Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 1 of 13 PageID #: 21936
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`Case No. 2:13-CV-1112-JRG
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`Case No. 2:14-CV-61-JRG
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`CONTENTGUARD HOLDINGS, INC.,
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`Plaintiff,
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`
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`v.
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`AMAZON.COM, INC., et al.,
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`Defendants.
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`CONTENT GUARD HOLDINGS, INC.,
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`Plaintiff,
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`
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`v.
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`GOOGLE, INC.,
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`Defendant.
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`MEMORANDUM OPINION AND ORDER
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`Before the Court is the Joint Renewed Motion for Judgment on the Pleadings Declaring
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`All Asserted Patent Claims Invalid Pursuant to 35 U.S.C. § 101 (Dkt. No. 539 in the -1112 case;
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`Dkt. No. 191 in the -61 case) (“Mot.”) filed by Defendants Motorola Mobility, LLC,
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`Amazon.com, Inc., Apple Inc., Google, Inc., Huawei Technologies Co., Ltd., Huawei Device
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`USA, Inc., HTC Corp., HTC America, Inc., Samsung Electronics Co., Ltd., Samsung Electronics
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`America, Inc., and Samsung Telecommunications America, LLC (collectively, “Defendants”).
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`Plaintiff ContentGuard Holdings, Inc. (“ContentGuard”) filed a Response in Opposition to the
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`Motion (Dkt. No. 597 in the -1112 case) (“Resp.”). Previously, the Court entered an order
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`denying the Motion and expressly reserving the right to supplement that order with more detailed
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 2 of 13 PageID #: 21937
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`analysis. (Dkt. No. 826 in the -1112 case; Dkt. No. 299 in the -61 case.) This Order
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`supersedes and replaces that prior Order. For the reasons stated below, the motion is DENIED.
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`I.
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`Background
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`On December 18, 2013, ContentGuard filed suit against Amazon, Apple, Blackberry,
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`Huawei, and Motorola Mobility asserting claims of patent infringement of the patents in this suit.
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`(Dkt. No. 1 in the -1112 case.) On January 17, 2014, ContentGuard filed an amended complaint
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`also bringing suit on the same patents against HTC and Samsung. (Dkt. No. 22 in the -1112
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`case.)
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`Defendants Motorola and Amazon each separately filed motions requesting dismissal
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`pursuant to 35 U.S.C. § 101. (Dkt. Nos. 298 and 390 in the -1112 case). The Court held a
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`Markman hearing on February 6, 2015, and issued a 144-page Claim Construction Order (Dkt.
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`No. 459 in the -1112 case) (“Claim Construction Order”) on March 20, 2015. On April 9, 2015,
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`the Court denied Defendants’ pending § 101 motions without prejudice to re-filing, and directed
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`that the parties re-brief the issue in accordance with the Court’s Claim Construction Order. (Dkt.
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`No. 482 in the -1112 case.) On April 24, 2015, Defendants filed this Joint Motion to Dismiss on
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`the Pleadings Under Federal Rule of Civil Procedure (“F.R.C.P.”) 12(c) re-raising the § 101
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`issue. (Mot.) Since both Defendants and Plaintiff submitted evidence outside the scope of what
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`can properly be considered under F.R.C.P. 12(c)1, pursuant to Rule 12(d), the Court converted
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`the motion to a motion for summary judgment under F.R.C.P. 56. (Dkt. No. 669 in the -1112
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`case.) The Court heard oral argument from the parties on July 29, 2015.
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`ContentGuard has asserted the following twenty claims from six related patents issued to
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`Mark Stefik: Claims 1, 3, 6, 8, 11, and 13 from U.S. Patent No. 8,393,007 (“the ’007 patent”);
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`Claims 1, 7, and 13 from U.S. Patent No. 8,370,956 (“the ’956 patent”); Claims 1 and 8 from
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`1 See, e.g., (Mot., Ex. 3, Dkt. No. 539-3 in the -1112 case; Resp., Ex. 6, Dkt. No. 597-6 in the -1112 case.)
`2
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 3 of 13 PageID #: 21938
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`U.S. Patent No. 7,523,072 (“the ’072 patent”); Claims 18, 21, and 34 from U.S. Patent No.
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`7,269,576 (“the ’576 patent”); and Claims 1, 21, and 58 from U.S. Patent No. 6,963,859 (“the
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`’859 patent”) (collectively, the “Stefik Patents”). ContentGuard has also asserted the following
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`five claims from two related patents issued to Mai Nguyen: Claims 1 and 5 of U.S. Patent No.
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`7,774,280 (“the ’280 patent”); and Claims 1, 3, and 5 from U.S. Patent No. 8,001,053 (“the ’053
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`patent”) (collectively, the “Nguyen Patents”).
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`At a high level, the Stefik Patents are generally directed toward systems and methods for
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`controlling the use and distribution of digital works in accordance with “usage rights” through
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`the use of “trusted” systems. See claim 1 of the ’007 Patent (“sending the digital content . . . to
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`the at least one recipient computing device only if the at least one recipient device has been
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`determined to be trusted”). The Court construed “trusted” to require that three types of
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`“integrities”—physical, communication, and behavioral—be maintained.
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` See
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`(Claim
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`Construction Order at 15.) Similarly, the Nguyen Patents are generally directed toward systems
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`and methods for controlling the use and distribution of digital works in accordance with “usage
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`rights”—and more particularly, “meta-rights”—through the use of “trusted” systems. The claim
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`language of the ’007 Patent is informative in this regard:
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`
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`For example, Claim 1 of the ’007 Patent recites:
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`1. A computer-implemented method of distributing digital content to at least one
`recipient computing device to be rendered by the at least one recipient computing
`device in accordance with usage rights information, the method comprising:
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`determining, by at least one sending computing device, if the at least one
`recipient computing device is trusted to receive the digital content from
`the at least one sending computing device;
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`3
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 4 of 13 PageID #: 21939
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`sending the digital content, by the at least one sending computing device,
`to the at least one recipient computing device only if the at least one
`recipient computing device has been determined to be trusted to receive
`the digital content from the at least one sending computing device; and
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`sending usage rights information indicating how the digital content may be
`rendered by the at least one recipient computing device, the usage rights
`information being enforceable by the at least on recipient computing
`device.
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`Defendants contend that the claims are directed to patent-ineligible subject matter and
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`therefore are invalid under 35 U.S.C. § 101. Specifically, Defendants argue that the Stefik
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`Patents address nothing more than the “abstract idea of enforcing usage rights and restrictions on
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`digital content.” (Mot. at 8.) Similarly, Defendants argue that the Nguyen Patents address
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`nothing more than the “abstract idea of enforcing sublicensing rights and restrictions (which the
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`patents name ‘meta-rights’) on digital content.” (Id. at 28.)
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`II.
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`LEGAL STANDARD
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`A.
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`Summary Judgment Under Rule 56
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`Federal Rule of Civil Procedure 56(c) authorizes a Court to grant summary judgment
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`where “there is no genuine issue as to any material fact and . . . the moving party is entitled to a
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`judgment as a matter of law.” A party moving for summary judgment must satisfy its initial
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`burden by showing that “there is an absence of evidence to support the nonmoving party’s case.”
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`Celotex Corp. v. Catrett, 477 U.S. 317, 323–25 (1986).
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`B.
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`Patent Eligibility Under 35 U.S.C. § 101
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`Section 101 of the Patent Act defines what is eligible for patent protection. It says:
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`“Whoever invents or discovers any new and useful process, machine, manufacture or
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`composition of matter, or any new and useful improvement thereof, may obtain a patent therefor,
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 5 of 13 PageID #: 21940
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`subject to the conditions and requirements of this title.” 35 U.S.C. § 101.
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`The Supreme Court has held that there are three specific exceptions to patent eligibility
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`under § 101: laws of nature, natural phenomena, and abstract ideas. Bilski v. Kappos, 561 U.S.
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`593, 601 (2010). In Mayo, the Supreme Court articulated a two-step test for “distinguishing
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`patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim
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`patent eligible applications of those concepts.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct.
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`2347, 2355 (2014) (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289,
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`1296–97 (2012)).
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`The first step of Mayo requires a court to determine if the claims are directed to a law of
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`nature, natural phenomenon, or abstract idea. Alice, 134 S. Ct. at 2355. “If not, the claims pass
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`muster under § 101.” Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 714 (Fed. Cir. 2014). In
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`making this determination, the court looks at what the claims cover. Ultramercial, 772 F.3d at
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`714–15 (“We first examine the claims because claims are the definition of what a patent is
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`intended to cover.”); Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363,
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`1369 (Fed. Cir. 2015) (“At step one of the Alice framework, it is often useful to determine the
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`breadth of the claims in order to determine whether the claims extend to cover a
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`‘fundamental . . . practice long prevalent in our system . . . .’”).
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`For example, in Bilski, the Supreme Court rejected as a patent-ineligible “Claims 1 and 4
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`in petitioners’ application” because the claims simply “explain[ed] the basic concept of hedging,
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`or protecting against risk.” Bilski, 561 U.S. at 611. Similarly, in Ultramercial, the Federal Circuit
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`rejected as patent-ineligible a claim that included “eleven steps for displaying an advertisement
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`in exchange for access to copyrighted media.” Ultramercial, 772 F.3d at 714. In Intellectual
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`Ventures, the Federal Circuit rejected as patent-ineligible a claim that contained steps
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`5
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 6 of 13 PageID #: 21941
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`“relat[ing]to customizing information based on (1) information known about the user and (2)
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`navigation data.” Intellectual Ventures, 792 F.3d at 1369.
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`A court applies the second step of Mayo only if it finds in the first step that the claims are
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`directed to a law of nature, natural phenomenon, or abstract idea. Alice, 134 S. Ct. at 2355. The
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`second step requires the court to determine if the elements of the claim individually, or as an
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`ordered combination, “transform the nature of the claim” into a patent-eligible application. Alice,
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`134 S. Ct. at 2355. In determining if the claim is transformed, “[t]he cases most directly on point
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`are Diehr and Flook, two cases in which the [Supreme] Court reached opposite conclusions
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`about the patent eligibility of a process that embodied the equivalent of natural laws.” Mayo, 132
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`S. Ct. at 1298; see also Alice, 134 S. Ct. at 2355 (“We have described step two of this analysis as
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`a search for an ‘inventive concept.’”).
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`In Diehr, the Court “found [that] the overall process [was] patent eligible because of the
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`way the additional steps of the process integrated the equation into the process as a whole.”
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`Mayo, 132 S. Ct. at 1298 (citing Diamond v. Diehr, 450 U.S. 175, 187 (1981)); see also Mayo,
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`132 S. Ct. at 1300 (“It nowhere suggested that all these steps, or at least the combination of those
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`steps, were in context obvious, already in use, or purely conventional.”). In Flook, the Court
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`found that a process was patent-ineligible because the additional steps of the process amounted
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`to nothing more than “insignificant post-solution activity.” Diehr, 450 U.S. at 191–92 (citing
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`Parker v. Flook, 437 U.S. 584 (1978)).
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`A claim may become patent-eligible when the “claimed process include[s] not only a law
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`of nature but also several unconventional steps . . . that confine[] the claims to a particular, useful
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`application of the principle.” Mayo, 132 S. Ct. at 1300; see also DDR Holdings, LLC v.
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`Hotels.com, L.P., 773 F.3d 1245, 1257 (Fed. Cir. 2014) (“In particular, the ’399 patent’s claims
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`6
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 7 of 13 PageID #: 21942
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`address the problem of retaining website visitors that, if adhering to the routine, conventional
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`functioning of Internet hyperlink protocol, would be instantly transported away from a host’s
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`website after ‘clicking’ on an advertisement and activating a hyperlink.”). A claim, however,
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`remains patent-ineligible if it describes only “‘post-solution activity’ that is purely ‘conventional
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`or obvious.’” Mayo, 132 S. Ct. at 1299.
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`III. DISCUSSION
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`In order to prevail on a § 101 challenge, the movant must show that the challenged claims
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`first fail the “ineligible concept” step and then also fail the “inventive concept” step of the Alice
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`test. In this case, Defendants contend the Patents-in-Suit fail both steps.
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`A.
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`Alice Step One: The Ineligible Concept Step2
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`Defendants argue that the claims of the Patents-in-Suit are directed to the abstract idea of
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`enforcing usage rights and restrictions on digital content. (Mot. at 8.) For example, Defendants
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`contend claim 1 of the ’007 Patent fails the first step of the Alice test because it is directed to an
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`abstract idea and “recites elements of a process that can be, and has been, performed by humans
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`without computers.” See, e.g., (id.) Defendants point to the example of a “basic library loan” to
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`illustrate the abstract and common nature of the invention. (Id. at 8–9.)
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`Plaintiff responds by arguing that “[n]owhere do Defendants explain how a bricks-and-
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`mortar library, coupled with a generic computer, meets the three ‘integrities’ taught by the
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`[Stefik] Patents.” (Resp. at 8.) Plaintiff further argues that “Defendants’ inability to demonstrate
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`how and why the actual claims of [the Stefik Patents] meaningfully resemble a trip to the library
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`is fatal.” (Id. at 10.) In particular, Plaintiff argues that the “honor-based code practiced for
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`2 Because all of the Patents-in-Suit are substantially similar in including the limitations of “trusted repositories” and
`“usage rights,” the Court will only substantively address the ’007 Patent in its analysis.
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`centuries by libraries and their patrons” is not analogous to the actual enforcement of usage
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`rights taught by the Patents-in-Suit. (Id. at 10–12.)
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`Defendants also argue that, because “the Stefik patent specifications make very clear that
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`the integrities/‘security levels’ for the referenced ‘trusted’ systems/‘repositories’ are not fixed or
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`specifically defined,” the “‘trusted’ systems do not require any specific computer programming.”
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`(Dkt. No. 605 in the -1112 case (“Repl.”), at 6.) Defendants further argue that the “‘technology-
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`based solution’ purportedly suggested by the asserted claims utilizes only the most conventional
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`and routine of computer actions and functions” and that the “Stefik specifications . . . recognize
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`the prevalence in the prior art of the very techniques purportedly used by the patent claims to
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`maintain the three integrities.” (Id. at 6–7.)
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`After consideration of all the evidence and the arguments presented, the Court finds that
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`the Patents-in-Suit are directed toward patent-eligible subject matter. In particular, the Patents-
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`in-Suit are not directed toward an abstract idea, at least because they are directed toward patent-
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`eligible methods and systems of managing digital rights using specific and non-generic “trusted”
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`devices and systems. See, e.g., (Resp. at 13 (“This is significant because it underscores that the
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`subject matter of the Trusted Repository Patents is narrow, i.e., limited to devices that maintain
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`physical, communications, and behavioral integrity, rather than all devices that are capable to
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`receive content via the Internet.”).) Though the Patents-in-Suit address problems associated with
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`creating and enforcing usage rights with content, they are directed to non-abstract solutions
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`through the use of trusted systems.
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`Further, the Court finds Defendants’ analogy to library loans unpersuasive. A library
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`cannot effectively enforce usage restrictions on a book once that book has left the library’s
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`premises. Though a library may be able to punish a patron for an unauthorized usage pattern
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 9 of 13 PageID #: 21944
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`after the fact, it cannot prevent such unauthorized usage by a patron. Moreover, a library cannot
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`ensure that its patrons maintain the three integrities required to be considered a “trusted system.”
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`Finally, the Court finds Defendants’ arguments regarding whether the Patents-in-Suit
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`required “specific computer programming” and whether the Patents-in-Suit used “conventional”
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`techniques unavailing. Defendants essentially argue that the Patents-in-Suit must disclose
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`detailed levels of security in order to require “specific computer programming.” However, the
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`implementation of the invention disclosed in the Patents-in-Suit may require “specific computer
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`programming,” even though the Patents-in-Suit may not disclose the particular security levels of
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`that implementation.
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`Defendants further argue that the Patents-in-Suit used “conventional” techniques. While
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`this question is more appropriately addressed in the Inventive Concept Step of the Alice inquiry,
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`the Court is not asked to determine whether the steps or limitations can be performed or
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`implemented using standard or well-known technologies. Instead, the Court considers whether
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`“the function performed by the computer at each step of the process is ‘[p]urely conventional.’”
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`See Alice, 134 S. Ct. at 2359. The Court does not find that all the steps or limitations in the
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`Patents-in-Suit are purely conventional, even though they may be performed using conventional
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`technology.
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`Accordingly, the Court finds that the Patents-in-Suit are not directed to an abstract idea.
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`B.
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`Alice Step Two: The Inventive Concept Step
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`Defendants argue that claim 1 of the ’007 Patent fails the second, “inventive concept”
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`step because “[t]here is no inventive element that renders [it] patentable.” See, e.g., (Mot. at 18.)
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`In particular, Defendants argue that the terms in the ’007 Patent “merely invoke general and
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`unspecified computer programming that permits the use of common computer functionality.”
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`(Id. at 9 (emphasis in original).) Defendants further argue that the “Stefik patent specification
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 10 of 13 PageID #: 21945
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`makes clear that the integrities/‘security levels’ for a ‘trusted’ system . . . are not even fixed or
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`specifically defined.” (Id. at 10.) Defendants argue that the Patents-in-Suit do not require “any
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`specific technological or inventive way of maintaining” the three integrities. (Id. at 10–13.)
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`Plaintiff responds by arguing that the “three integrities required to implement a ‘trusted
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`repository’ are not merely the routine or conventional use of a general-purpose computer.”
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`(Resp. at 14.) Plaintiff further argues that “there is no evidence in the record that the ‘trusted
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`repository’ inventions taught by the Stefik patents are a feat of ‘routine,’ ‘prosaic’ engineering,
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`such that they are devoid of an ‘inventive’ concept.” (Id. at 15.) Plaintiffs also point to the
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`PTAB’s decisions affirming the validity of four of the Patents-in-Suit and “numerous ‘objective
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`indicia of non-obviousness’ that exist” with regard to the Patents-in-Suit.” (Id. at 15–16.)
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`As an initial matter, the Court does not consider the PTAB’s decisions or the “objective
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`indicia of non-obviousness” particularly relevant or helpful to the patent-eligibility inquiry.
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`First, the PTAB did not consider the patent-eligibility of the Patents-in-Suit under Section 101.
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`Thus, any relevance to the question currently before the Court is minimal at best. Second, the
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`obviousness and eligibility question require separate and distinct analyses.
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`However, even if the Court were to find that the Stefik Patents are simply directed to the
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`“abstract idea of enforcing usage rights and restrictions on digital content” as Defendants
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`suggest, which it does not, the claim limitations, individually and “as an ordered combination,”
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`are sufficient to ensure that the Patents-in-Suit amount to “significantly more” than a patent
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`simply on that abstract idea. See Alice, 134 S. Ct. at 2355.
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`Similarly, even if the Court were to find that the Nguyen Patents are simply directed to
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`the “abstract idea of enforcing sublicensing rights and restrictions (which the patents name
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`‘meta-rights’) on digital content,” which it does not, they also contain an “inventive concept.”
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`For example, the claims require that the “repository” be a “trusted system” that “maintains . . .
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`behavioral integrity in the support of usage rights” through the use of “digital certificates.” See
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`(Claim Construction Order at 18–19.) Further, the claims require that “usage rights” are
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`“attached or treated as attached” to the “content” such that the invented methods and systems,
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`through the use of the “trusted systems,” enable the creation and effective enforcement of usage
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`permissions. See (Resp. at 12.) Without commenting on whether such a solution is novel or
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`obvious, the Court finds that, at the very least, the Patents-in-Suit disclose particular solutions for
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`the problem of “enforcing usage rights and restrictions on digital content” that “(1) [do] not
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`foreclose other ways of solving the problem, and (2) recite[] a specific series of steps that result[]
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`in a departure from the routine and conventional” way of managing digital rights. Internet
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`Patents Corp. v. Active Network, Inc., No. 2014-1048, 2015 WL 3852975, at *6 (Fed. Cir. June
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`23, 2015).
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`Finally, as previously stated, the Court does not find that all the steps or limitations in the
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`Patents-in-Suit are conventional, even though they may be performed using conventional
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`technology. Accordingly, the Court finds that the claim limitations of the Patents-in-Suit,
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`individually and as an ordered combination, provide an “inventive concept” sufficient to
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`“transform the nature of the claim” into a patent-eligible application. Alice, 134 S. Ct. at 2355.
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`IV.
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`CONCLUSION
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`The Court finds that Defendants have failed to meet their burden to show that the Patents-
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`in-Suit are directed toward an abstract idea and violate “the longstanding rule that ‘[a]n idea of
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`itself is not patentable.’” See Alice, 134 S. Ct. at 2355 (quoting Gottschalk v. Benson, 409 U.S.
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`63, 67 (1972)). The Court further finds that, even if the Patents-in-Suit were directed to an
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`abstract idea, Defendants have failed to meet their burden to show that the additional elements of
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 12 of 13 PageID #: 21947
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`the claims do not “transform the nature of the claim” into patent-eligible subject matter. See
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`Alice, 134 S. Ct. at 2355 (quoting Mayo, 132 S. Ct. 1298).
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`Accordingly, Defendants’ Motion for Judgment on the Pleadings (Dkt. No. 539 in the -
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`1112 case; Dkt. No. 191 in the -61 case), having been converted into a motion for summary
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`judgment, is in all things DENIED.
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`Case 2:14-cv-00061-JRG Document 381 Filed 10/05/15 Page 13 of 13 PageID #: 21948
`Case 2:14—cv—00061—JRG Document 381 Filed 10/05/15 Page 13 of 13 Page|D #: 21948
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`So ORDERED and SIGNED this 5th day of October, 2015.
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` RODNEY GE RAP
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`UNITED STAT
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`DISTRICT JUDGE
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`13