Case: 10-1544 Document: 143 Page: 1 Filed: 09/04/2014
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`No. 2010-15442014-1724
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`UNITED STATES COURT OF APPEALS
`FOR THE FEDERAL CIRCUIT
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`INTELLECTUAL VENTURES II LLC,
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`ULTRAMERCIAL, LLC AND ULTRAMERCIAL, INC.,
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`Plaintiffs-Appellants,
`Plaintiff-Appellee,
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`v.
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`HULU, LLC,
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`Defendant,
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`and
`JPMORGAN CHASE & CO., JPMORGAN CHASE BANK, NATIONAL
`ASSOCIATION, CHASE BANK USA, NATIONAL ASSOCIATION, CHASE
`PAYMENTECH SOLUTIONS, LLC, PAYMENTECH LLC,
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`WILDTANGENT, INC.,
`Defendant-Appellee.Defendant
`s-Appellants.
`
`AppealAppeals from the United States District Court for the CentralSouthern
`District of CaliforniaNew York in Casecivil action No.
`2:09-CV-6918,1:13-cv-03777, Judge R. Gary KlausnerAlvin K. Hellerstein
`
`BRIEF FOR AMICUS CURIAE
`THE CLEARING HOUSE
`ASSOCIATION,ASKELADDE
`N L.L.C.
`IN SUPPORT OF DEFENDANTS-APPELLANTS’ OPPOSITION TO
`PLAINTIFF-APPELLEE’S MOTION TO DISMISS
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`RICHARD W. O’NEILL WILMER
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`CUTLER PICKERING HALE
`AND DORR LLP
`60 State Street Boston, MA
`02109
`(617) 526-6000
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`September 3,15, 2014
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`JAMES L. QUARLES III
`GREGORY H. LANTIER
`THOMAS G. SAUNDERS
`DANIEL AGUILARROBERT
`A. ARCAMONA WILMER
`CUTLER PICKERING HALE
`AND DORR LLP
`1875 Pennsylvania Avenue, N.W.
`NW Washington, D.C.DC 20006
`(202) 663-6000
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`Case: 10-1544 Document: 143 Page: 2 Filed: 09/04/2014
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`CERTIFICATE OF INTEREST
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`Counsel for Amicus Curiae the Clearing House
`AssociationAskeladden, L.L.C. certifies the following:
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`1.
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`The full name of every party or amicus represented by me is:
`
`The Clearing House AssociationAskeladden, L.L.C.
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`2.
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`The name of the real party in interest (if the party named in the caption is not
`the real party in interest) represented by me is:
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`The Clearing House Association, L.L.C.Askeladden,
`L.L.C.
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`3.
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`All parent corporations and any publicly held companies that own 10 percent
`or more of the stock of the party or amicus curiae represented by me are:
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`None
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`Askeladden, L.L.C. is a wholly-owned subsidiary of The Clearing
`House Payments Company L.L.C. No corporation or publicly held
`company owns 10 percent or more of The Clearing House Payments
`Company L.L.C.
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`4.
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`The names of all law firms and the partners or associates that appeared for the
`party or amicus now represented by me in the trial court or agency or are
`expected to appear in this court are:
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`Wilmer Cutler Pickering Hale and Dorr LLP: Daniel Aguilar; Gregory
`H. Lantier; James L. Quarles III; Gregory Lantier; Richard W. O’Neill;
`and Thomas G. SaundersRobert A. Arcamona
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`Dated: September 3,15, 2014
`
`/s/ James L. Quarles III
`JAMES L. QUARLES III
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`Case: 10-1544 Document: 143 Page: 3 Filed: 09/04/2014
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`Case: 10-1544 Document: 143 Page: 4 Filed: 09/04/2014
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`TABLE OF CONTENTS
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`Page
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`CERTIFICATE OF INTEREST ................................................................................ i
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`TABLE OF AUTHORITIES ................................................................................... iii
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`STATEMENT OF IDENTITY AND INTEREST OF AMICUSAMICI CURIAE . 1
`
`ARGUMENT ............................................................................................................ 2
`
`I.PATENT ELIGIBILITY UNDER 35 U.S.C. § 101 OFTEN CAN AND SHOULD BE
`DETERMINED ON THE PLEADINGS
`2
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`II.THE ’545 PATENT IS INVALID UNDER § 101 ........................................................... 6
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`CONCLUSION ....................................................................................................... 89
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`CERTIFICATE OF SERVICE
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`CERTIFICATE OF
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`COMPLIANCE
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`ii
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`Case: 10-1544 Document: 143 Page: 5 Filed: 09/04/2014
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`ii
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`ii
`IIE:
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`Case: 10-1544 Document: 143 Page: 3 Filed: 09/04/2014
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`TABLE OF AUTHORITIES
`
`CASES
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`Page(s)
`
`Athenahealth, Inc. v. Carecloud Corp., No. 13-cv-10794,
`Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014) .......................2,
`5, 72014 WL 3566068 (D. Mass. July 17, 2014) ............................................ 5
`
`Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) ............................................... 4
`
`Bilski v. Kappos, 130 S. Ct. 3218 (2010) ................................................................... 3
`
`Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 (1989)...................... 4
`
`AutoAlert Inc. v. DealerSocket, Inc., No. 13-cv-00657,
`ECF Dkt. No. 190 (C.D. Cal. July 18, 2014) .................................................. 5
`
`Bender v. Dudas, 490 F.3d 1361 (Fed. Cir. 2007) ..................................................... 4
`
`Broadcast Innovation, L.L.C. v. Charter Communication Inc.,
`No. 03-cv-2223, 2006 WL 1897165 (D. Colo. July 11, 2006) ....................... 7
`
`buySAFE, Inc. v. Google, Inc., --- F.3d ----,No. 3:12-cv-781, 2014 U.S. App.
`LEXISWL 2714137
`16987 (Fed. Cir. Sept. 3,
`(E.D. Va. June 16, 2014) ................................................................................. 5
`
`Clear with Computers, LLC v. Dick’s Sporting Goods, Inc.,
`No. 12-674, 2014 WL 923280 (E.D. Tex. Jan. 21, 2014) ............................... 5
`
`Capital Dynamics AG v. Cambridge Associates, No. 13-cv-7766,
`Gametek LLC v. Zynga, Inc., No. 13-2546, 2014 WL 1665090 (N.D.2014 WL
`1694710 (S.D.N.Y. Apr. 1, 2014) ................................................................... 5
`Cal. Apr. 25, 2014) .......................................................................................... 5
`
`I/P Engine, Inc. v. AOL Inc., --- F. App’x ----,
`
`Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc.,
`467 U.S. 837 (1984) ........................................................................................ 4
`
`Credit Acceptance Corp. v. Westlake Services, LLC, No. 13-cv-01523,
`ECF Dkt. No. 67 (C.D. Cal. Dec. 30, 2013) .................................................... 5
`
`GT Nexus, Inc. v. Inttra, Inc., No. 11-cv-02145, 2014 WL 3973501
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`iii
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`Case: 10-1544 Document: 143 Page: 4 Filed: 09/04/2014
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`3373088
`(Fed. Cir. Aug. 15, 2014) ................................................................................. 6
`
`N.D. Cal. July 9, 2014) .............................................................................................. 5
`
`Gustafson v. Alloyd Co., 513 U.S. 561 (1995) .......................................................... 4
`
`In re Roslin Institute (Edinburgh), 750 F.3d 1333 (Fed. Cir. 2014)
`
`3
`
`Lear, Inc. v. Adkins, 395 U.S. 653 (1969) ................................................................. 4
`
`Lumen View Technology LLC v. Findthebest.com, Inc., No. 13-3599,Ameranth
`Patent Litigation Cases, No. 11-cv-1810,
`2013 WL 61643417144380 (S.D.N.Y Cal. Nov. 22,26, 2013) ....................... 5
`
`Mayo Collaborative Services v. Prometheus Laboratories, Inc.,
`132 S. Ct. 1289 (2012) ..................................................................................... 7
`
`Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843 (2014) ............. 4
`
`Parker v. Flook, 437 U.S. 584 (1978) ...................................................................3, 7
`
`Sony Corp. of America v. Universal City Studios, 464 U.S. 417 (1984
`
`Intertainer, Inc. v. Hulu, LLC, No. 13-cv-5499, 2014 WL 466034
`(C.D. Cal. Jan. 24, 2014) ................................................................................. 5
`
`Jay v. Boyd, 351 U.S. 345 (1956) .............................................................................. 6
`
`UbiComm, LLC v. Zappos IP, Inc., No. 13-1029, 2013 WL 6019203
`
`Landmark Technology, LLC v. iRobot Corp., No. 6:13-cv-411,
`2014 WL 486836 (E.D. Tex. Jan. 24, 2014) ................................................... 5
`Market-Alerts Pty. v. Bloomberg Finance L.P., 922 F. Supp. 2d 486
`(D. ........................................................................................................ D
`el. 2013) ........................................................................................................... 5
`
`NLRB v. Catholic Bishop of Chicago, 440 U.S. 490 (1979) ..................................... 8
`
`Sightsound Technologies, LLC v. Apple, Inc., No. 11-cv-1292,
`2013 WL 2457284 (W.D. Pa. June 6, 2013) ................................................... 5
`
`Van Wersch v. Department of Health & Human Services,
`197 F.3d 1144 (Fed. Cir. 1999) ....................................................................... 6
`
`iv
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`Case: 10-1544 Document: 143 Page: 5 Filed: 09/04/2014
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`Versata Software, Inc. v. Volusion, Inc., No. 12-cv-893,
`2013 WL 6912688 (W.D. Tex. June 20, 2013) ............................................... 5
`
`VirtualAgility, Inc. v. Salesforce.com, Inc., No. 2014-1232,
`2014 WL 3360806 (Fed. Cir. 2014) ................................................................ 9
`
`Xilidev, Inc. v. Boku, Inc., No. 13-cv-2793, 2014 WL 3353256
`(S.D. Cal. July 1, 2014) ................................................................................... 5
`
`Zillow, Inc. v. Trulia, Inc., 12-cv-1549, 2013 WL 5530573
`(D. .............................................................. Del. Nov. 13,(W.D. Wash. Oct. 7, 2013)
` ......................................................................................................................... 6
`
`iii Ultramercial, Inc. v.
`Hulu, LLC, 722 F.3d 1335
`(Fed. Cir. 2013)
`................2, 5, 6, 7
`
`STATUTES
`
`35 U.S.C. § 101
`.................................................................................................passim
`S
`
`35 U.S.C.
`
`AIPLA, Report of the Economic Survey 2013 (July 2013)
`
`...................................3, 4 Ford, Roger Allan, Patent Invalidity
`
`Versus Noninfringement, 99
`Cornell L. Rev. 71 (2013)
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`O T H E R A U T H O R I T I E
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`v
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`TES AND REGULATIONS
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`STATU
`§ 323 ................................................................................................................9
`§ 324 ................................................................................................................9
`
`Leahy-Smith American Invents Act, Pub. L. No. 112-29,
`125 Stat. 284 (2011) ...............................................................................passim
`
`37 C.F.R. § 42.2 ......................................................................................................... 3
`
`Love, Brian J., Why Patentable Subject Matter Matters for Software,
`81 Geo. Wash. L. Rev. Arguendo 1 (2012) ..................................................... 4
`
`U.S. Department of Commerce, Patent Reform: Unleashing Innovation, Promoting
`Economic Growth & Producing High- Paying Jobs (Apr. 13, 2010)
` .................................................................................................................................... 3
`Office Patent Trial Practice Guide, 77 Fed. Reg. 48,756 (2012) .............................. 3
`
`iv
`LEGISLATIVE MATERIALS
`
`157 Cong. Rec.
`S1053 (daily ed. Mar. 1, 2011) ........................................................................ 2
`S1360 (daily ed. Mar. 8, 2011)................................................................3, 7, 8
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`vi
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`STATEMENT OF IDENTITY AND INTEREST OF AMICUS CURIAE11
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`
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`Askeladden L.L.C. is an education, information and advocacy organization
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`whose goal is to improve the understanding, use, and reliability of patents in
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`financial services and related industries. Askeladden seeks to improve the United
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`States patent system by, among other things, submitting amicus curiae briefs on
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`important legal issues.2
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`Askeladden is a wholly-owned subsidiary of The Clearing House Payments
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`Company L.L.C. Established in 1853, The Clearing House is the oldest banking
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`association and payments company in the United States. It is owned by the world’s
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`largest commercial banks, which collectively hold more than half of all U.S.
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`deposits in the United States and employ over one million people in the United
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`States and more than two million people worldwide. The Clearing House Payments
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`Company L.L.C. clears almost $2 trillion each day, representing nearly half of all
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`automated clearing-house, funds transfer, and check-image payments made in the
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`United States. Its affiliate, The Clearing House Association, L.L.C., is a nonpartisan
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`advocacy organization that represents the interests of its owner banks by promoting
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`and developing policies to support a safe, sound, and competitive banking system.
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`Its affiliate, The Clearing House Payments Company, L.L.C., provides payment,
`
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`1
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`No party, and no person other than The Clearing House Association, L.L.C., The
`Clearing House Payments Company, L.L.C., or their wholly-owned subsidiaries or members,
`contributed toward the preparation or submission of this brief.
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`1
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`clearing, and settlement services to its member banks and other financial
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`institutions. It clears almost $2 trillion each day, representing nearly half of all
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`automated clearing-house, funds transfer, and check-image payments made in the
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`United States.
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`The Clearing House’s members hold patents of their own, and the Clearing
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`House believes that a strong patent system is vital to continued innovation. Invalid
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`patents, however, undermine real innovation and threaten our nation’s financial
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`infrastructure. The Clearing House is particularly concerned about the number of
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`computer-aided business method patents that have proliferated in recent years,
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`especially in the banking industry, where established practices and abstract ideas
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`have too often been patented based solely on the addition of a computer to a claim.
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`Early adjudication of subject-matter eligibility under 35 U.S.C. § 101 is vital to
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`weeding out bad patents and to ensuring that the patent system rewards actual
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`innovation with appropriately tailored patent protection.
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`1 No party, and no person other than Askeladden, L.L.C., or its members, contributed
`toward the preparation or submission of this brief.
`2 Defendants-Appellants have consented to the filing of this brief. Plaintiff- Appellee
`has not.
`The stay provisions of Section 18 of the Leahy-Smith American Invents Act,
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`Pub. L. No. 112-29, 125 Stat. 284 (2011) (“AIA”) are a critically important
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`component of Congress’s efforts to diminish abusive patent litigation practices
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`involving “business method” patents. Because the financial services sector, like
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`other sectors, has been subjected to numerous lawsuits on business method patents,
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`Askeladden has a specific and strong interest in promoting the correct interpretation
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`of Section 18, and ensuring that interlocutory review by this Court is available to
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`financial services companies and other defendants that have been denied a stay of
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`pending patent infringement litigation where a petition for covered business method
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`(“CBM”) review is currently pending before the U.S. Patent and Trademark Office
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`(“PTO”).
`
`ARGUMENT
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`I.PATENT ELIGIBILITY UNDER 35 U.S.C. § 101 OFTEN CAN AND SHOULD BE
`DETERMINED ON THE PLEADINGS
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`The last time this case was before this Court the panel majority stated that “it
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`will be rare that a patent infringement suit can be dismissed at the pleading stage for
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`lack of patentable subject matter.” Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335,
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`1338 (Fed. Cir. 2013). This statement and the discussion that followed unduly
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`discourage district courts from resolving subject-matter eligibility at the outset of a
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`case. Without that opportunity for early resolution, parties accused of infringing an
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`invalid patent often face a Hobson’s choice between, on the one
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`hand, licensing a patent that never should have been granted and, on the other,
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`incurring the expense of discovery and other proceedings to invalidate the patent,
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`often at far greater cost to themselves. The Clearing House respectfully urges the
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`Court to use the opportunity provided by the remand in light of Alice Corp. v. CLS
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`Bank International, 134 S. Ct. 2347 (2014), to revisit its earlier statements and to
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`2
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`clarify that subject-matter eligibility under 35 U.S.C. § 101 often can and should be
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`resolved at the pleading stage or shortly thereafter.
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`Laws of nature, natural phenomena, and abstract ideas are not patentable
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`under § 101 because of the “fundamental understanding that they are not the kind of
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`‘discoveries’ that the statute was enacted to protect.” Parker v. Flook, 437 U.S. 584,
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`593 (1978). The determination whether a claim satisfies this “threshold test” of
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`patentability, Bilski v. Kappos, 130 S. Ct. 3218, 3225 (2010), is a “question of law,”
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`In re Roslin Inst. (Edinburgh), 750 F.3d 1333, 1335 (Fed. Cir. 2014).
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`Early adjudication of § 101 challenges can ameliorate “arguably the single
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`biggest problem in modern patent law”: the unnecessary protection given to invalid
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`patents. Ford, Patent Invalidity Versus Noninfringement, 99 Cornell L. Rev. 71, 74
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`(2013). This problem is particularly acute for software patents, where a
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`“[l]ow-quality patent”—including one that simply claims an abstract concept
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`implemented by a general purpose computer or on the Internet—“can nonetheless
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`be profitably asserted against genuine innovators.” U.S. Dep’t of Commerce,
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`Patent Reform: Unleashing Innovation, Promoting Economic Growth & Producing
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`High-Paying Jobs 5 (Apr. 13, 2010).
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`Patent litigation is extremely expensive. The median cost of defending a
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`patent suit with $1 to $25 million at stake is $2.6 million. AIPLA, Report of the
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`Economic Survey 2013, at 34 (July 2013). Even when faced with an invalid patent,
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`3
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`an accused infringer may rationally choose to settle rather than incur the cost of
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`litigation. See Love, Why Patentable Subject Matter Matters for Software, 81 Geo.
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`Wash. L. Rev. Arguendo 1, 9-10 (2012) (“Because patent litigation defense costs are
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`extremely high, patentees can often negotiate sizable settlements[.]”).
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`For patent claims that fail to satisfy § 101, the timing of that determination
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`makes all the difference. More than half the cost of defending patent litigation is
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`incurred in discovery. AIPLA, Report of the Economic Survey 2013, at 34.
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`Failure to resolve § 101 questions on the pleadings thus places tremendous pressure
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`on defendants to settle. Nor can the problem be solved through summary judgment,
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`as “the threat of discovery expense will push cost-conscious defendants to settle
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`even anemic cases before reaching those proceedings.” Bell Atl. Corp. v. Twombly,
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`550 U.S. 544, 559 (2007).
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`The coercion of such settlements not only diverts resources from more
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`productive uses but also leaves invalid patents in place, undermining the “‘strong
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`federal policy favoring free competition in ideas which do not merit patent
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`protection.’” Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 168
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`(1989) (quoting Lear, Inc. v. Adkins, 395 U.S. 653, 656 (1969)); see also
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`Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843, 851 (2014)
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`(noting the public’s “paramount interest in seeing that patent monopolies ... are kept
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`within their legitimate scope” (internal quotation marks omitted)). And even
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`4
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`where there is no settlement, failure to resolve § 101 questions at the threshold
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`imposes an unnecessary burden on the parties and scarce judicial resources.
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`The Supreme Court’s decision in Alice Corp. lays to rest the objection that
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`§ 101 analysis is “rife with underlying factual issues” and “[a]lmost by definition,
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`analyzing whether something was ‘conventional’ or ‘routine’ involves analyzing
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`facts.” Ultramercial, 722 F.3d at 1339. In Alice Corp., the Supreme Court analyzed
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`the claims and concluded as a matter of law that the generic computer functions in
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`those claims—including “electronic recordkeeping,” “obtain[ing] data, adjust[ing]
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`account balances, and issu[ing] automated instructions”—added nothing to the
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`abstract idea of intermediated settlement. 134 S. Ct. at 2359. Those functions were
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`purely conventional and insufficient individually or in combination to transform the
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`claims into patent-eligible subject matter. Id.2
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`Challenges to patent eligibility often can and should be resolved on the
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`pleadings or, where necessary, shortly after claim construction or limited discovery
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`to encourage the prompt and efficient resolution of patent suits.
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`II.THE ’545 PATENT IS INVALID UNDER § 101
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`The ’545 patent falls into the class of computer-implemented inventions
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`where the steps of the patented method add nothing meaningful or inventive to the
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`underlying abstract idea. The ’545 patent simply uses a general purpose computer as
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`a tool to carry out its business method—the abstract idea of packaging paid
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`advertisements into free entertainment. That concept was ingrained in the
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`entertainment and broadcast industry long before Ultramercial’s claimed invention.
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`See Sony Corp. of Am. v. Universal City Studios, 464 U.S. 417, 446 n.28 (1984)
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`2
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`Although Alice Corp. was decided by the district court on summary judgment, the Supreme
`Court’s analysis of the representative method claim made no reference to the summary judgment
`record and could just as easily have been conducted on the face of the pleadings and the patent. See
`134 S. Ct. at 2355- 2360. Other courts have likewise been able to evaluate patents for abstractness
`under § 101 at the pleadings stage. See, e.g., buySAFE, Inc. v. Google, Inc., --- F.3d ----, 2014 U.S.
`App. LEXIS 16987, at *4, 11-12 (Fed. Cir. Sept. 3, 2014) (affirming judgment on the pleadings
`because computer functionality and restriction to online transactions did not add an inventive concept
`to abstract idea of guaranteeing transactions); Gametek LLC v. Zynga, Inc., No. 13-2546, 2014 WL
`1665090, at *3, 12 (N.D. Cal. Apr. 25, 2014); Clear with Computers, LLC v. Dick’s Sporting Goods,
`Inc., No. 12-674, 2014 WL 923280, at *8 (ED. Tex. Jan. 21, 2014) (granting Rule 12(c) motion
`where patent merely represented “the abstract idea of inventory-based selling”); Lumen View Tech.
`LLC v. Findthebest.com, Inc., No. 13-3599, 2013 WL 6164341, at *1 (S.D.N.Y. Nov. 22,
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`(“The traditional method by which copyright owners capitalize upon the television
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`medium” is that “compensation for the value of displaying the works will be
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`received in the form of advertising revenues”).
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`While this Court previously concluded that the ’545 patent’s claims “require
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`intricate and complex computer programming,” Ultramercial, 722 F.3d at 1350,
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`2013) (granting a Rule 12(c) motion because the plaintiff’s patent “claims the abstract
`idea of computer assisted matchmaking”); UbiComm, LLC v. Zappos IP, Inc., No.
`13-1029, 2013 WL 6019203, at *3 (D. Del. Nov. 13, 2013) (granting a motion to
`dismiss because the plaintiff’s patent “claims the fundamental concept of a
`conditional action”); see also I/P Engine, Inc. v. AOL Inc., --- F. App’x ----, 2014
`WL 3973501, at *12 (Fed. Cir. Aug. 15, 2014) (Mayer, J., concurring) (rather than
`incurring “years of needless litigation,” courts may resolve challenges to patent
`eligibility at the preliminary stages “without lengthy claim construction.”).
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`6
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`the patent discloses none of that programming. And even if it did, computer
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`programming standing alone does not confer patent-eligibility under § 101. Alice
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`Corp., 134 S. Ct. at 2359. Apart from the abstract idea it tries to monopolize,
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`Ultramercial’s claim limitations amount to “the most basic functions of a
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`computer”: “obtain[ing] data” from consumers and providers, “issu[ing] automated
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`instructions” to provide content, and “electronic recordkeeping” of the
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`advertisement’s play count and corresponding payments. Id.3 Put simply, the ’545
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`patent entirely consists of “well-understood, routine,
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`Congress enacted Section 18(b)(1) of the AIA to encourage district courts to
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`5
`8
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`stay litigation based on business method patents that are involved in CBM review
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`proceedings before the PTO. See 157 Cong. Rec. S1053 (daily ed. Mar. 1, 2011)
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`(statement of Sen. Schumer) (Section 18(b)(1) places a “very heavy thumb on the
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`scale in favor of the stay.”). At the same time, Congress enacted Section 18(b)(2) to
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`ensure that district courts consistently adhere to that Congressional intent by
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`authorizing immediate interlocutory appeal of any order issued under Section
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`18(b)(1) that grants or rejects a stay of litigation “relating to a [CBM review]
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`proceeding.” AIA § 18(b)(1); see 157 Cong. Rec. S1360 (daily ed. Mar. 8, 2011)
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`(statement of Sen. Schumer) (Section 18(b)(2) will “ensure consistent application of
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`standards and precedents across the country.”).
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`In its pending motion to dismiss this appeal, Intellectual Ventures (“IV”)
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`seeks to undermine that important statutory scheme by wrongly interpreting Section
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`18(b) to “only allow[] interlocutory appeal where a CBM proceeding has been
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`granted.” Dkt. No. 18-1 at 2. For the four reasons below, Askeladden respectfully
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`urges the Court to reject that incorrect reading of the statute, make clear that Section
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`18(b) permits interlocutory appeals of orders that grant or deny a litigation stay
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`based on the filing of a petition for CBM review, and deny IV’s motion to dismiss
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`this appeal.
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`First, IV’s argument conflicts with Section 18(b)(1)’s broad reference to a
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`CBM review “proceeding,” which necessarily commence when a petition is filed
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`seeking CBM review. Indeed, acting pursuant to a Congressional directive to “issue
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`9
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`regulations establishing and implementing [CBM] review proceeding[s],” AIA §
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`18(a)(1), the PTO has defined the term “proceeding” as involving “a trial or
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`preliminary proceeding,” and has defined a “preliminary proceeding” as “begin[ing]
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`with the filing of a petition for instituting a trial.” 37 C.F.R. § 42.2 (emphasis
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`added); see also Office Patent Trial Practice Guide, 77 Fed. Reg. 48756 (2012)
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`(“Proceedings begin with the filing of a petition to institute a trial.”).
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`The PTO’s expert interpretation of Section 18(a)(1) strongly suggests that the
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`term “proceeding” as used in Section 18(b)(1) includes the period during which a
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`petition for CBM review is pending before the PTO. See Gustafson v. Alloyd Co.,
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`513 U.S. 561, 570 (1995) (stating that there is a “normal rule of statutory
`
`construction” that “identical words used in different parts of the same act are
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`intended to have the same meaning”); see Bender v. Dudas, 490 F.3d 1361, 1368-
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`1370 (Fed. Cir. 2007) (Court “defer[ed]” to the PTO’s interpretation of the term
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`“before the office” when used in a statute authorizing the PTO to establish
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`regulations) (citing Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S.
`
`837, 842-845 (1984)).
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`That conclusion is further reinforced by the many district courts that have
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`similarly interpreted the term “proceeding” in Section 18(b)(1) as encompassing the
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`filing of a petition for CBM review.
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`The AIA states that “the court shall decide whether to enter a stay based
`on [the four enumerated factors]” whenever “a party seeks a stay of a
`civil action alleging infringement of a patent ... relating to a transitional
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`1 0
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`proceeding for that patent.” § 18(b)(1) (emphasis added). Since the
`PTO has recognized that “the proceedings begin with the filing of a
`petition,” the court finds that the relevant stay provisions apply when
`the petition is first filed. Office Patent Trial Practice Guide, 77 Fed.
`Reg. 48,757 (Aug. 14, 2012).
`Market-Alerts Pty. v. Bloomberg Fin. L.P., 922 F. Supp. 2d 486, 497 n.5 (D. Del.
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`2013) (emphasis added).3 Indeed, every substantive decision on a motion to stay
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`litigation due to the filing of a petition for CBM review has applied the four-factor
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`test set forth in Section 18(b)(1).4 In each of these orders, the district court
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`conventional activity already engaged in by the [business] community; and those
`
`steps, when viewed as a whole, add nothing significant beyond the sum of their parts
`
`taken separately.” Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132
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`S. Ct. 1289, 1298 (2012). There is no “inventive concept” behind using a
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`computer to place advertisements before an entertainment program that is provided
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`for free because of that sponsorship. See Flook, 437 U.S. at 594. Ultramercial is not
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`entitled to any protection under § 101.
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`3
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`This Court previously summarized the steps of claim 1 as “(1) receiving media
`products from a copyright holder, (2) selecting an advertisement to be associated
`with each media product, (3) providing said media products for sale on an Internet
`website, (4) restricting general public access to the media products, (5) offering free
`access to said media products on the condition that the consumer view the
`advertising, (6) receiving a request from a consumer to view the advertising,
`facilitating the display of advertising and any required interaction with the
`(7)
`advertising, (8) allowing the consumer access to the associated media product after
`such display and interaction, if any, (9) recording this transaction in an activity log,
`and (10) receiving payment from the advertiser.” Ultramercial, 722 F.3d at 1350.
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`7
`3 See buySAFE, Inc. v. Google, Inc., No. 3:12-cv-781, 2014 WL 2714137, at *2-3
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`1 1
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`(E.D. Va. June 16, 2014) (granting stay prior to institution of CBM review trial
`because “regardless of whether PTAB grants the Petition and a CBM Review is
`ultimately conducted, this Court must apply the AIA § 18(b)(1) factors to determine if
`a stay is appropriate at the time the Petition is first filed” (emphasis added)); Versata
`Software, Inc. v. Volusion, Inc., No. 12-cv-893, 2013 WL 6912688, at *2 (W.D. Tex.
`June 20, 2013) (“[T]he statute further authorizes district courts to stay civil
`proceedings once a party has petitioned the PTAB for review under the CBM
`Program. AIA § 18(b).” (emphasis added)); GT Nexus, Inc. v. Inttra, Inc., No.
`11-cv-02145, 2014 WL 3373088, at *2 (N.D. Cal. July 9, 2014) (denying motion to
`lift stay: “The statutory stay analysis under the AIA is triggered upon the filing of a
`petition for CBM review, not upon the granting of a petition for CBM review by the
`PTAB.” (emphasis added)).
`4
`
`See, e.g., Capital Dynamics AG v. Cambridge Assocs., No. 13-cv-7766, 2014
`WL 1694710, at *1-2 (S.D.N.Y. Apr. 1, 2014) (granting stay prior to the PTO
`instituting CBM review and applying four-factor test of Section 18(b)(1));
`Intertainer, Inc. v. Hulu, LLC, No. 13-cv-5499, 2014 WL 466034, at *1-2 (C.D. Cal.
`Jan. 24, 2014) (same); Sightsound Techs., LLC v. Apple, Inc., No. 11-cv-1292, 2013
`WL 2457284, at *1-4 (W.D. Pa. June 6, 2013) (same); In re Ameranth Patent Litig.
`Cases, No. 11-cv-1810, 2013 WL 7144380, at *1-3 (S.D. Cal. Nov. 26, 2013)
`(same); Credit Acceptance Corp. v. Westlake Servs., LLC, No. 13-cv-01523, ECF
`Dkt. No. 67, at *3-8 (C.D. Cal. Dec. 30, 2013) (same); AutoAlert Inc. v.
`DealerSocket, Inc., No. 13-cv-00657, ECF Dkt. No. 190, at *3-9 (C.D. Cal. July 18,
`2014) (same); Landmark Tech., LLC v. iRobot Corp., No. 6:13-cv-411, 2014 WL
`486836, at *2 (E.D. Tex. Jan. 24, 2014) (same); Xilidev, Inc. v. Boku, Inc., No.
`13-cv-2793, 2014 WL 3353256, at *1 (S.D. Cal. July 1, 2014) (same, and stating the
`AIA “requires the court” to consider the factors of Section 18(b)(1)); Athenahealth,
`Inc. v. Carecloud Corp., No. 13-cv-10794, 2014 WL 3566068, at *1-2 (D. Mass.
`July 17, 2014) (staying litigation except as to claim construction prior to institution
`of CBM review, stating the court “must consider” the four necessarily interpreted
`the term “proceeding” in Section 18(b)(1) as encompassing petitions for CBM
`review because the four factors in the statute apply only to stay requests “relating to
`a [CBM review] proceeding.” Second, IV’s motion to dismiss cannot be squared
`with the clear grant in Section 18(b)(2) for this Court to hear inte