WALTER S. SMITH, JR., District Judge.
Plaintiff Affinity Labs of Texas, LLC ("Affinity") filed the instant patent infringement suit, which was referred to the United States Magistrate Judge for all
Affinity is an innovation consulting firm that owns a large portfolio of technology-based patents. Defendants are four companies, all in the business of broadcast media. Affinity filed suit against each Defendant separately,
The '379 Patent, entitled "Providing Broadcast Content," claims a means for delivering regionally broadcasted radio or television content to an electronic device located outside a region of the regionally broadcasted content. '379 Patent (filed June 30, 2009). According to the specification, the patent addresses the following problem:
Id. at col. 15 1. 58-64. The patents claim (1) a method for streaming regional content outside of a specific geographic location ("the method claims"); and (2) a system configured to carry out the method on a wireless cellular telephone device ("the system claims"). Id. at 57.
At the hearing on Defendants' Motion, the parties agreed that Claim 1 is representative. Claim 1 reads as follows:
1. A broadcast system, comprising:
Id. at col. 18 1. 21-44. Defendants jointly seek to dismiss Affinity's Complaint pursuant to Fed.R.Civ.P. 12(b)(6) on the grounds that the '379 Patent is invalid under 35 U.S.C. § 101 for failing to state a claim patentable subject matter.
Affinity previously asserted the '379 Patent in the Austin Division of the Western District of Texas. See Affinity Labs of Tex., LLC v. Clear Channel Broad., Inc., No. 1:12-CV-205-LY, 2014 WL 1699063 (W.D.Tex. Apr. 29, 2014). In a Markman order, Judge Yeakel held that the purpose of the invention described in the '379 Patent at issue is "to allow a user to consume `regionally broadcasted content' when the user is physically located outside of the range of that regionally broadcasted content." Id. at *6. In Clear Channel, Judge Yeakel was not presented with the opportunity to analyze whether the '379 Patent was invalid under § 101.
Here, after holding oral argument and conducting a thorough review of the parties' briefing, the Magistrate Judge's Report and Recommendation recommended granting Defendants' Motion to Dismiss pursuant to Rule 12(b)(6). Doc. 53. In response to the Report and Recommendation, Affinity timely filed objections thereto. Doc. 56. Defendants filed a Response to Affinity's objections. Doc. 57.
If a party files specific written objections to a Magistrate Judge's Report and Recommendation, the court "shall make a de novo determination of those portions of the report or specified proposed findings or recommendations to which [an] objection is made." 28 U.S.C. § 636(b)(1); see also Fed.R.Civ.P. 72(b)(2) (requiring specific written objections). The objections must be "sufficiently specific to focus the district court's attention on the factual and legal issues which are truly in dispute." United States v. 2121 E. 30th St., 73 F.3d 1057, 1060 (10th Cir.1996); Nettles v. Wainwright, 677 F.2d 404, 410 (5th Cir.1982) (en banc) ("It is reasonable to place upon the parties the duty to pinpoint those portions of the magistrate's report that the district court must specifically consider.").
General, vague, conclusive, or frivolous objections will not suffice. See Battle v. U.S. Parole Comm'n, 834 F.2d 419, 421 (5th Cir.1987). In such cases, the Court will only review the Magistrate Judge's findings to determine if they are clearly erroneous or contrary to the law. See Gallegos v. Equity Title Co. of America, Inc., 484 F.Supp.2d 589, 591 (W.D.Tex. 2007) (citing United States v. Wilson, 864 F.2d 1219, 1221 (5th Cir.1989)). Objections made with sufficient specificity, however, allow for the district court to "accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate." Freeman v. Cnty. of Bexar, 142 F.3d 848, 852 (5th Cir.1998) (quoting 28 U.S.C. § 636(b)(1)).
Section 101 of the Patent Act defines patentable subject matter. 35 U.S.C. § 101. More specifically, § 101 states that "[w]hoever 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 therefor, subject to the conditions and requirements of this title." Id. The Supreme Court has interpreted § 101 to
The Supreme Court has recognized that, at some level, "all inventions ... embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." Mayo, 132 S.Ct. at 1293. Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. See Diamond v. Diehr, 450 U.S. 175, 187, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981). Applications of such concepts "to a new and useful end" remain eligible for patent protection. Gottschalk v. Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972).
In Alice, the Court identified a "framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts[,]" which reflects the two-part test it previously articulated in Mayo. 134 S.Ct. at 2355. Under the Mayo/Alice test, a court must first determine whether the claim is "directed to one of those patent-ineligible concepts[]" (e.g., a law of nature, physical phenomenon, or abstract idea). Id. If it is, the court moves to the second step and asks "[w]hat else is there in the claims before us?" Mayo, 132 S.Ct. at 1297. To answer that question, the court considers 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 1297-98. This analysis serves as a search for an "Inventive concept,'" which, in other words, is an element or combination of elements "sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself." Id. at 1294.
Affinity argues Defendants' 12(b)(6) Motion is unripe because claim construction and factual disputes existed. Although patent eligibility under § 101 is not determined at the pleadings stage in all cases, it is not error to do so and may "have a number of salutary effects." Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 718 (Fed.Cir.2014) (Mayer, J., concurring). These effects include "conserve[ing] scarce judicial resources," "provid[ing] a bulwark against vexatious infringement suits," and "weeding out ... patents that stifle innovation and transgress the public domain." Id. at 718-19. "Issues of patent-eligible subject matter are questions of
While Affinity asserts that the Federal Circuit's "analysis is limited and opaque[,]" it does acknowledge that the court "has affirmed Rule 12 motions on § 101[.]" Doc. 56 at 3 n. 1. The Court disagrees with Affinity's characterization of the extent of the Federal Circuit's analysis on this issue; the court recently issued two opinions in which it affirmed the invalidity of patents pursuant to § 101 stemming from 12(b)(6) motions to dismiss for lack of patent-eligible subject matter. See Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343 (Fed.Cir.2015); OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359 (Fed.Cir. 2015).
Further, the Federal Circuit has opined that "[a]lthough the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter, claim construction is not an inviolable prerequisite to a validity determination under § 101." Content Extraction, 776 F.3d at 1349. In Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), the Federal Circuit found that the district court did not err by declaring claims patent ineligible at the pleading stage without first construing the claims or allowing the parties to conduct fact discovery and submit opinions from experts supporting their claim construction positions. 687 F.3d 1266, 1273-74 (Fed.Cir.2012).
Affinity claims the Magistrate Judge erred in improperly shifting the burden to it to identify a specific claim construction issue for § 101 purposes. Furthermore, Affinity contends the Magistrate Judge failed to conduct a proper, formal claim construction analysis. But when "the parties have not sought construction of any terms in the ... patent[],... this lack of dispute over the proper construction of the asserted claims confirms that it is unnecessary to engage in claim construction before addressing validity under [§] 101." Open Text S.A. v. Alfresco Software Ltd, No. 13-CV-04843-JD, 2014 WL 4684429, at *3 (N.D.Cal. Sept. 19, 2014); cf. Loyalty Conversion v. American Airlines, Inc., 66 F.Supp.3d 829, 835 (E.D.Tex.2014) (proceeding with a § 101 determination at the pleading stage after circumstances showed "there [were] no disputed issues of claim construction that would affect the proper analysis of the patentability of the asserted claims, and no other issues of fact that [were] material to the § 101 question"); see also Clear with Computers, LLC v. Altec Indus., Inc., No. 6:14-cv-79, 2015 WL 993392, at *3 (E.D.Tex. Mar. 3, 2015) (stating "neither party has identified any disputes presently ripe for claim construction" and thus "the Court sees no reason to delay its § 101 ruling while the parties continue to expend significant resources which will not impact or aid the Court in reaching this decision"); Morales v. Square, Inc., 75 F.Supp.3d 716, 722, 2014 WL 7396568, at *4 (W.D.Tex.2014) (finding that "neither separate claim construction proceedings nor further development of the factual record is required before addressing the § 101 issue"); Morsa v. Facebook, Inc., 77 F.Supp.3d 1007, 1012, 2014 WL 7641155, at *4 (C.D.Cal. Dec. 23, 2014) (explaining that
Here, the Court overrules Affinity's claim construction objections because conducting claim construction was not required. The Magistrate Judge accurately noted that Affinity failed to identify a disputed term requiring construction before deciding the present motion, and thus formal claim construction is rendered unnecessary.
The Court also overrules Affinity's objection that Defendants' Motion is not ripe because the Magistrate Judge made unsupported factual determinations regarding what was conventional, routine, or well-known at the time of the invention. The Federal Circuit has invalidated patents under § 101 at the motion to dismiss stage because conventional, routine, or well-known elements did not provide an inventive concept. See, e.g., Internet Patents, 790 F.3d at 1348-49, 2015 WL 3852975, at *5 (analyzing the patent specification to demonstrate that the claim elements were conventional, common, and well-known); Content Extraction, 776 F.3d at 1348 ("There is no `inventive concept' in [plaintiff]'s use of a generic scanner and computer to perform well-understood, routine, and conventional activities commonly used in industry."). Additionally, as the Magistrate Judge explained, courts frequently make findings (e.g., general historical observations) when determining legal questions. See Cal. Inst. of Tech. v. Hughes Commc'ns Inc., 59 F.Supp.3d 974, 978 n. 6 (C.D.Cal.2014); Doc. 53 at 17.
Consequently, the Magistrate Judge did not err in proceeding to a § 101 analysis prior to addressing claim construction because there was no indication of a dispute on the matter. The Magistrate Judge's factual determinations were likewise not error.
Affinity's objections claim that the Magistrate Judge erred in his Mayo/Alice step one analysis because: (1) the '379 Patent's claims are tangible and concrete — not abstract; (2) the claims do not fall within any abstract idea category in which the Supreme Court and Federal Circuit have recognized; and (3) the "quick look" at the '379 Patent ignores the actual claimed inventions. Doc. 56 at 10. The
Affinity argues that the '379 Patent is tangible and concrete because it uses cell phones and downloadable applications. But under this view, it is difficult to foresee any patent that utilizes a computer component classified as abstract. The Alice opinion discussed as follows:
The fact that a computer "necessarily exist[s] in the physical, rather than purely conceptual realm" is beside the point. There is no dispute that a computer is a tangible system (in § 101 terms, a "machine"), or that many computer-implemented claims are formally addressed to patent-eligible subject matter. But if that were the end of the § 101 inquiry, an applicant could claim any principle of the physical or social sciences by reciting a computer system configured to implement the relevant concept.
134 S.Ct. at 2358-59.
Here, the Court agrees with the Magistrate Judge's conclusion and method in which he found that "the purpose of the '379 Patent [is for] the dissemination of regionally broadcasted] content to users outside the region and that such purpose is a well-known, longstanding, commercial business practice[.]" Doc. 53 at 17. The Court finds Affinity's objection arguing that Patent '379 is tangible and concrete unpersuasive.
In addition, although Affinity argues that the Magistrate Judge "erred by expanding the categories of recognized `abstract ideas,'" the Supreme Court has declined to "delimit the precise contours of the `abstract ideas' category ...." Alice, 134 S.Ct. at 2357. Indeed, nothing in Alice prohibits the Court from identifying a patent as an abstract idea that is neither a mathematical algorithm nor a fundamental economic practice. See id. The Court agrees with the Magistrate Judge's reasoning that Alice allows for "the lower courts to develop the [abstract idea] category on a case-by-case basis." Doc. 53 at 11.
Finally, the Magistrate Judge did not err in utilizing a "quick look" test in step one before moving to step two of his analysis. Enfish, LLC v. Microsoft Corp., 56 F.Supp.3d 1167, 1173 (C.D.Cal.2014) ("Step one is a ... `quick look' test, the purpose of which is to identify a risk of preemption and ineligibility. If a claim's purpose is abstract, the court looks with more care at specific claim elements at step two."). The more recent Internet Patents case is similarly informative, explaining that "we start [the § 101 analysis] by ascertaining the basic character of the subject matter[.]" Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1348, 2015 WL
Affinity contends that the Magistrate Judge erred in his step two analysis because the '379 Patent contains an inventive concept. More specifically, Affinity's objections argue that: (1) case law does not support the Magistrate Judge's application of a technological arts test; (2) the over-the-air downloadable application was not generic, conventional, well-known, or routine as of March 2000; (3) the claim elements as a whole were not generic, conventional, well-known, or routine as of March 2000; (4) the disputes on this topic raise factual issues that should not be decided on the pleadings; and (5) the claims of the '379 Patent pass the machine-or-transformation test. Doc. 56 at 16.
The Magistrate Judge did not err in his application of the Alice decision by citing to Judge Mayer's opinion, which deemed that Alice "for all intents and purposes, set out a technological arts test for patent eligibility." Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 717 (Fed.Cir.2014) (Mayer, J., concurring). In Alice, the Supreme Court found that the asserted method and systems claims did not transform an abstract idea into a patent-eligible invention in part because "the claims at issue amount to `nothing significantly more' than an instruction to apply the abstract idea ... using some unspecified, generic computer." 134 S.Ct. at 2360 (citing Mayo Collaborative Servs. v. Prometheus Labs., ___ U.S. ___, ___, 132 S.Ct. 1289, 1298, 182 L.Ed.2d 321 (2012)). In the instant case, the Magistrate Judge followed this precedent in finding that "Claim 1 takes the abstract idea and says `apply it' to a wireless, cellular telephone device acting as a generic computer." Doc. 53 at 22-23. The Court finds the Magistrate Judge did not err in his reliance upon Alice to the extent it set forth a "technological arts" test; the appropriate legal analysis was applied irrespective of the name of the test in which Affinity would like to attach to it in an effort to articulate an objection.
Additionally, the Magistrate Judge did not err in finding that the over-the-air downloadable application with graphical user interface and claim elements as a whole did not amount to an inventive concept. The Magistrate Judge wrote the following:
Affinity's objection contending that the Magistrate Judge failed to consider each claim of the '379 Patent as a whole (and instead only considered each element individually) is without merit. The Alice decision instructs courts to consider claim elements both individually and as an ordered combination. Alice Corp. Pty. Ltd. v. CLS Bank Int'l, ___ U.S. ___, ___, 134 S.Ct. 2347, 2355, 189 L.Ed.2d 296 (2014). This is precisely what the Magistrate Judge did. Doc. 53 at 26 ("[T]he ... claims, ... either individually or as an ordered combination, all describe conventional, well known and routine concepts, accomplished using computer hardware and software recited in `purely functional and generic' terms and are, therefore, invalid under 35 U.S.C. § 101.") (quoting Alice, 134 S.Ct. at 2360) (emphasis added). Regardless, the purpose of considering claims in an ordered combination is to determine whether the claims "`ad[d] [some]thing ... that is not already present when the steps are considered separately.'" Alice, 134 S.Ct. at 2359 (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., ___ U.S. ___, 132 S.Ct. 1289, 1298, 182 L.Ed.2d 321 (2012)). Here, Affinity did not specify any combination of elements that were not already present when the well-known and conventional elements are considered individually. Affinity's contention that the Magistrate Judge erred in considering the claim elements as a whole is overruled.
Affinity's objection to the Magistrate Judge's factual determinations regarding what was conventional and routine at the time of the invention is also without merit. A § 101 determination is a question of law, and "[c]ourts frequently make findings when deciding purely legal questions." Cal. Inst. of Tech. v. Hughes Commc'ns Inc., 59 F.Supp.3d 974, 978 n. 6 (C.D.Cal. 2014). Patent "[e]legibility questions mostly involve general historical observations, the sort of findings routinely made by courts deciding legal questions[,]" and "[t]he Federal Circuit has noted that § 101 analysis if `rife with underlying factual issues.'" Id. (quoting Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1339 (Fed.Cir. 2013)). Further, several Federal Circuit cases have made general historical observations in ruling on a 12(b)(6) motion. See, e.g., buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1354-55 (Fed.Cir.2014); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 722-23 (Fed.Cir.2014) (Mayer, J., concurring); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343, 1347 (Fed.Cir.2014). Therefore, the Magistrate Judge's reliance on the patent specification and use of taking judicial notice of well-known, general historical observations was not error.
Id. at 19-20 (citations and quotation marks omitted). Affinity's objection and argument in support fails to persuade the Court to depart from the Magistrate Judge's sound reasoning. The Magistrate Judge did not err in his machine-or-transformation test analysis.
Affinity next claims that the Magistrate Judge's analysis of the '379 Patent's dependent claims was conclusory and inadequate; however, Defendants are correct that a court's § 101 analysis of dependent claims that fail to add an inventive concept are generally briefly addressed. See Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1349, 2015 WL 3852975, at *6 (Fed.Cir.2015); Content Extraction, 776 F.3d at 1348-49. The Federal Circuit has even disposed of claims without even a conclusory supporting analysis. Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1378 (Fed.Cir.2015) ("None of the remaining asserted dependent or independent claims differ substantially from [the claims explicitly addressed].").
In the instant case, the Magistrate Judge found as a matter of law that "the dependent claims do not add something to the abstract idea that is an `integral' or `significant part' of the invention." Doc. 53 at 26. Because the Court agrees with the Magistrate Judge that the claims in this case "add only trivial limitations insufficient to confer patentability[,]" the Magistrate Judge did not err in his dependent claims analysis. Id. at 24.
Affinity's final objection asserts that the Magistrate Judge erred in his preemption analysis, but the Court disagrees. The Magistrate Judge did not err in concluding that "[t]he asserted claims of the '379 Patent preempt the dissemination of regionally broadcasted content to a user outside the region on an electronic device that utilizes cellular communication, thereby
Irrespective of the Court's agreement with the Magistrate Judge's preemption analysis, however, the issue is moot in light of the Court's adoption of the findings and recommendation that the claims are patent ineligible under the two-step Mayo/Alice test. The Federal Circuit recently held that, "[w]here a patent's claims are deemed only to disclose patent ineligible subject matter under the Mayo framework,... preemption concerns are fully addressed and made moot." Ariosa, 788 F.3d at 1379. Therefore, Affinity's preemption objection is overruled.
The Magistrate Judge, in a thorough review of the case and applicable law, has recommended that Defendants' Motion to Dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure be granted and that the case be dismissed. Further, the Magistrate Judge has recommended that Defendants' pending Motion to Transfer Venue to the Western District of Texas, Austin Division be denied as moot.
Having carefully reviewed the report and Plaintiff's objections de novo, the Court is persuaded that the Magistrate Judge's findings and recommendation should be adopted. Accordingly it is
JEFFREY C. MANSKE, United States Magistrate Judge.
This Report and Recommendation is submitted to the Court pursuant to 28 U.S.C. § 636(b)(1)(C) and Rules 1(h) and 4(b) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges.
Before the Court is Defendants' Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6). Defs.' Mot. (ECF No. 19). The Motion has been fully briefed (Pl.'s Resp. (ECF No. 25) and Defs.' Reply (ECF No. 33)), and oral argument
Plaintiff is Affinity Labs of Texas, LLC, ("Affinity"), an innovation consulting firm founded in 2008 by Russell White and Harlie Frost. Affinity is the owner of a large portfolio of technology-based patents. Defendants are four companies, all in the business of broadcast media.
Affinity filed suit against each Defendant separately,
The '379 Patent, entitled "Providing Broadcast Content," claims a means for delivering regionally broadcasted radio or television content to an electronic device located outside a region of the regionally broadcasted content. '379 Patent (filed June 30, 2009). According to the specification, the patent addresses the following problem:
Id. col. 15 1. 58-64. The patents in suit claim (1) a method for streaming regional content outside of a specific geographic location ("the method claims"), and (2) a system configured to carry out the method on a wireless cellular telephone device ("the system claims"). Id. at [57].
At the hearing on Defendants' Motion, the parties agreed that Claim 1 is representative. It reads as follows:
1. A broadcast system, comprising:
Id. at col. 18 1. 21-44. Defendants jointly seek to dismiss Affinity's Complaint pursuant to Fed.R.Civ.P. 12(b)(6) on the grounds that the '379 Patent is invalid under 35 U.S.C. § 101 for failing to claim patentable subject matter. In June 2014, the Supreme Court decided Alice Corp. Pty. Ltd. v. CLS Bank Ina, a seminal decision in which the Court held that patent claims designed to facilitate the exchange of financial obligations between two parties by using a computer system as a third-party intermediary were drawn to a patent ineligible abstract idea and thus not patent eligible under § 101. ___ U.S. ___, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014). Alice has engendered a wave of decisions from lower courts addressing the issue of patent eligibility under § 101.
Affinity previously asserted the '379 Patent in the Austin Division of the Western District of Texas in Affinity Labs of Tex., LLC v. Clear Channel Broad., Inc., No. 1:12-CV-205-LY, 2014 WL 1699063 (W.D.Tex. Apr. 29, 2014). In a Markman order, judge Yeakel held that the purpose
Section 101 of the Patent Act defines patentable subject matter: "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 therefor, subject to the conditions and requirements of this title." 35 U.S.C. § 101. Section 101 also "contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable." Alice, 134 S.Ct. at 2354 (quoting Ass'n for Molecular Pathology v. Myriad Genetics, Inc., ___ U.S. ___, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013)) (internal quotation marks omitted). "[T]he concern that drives this exclusionary principle [i]s one of pre-emption." Alice, 134 S.Ct. at 2354 (citing Bilski v. Kappos, 561 U.S. 593, 611, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010)). These categories are not patent-eligible because "they are the basic tools of scientific and technological work" "free to all men and reserved exclusively to none." Mayo Collaborative Serfs. v. Prometheus Labs., ___ U.S. ___, 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012) (citations omitted). Allowing patent claims for laws of nature, natural phenomena, and abstract ideas would "tend to impede innovation more than it would tend to promote it[,]" thereby thwarting the primary object of the patent laws. Id. The Supreme Court has "repeatedly emphasized this ... concern that patent law not inhibit further discovery by improperly tying up the future use of these building blocks of human ingenuity." Id. at 1301; see also O'Reilly v. Morse, 56 U.S. 62, 15 How. 62, 14 L.Ed. 601 (1853). However, the Court has also recognized the need to "tread carefully in construing this exclusionary principle, lest it swallow all of patent law." Alice, 134 S.Ct. at 2354. The Supreme Court recognized that, at some level, "all inventions ... embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." Mayo, 132 S.Ct. at 1293. Thus, an invention is not rendered ineligible for patent simply because it involves an abstract concept. See Diamond v. Diehr, 450 U.S. 175, 187, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981). Applications of such concepts "to a new and useful end" remain eligible for patent protection. Gottschalk v. Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972).
In Alice, the Supreme Court identified a "framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts." 134 S.Ct. at 2355 (citing Mayo, 132 S.Ct. at 1296-97). This framework reflects the two-part test articulated by the Supreme Court in Mayo.
Under the Mayo/Alice test, a court must first ask if the claim is "directed to one of those patent-ineligible concepts" — a law of nature, physical phenomenon, or abstract idea. Alice, 134 S.Ct. at 2355. If it is, the court moves to the second step. At step two, the court asks "[w]hat else is there in the claims before us?" Mayo, 132 S.Ct. at 1297. To answer that question, the court considers the elements of each claim both individually and "as an ordered combination"
Affinity argues that Defendants' Motion is unripe because (1) fact issues exist that cannot be decided on a 12(b)(6) motion because Defendants' Motion requests the Court find that certain claim elements and components are "well known" without a proper evidentiary basis for the conclusion, Pl.'s Resp. at 9-10, and (2) because claim construction has not occurred yet. Id. at 11-12. Additionally, Affinity alleges that the proper burden of proof for deciding Defendants' Motion is the clear and convincing evidence standard. Accordingly, the Court will address the timeliness of Defendants' Motion and the appropriate standard of proof.
Under Fed.R.Civ.P. 12(b)(6), a court may dismiss an action that fails to state a claim upon which relief may be granted. In deciding a Rule 12(b)(6) motion to dismiss for failure to state a claim, "[t]he court accepts all well-pleaded facts as true, viewing them in the light most favorable to the [nonmovant]." In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir.2007) (quoting Martin K Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir.2004)) (internal quotation marks omitted). To survive the motion, a nonmovant must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level, ... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)." Id. at 555, 127 S.Ct. 1955 (internal citations omitted) (parentheticals in original). "A claim has facial plausibility when the [nonmovant] pleads factual content that allows the court to draw the reasonable inference that the [movant] is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).
The Federal Circuit has confirmed that determining patent eligibility under § 101 is appropriate at the pleadings stage. "Issues of patent-eligible subject matter are questions of law." Cyber-Source Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1369 (Fed.Cir.2011). See, e.g., Content Extraction, 776 F.3d at 1349 (atfirming district court's resolution of a motion to dismiss at the pleading stage); Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 711 (Fed.Cir.2014) (Ultramercial III) (Mayer, J., concurring) (affirming district court's decision granting motion to dismiss infringement claim for failure to state patent-eligible subject matter); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1351 (Fed.Cir.2014) (affirming district court's decision to grant judgment on the pleadings based on § 101). "[S]ection 101 imposes `a threshold test,' ... one that must be satisfied before a court can proceed to
Furthermore, in this case the § 101 inquiry is properly addressed prior to claim construction. "Although the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter, claim construction is not an inviolable prerequisite to a validity determination under § 101." Content Extraction, 776 F.3d at 1349 (citing Ultramercial III, 772 F.3d at 714-15); Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1273-74 (Fed.Cir.2012) (finding that the district court did not err by declaring claims patent-ineligible at the pleading stage without first construing the claims or allowing the parties to conduct fact discovery and submit opinions from experts supporting their claim construction positions). However, completing claim construction prior to a § 101 analysis may be appropriate under certain circumstances. See Bancorp, 687 F.3d at 1273-74. For instance, "it will ordinarily be desirable — and often necessary — disputes prior to a[§ 101 analysis." Id. (emphasis supplied).
To deny Defendants' 12(b)(6) motion as premature because Markman has not occurred makes little sense. As Defendants point out, Affinity has not identified a disputed term requiring construction and has therefore not demonstrated why claim construction is necessary to determine whether the patent claims patenteligible subject matter. Defs.' Reply at 2-3;
A final preliminary issue meriting discussion is what burden of proof is applicable to a § 101 challenge. There is no clear mandate from the Supreme Court or the Federal Circuit in this regard post-Alice, and lower courts are split as to whether the clear and convincing evidentiary standard should still be applied in a challenge to a patent's eligibility under § 101.
The Court must first evaluate the patent claims "[oin their face" and determine whether the claims are directed to patent-ineligible subject matter — "laws of nature, natural phenomena, and abstract ideas." Alice, 134 S.Ct. at 2355-56. The instant case only presents the question of whether Plaintiff's patent is directed to an abstract idea.
The Supreme Court and lower courts have provided some important principles to direct courts in evaluating whether an idea is abstract. At step one, "the court must identify the purpose of the claim — in other words, determine what the claimed invention is trying to achieve — and ask whether that purpose is abstract.
The Supreme Court did not "delimit the precise contours of the `abstract ideas' category" in Alice — instead, it left the lower courts to develop the category on a caseby-case basis. 134 S.Ct. at 2357. Nevertheless, over the course of several cases, the Supreme Court has identified several categories of precluded subject matter. For example, mathematical algorithms, including those executed on a generic computer, are patent-ineligible.'
Since Alice, the Federal Circuit has issued seven decisions interpreting § 101. This body of case law has further defined the contours of the abstract ideas category.
Defendants contend the '379 Patent is abstract because it is "directed to an ageold concept of making broadcast content from one region available in another region — something performed since the first time someone held the phone up to the radio so that a distant friend could hear the broadcast." Defs.' Mot. at 7. According to Defendants, the availability in one region of programming that originated in another is a "decades-old idea" that "has been a familiar and unremarkable part of the media landscape." Id. at 1, Furthermore, Defendants argue the claims do not recite any new technology that makes this possible but merely "present a straightforward description of the conventional business model, accompanied by a generic recitation of a conventional cellular phone with its familiar parts (buttons[,] memory, a
In its briefing, Affinity suggests that the universe of patent-ineligible abstract ideas is limited to the two categories the Federal Circuit identified in DDR Holdings: "mathematical algorithms" and "fundamental economic and conventional business practices" — neither of which encompasses the '379 Patent. Pl.'s Resp. at 6 (citing DDR HoWitty's, 773 F.3d at 1256). At oral argument, Affinity vehemently objected to the process of ascertaining an invention's purpose at step one and then determining whether that purpose is abstract — particularly when the process involves considering whether the purpose the invention purports to achieve is longstanding or wellknown. Affinity argued that, on some level, every invention can be distilled to a general purpose or industry, and if that industry is either longstanding or wellknown, the patent is deemed abstract. By taking this approach, Affinity argued, lower courts have ignored the "doctrine of restraint"
At the hearing, the Court offered Affinity the opportunity to identify an alternative test Courts have applied post-Alice when evaluating patents for abstractness.
The Court finds the purpose of the '379 Patent is the dissemination of regionally broadcasted content to users outside the region. In reviewing the: system claims, the Court notes the idea embodied by the majority of the limitations,
The Court next examines whether the purpose is abstract. See Enfish, 56 F.Supp.3d at 1174. As set forth in detail above, courts have invalidated patents claiming mathematical algorithms,
At the hearing, Affinity attempted to distinguish the '379 Patent by arguing that the dissemination of regional broadcast content to users outside a region is not a longstanding, commercial practice like hedging or intermediated settlement at issue in Bilski and Alice, respectively. In doing so, Affinity again cautioned the Court to avoid overgeneralization and instead urged the Court to focus on the "product."
Affinity relies on a faulty analogy. The '379 Patent does not claim a concrete or
The commercial practice of disseminating regionally broadcast content to users outside the region is both well-known and historically long-standing. A lifelong sports fan, the undersigned has listened to broadcasts over the radio of baseball, basketball, football, and hockey games from other regions throughout my youth to the current day. Additionally, many baseball fans who were cable subscribers in the 1970's remember watching Atlanta Braves games on the TBS superstation despite not living in Atlanta, Georgia, and in the 1980's, watching Harry Caray announce Chicago Cubs games over the WGN superstation. The above examples represent just a few of the many general historical observations that come to mind as evidence of the longstanding practice of disseminating regionally broadcast content to users outside the region.
As a final comment on the step one Mayo/Alice analysis, Affinity objects to the Court finding that a practice is "wellknown" or a "longstanding commercial practice" on a Rule 12(b)(6) motion on the grounds that such a finding is without evidentiary support and improper at the 12(b)(6) stage. Pl.'s Resp. at 20. The Court notes, however, that "[e]ligibility questions mostly involve general historical observations, the sort of findings routinely made by courts deciding legal questions." See Cal. Inst. of Tech., 59 F.Supp.3d at 979 n. 6. Further, at oral argument, the Court directed Affinity to a number of Rule 12(b)(6) and 12(c) cases
Having found the purpose of the '379 Patent to be the dissemination of regionally broadcast content to users outside the region and that such purpose is a wellknown, longstanding, commercial business practice, the Court finds as a matter of law that the claims of the '379 Patent are directed to an abstract idea. Because the Court finds that Plaintiff's claims are drawn to an abstract idea, the Court will move to the second step of the analysis: determining whether the claim includes an inventive concept "sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself." Alice, 134 S.Ct. at 2355 (internal brackets omitted).
The United States Supreme Court has held that if an abstract idea is found, then at step two of the analysis the Court is to:
Id. at 2357 (citations omitted). Further, the Court is to consider claim elements both individually and as an ordered combination. Id. at 2355. The "additional features" must be more than "well-understood, routine, conventional activity." Ultranzercial III, 772 F.3d at 715 (citing Mayo, 132 S.Ct. at 1298) (internal quotations omitted). Alice also held that the "[m]ere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention." 134 S.Ct. at 2358. The Supreme Court held that stating an abstract idea awhile adding the words `apply it with a computer'" amounts to a "mere instruction to `implemen[t] an abstract idea `on a computer" and "cannot impart patent eligibility." Id. (quoting Mayo, 132 S.Ct. at 1301).
In its brief, Affinity urges the application of the "machine or transformation" test as a "useful clue" in the second step of the Alice analysis. Pl.'s Resp. at 18. Under the "machine or transformation" test, a claimed process can be patent eligible if 1) it is tied to a particular machine or apparatus; or 2) if it transforms a particular article into a different state or thing. See Bilski, 561 U.S. at 593, 130 S.Ct. 3218. During the hearing, Affinity informed the Court that prong one of the "machine or transformation" test is the only relevant prong for analysis because Affinity does not claim that the '379 Patent transforms broadcast content into something else.
The Court notes that a general purpose computer, coupled with the internet, has been found to be a "ubiquitous, information-transmitting medium, not a novel machine," thus failing the machine test. Ultramercial III, 772 F.3d at 716-17. Affinity counters that the '379 Patent provides more than a general purpose computer because the claims reference a "specific combination of hardware and software components[,]" including "an application for `storage and execution' available for over the air download to a cellular phone" and that none of the claim steps can be performed by a human alone. Pl.'s Resp. at 19. Affinity further contends that Claim 1 recites specialized components such as a "network based resource," "non-transitory storage medium," and the downloadable software application providing a "graphical user interface," with requesting and receiving capabilities which "are essential to the inventors' specific solution to distributing regional broadcast content." Id.
In reviewing representative Claim 1, the Court finds it fails the "machine or transformation" test. Specifically, in analyzing Claim 1, Affinity merely takes the abstract idea identified above and applies it to a generic, electronic device — in this case, a wireless cellular telephone device operating as a "ubiquitous, informationtransmitting medium, not a novel machine." Ultramercial III, 772 F.3d at 716-717. Although Affinity alleges the components in Claim 1 are specialized, the Court finds the claim merely sets forth
In finding Affinity's '379 patent fails the "machine or transformation" test, In re TLI Communications is analogous and persuasive. In TLI Communications, the Eastern District of Virginia, on motions to dismiss based on § 101, examined a patent which the Court found was clearly directed to the abstract idea of taking, organizing, classifying, and storing photographs. Id. at 788-89, at *11. Plaintiff contended that the "inventive concept" within the relevant claim was an "intelligent" server which performs a variety of inventive functions: (1) it receives data — digital images and classification information — entered or inputted by the user; (2) it extracts from the received data the classification information which characterizes the digital images; and (3) it stores the digital images by taking the classification information into consideration. Id. at 791-92, at *14. In applying the "machine or transformation" test to the "intelligent" server, the Court held:
Id. at 793-94, at *16 (emphasis supplied) (internal citations omitted). Similarly, the functions performed by claim 1 of the '379 Patent — storage of memory, software to execute the program, sending and receiving data — can all be performed by a generic computer. There is not a non-generic function or component contained in the claims that sets forth the blueprint with any degree of specificity of how to disseminate regional broadcast content to a user outside the region over a wireless, cellular telephone device. Although the Court need not look to the specification to resolve the issue, a review of the '379 Patent's specification confirms this. In column 10, line 6, the specification provides that "[t]he present invention is not limited to any one specific type of software and may be realized in plurality of ways as can be appreciated by those skilled in the art." Claim 1 does not pass the "machine or transformation" test because the only recited machine in the claim is a wireless, cellular telephone device operating as a generic computer, which does not serve as a meaningful limitation.
Affinity's position is that the inventive concept in the claims, "the number one element to look for,"
In Alice, the Supreme Court set out a "technological arts"
Id. at 1333. (citing Dealertrack, 674 F.3d at 1333). In the instant base, the claim limitations of Affinity's '379 patent, specifically the downloadable application with graphical user interface, do not identify any specific functionality or explain "how" they are going to download regionally broadcast content onto a wireless cellular telephone device such that a user outside the region can view the content. On its face, Claim 1 merely states that the application "enables" the device to present a graphical user interface so a user can select what data that user wants to stream. Both the claim and the specification are devoid of any teaching or blueprint explaining how the device can do what it purports to do. The claim is silent as to how the downloadable application with graphical user interface aids the system or method, the extent to which it aids the system or method, nor does it explain the significance of the downloadable application with graphical user interface to performance of the system or method. The bottom line is that Claim 1 takes the abstract idea and says "apply it" to a wireless, cellular telephone device acting as a generic computer. As such, the downloadable application with graphical user interface does not add something to the abstract idea that is an
Even if the Court were to further break down the limitation and consider only the "graphical user interface" standing alone, the graphical user interface itself does not amount to an inventive concept. By way of function, the claim states that the graphical user interface comprises a "partial listing of available media sources on a display ... wherein the listing includes a selectable item that enables user selection of the regional broadcasting channel." '379 Patent col. 18 1. 31-35. Similarly, this is a generic computer component that does not contain an inventive concept. See Cloud Satchel a Amazon.com, Inc., No. 13-941-SLR, 76 F.Supp.3d 553, 2014 WL 7227942 (D.Del. Dec. 18, 2014). In Cloud Satchel, the limitations present in the dependent claims included a "display unit and a graphical user interface." Id. at 563 n. 9, at *7, n. 9. The defendants contended that such limitations merely recited "generic computer components" or "token postsolution components." Id. In finding the patent invalid, the District of Delaware concluded that "the claimed computers and hardware elements of the claimed subsystem are generic." Id. Likewise, this Court finds that the "graphical user interface" is a generic computer component.
As a final point on "graphical user interfaces," the Court finds the Trading Techs. decision relied upon by Affinity is not applicable. In Trading Techs., the Northern District of Illinois determined that graphical user interfaces designed to display a "static price axis" for commodities trading "recite[d] an invention that is not merely the routine or conventional use of computers or the Internet," but rather "eliminated some problems of prior GUIs relating to speed, accuracy and usability." 2015 WL 774655, at *5. First, the undersigned notes that the Northern District of Illinois initially stated that "the recitation of a GUI in the claims of the patents in suit does not automatically impart patent eligibility." Id. Rather, the district court found that the "claims are directed to a technological improvement of GUIs." Id. (emphasis supplied). As such, Trading Techs. is distinguishable because unlike in the instant case, the claims of the patent in the case examined by the Northern District of Illinois explained the "how" and "specific functionality" of the graphical user interface resulting in a technological improvement. As explained above, the claims of the '379 Patent present the graphical user interface as merely a generic computer component.
Therefore, the Court finds as a matter of law that Claim 1, the representative claim of the '379 Patent, does not contain an inventive concept in that it does not add something to the abstract idea that is an "integral" or "significant part" of the invention. Since the parties stipulated that system claim 1 is representative of method claim 14, claim 14 is likewise abstract and contains no inventive concept. The Court will now review the dependent claims to determine whether they add anything of substance to Claim 1 sufficient to confer patentability.
The dependent claims of the '379 Patent consist of claims 2-13 of the system claims and 15-21 of the method claims. Defendants allege the dependent claims of the '379 Patent add only trivial limitations insufficient to confer patentability. The Court agrees.
The other asserted claims add little to the substance of claims 1 and 14. The dependent method claims assert routine, well known, and conventional concepts, all existent as of the year 2000. Claims 15 and 16 provide that the streaming media is audio accompanied by information about
Likewise, the dependent system claims present limitations which were well known, routine and generic computer-based concepts as of the year 2000 and do nothing either individually, or as an ordered combination, to confer patentability on the '379 Patent. Claims 2, 4, 5, 9, and 10 each recite instructions for either receiving or displaying content or content sources. None of these claims are inventive as claim 2 (presenting information about a song in a "graphical representation"), claims 4 and 5 (both displays of content), and claim 10 (instructions to present media sources within a graphical user interface without use of a web browser) were each discussed in detail above and rejected as an inventive concept in the Court's analysis of a "graphical user display." Claim 9 is nothing but a virtual representation of a radio dial which has been a longstanding feature of radios for years. Claim 6 recites a search engine which was a well known generic computer feature as of the year 2000. Claim 7 describes a private login for the user, and Claim 8, which incorporates the system of claim 7, allows a user to select a playlist, both of which are basic computer functions within the prior art that add nothing of practical significance. Claim 3 recites receiving an FM signal in the wireless cellular telephone device over the internet, but it is devoid of specific functionality and is representative of the type of claims that Alice and Ultramercial III describe as unpatentable. Finally, claim 11 sets forth buffering of the streaming media signal, claim 12 describes the streaming media signal as video, and claim 13 recites that the electronic device has a network address. Again, neither claims 11, 12 nor 13 describe anything inventive and not in the prior art.
In sum, the dependent system and method claims, considered with Claims 1 and 14, either individually or as an ordered combination, all describe conventional, well known and routine concepts, accomplished using computer hardware and software recited in "purely functional and generic" terms and are, therefore, invalid under 35 U.S.C. § 101. See Alice, 134 S.Ct. at 2360. Accordingly, the Court finds as a matter of law that the dependent claims do not add something to the abstract idea that is an "integral" or "significant part" of the invention.
United States Supreme Court jurisprudence makes clear that the rationale for excluding laws of nature, natural phenomena, and abstract ideas from patentability is the concern of preemption. See Alice, 134 S.Ct. at 2354. "[M]onopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it,' thereby thwarting the primary object of the patent laws." Id. (quoting Mayo, 132 S.Ct. at 1293). In analyzing whether a patent is preemptive, the Supreme Court has stated that the relevant question is "how much future innovation is foreclosed relative to the contribution
Affinity argues the claimed inventions of the '379 Patent do not risk preemption of the dissemination of regionally broadcasted content to users outside the region because the patent's claims do not cover satellite radio or television, cable television, media streamed over a traditional, home computer or even by FM signal to a cellular phone. On the other hand, Defendants contend that the '379 Patent is preemptive because it prohibits the use of regionally broadcast content to a user outside the region on arguably any electronic device that involves cellular communication.
In determining "how much future innovation is foreclosed relative to the contribution of the inventor," a claim need not tie up the entire field to be preemptive, rather the concern is whether the claim "tie[s] up too much future use" of the abstract idea. See Mayo, 132 S.Ct. at 1302. In other words, the "pre-emption inquiry focuses on whether the patent `would risk disproportionately tying up the use of the underlying ideas.'" Cloud Satchel, 76 F.Supp.3d at 564, 2014 WL 7227942 at *9 (citing Alice, 134 S.Ct. at 2354; Mayo, 132 S.Ct. at 1294).
On the issue of preemption, analysis of steps one and two under the Mayo/Alice test leads the Court to side with Defendants. Allowing the asserted claims to survive would curb any innovation related to the implementation of the abstract idea on potentially any electronic device that utilizes cellular communication. The asserted claims of the '379 Patent preempt the dissemination of regionally broadcasted content to a user outside the region on an electronic device that utilizes cellular communication, thereby monopolizing the idea on a ubiquitous device as is evidenced by the scope of the definition in the specification. In this case, it is clear neither the system nor method claims, either considered individually or as an ordered combination, impose any significant limitation on the abstract idea and, therefore, disproportionately tie up the future use of that idea.
In DDR Holdings, the Federal Circuit found that patents directed to systems and methods of generating a composite web page that combines certain visual elements of a "host" website with content of a third-party merchant were not invalid. 773 F.3d at 1259. The claimed invention sought to overcome a problem specifically arising in the realm of computer networks — the challenge of "retaining website visitors that, if adhering to the routine, conventional functioning of Internet hyperlink protocol,
In its brief, Affinity suggests that the DDR Holdings opinion is "particularly relevant." The Court, however, finds that it is easily distinguishable. First, unlike the instant case, the Federal Circuit concluded that the patent at issue was probably not directed to an abstract idea because "these claims stand apart because they do not merely recite the performance of some business practice known from the pre-Internet world along with the requirement to perform it on the Internet." Id. Second, and in contrast to the instant case, the Federal Circuit found that "[u]nlike the claims in Ultramercial, the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result." Id. (emphasis supplied). Specifically, the Court found that the claims recite an inventive concept for resolving a particular "Internet-centric problem." Id. at 1258-59. Further, in making this finding, the Federal Circuit cautioned "that not all claims purporting to address Internet-centric challenges are eligible for patent." Id. at 1258. At the hearing, the Court asked Affinity's counsel if there is any Internet centric problem with being able to transmit regional broadcast content over streaming media to MLB.com on my home computer in order for me to watch that ball game," and Affinity agreed that there was not.
For the foregoing reasons, the undersigned
The undersigned further recommends that Defendants' pending Motions to transfer Venue to the Western District of Texas, Austin division be
The parties may wish to file objections to this Report and Recommendation. A party filing objections must specifically identify those findings or recommendations to which objections are being made. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. United States Parole Comin'n, 834 F.2d 419, 421 (5th Cir.1987). A party's failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report and, except upon grounds of plain error, shall bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 U.S.C. § 636(b)(1)(C); Thomas v. Am, 474 U.S. 140, 150-53, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Douglass v. United Servs. Auto. Ass'n, 79 F.3d 1415 (5th Cir. 1996) (en banc). To the extent that a party has not been electronically served by the Clerk with this Report and Recommendation
