Honorable Edmond E. Chang, United States District Judge.
Plaintiff Neochloris owns patent number 6,845,336 (the '336 patent) for a "Water Treatment Watering System" and brings this infringement action against Defendants Emerson Process Management LLLP and CITGO Petroleum Corporation.
Neochloris is an Illinois corporation that "develop[s] environmental technologies for public health, homeland security, and environmental protection applications." R. 36, Pl.'s Resp. at 1. Neochloris owns the '336 patent, which covers a water treatment monitoring system that measures water quality, sends data through a computer network, and alarms users when certain events are triggered. R. 35-3, Defs.' Br., Exh. A, '336 Patent. On January 6, 2015, Neochloris alleged that Emerson and CITGO (Emerson's customer) were infringing "at least claims 13 and 17" of the '336 patent by using Delta V, Emerson's systems-monitoring technology. R. 18, Pl.'s Am. Compl. ¶¶ 3-24, 27. Neochloris claimed that Emerson indirectly infringed the '336 patent by inducing Delta V users (such as CITGO) to infringe the patent and that Emerson also contributorily infringed by "instructing, aiding, assisting, authorizing, advertising, marketing, promoting, providing and/or encouraging the ... sale and use of the Delta V system." Id. ¶¶ 25-31. Neochloris also alleged that CITGO directly infringed the '336 patent by using the Delta V system across the United States, including at its refinery in Lemont, Illinois. Id. ¶¶ 32-35. During a status hearing, the parties jointly requested a stay of discovery to permit Defendants to file a summary judgment motion on invalidity under Section 101. R. 33, Minute Entry dated 2/18/15. The Court granted the request, id., and Defendants filed this joint motion for summary judgment.
The Patent and Trademark Office issued the '336 patent to inventors Prasad Kodukula and Charles Stack in 2005. '336 Patent. The '336 patent describes a system of monitoring water quality at water treatment plants. Id. Sensors collect information such as water temperature, pH levels,
Neochloris alleges infringement of "at least claims 13 and 17" of the patent. Pl.'s Am. Compl. ¶ 27. Claim 13 describes the process for monitoring the water and sending out alarms:
'336 Patent 13:3-17. Claim 17 outlines a similar process, but adds a hierarchal alarm system:
Id. 13:38-56. All in all, these claims describe a method for (1) collecting data at a water treatment plant; (2) sending the data over an internet connection to a computer; (3) monitoring and analyzing the data with an ordinary computer and software; and (4) alerting the facility of any abnormalities.
Summary judgment must be granted "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A genuine issue of material fact exists if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In evaluating summary judgment motions, courts must view the facts and draw reasonable inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S. 372, 378, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007). The Court may not weigh conflicting evidence or make credibility determinations, Omnicare, Inc. v. UnitedHealth Grp., Inc., 629 F.3d 697, 704 (7th Cir.2011),
In addition, Section 101 validity is a question of law.
Most courts have also required the movant to prove invalidity by clear and convincing evidence because patents are afforded a presumption of validity. See, e.g., Ameritox, Ltd. v. Millennium Health, LLC, 88 F.Supp.3d 885, 901-02 (W.D.Wis. 2015) (citing Microsoft Corp. v. i4i Ltd. P'ship, 564 U.S. 91, 131 S.Ct. 2238, 2242, 180 L.Ed.2d 131 (2011)). But at least one court in this circuit has questioned this presumption at the Section 101 stage, Celsis In Vitro, 83 F.Supp.3d at 777, based on a recent Federal Circuit concurrence: "The [Patent and Trademark Office] has for many years applied an insufficiently rigorous subject matter eligibility standard, [so] no presumption of eligibility should attach when assessing whether claims meet the demands of 101." Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 720-21 (Fed.Cir.2014) (Mayer, J., concurring). See also Wireless Media Innovations, LLC v. Maher Terminals, LLC, 100 F.Supp.3d 405, 411, 2015 WL 1810378, at *5 (D.N.J. Apr. 20, 2015) (the Supreme Court "has never mentioned — much less applied — any presumption of eligibility" in the Section 101 context, so no presumption applies). But because Defendants meet the clear and convincing evidence standard, the Court need not decide the standard-of-proof issue. See Celsis In Vitro, 83 F.Supp.3d at 777.
The Patent Act describes the scope of patentable material: "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent
At the same time, the Supreme Court has recognized that because "all inventions at some level embody, use, reflect, rest upon, or apply ... abstract ideas," this exclusionary principle cannot be so broad as to make something un-patentable simply because it involves, at some level, an abstract concept. Mayo, 132 S.Ct. at 1293 (citing Diamond v. Diehr, 450 U.S. 175, 187, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981)). So long as the concept has been applied to "a new and useful end," transforming the abstract idea into an actual invention, the result may be eligible subject matter for patent protection. Gottschalk v. Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972) (quotations omitted).
In Alice Corp. Pty. v. CLS Bank Int'l, ___ U.S. ___, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014), the Supreme Court refined the two-step analysis for determining whether material is patentable under Section 101. First, the reviewing court asks if the claims in question are "directed to a patent-ineligible concept" on their face. Id. at 2355. If so, the court then must ascertain if the claims nonetheless contain an "inventive concept" that can "transform th[e] abstract idea into a patent-eligible invention." Id. at 2357. The court "consider[s] the elements of each claim both individually and `as an ordered combination' to determine whether the additional elements `transform the nature of the claim' into a patent-eligible application." Id. at 2355 (citing Mayo, 132 S.Ct. at 1297). At its heart, the question boils down to whether the patent-seeker claims ownership over a basic "building block of human ingenuity," rather than a creation that "integrate[s] the building blocks into something more." Id. at 2354 (citation and quotations omitted).
Defendants argue that the '336 patent is invalid because it describes the patent-ineligible abstract idea of "monitoring [a process], processing results and reporting selected results." Defs.' Br. at 10. As discussed next, the Court agrees that the '336 patent does not satisfy subject matter eligibility under the Alice framework.
As an initial matter, for the purposes of a Section 101 challenge, courts may look to claims that are representative of the patent when the patent's claims are "substantially similar and linked to the same abstract idea." Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass'n, 776 F.3d 1343, 1348 (Fed.Cir.2014); see also Alice, 134 S.Ct. at 2359-60. So "addressing each claim of the asserted patents [is] unnecessary." Id. The parties focus on two claims — 13 and
The Court agrees that, at bottom, the claims cover the general process of observing, analyzing, monitoring, and alerting that can be done entirely by the human mind and by using pen and paper. See, e.g., CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1372 (Fed. Cir.2011) ("methods which can be performed entirely in the human mind are the types of methods that embody the `basic tools of scientific and technological work' that are free to all men and reserved exclusively to none.") (emphasis in original) (citation omitted). Although the Supreme Court has not "delimit[ed] the precise contours of the `abstract ideas' category," the Federal Circuit has determined that collecting and processing data is an abstract idea. Content Extraction, 776 F.3d at 1347 (a patent for reading and processing the data on checks involved the abstract idea of "data collection, recognition, and storage," a process that "is undisputedly well-known. Indeed, humans have always performed these functions."). Similarly, courts have also invalidated patents that claimed nothing more than merely monitoring a process. See, e.g., IPLearn-Focus, LLC v. Microsoft Corp., 2015 WL 4192092, at *1 (N.D.Cal. July 10, 2015) (using a computer and sensors to monitor a student's concentration levels and analyze changes was an abstract idea); Wireless Media Innovations, 100 F.Supp.3d at 413, 2015 WL 1810378, at *8 ("Patents are directed to the same abstract idea: monitoring locations, movement, and load status of shipping containers within a container-receiving yard, and storing, reporting and communicating this information in various forms through generic computer functions."); Hewlett Packard Co. v. ServiceNow, Inc., 2015 WL 1133244, at *7 (N.D.Cal. Mar. 10, 2015) (a system that monitored service tickets and alerted help desk users "[did] nothing more than recite the abstract idea of monitoring deadlines and alerting users about upcoming deadlines, along with an instruction to implement the idea on various computing components"); Joao Bock Transaction Sys., LLC v. Jack Henry & Associates, Inc., 76 F.Supp.3d 513, 516 (D.Del.2014) (patent allowing cardholder to monitor credit card transaction activity, make predetermined limitations on transactions, and accept or deny a transaction based on those restrictions covered an abstract idea).
Neochloris does not refute that a system of observing, analyzing, monitoring, and alerting is an abstract idea. Instead, Neochloris
Neochloris first argues that Defendants failed to consider the '336 patent's claim limitations, including the system's use of hardware and software to predict future events. Pl.'s Resp. at 3-4; 7-8. But even with those limitations, the claims still only describe the abstract idea of collecting data, monitoring the data, processing results, and alerting the user of the results. In any event, any claim limitations, inventive concepts, or "novelty in implementation of the idea [are][] factor[s] to be considered only in the second step of the Alice analysis." Ultramercial, 772 F.3d at 715 (explaining that step two involves "examin[ing] the limitations of the claims" to find an inventive concept). As explained in detail below, Neochloris's asserted limitations do not add anything concrete to the claim such that the abstract idea becomes patentable. See infra Section IV(C).
The Court discerns Neochloris's second argument to be that Defendants have not met their burden because they have not cited to historical evidence or academic literature showing that the process of observing, analyzing, monitoring, and alerting is a long-standing human practice. Pl.'s Resp. at 8. This argument is unpersuasive. Although historical prevalence of a purported invention may help guide a court's analysis, see buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed.Cir.2014) (citing a 1927 article on suretyship), it is not required in the Alice framework. Indeed, a court's role is not to determine how many centuries humans have engaged in a certain practice, but to determine whether a patent involves an idea, concept, or principle. Alice, 134 S.Ct. at 2355. So, although some cases do rely on historical evidence on the way to invalidating a patent as subject-ineligible, not surprisingly, many do not. See, e.g., Ultramercial, 772 F.3d at 714 (abstract idea of viewing an advertisement before accessing content was not patentable).
In the second step of the analysis, courts will "consider the limitations of each claim both individually and as an ordered combination to determine whether the additional limitations transform the claim into a patent-eligible application of a patent-ineligible concept." Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1332 (Fed.Cir.2015) (citing Alice, 134 S.Ct. at 2355). To be patentable, the claims must include "additional features to ensure that [it] is more than a drafting effort designed to monopolize [the abstract idea]." Alice, 134 S.Ct. at 2357 (citing Mayo, 132 S.Ct. at 1297) (quotations omitted). It is insufficient, for example, to state the abstract idea and add "apply it." Id. (citation omitted). As previously discussed, Neochloris argues that three inventive features transform the monitoring concept into a patent-eligible application, namely, the system's (1) use of computers and software; (2) ability to predict future failure events; and (3) ability to reduce human error. Pl.'s Resp. at 9-10. None of these limitations make the abstract idea patent-eligible.
Neochloris first argues that the '336 patent is salvageable because "the claims are tied to a monitoring computer with software to operably analyze the data and to detect ongoing and predict future waste water treatment process upsets and
An abstract idea is not transformed by the addition of a computer when "the function performed by the computer at each step of the process is purely conventional." Id. (quotations omitted) (citing Mayo, 132 S.Ct. at 1299). "At its most basic ... a computer is an automatic electronic device for performing mathematical or logical operations" involving the monitoring and processing of data. Bancorp Servs., 687 F.3d at 1277 (citation and quotations omitted). For example, in Content Extraction, the Federal Circuit rejected the patent owner's argument that using a scanner and computer to extract and store data from a check was an inventive concept. 776 F.3d at 1348-49. Because these were "well-known, routine, and conventional functions of scanners and computers," these limitations did not save the plaintiff's abstract idea. Id.; see also, e.g., Bancorp Servs., 687 F.3d at 1278 ("the use of a computer in an otherwise patent-ineligible process for no more than its most basic function — making calculations or computations — fails to circumvent the prohibition against patenting abstract ideas and mental processes.").
Similarly, here, the '336 patent employs any "monitoring computer" and any "software" to perform basic computer functions. The computer and software simply make routine calculations to monitor and analyze water data. The claims are not limited to any particular software or hardware, and this generic technology has no special capabilities that "improve the functioning of the computer itself" or "effect an improvement in any other technology or technical field." Alice, 134 S.Ct. at 2359. Because the addition of a computer and software in the '336 patent "does no more than require a generic computer to perform generic computer functions," id. at 2359, this generic technology does not save the '336 patent.
Neochloris counters that the computer and software perform more than generic functions because the technology "us[es] highly sophisticated techniques such as encryption/decryption of data, artificial neural networks, expert systems, optimization, pattern recognition, search functions, and advanced statistical functions." Pl.'s Resp. at 3-4 (citing '336 Patent 9:4-9). But Neochloris cites the claim specification rather than the limitations in the claims themselves. Claims 13 and 17 only refer to any "computer" and "software," and "the important inquiry for a § 101 analysis is to look to the claim." Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1345 (Fed.Cir.2013) (emphasis added). In Accenture, "[a]lthough the specification of the [disputed] patent contains very detailed software implementation guidelines, the system claims themselves only contain generalized software components arranged to implement an abstract concept on a computer." Id. And "the complexity of the implementing software or the level of detail in the specification does not transform a claim reciting only an abstract concept into a patent-eligible system or method." Id. To be sure, a patent's specification can provide context and thus help illuminate the meaning of a term in a claim, but that is not Neochloris's proposed use for the specification. To add the detailed explanation into the claims would do much more than
Even though Neochloris does not direct the Court's attention to any other claims, the Court recognizes that some of the other claims include limitations mentioned in the specifications. For example, Claim 19 of the '336 patent includes software with "an artificial neural network module," a "search module," a "statistical module," and the ability to "locate common patterns." '336 Patent 13:61-14:50. Claim 24 also states that the computer "optimize[s] operation of the facility." Id. 16:4. As previously explained, Neochloris could have disputed that Claims 13 and 17 represent the patent as a whole. But it did not, choosing instead to focus on these two claims. See Content Extraction, 776 F.3d at 1348 (plaintiff "never asserted in its opposition ... that the district court should have differentiated any claim from those identified as representative ..., [n]or did [it] identify any other claims as purportedly containing an inventive concept."). Even if the Court were to consider these limitations, however, it would still conclude that they are no more than elaborate descriptions of rudimentary computer functions. Neochloris provides no explanation or citation as to why these advanced functions are inventive. Indeed, it is not even clear what "an artificial neural network module" refers to besides a central processing unit — a basic computer's brain. And nowhere does Neochloris assert that it invented an interface that optimizes water management or created a new form of searching, statistical analysis, pattern recognition, or data encryption. See, e.g., Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1370 (Fed.Cir. 2015) (plaintiff argued that its "interactive interface" had the special ability to tailor information to the user, but the software was simply the "brains of the outfit," or a "generic web server with attendant software, tasked with providing web pages to and communicating with the user's computer") (citation and quotations omitted). Thus, Claims 13 and 17, which are representative of the patent as a whole, involve only generic computer functions. The additional "sophisticated techniques" do not add an inventive concept.
Neochloris also argues that the ability "to predict upsets that a human operator may overlook" on "a real time basis" is sufficiently inventive. Pl.'s Resp. at 4, 10. This limitation is included in Claims 13 (the "real-time monitoring" system "predict[s] future waste water treatment process failure events") and 17 (the "real-time monitoring" system "predict[s] waste water treatment process upsets and process failure events"). These abilities, Neochloris offers, also reduce human error. Id. at 11. Once again, however, none of these limitations go beyond the basic functioning of a computer, and Neochloris
As to predictive ability, the Federal Circuit recently upheld a patent's invalidity even though it involved predicting a customer's preferences. OIP Tech., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1361 (Fed.Cir.2015). The patent covered "a price-optimization method that help[ed] vendors automatically reach better pricing decisions through automatic estimation and measurement of actual demand to select prices." Id. (citation omitted). The patent helped sellers set prices by gathering statistics about consumers, using that data to project a demand curve, and choosing a new price for a product. Id. at 1361. But the court concluded that "[a]t best, the claims describe the automation of the fundamental economic concept of offer-based price optimization through the use of generic-computer functions." Id. at 1363. The key inventive feature was the automation of traditional methods of price optimization, and that still was not enough to make it patent-eligible. Id.
Nor is the ability to predict in real-time an inventive concept. In another persuasively reasoned opinion, a district court held that predicting what a customer wanted to buy — or "offering something to a customer based on his or her interest in something else" — was a "marketing technique as old as the field itself." Tuxis Tech., LLC v. Amazon.com, Inc., 2014 WL 4382446, at *3 (D.Del. Sept. 3, 2014). And "that the upsell item can be recommended in real time using a computer does not save the claim because the computer must be integral and facilitate the process in a way that a person making calculations or computations could not." Id. at *5. Although humans cannot predict customer preferences as quickly as a computer, the computer was not integral because it "performs nothing more than purely conventional steps that are well-understood, routine, and previously known to the industry." Id. (citing Alice, 134 S.Ct. at 2359).
Similarly, in this case, the monitoring system's ability to predict failures in real time is not sufficiently inventive to save the '336 patent. Like the patents in OIP and Tuxis, the '336 system automates a computational process that a person could do with pen and paper — for example, "a human could readily measure the pH of water every hour and note an increasing or decreasing trend that would predict that the water may breach a safe pH range in the near future." R. 38, Defs.' Reply at 10-11. Though perhaps true, it is irrelevant that "it would not be humanly possible for one to physically examine data from multiple sensors as well as historical data and predict future waste water treatment process upsets and process failure events on a real time basis." Pl.'s Resp. at 10. This is because "relying on a computer to perform routine tasks more quickly or more accurately is insufficient to render a claim patent eligible." OIP, 788 F.3d at 1363.
Finally, Neochloris makes the related argument that the '336 system is inventive because it detects events that
In sum, none of the '336 patent's limitations — the use of computers and software, the predictive abilities, or the ability to reduce error — constitute a sufficiently inventive concept to warrant patent protection.
For the reasons given above, Defendants' motion for summary judgment [34] on the invalidity of the '336 patent is granted. Judgment will be entered against Neochloris's claims as to both Defendants and in favor of Defendants' counterclaim for a declaration of invalidity. The status hearing of October 27, 2015 is vacated.