear and convincing
`evidence.”State Contracting & Eng'g, 346 F.3d at 1067.
`Given the density of the ′908 Patent with its 100 claims, the
`statutory presumption of validity, the “clear and convincing”
`evidentiary burden, and the lack of Plaintiff's proposed
`constructions or any agreement about claim construction, the
`Court finds it is advisable to postpone adjudication of the ′ 908
`Patent's eligibility under the abstractness test. Defendants'
`motion will be denied without prejudice to their right to raise
`their abstractness arguments again after claim construction,
`or at an appropriate earlier time. 5
`
`B. Abstract Idea Analysis
`*9 Although Defendants' motion will be denied without
`prejudice, the Court can address some of the parties'
`arguments to streamline the issues before they are argued
`again.
`
`1. Abstract Idea Exclusion From Patent Eligibility
`Congress has specified that “[w]hoever invents or discovers
`any new and useful process, machine, manufacture, or
`composition of matter, or any new and useful improvement
`thereof, may obtain a patent therefor ....“ 35 U.S.C. § 101.
`“Excluded from such patent protection are laws of nature,
`natural phenomena, and abstract ideas.” Diehr, 450 U.S. at
`185. In other words, “any invention within the broad statutory
`categories of § 101 that is made by man, not directed to a
`law of nature or physical phenomenon, and not so manifestly
`abstract as to preempt a fundamental concept or idea is patent
`eligible.” Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1331
`(Fed.Cir.2012) (emphasis in original).
`
`Defining “abstractness” is difficult because “all inventions
`at some level embody, use, reflect, rest upon, or apply
`laws of nature, natural phenomena, or abstract ideas.”Mayo
`Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct.
`1289, 1293 (2012). The abstract-idea exception precludes
`patents that “would pre-empt use of [a particular] approach
`in all fields, and would effectively grant a monopoly over
`an abstract idea.”Bilski v. Kappos, 130 S.Ct. 3218, 3231
`
` © 2015 Thomson Reuters. No claim to original U.S. Government Works.
`
`6
`
`Ocean Tomo Ex. 1022-006
`
`

`
`Data Distribution Technologies, LLC v. BRER Affiliates, Inc., Slip Copy (2014)
`2014 WL 4162765
`
`(2010). For example, “[a] mathematical formula as such is not
`accorded the protection of our patent laws, and this principle
`cannot be circumvented by attempting to limit the use of
`the formula to a particular technological environment.”Diehr,
`450 U.S. at 191 (citations omitted).“Similarly, insignificant
`post-solution activity will not transform an unpatentable
`principle into a patentable process.”Id. at 191–92.“[M]ethods
`which can be performed mentally, or which are the equivalent
`of human mental work, are unpatentable abstract ideas ....“
`CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366,
`1371 (Fed.Cir.2011). By contrast, “an application of a law
`of nature or mathematical formula to a known structure or
`process may well be deserving of patent protection.” Diehr,
`450 U.S. at 187 (emphasis in original).
`
`2. The Alice Decision
`The Supreme Court examined the abstract-idea exception
`in Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347
`(2014), particularly as that exception applies to computer-
`implemented schemes, and clarified the test that courts must
`apply.
`
`In Alice, the Supreme Court evaluated patents that disclosed
`a computer-implemented scheme for mitigating settlement
`risk by using a third-party intermediary. The Alice patent
`claims involved using a computer system as a third-party
`intermediary to “create[ ] ‘shadow’ credit and debit records
`(i.e., account ledgers) that mirror the balances in the parties'
`real-world accounts at ‘exchange institutions' (e.g., banks)”;
`“update[ ] the shadow records in real time as transactions are
`entered”; and “instruct[ ] the relevant financial institutions to
`carry out the ‘permitted’ transactions in accordance with the
`updated shadow records ....“ Id. at 2352.
`
`*10 The Supreme Court considered whether the Alice
`patents were directed to a patent-ineligible, abstract idea. The
`Supreme Court noted that “we tread carefully in construing
`this exclusionary principle lest it swallow all of patent
`law.”Id. at 2354.“[A]n invention is not rendered ineligible
`for patent simply because it involves an abstract concept.
`[A]pplication[s] of such concepts to a new and useful
`end ... remain eligible for patent protection.”Id. (citations
`and quotations omitted). The Supreme Court cited Mayo
`Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct.
`1289, 1303 (2012), to explain that “in applying the § 101
`exception, we must distinguish between patents that claim
`the buildin[g] block[s] of human ingenuity and those that
`integrate the building blocks into something more, thereby
`
`transform[ing] them into a patent-eligible invention.”Id.
`(citations and quotations omitted).
`
`The Supreme Court identified a two-part analysis for
`distinguishing patents that claim abstract ideas from those
`that claim patent-eligible applications