`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`
`
`LUMINATI NETWORKS LTD.
`
`
`
`
`
`Plaintiff,
`
`v.
`
`TESO LT, UAB; OXYSALES, UAB;
`METACLUSTER LT, UAB;
`
`
`Defendants.
`
`
`
`
`
`
`Case No. 2:19-cv-395-JRG
`
`
`
`
`LUMINATI’S OPPOSITION TO DEFENDANTS’ MOTION TO DISMISS
`
`
`
`Code200 Exhibit 1004
`Page 1 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 2 of 36 PageID #: 588
`
`TABLE OF CONTENTS
`INTRODUCTION ................................................................................................................. 1
`I.
`II. STATEMENT OF THE ISSUES ......................................................................................... 1
`III. FACTUAL AND PROCEDURAL BACKGROUND ......................................................... 2
`A. Technical Background of Asserted Patents .......................................................................... 2
`B. Procedural History ................................................................................................................ 8
`IV. LUMINATI’S ASSERTED PATENT CLAIMS ARE VALID UNDER 101 ................... 8
`A. Legal Standard ...................................................................................................................... 8
`1. Step One: The Asserted Patents Are Not “Directed To” An Abstract Idea or Law of
`Nature .............................................................................................................................. 10
`2. Step Two: The Asserted Claims Recite Inventive Concepts ........................................... 11
`B. Defendants misconstrue patent terms to overgeneralize the claims and make them seem
`more abstract than they are ................................................................................................. 12
`C. The Asserted Patents Satisfy Alice Step One. They Are Directed Toward an Entirely New
`Network Based on an Innovative Server-Client Device-Web Server Architecture ........... 14
`1. ‘319 Patent Claims .......................................................................................................... 14
`2. ‘510 Patent Claims .......................................................................................................... 15
`3. ‘614 Patent Claims .......................................................................................................... 16
`4. Defendants’ argument that the claims use “routine and ordinary devices and servers ... in
`a routine and ordinary way” is incorrect and a misapplication of the law ...................... 17
`5. Defendants’ cited cases are distinguishable .................................................................... 19
`D. The Asserted Patents Meet Alice Step Two By Reciting Inventive Concepts ................... 23
`1. The Asserted Patents recite inventive concepts and improvements ................................ 23
`2. Under Alice step two, the question of whether the claims are conventional is a question
`of fact not amenable to dismissal or summary judgment ................................................ 25
`V. LUMINATI’S NON-PATENT CLAIMS SHOULD NOT BE DISMISSED UNDER
`12(B)(6), BECAUSE LUMINATI PROPERLY PROVIDED NOTICE OF FACIALLY
`PLAUSIBLE CLAIMS ....................................................................................................... 26
`A. Legal Standard .................................................................................................................... 26
`B. Plaintiff Properly Pled Misappropriation of Trade Secrets. ............................................... 26
`C. Plaintiff Properly Pled Intentional Unauthorized Access of a Protected Computer .......... 27
`D. Plaintiff Properly Pled False Advertising Under the Lanham Act ..................................... 28
`E. Plaintiff Properly Pled Tortious Interference with Business Relations .............................. 30
`VI. CONCLUSION .................................................................................................................... 30
`
`Code200 Exhibit 1004
`Page 2 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 3 of 36 PageID #: 589
`
`TABLE OF AUTHORITIES
`
`Cases
`
`Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121 (Fed. Cir. 2018) .. 12, 21, 23,
`25
`
`Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347 (2014) ........................................ 9, 10, 11
`
`Amdocs Isr. Ltd. v. Openet Telecom, Inc., 841 F.3d 1288 (Fed. Cir. 2016) ............... 11, 21, 22, 25
`
`Atticus Research Corp. v. Mmsoft Design, 2018 U.S. Dist. LEXIS 228681 (S.D. Tex. Sept. 6,
`2018).......................................................................................................................................... 24
`
`Bancorp Servs. L.L.C v. Sun Life Assurance Co. of Canada, 687 F.3d 1266 (Fed. Cir. 2012) .... 12
`
`BASCOM Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016) ... 21
`
`Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) ......................................................................... 26
`
`Berkheimer v. HP Inc., 881 F.3d 1360 (Fed. Cir. 2018) ................................................... 10, 12, 25
`
`Butowsky v. Folkenflik, Civil Action No. 4:18CV442, 2019 U.S. Dist. LEXIS 104297 (E.D. Tex.
`Apr. 17, 2019) ........................................................................................................................... 29
`
`buySAFE, Inc. v. Google, Inc., 765 F.3d 1350 (Fed. Cir. 2014) ............................................. 22, 24
`
`Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343 (Fed.
`Cir. 2014) .................................................................................................................................. 10
`
`Core Wireless Licensing S.A.R.L. v. LG Elecs., Inc., 880 F.3d 1356 (Fed. Cir. 2018) ................ 21
`
`CXT Sys. v. Acad., Ltd., No. 2:18-CV-00171-RWS-RSP, 2019 U.S. Dist. LEXIS 51992 (E.D.
`Tex. Mar. 27, 2019) ................................................................................................................... 25
`
`DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245 (Fed. Cir. 2014 ................................... 20
`
`Diamond v. Diehr, 450 U.S. 175 (1981) ........................................................................... 10, 20, 23
`
`Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016) ................................ 21, 24
`
`Enfish, LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016) ........................................... 18, 20
`
`Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299 (Fed. Cir. 2018) ........................................... 21
`
`Freeny v. Fossil Grp., Inc., 2019 U.S. Dist. LEXIS 36688 (E.D. Tex., Feb. 12, 2019) ............... 21
`
`Code200 Exhibit 1004
`Page 3 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 4 of 36 PageID #: 590
`
`Frisco Med. Ctr., LLP. Bledsoe, 147 F. Supp. 3d 646 (E.D. Tex. 2015) ............................... 27, 28
`
`In re Katrina Canal Breaches Litig., 495 F.3d 191 (5th Cir. 2007) ............................................. 26
`
`Intellectual Ventures I LLC v. Capital One Bank, 792 F.3d 1363 (Fed. Cir. 2015) ..................... 22
`
`Intellectual Ventures I LLC v. Symantec Corp., 100 F. Supp. 3d 371 (D. Del. 2015).................. 22
`
`Intellectual Ventures II LLC v. BITCO Gen. Ins. Corp., 362 F. Supp. 3d 370 (E.D. Tex. Jan. 24,
`2019).......................................................................................................................................... 22
`
`Interval Licensing LLC v. AOL, Inc., 896 F.3d 1335 (Fed. Cir. 2018) ................................... 22, 24
`
`Kazee, Inc. v. Callender, No. 4:19-CV-31-SDJ, 2020 U.S. Dist. LEXIS 36105 (E.D. Tex, March
`2, 2020)...................................................................................................................................... 26
`
`Lifetime Indus., Inc. v. Trim-Lok, Inc., 869 F.3d 1372 (Fed. Cir. 2017) ...................................... 26
`
`Lormand v. US Unwired, Inc., 565 F.3d 228 (5th Cir. 2009) ....................................................... 26
`
`Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012) ................. 11
`
`McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299 (Fed. Cir. 2016) ......................... 11
`
`Milkovich v. Lorain Journal Co., 497 U.S. 1 (1990) .................................................................... 29
`
`Mortg. Grader, Inc. v. First Choice Loan Servs., Inc. 811 F.3d 1314 (Fed. Cir. 2016) ............... 23
`
`MyMail, Ltd. v. ooVoo, LLC, 934 F.3d 1373 (Fed. Cir. 2019................................................... 8, 12
`
`NobelBiz, Inc. v. InsideSales.com, Inc., No. 6:13-cv-360, Dkt. 32 (E.D. Tex. Oct. 14, 2014)..... 26
`
`Parus Holdings, Inc. v. Sallie Mae Bank, 137 F. Supp. 3d 660 (N.D. Cal. 2015)........................ 21
`
`Pizza Hut Inc. v. Papa John’s Int’l Inc., 227 F.3d 489 (5th Cir. 2000) ......................................... 28
`
`Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042 (Fed. Cir. 2016) ............................. 20
`
`Reese v. Sprint Nextel Corp., 774 Fed. App’x 656 (Fed. Cir. 2019) ............................................ 21
`
`SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161 (Fed. Cir. 2018) ............................................... 20
`
`Specialized Monitoring Sols., LLC v. ADT LLC, 367 F. Supp. 3d 575 (E.D. Tex. 2019) ............ 20
`
`Staton Holdings, Inc. v. Russell Ath., Inc., Civil Action No. 3:09-CV-0419-D, 2009 U.S. Dist.
`LEXIS 108603 (N.D. Tex. Nov. 20, 2009) ............................................................................... 30
`
`Code200 Exhibit 1004
`Page 4 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 5 of 36 PageID #: 591
`
`Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559 (5th Cir. 2005) ....................................... 26
`
`Thales Visionx, Inc. v. United States, 850 F.3d 1343 (Fed. Cir. 2017)................................... 10, 20
`
`Tinnus Enters., LLC v. Telebrands Corp., No. 6:17-CV-00170-RWS, 2018 U.S. Dist. LEXIS
`79068 (E.D. Tex. Mar. 9, 2018) ................................................................................................ 28
`
`TLI Communs. LLC v. AV Auto., L.L.C. (In re TLI Communs. LLC Patent Litig.), 823 F.3d 607
`(Fed. Cir. 2016) ................................................................................................................... 13, 19
`
`Trading Techs. Int’l, Inc. v. CQG, Inc., 675 Fed. App’x. 1001 (Fed. Cir. 2017) ......................... 11
`
`Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343 (Fed. Cir. 2014) ............... 22
`
`Uniloc United States, Inc. v. Samsung Elecs. Am., Inc., No. 2:17-CV-00651-JRG, 2018 U.S.
`Dist. LEXIS 176336 (E.D. Tex. Sep. 18, 2018) .......................................................................... 9
`
`Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253 (Fed. Cir. 2017) ...................................... 21
`
`Voip-Pal.com, Inc. v. Apple Inc., 411 F. Supp. 3d 926 (N.D. Cal. 2019) ..................................... 20
`
`Windy City Innovations, LLC v. Facebook, Inc., 411 F. Supp. 3d 886 (N.D. Cal 2019) .............. 22
`
`Statutes
`
`18 U.S.C. § 1030(e)(11) ................................................................................................................ 28
`
`
`
`
`
`
`
`
`
`Code200 Exhibit 1004
`Page 5 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 6 of 36 PageID #: 592
`
`I.
`
`INTRODUCTION
`
`Defendants move to dismiss patent claims as not patent eligible and non-patent claims as
`
`failing to state a claim for which relief can be granted. Neither argument has any merit.
`
`Defendants know they cannot win their Alice motion based on the actual claim limitations, which
`
`are tangible and not abstract. So, instead, they build “straw man” claims by misconstruing the
`
`claim requirements and rewriting the claims to make them seem more generic than they are. To
`
`do so, Defendants intentionally gloss over the claimed, innovative server-client device-web server
`
`architecture and other important limitations.
`
`Defendants’ arguments lack basic credibility. The Patent Office reviewed and granted
`
`these claims, yet Defendants would have the Court believe the claims do nothing more than
`
`describe the Internet, or, even more unbelievably, a method of communication practiced by middle
`
`school children. The Patent Office knows what the Internet is. The patent examiner understood
`
`that the Asserted Patents created a new network of client peer devices that constitute a tangible,
`
`patentable advance in networking technology.
`
`As to the non-patent claims, Luminati has provided extensive factual allegations in support.
`
`The Complaint includes allegations regarding Defendants’ access to test emails, contact with
`
`Luminati former employees, and publication of advertisements containing false and misleading
`
`statements regarding Luminati’s patents and patented technology. The allegations are further
`
`supported by exhibits attached to the Complaint. These allegations are more than sufficient to
`
`provide notice of plausible claims by Luminati and meet the pleading standard.
`
`STATEMENT OF THE ISSUES
`
`II.
`Defendants’ 12(b)(6) Motion raises two issues:
`(i) Whether the asserted patents are unpatentable under 35 U.S.C. § 101 as abstract, when
`
`Code200 Exhibit 1004
`Page 6 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 7 of 36 PageID #: 593
`
`the patents claim methods that create a novel computer network architecture performed by a client
`
`device, such as a normal consumer cell phone or laptop, serving as a proxy within a server – client
`
`device – web server system architecture, when courts regularly hold that improvements to network
`
`architecture are patentable and not abstract; and
`
`(ii) Whether the Luminati pled sufficient facts to meeting the pleading standards for its
`
`non-patent causes of action.
`
`III.
`
`FACTUAL AND PROCEDURAL BACKGROUND
`
`A.
`
`Technical Background of Asserted Patents
`
`The patent claims at issue address a new computer network architecture. The asserted
`
`claims include at least claims 1, 17, 24, 25, and 27 of U.S. Patent No. 10,257,319 (“‘319 Patent”),
`
`claims 1, 8, 13, 15, 16, 18, 20, 22, and 23 of U.S Patent No. 10,484,510 (“‘510 Patent”), and claims
`
`1, 2,4, 7, 9, 11, 12, 15, 16, 17, and 29 of U.S. Patent No. 10,469,614 (“‘614 patent”), with the
`
`patents referred collectively as the Asserted Patents. Complaint at ¶¶ 28, 54, 67, 80.
`
`The ‘319 and ‘510 patents, directed to architecture and methods for fetching content over
`
`the Internet, share the same named inventors (Derry Shribman and Ofer Vilenski), the same
`
`specification (the ‘510 patent is a continuation of the ‘319 patent), and the same title: “System
`
`Providing Faster and More Efficient Data Communication.” Complaint at ¶¶ 14-15, 62, 75; see
`
`also Dkt. 1-2 and 1-3. Both patents claim priority to provisional application 61/249,624, filed on
`
`October 8, 2009. Complaint at ¶¶ 62, 75. The ‘614 patent is also directed to a server-client device-
`
`web server architecture and methods for fetching content over the Internet and has the same named
`
`inventors. It is in a different patent family that claims priority to provisional application
`
`61/870,815, filed on August 28, 2013. Complaint at ¶¶ 14-15, 48; Dkt. 1-1.
`
`The ‘319 and ‘510 Patents create a “system designed for increasing network
`
`Code200 Exhibit 1004
`Page 7 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 8 of 36 PageID #: 594
`
`communication speed for users…” Dkt. 1-2 at Abstract.1 As described in the shared specification,
`
`“[t]he present invention is related to Internet communication, and more particularly, to improving
`
`data communication speed and bandwidth efficiency on the Internet.” Id. at 1:23-25. “The need
`
`for a new method of data transfer that is fast for the consumer, cheap for the content distributor
`
`and does not require infrastructure investment for ISPs, has become a major issue which is yet
`
`unsolved.” Id. at 1:54-57. The ‘319 and ‘510 Patents discuss that previous “proxy servers” fail to
`
`provide a “comprehensive solution for Internet surfing,” at least in part because they “would need
`
`to be deployed at every point around the world where the Internet is being consumed.” Id. at 2:24-
`
`27; see also 2:8-23.
`
`Instead, to create a new type of consumer-based network that never existed before, these
`
`patents employ “client devices,” which are consumer devices that operate as proxies. Id. at 3:13-
`
`55. The client devices (circled in red below) are modified to function as a client, peer or agent and
`
`serve as a proxy in the system, permitting “any number of agents and peers.” Id. at 4:43-64.
`
`The present system and method provides for faster and more efficient data
`communication within a communication network. An example of such a
`communication network 100 is provided by the schematic diagram of FIG. 3. The
`network 100 of FIG. 3 contains multiple communication devices. Due to
`functionality provided by software stored within each communication device,
`which may be the same in each communication device, each communication device
`may serve as a client, peer, or agent, depending upon requirements of the network
`100, as is described in detail herein. It should be noted that a detailed description
`of a communication device is provided with regard to the description of FIG. 4.
`
`Returning to FIG. 3, the exemplary embodiment of the network 100 illustrates that
`one of the communication devices is functioning as a client 102. The client 102 is
`capable of communication with one or more peers 112, 114, 116 and one or more
`agents 122. For exemplary purposes, the network contains three peers and one
`agent, although it is noted that a client can communicate with any number of agents
`and peers.
`
`1 Citations to the specification of the ‘319 Patent at Dkt. 1-2 also apply to the same portion of the
`‘510 Patent (Dkt. 1-3).
`
`Code200 Exhibit 1004
`Page 8 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 9 of 36 PageID #: 595
`
`
`
`
`
`The ‘614 Patent creates a client device network of “tunnel devices” that are client devices
`
`(circled in red below) within a server-client device–web server architecture. Complaint at ¶ 51;
`
`Dkt. 1-1 at 1:19-23 (“apparatus and method for improving communication over the Internet by
`
`using intermediate nodes, and in particular, to using devices that may doubly function as an end-
`
`user and as an intermediate node.”).
`
`Each of devices herein may consist of, include, be part of, or be based on, a part of,
`or the whole of, the computer 11 or the system 100 shown in FIG. 1. Each of the
`servers herein may consist of, may include, or may be based on, a part or a whole
`of the functionalities or structure (such as software) of any server described in the
`‘604 Patent, such as the web server, the proxy server, or the acceleration server.
`Each of the clients or devices herein may consist of, may include, or may be based
`on, a part or a whole of the functionalities or structure (such as software) of any
`client or device described in the ‘604 Patent, such as the peer, client, or agent
`devices.
`
`In one example, an accessing to a data server is improved by using an intermediate
`device referred to as ‘tunnel’ device, that is executing a ‘tunnel’ flowchart. FIG. 5
`shows a system 30 including two client devices, a client device #1 31a and a client
`device #2 31b, that may access the data 20 servers 22a and 22b using one or more
`of a tunnel device #1 33a, a tunnel device #2 33b, and a tunnel device #3 33c, under
`the management and control of an acceleration server 32. These network elements
`
`Code200 Exhibit 1004
`Page 9 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 10 of 36 PageID #: 596
`
`communicates with each other using the Internet 113. Dkt. 1-1 at 83:4-15.
`
`
`The ‘614 Patent further improves on the above network by having the proxy client devices
`
`
`
`dynamically shift between two states based on a criteria. Specifically, the client (tunnel) device
`
`is available as a proxy in the first state (for example, when there is sufficiently available
`
`bandwidth) and unavailable in the second state (for example, when there is not sufficiently
`
`available bandwidth). Complaint at ¶ 51. Criteria-based dynamic switching improves the
`
`performance of the system by maintaining a new, dynamic network made exclusively of available
`
`client devices that can meet a given performance criteria. Dkt. 1-1 at 124:3-13.
`
`A device may be selected to provide a service, such as a tunnel device that may be
`selected (alone or as part of a group) by a client device as part of the ‘Select
`Tunnels’ step l0la in the flowchart 100. The selected tunnel device may shift to the
`‘offline’ state 301 or to the ‘congested’ state 303, and thus respectively becomes
`unavailable or less effective to use. In such a case, a new tunnel device, that was
`not formerly selected, may be now selected as a substitute for the ‘offline’ or
`‘congested’ tunnel device as part of a ‘Replace Device’ step 32ld.
`
`Code200 Exhibit 1004
`Page 10 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 11 of 36 PageID #: 597
`
`
`
`This network created by a registry of available client devices as proxies has notable
`
`advantages. For example, it provides untraceability and anonymity, which in turn stops requests
`
`from being blocked. ‘614 Patent at 87:51-88:10. As addressed in paragraph 17 of the Complaint,
`
`this anonymity addressed a well-known problem with direct requests over the Internet that
`
`otherwise permit web servers to identify requesting devices (emphasis added):
`
`“Since 2014, Luminati has offered proxy-based services relying on its “Residential
`Proxy Network” that practice one or more claims of the Asserted Patents. Luminati
`permits its business customers to utilize its residential proxy network to gather data
`over the Internet using residential proxy devices from various localities as required
`by the customers. Because each of these residential proxy devices has its own
`residential IP address, web servers receiving requests from these proxy devices do
`not recognize such requests as originating from the actual user making the request.
`Instead, the server identifies the request as coming from a residential device based
`upon the residential IP address of the proxy device. These residential proxy devices
`provide businesses with a number of advantages. For example, online retailers may
`anonymously use these residential proxy devices to gather information from web
`servers (such as for comparative pricing), businesses may utilize these devices to
`test their web sites from any city in the world, and cyber security firms may employ
`these devices to test web sites for malicious code.”
`
`Traditional data center proxy services used proxy data servers with a limited number of
`
`commercial IP addresses. ‘319 Patent at 2:8-32. Target servers regularly blocked such proxies
`
`Code200 Exhibit 1004
`Page 11 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 12 of 36 PageID #: 598
`
`because a target server could easily identify such commercial IP addresses, or a web server might
`
`intentionally send incorrect information to such an address, for example. Additional IP addresses
`
`leasing failed to solve the problem because they were still identifiable as commercial IP addresses
`
`and leasing individual addresses is prohibitively expensive beyond a number in the thousands.
`
`In contrast, the Asserted Patents created a new residential IP proxy network that solved
`
`these problems. It was made of a dynamic registry of consumer devices that would go on and
`
`offline but allowed for a proxy network with millions of nodes instead of thousands. As consumer
`
`devices, they would not easily be identified or blocked. This contrasts with the previously client-
`
`server Internet architecture that relied on servers as proxies. Dkt. 1-1 at 4:40-61.
`
`The claimed solution provides concrete structure differing from the prior art. The Asserted
`
`Claims require this new network architecture of a server-client device-web server to operate. The
`
`‘614 patent also requires additional functionality on the proxy client device to optimize the
`
`architecture by dynamically that client devices meet criteria, such as available bandwidth, access
`
`to wi-fi connections versus cellular connections, etc. The real-time nature of the ‘614 patent also
`
`ensures that the content obtained is fresh and that not cached. Dependent claims add limitations
`
`such as causing the client device and server to periodically communicate (claim 17 of the ‘319
`
`Patent and claim 8 of the ‘510 Patent); downloading the software application containing the
`
`computer instructions that causes the client device to perform the claimed steps (claim 13 of the
`
`‘510 Patent); receiving the request from the first server over the established TCP connection (claim
`
`15 of the ‘510 Patent); the client device performs the determining step (claim 2 of the ‘614 Patent);
`
`the client device is a smartphone (claim 16 of the ‘614 Patent); and the client device is using a
`
`client operating system, which can be a mobile operating system including Android version 2.2 or
`
`Apple iOS version 3 (claims 9, 11, and 12 of the ‘614 Patent).
`
`Code200 Exhibit 1004
`Page 12 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 13 of 36 PageID #: 599
`
`B.
`
`Procedural History
`
`On July 19, 2018 Luminati filed a complaint against Tesonet, UAB (“Tesonet”) in
`
`Luminati Networks Ltd. v. UAB Tesonet, case no. 2:18-cv-299 (“Tesonet Action”) for patent
`
`infringement followed by an amended complaint (Dkt. 15) on December 12, 2018 adding claims
`
`of misappropriation of trade secrets, intentional unauthorized access of protected computer, false
`
`advertising, and tortious interference with Luminati’s business relationships. Subsequent to
`
`service of the complaint, Tesonet reorganized itself into a number of related entities including
`
`defendants Teso LT, UAB (“Teso”), Metacluster UAB (“Metacluster”), and Oxysales, UAB
`
`(“Oxysales”) (collectively, “Defendants”) in the present action. On November 5, 2019, the parties
`
`to the Tesonet Action filed a joint stipulation (Dkt. 220) dismissing without prejudice the non-
`
`patents claims of all parties in that case (Luminati, Teso and Metacluster).
`
`Notably, no motion to dismiss was filed against the non-patent claims in the prior case.
`
`Yet the same claims with even more supporting evidence are subject to a motion on the pleadings
`
`here in a clear overreach by Defendants. On December 6, 2019, Luminati filed the Complaint
`
`against Defendants in this action (“Teso Action”). This Complaint includes the allegations from
`
`the Tesonet Action relevant to the non-patent claims as well as additional allegations regarding
`
`Defendants’ activities after the filing of the Tesonet Action complaint, including unrefuted
`
`allegations upon information and belief that Defendants are behind the website titled “the Dark
`
`Side of Luminati.” Complaint at ¶¶ 36-46; 87-108.
`
`IV.
`
`LUMINATI’S ASSERTED PATENT CLAIMS ARE VALID UNDER 101
`
`A.
`
`Legal Standard
`
`“Determining patent eligibility requires a full understanding of the basic character of the
`
`claimed subject matter.” MyMail, Ltd. v. ooVoo, LLC, 934 F.3d 1373, 1379 (Fed. Cir. 2019). For
`
`Code200 Exhibit 1004
`Page 13 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 14 of 36 PageID #: 600
`
`questions of patent eligibility under §101, the Supreme Court instructs courts to distinguish
`
`between claims that claim patent ineligible subject matter and those that “integrate the building
`
`blocks into something more.” Uniloc United States, Inc. v. Samsung Elecs. Am., Inc., No. 2:17-
`
`CV-00651-JRG, 2018 U.S. Dist. LEXIS 176336, at *3-5 (E.D. Tex. Sep. 18, 2018)(citing
`
`Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014)).
`
`The Alice test on patent eligibility consists of a two-part test which asks: 1. Are the claims
`
`at issue directed to a patent-ineligible concept, i.e., law of nature, natural phenomena, or abstract
`
`idea? and 2. If so, do the claims contain additional element(s) sufficient to ensure that the claims
`
`amount to significantly more than the ineligible concept itself?” Alice Corp. Pty. Ltd. v. CLS Bank
`
`Int’l, 134 S. Ct. 2347 (2014). The requirement of patent eligibility under 35 U.S.C. § 101 is not
`
`new. In Alice, the Court acknowledged that “[w]e have interpreted § 101 and its predecessors in
`
`light of this exception for more than 150 years.” Id. at 2354 (internal citations omitted). The
`
`concern that has always driven the exclusionary principle embodied in § 101 is preemption, mainly
`
`“that patent law not inhibit further discovery by improperly tying up the future use of these building
`
`blocks of human ingenuity.” Id. (internal quotations and citations omitted).
`
`To promote and encourage innovation, these preemptive concerns must be balanced against
`
`the primary purpose of the patent laws. The Supreme Court recognized this balance and the need
`
`to “tread carefully in construing this exclusionary principle lest it swallow all of patent law.” Id.
`
`(emphasis added). The Court recognized that “[a]t some level, all inventions embody, use, reflect,
`
`rest upon, or apply laws of nature, natural phenomena, or abstract ideas” and that “an invention is
`
`not rendered ineligible for patent simply because it involves an abstract concept.” Id. (internal
`
`quotations and citations omitted). “The applications of such concepts to a new and useful end, we
`
`have said, remain eligible for patent protection.” Id.
`
`Code200 Exhibit 1004
`Page 14 of 36
`
`
`
`Case 2:19-cv-00395-JRG Document 28 Filed 04/07/20 Page 15 of 36 PageID #: 601
`
`The second step of the Alice test only applies if step one finds that the patent claims address
`
`only abstract, ineligible ideas. Even if true, the patent claim is nonetheless patentable under step
`
`two when the claim limitations “involve more than performance of ‘well-understood, routine,
`
`[and] conventional activities previously known to the industry.’” Content Extraction &
`
`Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1347-48 (Fed. Cir. 2014)
`
`(quoting Alice, 134 S. Ct. at 2359). “The 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” that must be “proven by clear and convincing evidence.” Berkheimer v. HP Inc.,
`
`881 F.3d 1360, 1368 (Fed. Cir. 2018).
`
`Step One: The Asserted Patents Are Not “Directed To” An Abstract Idea
`1.
`or Law of Nature
`
`The patent claims here are eligible under step one because they are not merely directed to
`
`“laws of nature, natural phenomena [or] abstract ideas.” Alice at 2355. Courts must “ensure at step
`
`one that we articulate what the claims are directed to with enough specificity to ensure the step
`
`one inquiry is meaningful.” Thales Visionx, Inc. v. United States, 850 F.3d 1343, 1347 (Fed. Cir.
`
`2017) (citing Alice, 134 S. Ct. at 2354).
`
`By law, just because a patent claim on some level may involve various concepts or ideas
`
`does not render it ineligible. Diamond v. Diehr, 450 U.S. 175, 187 (1981); see also Alice at 2354
`
`(“an invention is not rendered ineligible for patent simply because it involves an abstract
`
`concept”).2 A patent directed to improving an existing technological process is patent eligible and
`
`2 Diehr recognized the key limitations of prior art rubber molding techniques which were not
`precise due in part to the inability to accurately monitor the temperature inside the mold. Diehr
`450 U.S. at 177-178. The invention at issue in Diehr solved these problems using a thermocouple
`to monitor the temperature and take the steps of: “installing rubber in a press, closing the mold,
`constantly determining the temperature of the mold, constantly recalculating the appropriate cure
`time through the use of the formula and a digital computer, and automatically opening the press at
`the proper time.” Id. at 187. The Diehr claims were patent-eligible because t