`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`C.A. No. 17-585 (JFB) (SRF)
`
`))))))))))
`
`UNIVERSAL SECURE REGISTRY LLC,
`
`Plaintiff,
`
`v.
`
`APPLE INC., VISA INC., and
`VISA U.S.A., INC.,
`
`Defendants.
`
`PLAINTIFF'S ANSWERING BRIEF IN OPPOSITION TO
`DEFENDANTS’ MOTION TO DISMISS PLAINTIFF'S COMPLAINT
`
`OF COUNSEL:
`
`Harold Barza
`Tigran Guledjian
`Valerie Roddy
`Jordan Kaericher
`QUINN EMANUEL
`URQUHART & SULLIVAN, LLP
`865 S Figueroa Street, 10th Floor
`Los Angeles, CA 90017
`(213) 443-3000
`
`Sean Pak
`Brian E. Mack
`QUINN EMANUEL
`URQUHART & SULLIVAN, LLP
`50 California Street, 22nd Floor
`San Francisco, CA 94111
`(415) 875-6600
`
`September 29, 2017
`
`MORRIS, NICHOLS, ARSHT & TUNNELL LLP
`Jack B. Blumenfeld (#1014)
`Jeremy A. Tigan (#5239)
`1201 North Market Street
`P.O. Box 1347
`Wilmington, DE 19899-1347
`(302) 658-9200
`jblumenfeld@mnat.com
`jtigan@mnat.com
`
`Attorneys for Universal Secure Registry LLC
`
`Apple 1013
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 2 of 25 PageID #: 639
`
`TABLE OF CONTENTS
`
`Page
`
`B.
`
`C.
`
`TABLE OF AUTHORITIES .......................................................................................................... ii
`I.
`NATURE AND STAGE OF THE PROCEEDINGS ..........................................................1
`II.
`SUMMARY OF ARGUMENT ...........................................................................................1
`III.
`STATEMENT OF FACTS ..................................................................................................2
`IV.
`ARGUMENT.......................................................................................................................3
`A.
`The Electronic ID Device of the '813 Patent Is Patent-Eligible ..............................3
`1.
`Claim 1 Of The '813 Patent Is Not Directed To An Abstract Idea ..............4
`2.
`Claim 1 Of The '813 Patent Provides A Technical Innovation....................7
`The Secure Payment and ID System of the '137 Patent Is Patent-Eligible............10
`1.
`Claim 12 Of The '137 Patent Is Not Directed To An Abstract Idea ..........10
`2.
`Claim 12 Of The '137 Patent Provides A Technical Innovation................12
`The Distributed Authentication System of the '826 Patent Is Patent-Eligible.......13
`1.
`Claim 10 Of The '826 Patent Is Not Directed To An Abstract Idea ..........14
`2.
`Claim 10 Of The '826 Patent Provides A Technical Innovation................16
`The Secure Registry System of the '539 Patent Is Patent-Eligible ........................17
`1.
`Claim 22 Of The '539 Patent Is Not Directed To An Abstract Idea ..........17
`2.
`Claim 22 Of The '539 Patent Provides A Technical Innovation................19
`Defendants Motion Should Be Denied For The 107 Unaddressed Claims ...........20
`
`D.
`
`E.
`
`i
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 3 of 25 PageID #: 640
`
`TABLE OF AUTHORITIES
`
`Cases
`Accenture Global Servs., GmbH v. Guidewire Software,
`728 F.3d 1336 (Fed. Cir. 2013)................................................................................................. 18
`Affinity Labs of Texas, LLC v. DIRECTV, LLC,
`838 F.3d 1253 (Fed. Cir. 2016)................................................................................................. 18
`Alice Corp. Pty. Ltd. v. CLS Bank Int’l,
`134 S. Ct. 2347 (2014)....................................................................................................... passim
`Bancorp Servs. v. Sun Life Assurance Co. of Can. (U.S.),
`687 F.3d 1266 (Fed. Cir. 2012)................................................................................................. 18
`Bascom Glob. Internet Servs., Inc. v. AT&T Mobility, LLC,
`827 F.3d 1341 (Fed. Cir. 2016)............................................................................................. 8, 16
`Bilski v. Kappos,
`561 U.S. 593 (2010)........................................................................................................ 1, 11, 18
`Blue Spike, LLC v. Google, Inc.,
`2015 WL 5260506 (N.D. Cal. Sept. 8, 2015) ........................................................................... 18
`buySAFE, Inc. v. Google, Inc.,
`765 F.3d 1350 (Fed. Cir. 2014)....................................................................................... 8, 15, 18
`CallWave Commc’ns, LLC v. AT&T Mobility, LLC,
`207 F. Supp. 3d 405 (D. Del. Sept. 15, 2016)............................................................................. 9
`CyberSource Corp. v. Retails Decisions Inc.,
`654 F.3d 1366 (Fed. Cir. 2011)................................................................................................. 18
`DDR Holdings, LLC v. Hotels.com,
`773 F.3d 1245 (Fed. Cir. 2014)........................................................................................... 10, 16
`Diamond v. Diehr,
`450 U.S. 175 (1981).............................................................................................................. 7, 19
`Digitech Image Tech. v. Elect. For Imaging, Inc.,
`758 F.3d 1344 (Fed. Cir. 2014)........................................................................................... 6, 7, 9
`Enfish, LLC v. Microsoft Corp.,
`822 F.3d 1327 (Fed. Cir. 2016)................................................................................. 4, 5, 6, 9, 18
`Gottschalk v. Benson,
`409 U.S. 63 (1972)...................................................................................................................... 8
`Idexx Labs., Inc. v. Charles River Labs., Inc.,
`2016 WL 3647971 (D. Del. Jul. 1, 2016) ................................................................................... 6
`In re Bilski,
`545 F.3d 943 (Fed. Cir. 2008)..................................................................................................... 8
`In Re TLI Communications,
`823 F.3d 607 (Fed. Cir. 2016)..................................................................................................... 9
`Intellectual Ventures I LLC v. Capital One Bank (USA),
`792 F.3d 1363 (Fed. Cir. 2015)................................................................................................... 8
`Internet Patents Corp. v. Active Network, Inc.,
`790 F.3d 1343 (Fed. Cir. 2015)............................................................................................. 9, 12
`
`ii
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 4 of 25 PageID #: 641
`
`IQS US Inc. v. Calsoft Labs Inc.,
`2017 WL 3581162 (N.D. Ill. Aug. 18, 2017) ........................................................................... 15
`Jericho Sys. Corp. v. Axiomatics, Inc.,
`2015 WL 2165931 (N.D. Tex. May 7, 2015) ........................................................................... 18
`Joao Bock Trans. Sys., LLC v. Jack Henry & Assocs., Inc.,
`76 F. Supp. 3d 513 (D. Del. 2014)...................................................................................... 15, 18
`JSDQ Mesh Techs. LLC v. Fluidmesh Networks, LLC,
`2016 WL 4639140 (D. Del. Sept. 6, 2016)............................................................................... 20
`King Pharms., Inc. v. Eon Labs, Inc.,
`616 F.3d 1267 (Fed. Cir. 2010)................................................................................................... 7
`MAZ Encryption Technologies LLC v. Blackberry Corp.,
`2016 WL 5661981 (D. Del. Sept. 29, 2016)............................................................... 5, 7, 11, 17
`McRO, Inc. v. Bandai Namco Games Am. Inc.,
`837 F.3d 1299 (Fed. Cir. 2016)................................................................................. 5, 10, 11, 12
`Messaging Gateway Solutions LLC v. Amdocs, Inc.,
`2015 WL 1744343 (D. Del. April 5, 2015)................................................................................. 6
`Mortgage Grader, Inc. v. First Choice Loan Servs. Inc.,
`811 F.3d 1314 (Fed. Cir. 2016)................................................................................................... 8
`OIP Techs., Inc. v. Amazon.com, Inc.,
`788 F.3d 1359 (Fed. Cir. 2015)................................................................................................... 8
`PalTalk Holdings, Inc. v. Riot Games, Inc.,
`2017 WL 2106124 (D. Del. May 15, 2017).............................................................................. 18
`Parker v. Flook,
`437 U.S. 584 (1978).................................................................................................................... 8
`Research Corp. Techs., Inc. v. Microsoft Corp.,
`627 F.3d 859 (Fed. Cir. 2010)..................................................................................................... 4
`Smart Meter Techs., Inc. v. Duke Energy Corp.,
`2017 WL 2954916 (D. Del. July 11, 2017) ........................................................................ 18, 19
`Sonos, Inc. v. D&M Holdings Inc.,
`2017 WL 971700 (D. Del. March 13, 2017)............................................................................. 12
`Triplay, Inc. v. WhatsApp Inc.,
`2015 WL 1927696 (D. Del. Apr. 28, 2015).............................................................................. 20
`Ultramercial, Inc. v. Hulu, LLC,
`772 F.3d 709 (Fed. Cir. 2014)..................................................................................................... 8
`Vehicle IP, LLC v. AT&T Mobility LLC,
`2016 WL 5662004 (D. Del. Sept. 29, 2016)......................................................................... 9, 11
`Versata Development Group v. SAP America, Inc.,
`793 F.3d 1306 (Fed. Cir. 2015)................................................................................................... 8
`Versata Software v. NetBrain Techs.,
`2015 WL 5768938 (D. Del. Sept. 30, 2015)............................................................................. 20
`Walker Digital, LLC v. Google, Inc.,
`66 F. Supp. 3d 501 (D. Del. 2014)...................................................................................... 11, 12
`
`iii
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 5 of 25 PageID #: 642
`
`I.
`
`NATURE AND STAGE OF THE PROCEEDINGS
`
`This is the Answering Brief of Plaintiff Universal Secure Registry, LLC ("USR") in
`
`opposition to Defendants' Rule 12(b)(6) Motion seeking to dismiss, as invalid under 35 U.S.C.
`
`§101, all 111 claims of USR's four patents-in-suit (the "Asserted Patents").
`
`II.
`
`SUMMARY OF ARGUMENT
`
`1.
`
`The claims of the four Asserted Patents are directed to patent-eligible subject matter
`
`under 35 U.S.C. Section 101 ("any new and useful process, machine, manufacture, or composition
`
`of matter, or any new and useful improvement thereof.") Defendants fail to show that any of the
`
`111 claims fall within the three narrow exceptions of §101: "laws of nature, physical phenomena,
`
`and abstract ideas." Bilski v. Kappos, 561 U.S. 593, 601-02 (2010) ("Bilski II"). The Supreme
`
`Court has expressed its reluctance to broadly apply these three narrow judicial exceptions: "[W]e
`
`tread carefully in construing this exclusionary principle, lest it swallow all of patent law….At some
`
`level, 'all inventions. . .embody, use, reflect, rest upon, or apply laws of nature, natural phenomena,
`
`or abstract ideas.'" Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S. Ct. 2347, 2354 (2014).
`
`2.
`
`Defendants argue that all 111 claims of the Asserted Patents are invalid under
`
`§ 101, but their motion is fatally flawed. Defendants have sought to oversimplify the inventions in
`
`suit, a common error in such motions as courts have noted with increasing frequency. Section 101
`
`is inclusive, while the judicial exceptions to it are narrow. Defendants' approach flips this balance,
`
`advancing the argument that patent eligible claims that include computer components are an
`
`exception. In doing so, Defendants ignore many of the key limitations in the claims, and fail to
`
`account for how the claims might be construed in a Markman hearing. The specifications show
`
`that the claimed inventions are directed to concrete and useful improvements to current electronic
`
`payment technologies and devices, and are demonstrably valid under the analysis of Alice and its
`
`progeny. The problems addressed by the Asserted Patents are firmly rooted in technological
`1
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 6 of 25 PageID #: 643
`
`challenges associated with digital security and authentication, and so are the claimed solutions.
`
`Indeed, several recent decisions in this court and in the Federal Circuit highlight the reasons why
`
`highly technological inventions are valid. Further, the claims do not pre-empt the field of electronic
`
`payment transactions, but instead cover very specific technologies used on specialized devices
`
`(e.g., with biometric sensors), while leaving open other known or unknown technology for
`
`conducting such transactions.1 Finally, Defendants have not demonstrated that the four claims they
`
`have chosen to address are representative of the remaining 107 claims, as is their burden. For this
`
`reason as well, their Motion should be denied.
`
`III.
`
`STATEMENT OF FACTS
`
`Electronic payment transactions using credit cards and other payment cards have become
`
`commonplace. There are major risks in such transactions, however, because bad actors can steal
`
`and then misuse a person's information. For example, when a person pays a merchant by credit
`
`card, the account data for that card is exposed to the risk of misuse by the merchant or by someone
`
`who intercepts the data as it is sent over a network to the merchant and/or the credit card company.
`
`USR's patented inventions address the need for technology that allows consumers to make
`
`mobile payment-card transactions conveniently and with a high-degree of security. Complaint at
`
`¶31. The claimed inventions provide an innovative and highly secure identification, authentication
`
`and transaction authorization system.2 Using inventive aspects of USR's technology, the user
`
`
`1 "[T]he concern that drives" § 101 jurisprudence is "one of pre-emption." Alice, 134 S. Ct. at
`2354. Yet, tellingly, Defendants do not contend that any claim in the Asserted Patents presents any
`preemption concern in any industry—in fact, the word "preemption" does not even appear in their
`motion. Defendants have made no showing that any authentication process or system, or any
`financial transaction authorization process or system, must necessarily fall within the claims of
`these patents.
`2 Before the claimed invention, customers would use their credit cards at a merchant's in-store
`point-of-sale ("POS") device, which would read the card number and other account data from the
`card. Complaint at ¶29. Customers would also provide their credit card account data directly to
`
`2
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 7 of 25 PageID #: 644
`
`device does not store or send any sensitive information, such as personal account information or
`
`payment card details that, if compromised, could be used for fraudulent purposes. Id. at ¶23.
`
`Instead, each time a transaction occurs, the improved user device locally generates and sends one-
`
`time use data including a cryptographic value used for authentication by the credit card company.
`
`Id. USR's improved user device can also require the user to authenticate him/herself via entry of
`
`biometric information (e.g., a fingerprint) and/or secret information (e.g., a PIN) before the user
`
`device will carry out a payment request. Id. If this improved user device is lost or stolen or the
`
`one-time cryptographic value is intercepted, neither the user device nor the value can be used to
`
`make a fraudulent purchase request. Also, the patented system avoids the problem of storing any
`
`sensitive information at the merchant that can be misused in fraudulent payment requests.
`
`IV.
`
`ARGUMENT
`
`A.
`
`The Electronic ID Device of the '813 Patent Is Patent-Eligible
`
`The '813 patent provides improved systems, devices and methods that allow users to
`
`securely authenticate their identity when using a POS device; e.g., when making a retail credit card
`
`transaction.3 '813 patent, Fig. 31, 43:4-51:55. When used in conjunction with the patent's Universal
`
`Secure Registry ("USR"), the Electronic ID Device can both securely identify the user, and
`
`separately authenticate and approve the user's financial transaction requests made through a POS
`
`device. Id., 43:4-15, Fig. 31. The USR (USR 10 in Fig. 1, USR 356 in Fig. 31) includes a secure
`
`
`online merchants. The account data would be stored by the merchant and then sent through a card
`network, ultimately to the issuing bank for transaction approval (or disapproval). Id. These
`preexisting methods lack adequate security and are highly susceptible to fraud. Id. at ¶30.
`3 The specification identifies a number of disadvantages of prior art approaches to providing
`secure access. For example, an authorization system may control access to computer networks
`using password protected accounts, but such a system is susceptible to tampering and difficult to
`maintain. '813 patent, 1:64-2:15. Or, hand-held computer devices may be used to verify identify,
`but security could be compromised if a device ends up in the wrong hands. Id., at 2:16-43.
`
`3
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 8 of 25 PageID #: 645
`
`database that stores account (e.g., credit card) information for a plurality of users. Id., 44:39-53.
`
`To prevent unauthorized use of the Electronic ID Device, a user must first authenticate
`
`herself to the device to activate it for a financial transaction. The '813 patent describes multiple
`
`ways to do this, including using a biometric input (e.g., fingerprint) and/or secret information (e.g.,
`
`a PIN). Id., 45:55-46:45, 50:1-22, 51:7-26. Once activated, the Electronic ID Device generates
`
`encrypted authentication information that is sent via the POS device to the USR for authentication
`
`and approval of the requested financial transaction. Id., 46:22-36. This encrypted authentication
`
`information is not the user's credit card information (which could be intercepted and misused).
`
`Instead, the Electronic ID Device first generates a non-predictable value (e.g., a random number)
`
`using, for example, the user's biometric information and/or a seed (Id., 33:64-34:61, 46:46-67),
`
`and then generates single-use authentication information using the non-predictable value,
`
`information associated with the biometric data, and the secret information. Id., 46:14-36, 50:56-
`
`65. This encrypted authentication information is transmitted to the secure registry, where it is used
`
`to determine transaction approval. Id., 11:36-45, 12:19-44, 12:64-13:8, 48:60-49:24, 50:23-32,
`
`51:7-26. Defendants' cursory treatment of the '813 patent gives short-shrift to both steps of the
`
`Alice test, and is insufficient to carry their burden to show that any claim is patent ineligible.
`
`1.
`
`Claim 1 Of The '813 Patent Is Not Directed To An Abstract Idea
`
`A patent claim does not embody an unpatentable abstract idea unless that abstractness
`
`"exhibit[s] itself so manifestly as to override the broad statutory categories of eligible subject
`
`matter." Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 868 (Fed. Cir. 2010). The
`
`consistent flaw running across Defendants' entire motion is that they have grossly oversimplified
`
`(and ignored) express claim language, running afoul of a host of precedent. "Describing the claims
`
`at such a high level of abstraction and untethered from the language of the claims all but ensures
`
`that the exceptions to § 101 swallow the rule." Enfish, LLC v. Microsoft Corp., 822 F.3d 1327,
`4
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 9 of 25 PageID #: 646
`
`1337 (Fed. Cir. 2016). Defendants' "abstract idea" strawman omits the claims' express
`
`requirements, "run[ning] afoul of the Federal Circuit's guidance in Enfish that courts should not
`
`'oversimplif[y]' key inventive concepts or 'downplay' an invention's benefits in conducting a step-1
`
`analysis." MAZ Encryption Techs. LLC v. Blackberry Corp., 2016 WL 5661981 at *6 (D. Del.
`
`Sept. 29, 2016). "Whether at step one or step two of the Alice test,…a court must look to the claims
`
`as an ordered combination, without ignoring the requirements of the individual steps." McRO,
`
`Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016) (emphasis added).
`
`Defendants argue claim 1 is directed to the abstract idea of "verifying an account holder's
`
`identity with code and information related to the account holder before enabling a transaction," but
`
`Defendants fail to account for the specific claim requirements. Claim 1's Electronic ID Device
`
`includes a biometric sensor, user interface, communication interface, and processor, all working
`
`together in a specific way to generate and transmit encrypted authentication information via a POS
`
`device to a secure registry. The Electronic ID Device collects biometric information from the user,
`
`secret information known by the user, and account identifying information selected by the user to
`
`activate the device, and to generate a non-predictable value and the encrypted authentication
`
`information. '813 patent, 51:65-52:29. None of this is captured by Defendants' proffered overbroad
`
`abstract idea. This fatal flaw permeates and undermines their entire motion.
`
`The determination of whether the claims at issue are "directed to" a patent-ineligible
`
`concept "plainly contemplates that the first step of the inquiry is a meaningful one, i.e., that a
`
`substantial class of claims are not directed to a patent-ineligible concept." Enfish, 822 F.3d at 1335.
`
`Defendants do not "tread carefully in construing this exclusionary principle" as Alice mandates.
`
`Indeed, Defendants' analysis invites trampling of USR's claims, "by looking at them generally and
`
`failing to account for the specific requirements of the claims." McRO, 837 F.3d at 1313. Claim 1
`
`requires more than simply verifying an account holder's identity. It is directed to an innovative
`5
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 10 of 25 PageID #: 647
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`device containing multiple, interrelated components that obtain specific information from the user,
`
`permit device activation under appropriate authentication, and create and transmit specified
`
`authentication information in an expressed, limited manner. To increase the overall security of the
`
`system, the device generates a one-time variable token (determined in part from the non-
`
`predictable value) as the authentication information that cannot be stolen and misused.
`
`Far from being directed to the mere idea of transaction authentication, claim 1 of the '813
`
`patent is directed to a specific, concrete, technological solution that improves network security
`
`for mobile electronic transactions. The "level of abstraction" "in describing the claims must be
`
`consonant with the level of abstraction expressed in the claims themselves." Idexx Labs., Inc. v.
`
`Charles River Labs., Inc., 2016 WL 3647971 (D. Del. Jul. 1, 2016), at *4. Only by applying the
`
`highest possible level of abstraction could one conclude that claim 1 claims nothing more than the
`
`abstract idea of "verifying an account holder based on a code," as Defendants contend, and is
`
`therefore "directed to" this abstract idea. Viewed through the lens of Defendants' analysis, every
`
`claim is abstract. "If one looks at almost any patent from far enough away, it could arguably claim
`
`an abstract idea." Messaging Gateway Solutions LLC v. Amdocs, Inc., 2015 WL 1744343 (D. Del.
`
`April 5, 2015) at *5 (Noting that Alexander Graham Bell's "invention was not the concept of oral
`
`communication itself; it was a technological innovation that allowed a type of oral communication
`
`between people who could otherwise not communicate in that way.").
`
`Defendants' reliance on Digitech Image Tech. v. Elect. For Imaging, Inc., 758 F.3d 1344
`
`(Fed. Cir. 2014) is inapposite.4 First, Defendants incorrectly assert that claim 1 takes existing
`
`
`4 To the extent that the 2014 Digitech decision suggests that all software inventions are
`unpatentable, subsequent Federal Circuit decisions have dispelled that notion. See Enfish, 822 F.3d
`at 1339 (holding that claims not required to be defined by reference to "physical" components, for
`holding otherwise "risks resurrecting a bright-line machine-or-transformation test,…or creating a
`categorical ban on software patents, [citing Bilski]").
`6
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 11 of 25 PageID #: 648
`
`information and organizes it into a new form. Mot. at 19. To the contrary, the invention of the '813
`
`patent gathers user information, not to organize it, but to more securely complete a transaction.
`
`Second, the Digitech court concluded the claims were drawn to the abstract idea of "organizing
`
`information through mathematical correlations" because the claims were "not tied to a specific
`
`structure or machine." Id., at 1350. Claim 1's Electronic ID Device is tied to a "tangible machine"
`
`(a device with biometric sensor, user interface, processor, etc.) performing specific functions.
`
`Viewed in light of the patent's specification, claim 1 is not directed to "basic tools of
`
`scientific and technological work," Alice, 134 S. Ct. at 2354, nor is it directed to a "fundamental
`
`economic practice" as were the claimed inventions held to be patent-ineligible in Alice and Bilski.
`
`See Alice, 134 S. Ct. at 2355–56. The inventions in Alice and Bilski covered concepts that had been
`
`"long prevalent in our system of commerce," Alice, 134 S. Ct. at 2356, but Defendants do not point
`
`to a "long prevalent" practice that carried out the specific secure authentication transaction in the
`
`same way as claim 1. Defendants have failed to analyze the character of claim 1 as a whole to
`
`determine if its focus is directed to an impermissible abstract idea. See MAZ Encryption, 2016 WL
`
`5661981 at *2 (At Alice step 1, "the claims are considered in their entirety to ascertain whether
`
`their character as a whole is directed to excluded subject matter") (emphasis added).
`
`2.
`
`Claim 1 Of The '813 Patent Provides A Technical Innovation
`
`Under Alice's second step, the Court "considers the elements of each claim both
`
`individually and 'as an ordered combination' to determine whether the additional elements
`
`'transform the nature of the claim' into a patent-eligible application." Alice, 134 S. Ct. at 2355
`
`(quoting Mayo, 132 S. Ct. at 1297-8). It is improper to analyze the claim as individual limitations.
`
`Diamond v. Diehr, 450 U.S. 175, 188-89 (1981); King Pharms., Inc. v. Eon Labs, Inc., 616 F.3d
`
`1267, 1277 (Fed. Cir. 2010) ("The Supreme Court has stated that a § 101 patentability analysis is
`
`directed to the claim as a whole, not individual limitations."). "[I]t is irrelevant that any individual
`7
`
`
`
`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 12 of 25 PageID #: 649
`
`step or limitation of such processes by itself would be unpatentable under § 101." In re Bilski, 545
`
`F.3d 943, 958 (Fed. Cir. 2008); Bascom Glob. Internet Servs., Inc. v. AT&T Mobility, LLC, 827
`
`F.3d 1341, 1350 (Fed. Cir. 2016) ("The inventive concept inquiry requires more than recognizing
`
`that each claim element, by itself, was known in the art.")
`
`Claim 1 is directed to specific improvements in a mobile electronic transaction
`
`authentication system that allows an electronic device to remotely place transaction requests at a
`
`POS device in a more secure manner. Sec. IV.A, supra. Claim 1 is, therefore, unlike the claims
`
`found unpatentable in Alice and Versata Dev. Group v. SAP America, Inc., 793 F.3d 1306 (Fed.
`
`Cir. 2015), which added conventional computer components to well-known business practices—
`
`a showing that Defendants have failed to make here. See Alice, 134 S. Ct. at 2358–60; Versata.,
`
`793 F.3d at 1333–34 (computer performed "purely conventional" steps directed to the "abstract
`
`idea of determining a price using organization and product group hierarchies").5 Claim 1 covers
`
`security improvements to a specific mobile electronic transaction authentication system, and thus
`
`is fundamentally distinct from claims found patent-ineligible that recited use of an abstract
`
`mathematical formula on any general purpose computer,6 or a purely conventional computer
`
`implementation of a mathematical formula,7 or generalized steps to be performed on a computer
`
`
`5 See also Mortgage Grader, Inc. v. First Choice Loan Servs. Inc., 811 F.3d 1314, 1324–25 (Fed.
`Cir. 2016) (claims attaching generic computer components to perform "anonymous loan shopping"
`not patent eligible); Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1367-
`69 (Fed. Cir. 2015) (claims adding generic computer components to conventional financial
`budgeting); OIP Techs. v. Amazon, 788 F.3d 1359, 1362–64 (Fed. Cir. 2015) (claims implementing
`offer-based price optimization using conventional computer activities); Ultramercial, Inc. v. Hulu,
`LLC, 772 F.3d 709, 714-17 (Fed. Cir. 2014) (claims applying an exchange of advertising for
`copyrighted content to the Internet); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1354-55 (Fed.
`Cir. 2014) (claims adding generic computer functionality to the formation of guaranteed
`contractual relationships).
`6 See Gottschalk v. Benson, 409 U.S. 63 (1972), see also Alice, 134 S.Ct. at 2357-58.
`7 See Parker v. Flook, 437 U.S. 584, 594 (1978); see also Alice, 134 S.Ct. at 2358.
`
`8
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`
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`Case 1:17-cv-00585-JFB-SRF Document 30 Filed 09/29/17 Page 13 of 25 PageID #: 650
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`using conventional activity, see Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343,
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`1348-49 (Fed. Cir. 2015) (claims directed to abstract idea of maintaining computer state without
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`reciting specific activity used to generate that result); Digitech, 758 F.3d at 1351 (claims directed
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`to abstract idea of "organizing information through mathematical correlations" and reciting only
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`generic gathering and processing activities).8
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`Defendants argue that "there is nothing unusual about the ordered combination" in claim 1,
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`which "are arranged in the most conventional manner to facilitate access to a database." Mot. at
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`20. Defendants fail to provide any support for these statements,9 which contradict the '813 patent's
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`discussion of the novel aspects of the claim's ordered combination. Sec. IV.A, supra. Defendants
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`mistakenly argue that the claimed POS engages in "ordinary point of sale encrypted
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`communications," but the specification and claim make clear that what the POS receives from the
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`claimed Electronic ID Device is encrypted authentication information generated from "the non-
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`predictable value, information associated with at least a portion of the biometric input, and the
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`secret information" obtained from the user. Like the lip-synching technology in McRO, this claim
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`8 Defendants argue that the invention's use of purportedly "known" computer components—a
`biometric sensor, user interface, communication interface, processor, and a secure registry—to
`provide more secure mobile transaction authentication dooms the claims under section 101, but
`there is no such general rule. See Enfish, 822 F.3d at 1338 ("we are not persuaded that the
`invention's ability to run on a general-purpose computer dooms the claims.") Defendants do not
`explain how the specific claim limitations of claim 1 cover a pre-existing business practice. Instead
`of addressing the language of claim 1, Defendants focus on whether the addition of conventional
`computer components to their proposed abstract idea of "verifying an account holder's identity
`using a code" would make that idea patentable. Because their abstract idea bears little resemblance
`to the actual claim language, Defendants' analysis is of no assistance.
`9 Defendants' unsubstantiated contention that selected limitations of the '813 patent require only
`"conventional" use of generic technology raises factual issues that cannot be properly resolved on
`the limited record before the Court (i.e., the Complaint and the Asserted Patents). See Vehicle IP,
`LLC v. AT&T Mobility LLC, 2016 WL 5662004 at *6 (D. Del. Sept. 29, 2016); CallWave
`Commc'ns, LLC v. AT&T Mobility, LLC, 207 F. Supp. 3d 405, 412 (D. Del. Sept. 15, 2016) (citing
`In Re TLI Commc'ns, 823 F.3d 607, 611 (Fed. Cir. 2016)).
`
`9
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`
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`Case 1: