Case 2:17-cv-00220-MLH-KS Document 117 Filed 02/27/18 Page 1 of 12 Page ID #:5057
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`UNITED STATES DISTRICT COURT
`CENTRAL DISTRICT OF CALIFORNIA
`
`VAPORSTREAM, INC.,
`
`Case No.: 2:17-cv-00220-MLH (KSx)
`
`Plaintiff,
`
`v.
`SNAP INC. d/b/a/ Snapchat, Inc.,
`Defendant.
`
`ORDER DENYING DEFENDANT’S
`MOTION FOR SUMMARY
`JUDGMENT
`
`[Doc. No. 74.]
`
`On August 22, 2017, Defendant Snap Inc. filed a motion for summary judgment on
`the basis that the patents-in-suit are invalid under 35 U.S.C. § 101. (Doc. No. 74.) On
`September 26, 2017, Plaintiff Vaporstream, Inc. filed an opposition to Defendant’s motion
`for summary judgment. (Doc. No. 82.) On October 16, 2017, Snap filed its reply. (Doc.
`No. 84.) On October 18, 2017, Snap filed a notice of supplemental authority. (Doc. No.
`86.) On February 9, 2018, Vaporstream filed a notice of supplemental authority. (Doc.
`No. 104.) On February 13, 2018, Snap filed a response to Vaporstream’s February 9, 2018
`notice of supplemental authority. (Doc. No. 105.) On February 14, 2018, Vaporstream
`filed a second notice of supplemental authority. (Doc. No. 106.) On February 22, 2018,
`Snap filed a second notice of supplemental authority. (Doc. No. 108.) On February 26,
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`2018, the Court took the matter under submission. (Doc. No. 113.) For the reasons below,
`the Court denies Defendant Snap’s motion for summary judgment.
`Background
`On January 10, 2017, Plaintiff VaporStream filed a complaint for patent
`infringement against Defendant Snap, alleging infringement of U.S. Patent Nos. 8,886,739,
`8,935,351, 9,306,885, 9,306,886, 9,313,155, 9,313,156, 9,313,157, 9,338,111, and
`9,413,711. (Doc. No. 1.) In the present action, Vaporstream has asserted 89 claims from
`nine patents against Snap. (Doc. No 54, Ex. C.)
`The patents-in-suit are closely related, claim priority to the same July 28, 2005 filing,
`and share a substantially identical specification.1 (Doc. No. 23 at 2.) The patents-in-suit
`relate generally to systems and methods for “reducing traceability” of electronic messages.
`See ’739 Patent at 1:46-2:8. The common Background section of the specification explains
`some perceived problems with conventional email messaging:
`Typically, an electronic message between two people is not private. It may
`travel along a public network, such as the Internet, and be susceptible to
`interception by unintended third parties. Messages are also logged and
`archived by the communication systems themselves. They may also be
`copied, cut, pasted, printed, forwarded, blind copied, or otherwise
`manipulated. This may give a message a “shelf-life” that is often
`uncontrollable by the sender or even the recipient. Surreptitious logging (e.g.,
`by keystroke and message recording software) may occur by third parties that
`have gained authorized access to either the computer of the sender and/or the
`recipient.
`
`1
`The claims of the ’739, ’885, ’155, and ’156 patents relate to the “sending user device,” while the
`claims of the ’351, ’886, ’157, and ’111 patents relate to the “receiving user device.” The asserted claims
`of the ’711 patent recite aspects of both the “send side” and the “receive side.” (Doc. No. 23 at 2, n. 2.)
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`’739 Patent at 1:51-64.2 To address these problems, the claimed inventions disclose
`systems and methods purporting to reduce the traceability of electronic messages. Id. at
`3:48-4:6.
`Claim 1 of the ’739 patent is an example of a “send side” asserted claim.3 Claim 1
`of the ’739 patent claims:
`1. A computer-implemented method of handling an electronic message, the
`method comprising:
`
`providing a first display and a second display at a sending user device, the
`first display configured to allow a sending user to associate a first message
`content including a media component with the electronic message, the second
`display configured to allow the sending user to input a first recipient address
`corresponding to the first message content, the first and second displays not
`being displayed at the same time;
`
`displaying via the first display a first message content including a media
`component;
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`receiving via the second display a first recipient address, wherein the first
`message content including a media component and the first recipient address
`are not displayed to the sending user at the same time;
`
`associating a message ID with the first message content including a media
`component, the message ID correlating the first recipient address and the first
`message content including a media component; and
`
`transmitting the recipient address and the first message content including a
`media component from the sending user device to a server computer, the first
`message content including a media component being transmitted to the server
`computer separately from the recipient address, the first message content
`including a media component not being accessible by the sending user for
`
`2
`The parties agree that the specification of the ’739 patent may be used and cited to as an exemplary
`specification for all of the patents-in-suit except for the ’711 patent. (See Doc. No. 97-1 at 1; Doc. No.
`100 at 3 n.4.)
`
`3
`The “send side” asserted claims are claims 1, 4-8, and 10 of the ’739 Patent; claims 1 and 5-10 of
`the ’885 Patent; claims 1-6 and 9-13 of the ’155 Patent; and claims 1-3 and 6-11 of the ’156 Patent.
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`display via the sending user device after said transmitting the media
`component to the server computer.
`
`’739 Patent at 18:50-19:11.
`Claim 1 of the ’351 patent is an example of a “receive side” asserted claim.4 Claim
`1 of the ’351 patent claims:
`1. A computer-implemented method of handling an electronic message, the
`method comprising:
`
`receiving at a recipient user device a first header information corresponding
`to a first message content that includes a media component;
`
`providing a first display via the recipient user device, the first display
`including the first header information in a message list, the first display not
`displaying the media component;
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`receiving at the recipient user device the first message content including the
`media component, wherein the first message content including the media
`component is associated with a unique message ID that correlates the first
`message content including the media component with the first header
`information;
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`receiving a selection by the recipient user via the first display, the selection
`directed to a portion of the message list corresponding to the first header
`information;
`
`in response to the selection, providing a second display via the recipient user
`device, the second display displaying the first message content including the
`media component without displaying a username associated with the first
`header information; and
`
`automatically deleting the first message content including the media
`component at a predetermined amount of time after being displayed such that
`after the second display is terminated from view, the first message content
`including the media component is no longer available to the recipient user.
`
`4
`The “receive side” asserted claims are claims 1, 3-7, 9, 11, and 12 of the ’351 Patent; claims 1-6
`and 8-13 of the ’886 Patent; claims 1-7 and 10 of the ’157 Patent; and claims 1, 2, 4-6, and 8-12 of the
`’111 Patent. The asserted claims of the ’711 patents are claims 1-17, which recites aspects of both the
`“send side” and “receive side” asserted claims.
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`’351 Patent at 18:50-19:11.
`On February 22, 2017, Snap filed a motion to dismiss Vaporstream’s patent
`infringement claims on the grounds that the patents-in-suit fail to claim patent-eligible
`subject matter and, thus, are invalid under 35 U.S.C. § 101. (Doc. No. 23.) On June 12,
`2017, the Court denied Snap’s motion to dismiss for lack of patentable subject matter
`without prejudice. (Doc. No. 59.) In the order, the Court analyzed the subject matter
`eligibility of the patents-in-suit under the two-step inquiry from Alice Corp. Pty. v. CLS
`Bank Int’l, 134 S. Ct. 2347, 2355 (2014). At Alice step one, the Court held that “the
`asserted claims and their specific limitations ‘do not readily lend themselves to a step-one
`finding that they are directed to a nonabstract idea.’” (Doc. No. 59 at 10-11 (quoting
`Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1349 (Fed.
`Cir. 2016).)
`The Court then turned to Alice step two and explained that the determination of
`“[w]hether the generic components [utilized by the patents-in-suit] operate in an
`unconventional manner to achieve an improvement in computer functionality raises factual
`issues that precludes adjudication of Snap’s motion to dismiss.” (Id. at 12.) “At the
`pleadings stage, the record is ambiguous as to whether the various claimed limitations . . .
`are conventional protocols or technological improvements. Given the ambiguity, it is
`premature to determine if these limitations, when considered individually and as an ordered
`combination, provide an inventive concept.” (Id. at 12-13.) Accordingly, the Court
`concluded that Snap’s Alice motion was premature and denied the motion without
`prejudice. (Id. at 13.)
`On June 26, 2017, Snap filed an answer to the complaint. (Doc. No. 61.) On
`December 1, 2017, the Court issued an amended scheduling order. (Doc. No. 96.) By the
`present motion, Snap moves for summary judgment on the grounds that the patents-in-suit
`are invalid as a matter of law. (Doc. No. 74.) Specifically, Snap argues that the patents-
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`in-suit fail to claim patent-eligible subject matter and, therefore, are invalid under 35
`U.S.C. § 101. (Id.)
`
`I.
`
`Discussion
`Legal Standards for Summary Judgment
`Summary judgment is appropriate under Rule 56 of the Federal Rules of Civil
`Procedure if the moving party demonstrates that there is no genuine issue of material fact
`and that it is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); Celotex Corp.
`v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing
`substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc.,
`477 U.S. 242, 248 (1986); Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Mgmt.,
`Inc., 618 F.3d 1025, 1031 (9th Cir. 2010). “A genuine issue of material fact exists when
`the evidence is such that a reasonable jury could return a verdict for the nonmoving party.”
`Fortune Dynamic, 618 F.3d at 1031 (internal quotation marks and citations omitted);
`accord Anderson, 477 U.S. at 248. “Disputes over irrelevant or unnecessary facts will not
`preclude a grant of summary judgment.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors
`Ass’n, 809 F.2d 626, 630 (9th Cir. 1987).
`A party seeking summary judgment always bears the initial burden of establishing
`the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving
`party can satisfy this burden in two ways: (1) by presenting evidence that negates an
`essential element of the nonmoving party’s case; or (2) by demonstrating that the
`nonmoving party failed to establish an essential element of the nonmoving party’s case that
`the nonmoving party bears the burden of proving at trial. Id. at 322-23; Jones v. Williams,
`791 F.3d 1023, 1030 (9th Cir. 2015). Once the moving party establishes the absence of a
`genuine issue of material fact, the burden shifts to the nonmoving party to “set forth, by
`affidavit or as otherwise provided in Rule 56, ‘specific facts showing that there is a genuine
`issue for trial.’” T.W. Elec. Serv., 809 F.2d at 630 (quoting former Fed. R. Civ. P. 56(e));
`accord Horphag Research Ltd. v. Garcia, 475 F.3d 1029, 1035 (9th Cir. 2007). To carry
`this burden, the non-moving party “may not rest upon mere allegation or denials of his
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`pleadings.” Anderson, 477 U.S. at 256; see also Behrens v. Pelletier, 516 U.S. 299, 309
`(1996) (“On summary judgment, . . . the plaintiff can no longer rest on the pleadings.”).
`Rather, the nonmoving party “must present affirmative evidence . . . from which a jury
`might return a verdict in his favor.” Anderson, 477 U.S. at 256.
`When ruling on a summary judgment motion, the court must view the facts and draw
`all reasonable inferences in the light most favorable to the non-moving party. Scott v.
`Harris, 550 U.S. 372, 378 (2007). The court should not weigh the evidence or make
`credibility determinations. See Anderson, 477 U.S. at 255. “The evidence of the non-
`movant is to be believed.” Id. Further, the Court may consider other materials in the record
`not cited to by the parties, but it is not required to do so. See Fed. R. Civ. P. 56(c)(3);
`Simmons v. Navajo Cnty., 609 F.3d 1011, 1017 (9th Cir. 2010).
`II.
`Legal Standards for Patent Eligibility under § 101
`Section 101 of the Patent Act defines patent-eligible subject matter as “any new and
`useful process, machine, manufacture, or composition of matter, or any new and useful
`improvement thereof.” 35 U.S.C. § 101. The Supreme Court has “‘long held that this
`provision contains an important implicit exception[:] Laws of nature, natural phenomena,
`and abstract ideas are not patentable.’” Ass’n for Molecular Pathology v. Myriad Genetics,
`Inc., 133 S. Ct. 2107, 2116 (2013). “The concern underlying these judicial exclusions is
`that ‘patent law not inhibit further discovery by improperly tying up the future use of these
`building blocks of human ingenuity.’” Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827
`F.3d 1042, 1047 (Fed. Cir. 2016).
`“The Supreme Court has devised a two-stage framework to determine whether a
`claim falls outside the scope of section 101.” Affinity Labs of Texas, LLC v. DIRECTV,
`LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016); see Alice, 134 S. Ct. at 2355. “The prescribed
`approach requires a court to determine (1) whether the claim is directed to a patent-
`ineligible concept, i.e., a law of nature, a natural phenomenon, or an abstract idea, and if
`so, (2) whether the elements of the claim, considered both individually and as an ordered
`combination, add enough to transform the nature of the claim’ into a patent-eligible
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`application.” Affinity Labs, 838 F.3d at 1257 (internal quotation marks omitted) (citing
`Alice, 134 S. Ct. at 2355). “In the context of claims that are challenged as containing only
`abstract ideas, those two stages are typically referred to as the ‘abstract idea’ step and the
`‘inventive concept’ step.” Id.
`“The ‘abstract idea’ step of the inquiry” requires courts “to look at the ‘focus of the
`claimed advance over the prior art’ to determine if the claim’s ‘character as a whole’ is
`directed to excluded subject matter.” Id. at 1257. “The ‘inventive concept’ step requires
`[courts] to look with more specificity at what the claim elements add, in order to determine
`‘whether they identify an “inventive concept” in the application of the ineligible subject
`matter’ to which the claim is directed. Id. at 1258. “This inventive concept must do more
`than simply recite ‘well-understood, routine, conventional activity.’” FairWarning IP,
`LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1093 (Fed. Cir. 2016).
`“Patent eligibility under 35 U.S.C. § 101 is ultimately an issue of law.” Berkheimer
`v. HP Inc., No. 2017-1437, 2018 WL 774096, at *3 (Fed. Cir. Feb. 8, 2018). But “[t]he
`patent eligibility inquiry may contain underlying issues of fact.” Id.
`“The accused
`infringer bears the burden of proof on both steps” of the Alice inquiry. InsideSales.com,
`Inc. v. SalesLoft, Inc., No. 2:16CV859DAK, 2017 WL 2559932, at *2 (D. Utah June 13,
`2017); see Microsoft Corp. v. i4i Ltd. P’ship, 564 U.S. 91, 95 (2011). Patent ineligibility
`must be proven by clear and convincing evidence. See Berkheimer, 2018 WL 774096, at
`*3; Microsoft, 564 U.S. at 95.
`III. Analysis
`A.
`Alice Step One
`Defendant Snap argues that the patents-in-suit are directed to an abstract idea
`because the claims specifically are directed to the abstract idea of “preventing third parties
`from tracing a message’s content to the sender or recipient.” (Doc. No. 74 at 1, 8.) In
`response, Vaporstream argues that the claims are not directed to an abstract idea. (Doc.
`No. 82 at 2-10.) Vaporstream argues instead the claims are directed to a specific
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`technological solution to the various and unique challenges within the field of electronic
`messaging. (Id. at 1, 3-8.)
`“The step one inquiry focuses on determining ‘whether the claim at issue is ‘directed
`to’ a judicial exception, such as an abstract idea.’” Apple, Inc. v. Ameranth, Inc., 842 F.3d
`1229, 1241 (Fed. Cir. 2016). The Federal Circuit has explained that “[w]hile the two steps
`of the Alice framework are related, the ‘Supreme Court’s formulation makes clear that the
`first-stage filter is a meaningful one, sometimes ending the § 101 inquiry.’” Thales
`Visionix Inc. v. United States, 850 F.3d 1343, 1347 (Fed. Cir. 2017).
`The Federal Circuit has cautioned that the step one inquiry does not “simply ask
`whether the claims involve a patent-ineligible concept, because essentially every routinely
`patent-eligible claim involving physical products and actions involves a law of nature
`and/or natural phenomenon—after all, they take place in the physical world.” Enfish, LLC
`v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016). “Rather, the ‘directed to’ inquiry
`applies a stage-one filter to claims, considered in light of the specification, based on
`whether ‘their character as a whole is directed to excluded subject matter.’” Id.
`In so
`doing, a court should “determine whether the claims ‘focus on a specific means or method
`that improves the relevant technology’ or are ‘directed to a result or effect that itself is the
`abstract idea and merely invoke generic processes and machinery.’” Apple, 842 F.3d at
`1241.
`
`In the Court’s order denying Snap’s motion to dismiss without prejudice, the Court
`held that “the asserted claims and their specific limitations ‘do not readily lend themselves
`to a step-one finding that they are directed to a nonabstract idea.’” (Doc. No. 59 at 10-11
`(quoting Bascom Global, 827 F.3d at 1349).) Nothing in the parties’ summary judgment
`briefing has altered the Court’s prior conclusion as to the Alice step one analysis.
`Accordingly, the Court turns to step two of the Alice inquiry.
`B.
`Alice Step Two
`Snap argues that the asserted claims fail to recite an inventive concept under Alice
`step two. (Doc. No. 74 at 16-25.) In response, Vaporstream argues that Snap’s motion
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`should be denied at Alice step two because at the very least, a genuine issue of material
`fact exists as to whether the asserted claims provide an inventive concept under Alice step
`two. (Doc. No. 82 at 10.)
`At Alice step two, the Court “consider[s] 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.” Berkheimer, 2018 WL
`774096, at *4 (internal quotation marks omitted) (quoting Alice, 134 S. Ct. at 2355). “The
`second step of the Alice test is satisfied when the claim limitations ‘involve more than
`performance of “well-understood, routine, [and] conventional activities previously known
`to the industry.”’” Berkheimer, 2018 WL 774096, at *5 (quoting Content Extraction &
`Transmission LLC v. Wells Fargo Bank, Nat. Ass’n, 776 F.3d 1343, 1347-48 (Fed. Cir.
`2014)); see Aatrix Software, Inc. v. Green Shades Software, Inc., No. 2017-1452, 2018
`WL 843288, at *5 (Fed. Cir. Feb. 14, 2018) (“If the elements involve ‘well-understood,
`routine, [and] conventional activity previously engaged in by researchers in the field,’ they
`do not constitute an ‘inventive concept.’ (quoting Mayo, 566 U.S. at 73)). The Federal
`Circuit has recently held that “[t]he question of whether a claim element or combination of
`elements is well-understood, routine and conventional to a skilled artisan in the relevant
`field is a question of fact.” Berkheimer, 2018 WL 774096, at *5; accord Aatrix, 2018 WL
`843288, at *5.
`Snap argues that each of the claim elements of the patents-suit – separate displays,
`separate transmissions, access restrictions/automatic deletion, message IDs, a display-
`based keyboard, and electronic instruction – were well-understood, routine, and
`conventional at the time of the invention.
`(Doc. No. 74 at 16-25.) In support of this
`contention, Snap relies on testimony from its technical expert as to what techniques were
`well know and routine at the time of the invention. (See Doc. No. 74-9, Greenberg Decl.
`¶¶ 16-68.)
`In response, Vaporstream disputes Snap’s assertion as to what was well-understood,
`routine, and conventional at the time of the invention, and Vaporstream offers competing
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`testimony from its own technical expert on this issue. (Doc. No. 82 at 10-25 (citing Doc.
`No. 82-5, Cohen Decl. ¶¶ 19-89).) Vaporstream further argues that there is a genuine
`dispute of facts as to the Alice step two analysis, rendering summary judgment on this issue
`inappropriate. (Id. at 1-2, 10.)
`The Court agrees with Vaporstream. The Federal Circuit has explained that that
`“[t]he question of whether a claim element or combination of elements is well-understood,
`routine and conventional to a skilled artisan in the relevant field is a question of fact.”
`Berkheimer, 2018 WL 774096, at *5; accord Aatrix, 2018 WL 843288, at *5. Here, there
`is competing expert testimony as to that specific question of fact. (See Doc. No. 74-9,
`Greenberg Decl. ¶¶ 16-68; Doc. No. 82-5, Cohen Decl. ¶¶ 19-89.) Accordingly, summary
`judgment on this issue is inappropriate. See Crown Packaging Tech., Inc. v. Ball Metal
`Beverage Container Corp., 635 F.3d 1373, 1384 (Fed. Cir. 2011) (“Where there is a
`material dispute as to the credibility and weight that should be afforded to conflicting
`expert reports, summary judgment is usually inappropriate.”); Leggett & Platt, Inc. v.
`Hickory Springs Mfg. Co., 285 F.3d 1353, 1362 (Fed. Cir. 2002) (finding summary
`judgment inappropriate because “the conflicting allegations of the experts here leave
`unresolved factual disputes”).
`Further, Vaporstream argues that Snap’s motion should be denied because Snap
`failed to conduct a proper ordered combination analysis as part of its Alice step analysis.
`(Doc. No. 82 at 21-25.) The Court agrees. Both the Supreme Court and the Federal Circuit
`have explained that when conducting an Alice step two analysis, a Court must examine the
`“elements of each claim both individually and as an ordered combination.” Alice, 134 S.
`Ct. at 2355; Berkheimer, 2018 WL 774096, at *4. Both Snap and its expert’s Alice step
`two analysis simply breaks apart the asserted claims into their individual elements and
`analyzes each element in an attempt to show that each individual element, by itself, was
`well-understood and conventional at the time of the invention. (See Doc. No. 74 at 17-25.)
`But “[t]he inventive concept inquiry requires more than recognizing that each claim
`element, by itself, was known in the art. . . . [A]n inventive concept can be found in the
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`Case 2:17-cv-00220-MLH-KS Document 117 Filed 02/27/18 Page 12 of 12 Page ID #:5068
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`non-conventional and non-generic arrangement of known, conventional pieces.” Bascom
`Glob., 827 F.3d at 1350. Here, Snap has failed to present any evidence showing that the
`specific combination of the elements performed in the specific order claimed in the patents-
`in-suit was conventional and generic at the time of the invention in the field of electronic
`messaging, or in any other field. As a result, this is an additional reason for denying Snap’s
`motion for summary judgment.
`Finally, the Court notes that with respect to the ’886 patent, the patent examiner
`specifically allowed the claims in that patent to issue over a prior rejection of the claims
`for failure to claim patent-eligible subject matter under § 101. (Doc. No. 82-3, Xi. Decl.
`Ex. 2 at 14-28; Doc. No. 82-4, Xi Decl. Ex. 3 at 1-3.) The Federal Circuit has explained
`that “an examiner’s decision on an original or reissue application is ‘evidence the court
`must consider in determining whether the party asserting invalidity has met its statutory
`burden by clear and convincing evidence.’” Custom Accessories, Inc. v. Jeffrey-Allan
`Indus., Inc., 807 F.2d 955, 961 (Fed. Cir. 1986). Although the examiner’s decision is not
`dispositive of the Court’s § 101 analysis, it is additional evidence weighing against Snap’s
`assertion that the patents-in-suit are invalid under § 101 and rendering summary judgment
`of this issue inappropriate.
`In sum, Snap has failed to show at the summary judgment stage that the patents-in-
`suit are invalid under § 101 as a matter of law. As a result, the Court denies Snap’s motion
`for summary judgment.
`
`Conclusion
`For the reasons above, the Court denies Defendant Snap’s motion for summary
`judgment.
`IT IS SO ORDERED.
`DATED: February 27, 2018
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`MARILYN L. HUFF, District JudgeMARILYN L. HUFF, District Judge
`UNITED STATES DISTRICT COURT
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