LEONIE M. BRINKEMA, District Judge.
Before the Court is Defendants' Motion for Judgment on the Pleadings [Dkt. No. 293]. Having considered the pleadings as well as the oral argument of counsel, the motion will be granted for the reasons discussed below.
Amdocs (Israel) Limited ("plaintiff" or "Amdocs") and Openet Telecom LTD and Openet Telecom, Inc. (collectively, "Openet") compete to provide software which allows telecommunications providers to track customer usage of computer network services. On August 16, 2010 Amdocs filed this patent infringement action alleging that Openet infringed U.S. Patent Nos. 6,836,797 ("the '797 Patent") and 7,631,065 ("the '065 Patent."). Complaint [Dkt. No. 1]. Amdocs added U.S. Patent Nos. 7,412,510 ("the '510 Patent") and 6,947,984 ("the '984 Patent") via an Amended Complaint on February 3, 2011. [Dkt. No. 50]. Openet responded with an Answer and Counterclaim, alleging invalidity and non-infringement and filed a Motion for Summary Judgment of Non-Infringement and Invalidity on May 26, 2011. The motion was granted as to non-infringement by a memorandum opinion on January 22, 2013. [Dkt. No. 259]. Amdocs appealed. [Dkt. No. 264]. The Federal Circuit affirmed two term constructions but reversed a third, and accordingly vacated the grant of summary judgment of non-infringement. Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 761 F.3d 1329 (Fed.Cir.2014). While the case was on appeal, the Supreme Court decided Alice Corp. Pty. Ltd. v. CLS Bank Int'l, which invalidated a computer
Upon remand, Openet filed the pending Motion for Judgment on the Pleadings, in which it argues that all of the asserted claims are invalid under 35 U.S.C. § 101 as being directed to unpatentable abstract ideas. Defendants' Memorandum In Support Of Their Motion For Judgment On The Pleadings [Dkt. No. 2941] ("Openet's Br."). Amdocs has filed an opposition, Plaintiff's Opposition To Defendants' Motion For Judgment On The Pleadings [Dkt. No. 297] ("Opp'n"), and Openet has replied. Openet's Reply In Support Of Their Motion For Judgment On The Pleadings [Dkt. No. 298] ("Reply").
"Section 101 patent eligibility is a question of law." In re Roslin Institute (Edinburgh), 750 F.3d 1333, 1335 (Fed.Cir. 2014). Accordingly, a court may invalidate patent claims directed to non-eligible subject matter on the pleadings. See buySAFE, Inc. v. Google, Inc., 765 F.3d 1350 (Fed.Cir.2014).
In a motion for judgment on the pleadings, the court should "assume all facts alleged in the complaint are true and draw all reasonable factual influences in [the plaintiff]'s favor." Burbach Broadcasting Co. of Del. v. Elkins Radio Corp., 278 F.3d 401, 406 (4th Cir.2002). "Judgment should be entered when the pleadings, construing the facts in the light most favorable to the non-moving party, fail to state any cognizable claim for relief, and the matter can, therefore, be decided as a matter of law." O'Ryan v. Dehler Mfg. Co., 99 F.Supp.2d 714, 718 (E.D.Va.2000).
To be eligible for a patent, a claimed invention must be directed to "any new and useful process, machine, manufacture, or composition of matter." 35 U.S.C. § 101 (2012). "In choosing such expansive terms ... modified by the comprehensive `any,' Congress plainly contemplated that the patent laws would be given wide scope," Diamond v. Chakrabarty, 447 U.S. 303, 308, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980); however, "for more than 150 years" the Supreme Court has "held that [§ 101] contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable." Alice Corp. Pty. Ltd. v. CLS Bank Intern., ___ U.S. ___, 134 S.Ct. 2347, 2354, 189 L.Ed.2d 296 (2014) (quoting Ass'n for Molecular Pathology v. Myriad Genetics, Inc., ___ U.S. ___, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013)). Accordingly, "a new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc
Although those examples match the Supreme Court's old description of the exceptions as "a fundamental truth; an original cause; [or] a motive," LeRoy v. Tatham, 55 U.S. 156, 175, 14 How. 156, 14 L.Ed. 367 (1852), claims which are not so purely abstract have also been invalidated under § 101. For example, in Bilski v. Kappos the Court found a claim directed to "the basic concept of hedging, or protecting against risk" to be unpatentable. 561 U.S. 593, 130 S.Ct. 3218, 3231, 177 L.Ed.2d 792 (2010). In Bilski, the Court looked past the text of the claims to the underlying concept, and viewing the claimed invention as manifesting no more than an abstract idea declared the claims patent ineligible.
Decided on June 19, 2014,
At step one, a court must evaluate the claims "[o]n their face" to determine to which "concept" the claims are "drawn." Id. at 2356 ("On their face, the claims before us are drawn to the concept of intermediated settlement."); Bilski, 130 S.Ct. at 3229 (finding claims drawn to "both the concept of hedging risk and the application of that concept to energy markets" to be patent ineligible).
At step two, a court "search[es] for an inventive concept—i.e., an element or combination of elements that is 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 quotation marks omitted). In Alice, the Court concluded that the claimed invention was directed to an abstract idea implemented on a generic computer, and that computer implementation was not "sufficient to transform the claimed abstract idea into a patent-eligible application." Id. at 2357 (internal quotation marks omitted). For an abstract idea involving a computer to be patent-eligible, "the claim ha[s] to supply a `new and useful' application of the idea." Id. (quoting Gottschalk v. Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972)). Accordingly, "the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent eligible invention." Id. at 2358. At step two, the Supreme Court looked at the invention as described by the claims, rather than the further detail given in the specification. See id. at 2359.
This framework requires considering what constitutes an abstract idea and what can raise an abstract idea to the level of a patent-eligible application. The Supreme Court explicitly refused to "delimit the precise contours of the `abstract ideas' category." Id. at 2357. Although the Court was clear that "appending conventional steps, specified at a high level of generality" or reciting the use of a generic computer was not sufficient to make an idea patent eligible, id., neither did the Court elucidate any necessary elements for eligibility. See id. at 2358. The Court described Diamond v. Diehr, 450 U.S. 175, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) as succeeding at step two because the claim "improved an existing technological process," id., and implied that if the claims "improve[d] the function of the computer itself" then they would be patentable. Id. at 2359. Indeed, one district judge observed that since Alice, the "two step test"
Application of the two-part test can be guided by the rationale underlying the doctrine that abstract ideas are not patentable. The § 101 exceptions prevent a patentee from preempting further research, which the Court has explained as a concern because "[l]aws of nature, natural phenomena, and abstract ideas are the basic tools of scientific and technological work ... Monopolization 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." Alice, 134 S.Ct. at 2354 (internal quotation marks omitted).
The preemption concern must also be considered in light of the field to which the patent is directed. If the claimed abstract idea "has no substantial practical application except in connection" with the particular field claimed, then allowing a claim to that idea, even if limited to a particular field, "would wholly pre-empt" the idea and "in practical effect would be a patent on the [idea] itself." Gottschalk v. Benson, 409 U.S. 63, 71-72, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972). In other words, even if an idea is only useful in one particular field, "limiting" a patent claim to that particular field is not enough to transform the idea into something patent-eligible because the idea would only work in that field anyway. In Gottschalk, for example, the claim was to a method, in a digital computer, of converting a decimal representation of a number to a binary representation. Id. at 65-66, 93 S.Ct. 253. Because that formula "has no substantial practical application except in connection with a digital computer, [allowing the claim] would wholly preempt the mathematical formula and in practical effect would be a patent on the algorithm itself." Id. at 71-72, 93 S.Ct. 253.
Courts must balance concerns about preemption with the reality that, at some level, all inventions use abstract ideas, laws of nature, and natural phenomena. Alice, 134 S.Ct. at 2354. That a claim involves an abstract concept is not enough to render the claim invalid; the claim must also preempt research or invention. The preempted area does not need to be broad. "[T]he underlying functional concern is a relative one: how much future innovation is foreclosed relative to the contribution of the inventor. A patent upon a narrow law of nature may not inhibit future research as seriously as would a patent upon Einstein's law of relativity, but the creative value of the discovery is also considerably smaller." Mayo Collab. Servs. v. Prometheus Labs. Inc., ___ U.S. ___, 132 S.Ct. 1289, 1303, 182 L.Ed.2d 321 (2012) (citation omitted). Accordingly, in applying the § 101 exceptions, a court must distinguish patents that claim only ideas from those which claim ideas as part of something more. Alice, 134 S.Ct. at 2354; Digitech Image Techs., LLC v. Electronics for Imaging, Inc., 758 F.3d 1344, 1350 (Fed.Cir. 2014) ("A claim may be eligible if it includes additional inventive features such that the claim scope does not solely capture the abstract idea.").
A claim directed to "a method of organizing human activity" seems presumptively patent ineligible. Alice, 134 S.Ct. at
At the onset, Amdocs argues that this Court should deny defendants' motion because it is procedurally barred and contrary to the "law of the case." Opp'n at 7-10. In particular, Amdocs argues that Openet already presented summary judgment argument on the § 101 issue, but lost the motion after the Court found that there were genuine issues of material fact precluding summary judgment of invalidity. Id. at 10. Openet responds that the Court may consider validity because the Court never concluded that Amdocs's patents were drawn to eligible subject matter. Moreover, a court may revisit an interlocutory ruling (such as denial of summary judgment) at any time, and, in any event, Alice represents a change in substantive law as applied to this case. Reply at 11-13.
Openet has the better of this argument. Whether Amdocs's patents were drawn to eligible subject matter was not resolved by the Court, and even if the issue had been addressed Alice represents a change, or a significant clarification, of the law: "Alice... categorically establish[ed] a clear rule that had been previously subject to debate: `mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.'" Eclipse IP LLC v. McKinley Equipment Corp., No, SACV 14-742-GW, 2014 WL 4407592, at *3 (C.D.Cal. Sept. 4, 2014).
Amdocs alleges infringement of claims 1, 4, 7, 13, and 17 of the '065 Patent. Opp'n at 15. Claims 1, 7, and 13 are independent, claiming a computer program product, a method, and a system, respectively. See '065 Patent Col. 16. Claim 1 is representative:
Openet argues that claim 1 of the '065 Patent is directed to the abstract idea of "correlating and enhancing network usage data," which is ineligible subject matter because it merely creates and merges two data sets, similar to the claim at issue in Alice. Openet's Br. at 7-8. Openet further argues that the claim is similar to the claims invalidated by the Federal Circuit in Digitech Image Techs., LLC v. Electronics for Imaging, Inc. Id. at 8 (citing Digitech, 758 F.3d 1344, 1350 (Fed.Cir. 2014)). Finally, Openet argues that the elements recited by claim 1 of the '065 Patent are merely conventional, and do not improve the functioning of the computer or effect an improvement in any technology or field. Openet's Br. at 9. Amdocs responds that the claim does not recite a fundamental economic practice or method of organizing human activity, and so is not similar to the claims found ineligible in Bilski and invalidated in Alice. Opp'n at 15. Further, Amdocs argues that the claim "is directed to a specific improvement to packet-based network billing technology" and therefore, to the extent that the claims recite an abstract idea, they recite sufficiently "more" to make the claim patent-eligible. Id. at 16.
To determine whether the claim is patent eligible, the Court employs the two-step analysis articulated in Alice. Step one requires determining whether the claim is directed to an abstract idea. On its face and looking past the mere claim language, claim 1 focuses on the concept of correlating two network accounting records to enhance the first record. As the claim satisfies step one by being drawn to an abstract idea, the court must turn to step two to determine whether the claim adds enough to the abstract idea to make the claim patent eligible. Here, claim 1 does not add to the idea of correlating two network accounting records. Indeed, it is difficult to conceive of broader terms with which the idea of correlating two records could be described. Claim 1 does not limit the correlation to any specific hardware, nor give any detail regarding how the records are "correlated" or "enhanced." Accordingly, the claim amounts to "nothing significantly more than an instruction to apply the abstract idea" of correlating two network accounting records "using some unspecified, generic" computer hardware. See Alice, 134 S.Ct. at 2360 (internal quotation marks omitted). Accordingly, claim 1 is invalid under 35 U.S.C. § 101.
This conclusion is buttressed by decisions from other courts which have held similar claims invalid. For example, the claim invalidated in Alice involved correlating a shadow credit record and a shadow debit record, and provided much more detail than does claim 1 of the '065 Patent. Id. at 2352 n. 2. Similarly, the claim at issue in Digitech involved generating a device profile (i.e., an enhanced record) from two other sets of data. 758 F.3d at 1350-51. In that case, the Federal Circuit found that "Without additional limitations, a process that employs mathematical algorithms to manipulate existing information to generate additional information is not patent eligible." Id. at 1351. In Alice, the Supreme Court found that "electronic recordkeeping" was "one of the most basic functions of a computer" and, therefore, the claim was directed to an abstract idea because the claim simply required a "generic
Claim 1 also implicates the preemption concerns that the Supreme Court indicated animate the § 101 eligibility exceptions. Because claim 1 "has no substantial practical application except in connection" with computer networks, finding claim 1 patent-eligible "would wholly preempt" essentially all research or development involving correlation of two accounting records over a network, and therefore "in practical effect would be a patent on the [idea] itself." See Gottschalk v. Benson, 409 U.S. 63, 71-72, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972). Claim 1 does not "integrate the [abstract idea] into something more," and therefore is not patent eligible. Alice, 134 S.Ct. at 2355.
Amdocs's arguments that the claim is patent eligible fail. First, Amdocs argues that that the claim is not directed to a fundamental economic practice, as in Bilski, or a method of organizing human activity, as in Alice. Opp'n at 15. Accordingly, Amdocs argues that because the claim is "far from a `fundamental truth,'" it is patent eligible. Id. In Alice, however, the Supreme Court specifically found that abstract ideas were not limited to "preexisting, fundamental truth[s]." Alice, 134 S.Ct. at 2356.
Amdocs also argues that all asserted claims are patentable because the claims could not be performed by a human being alone. Opp'n at 12 (citing Helios Software, LLC v. SpectorSoft Corp., No. 12-081-LPS, 2014 WL 4796111, at *17 (D.Del. Sept. 18, 2014)). Alice focuses the inquiry, however, on whether the claim is directed to an abstract idea, not on whether the claim could be performed by a human. See Alice, 134 S.Ct. at 2359-60. Although performance by a human may be sufficient to find that an idea is abstract, it is not necessary. See id.; Digitech, 758 F.3d at 1351. Accordingly, Amdocs's argument fails.
Amdocs also argues that, despite the spate of patents invalidated under 35 U.S.C. § 101 post-Alice, "no court has invalidated patent claims ... directed to specific technology similar to the claims of the asserted patents." Opp'n at 11. That argument also fails. Courts have not only invalidated patents for business methods or methods of organizing human activity since Alice, but in McRO, Inc. v. Activision Pub., Inc. Judge Wu invalidated a patent to a novel method for animating lip synchronization and facial expressions of three-dimensional characters, even though he recognized that the patentee invented an innovative process. No. CV 14-336-GW, 2014 WL 4759953, at *11 (C.D.Cal. Sept. 22, 2014). The Supreme Court spoke broadly in Alice, and did not restrict its holding to any particular field or fields.
Finally, Amdocs presents a number of arguments regarding unclaimed aspects of how the invention operates. For example, Amdocs quotes this Court's previous memorandum opinion, which stated that "[t]he patented system collects ... raw usage data records from their diffuse locations throughout the network and through appropriate filtering, aggregation, correlation, and enhancement transforms them into a format suitable for accounting." Opp'n at 15-16 (quoting January 22, 2013 Memorandum Opinion [Dkt. No. 259] at 6). As those features are unclaimed, they cannot affect patent eligibility.
Accordingly, claim 1 of the '065 patent, as well as claims 7 and 13, are directed to ineligible subject matter and are therefore invalid. Dependent claim 4 only adds that "the accounting information is in the form of a second network accounting record," and dependent claim 17 only adds that the system further includes "a module coupled to the plurality of data collectors, the module
Amdocs alleges infringement of claims 16, 17, and 19 of the '510 Patent. Opp'n at 15. Claims 16 is independent, claiming a computer program product. See '510 Patent Col. 17. Claim 16 provides:
Openet argues that claim 16 of the '510 Patent is directed to "[t]he abstract idea of... creation of a database of network usage information that can be queried to retrieve information on the collection of network usage information. Reports can be generated based on the queries and alerts can be set." Openet's Br. at 11. Openet argues that because the prior art included the use of batch processing, the computer implementation does not provide the inventive concept necessary at step two. Id. Further, Openet argues that the claim is drawn to a method of organizing human activity, as it could be performed by a human being with a file cabinet. See id. at 12. Amdocs responds that because the data is collected and processed by a physical device, the claims cover enhancements of network accounting records in a packet-based network, and the enhancement must occur close to the source of the usage information, the tasks cannot be performed by a human and therefore the claim is patent eligible. Opp'n at 19.
Claim 16 of the '510 Patent is not as manifestly broad as claim 1 of the '065 Patent. Accordingly, at step one of the Alice analysis, the concept at issue must be framed carefully, mindful of preemption while recognizing that at some level all patent claims involve an abstract idea or
Because asserted dependent claims 17 and 19 do not "transform" claim 16 to a patent-eligible application of an abstract idea (nor does Amdocs argue that they do, see Opp'n at 16-19), those claims are invalid for the same reason.
Amdocs alleges infringement of claims 1, 2, 7, 8, and 19 of the '797 Patent. Claims 1, 7, and 19 are independent, and claim 1 is representative:
Openet argues that the claims of the '797 Patent are directed to the abstract idea of "creation of a single record for accounting purposes from information collected from two of the specified services." Openet's Br. at 19. Amdocs repeats its argument that the claims are not directed to a "fundamental truth." Opp'n at 20. Amdocs also argues that the '797 Patent specifically states how data is collected—namely, "utilizing an enhancement procedure defined
Under step one of the Alice analysis, the abstract idea in this claim is to generate a single record reflecting multiple services. At step two, the claim does not appear to add more than conventional computer functions operating in a conventional manner. For example, a generic computer identifies services, collects data, and generates a single record. Again, this amounts to "electronic recordkeeping ... one of the most basic functions of a computer." Alice, 134 S.Ct. at 2359. The data is collected using an enhancement procedure via a graphical user interface (GUI), which is the conventional method for a user to interact with a computer and computer data. The listed "services" are merely the conventional methods of computer network communication. Accordingly, the claim is directed to an abstract idea performed using purely conventional computer operations, and is, therefore, invalid under § 101.
As they are directed to essentially the same invention, claims 7 and 19 are also directed to ineligible subject matter. Dependent claims 2 and 8 do not add sufficiently "more" to render them patent eligible, and Amdocs does not argue that they do. See Opp'n at 26-27. Therefore, the asserted claims of the `797 Patent are also invalid.
Amdocs alleges infringement of claim 1, 2, 7, 8, and 13. Claims 1 and 13 are independent, and claim 1 is representative:
Openet argues that the claims of the '984 Patent are directed to the abstract idea of "the creation of a `queryable' database of network usage information." Openet's Br. at 14. Openet argues that the claims of the '984 Patent "add nothing more than generic and conventional computer hardware," and that "[t]he claim recites a litany of well-known `network
In light of Amdocs's grouping of the asserted claims of the '984 Patent with the asserted claims of the '510 Patent, see Opp'n at 16-19 and 24-26, and admission at oral argument that such grouping is appropriate, Transcript of Oct. 24, 2014 Oral Argument [Dkt. No. 300] at 5-6, the asserted claims of the '984 Patent are invalid for the reasons supporting invalidity of the `510 Patent.
Even taken separately, the claims of the '984 Patent are invalid as directed to abstract ideas. Starting again at step one of Alice, the abstract idea at issue in this claim is reporting on the collection of network usage information from a plurality of network devices. At step two, the Court must determine whether the claims add sufficiently more to the abstract idea to render it patent eligible. At step (a), some device—presumably a generic computer —collects data communication usage information from a number of conventional devices for network communication.
As it is directed to essentially the same invention, claim 13 is also directed to ineligible subject matter. Dependent claims 2, 7, and 8 do not add sufficiently "more" to render them patent eligible, and Amdocs does not argue that they do. See Opp'n at 26-27. Therefore, the asserted claims of the '984 Patent are also invalid.
Amdocs often argues that it developed a new process that solved a problem existing in the art. See, e.g., Opp'n at 1, 6-7. That argument misses the point. The concern of § 101 is not novelty, but preemption. In Alice, the Supreme Court articulated concerns that claims to abstract ideas would preempt the "building blocks" of research—in essence, that people who merely had the idea of how to solve a problem, but did not actually know how to solve the problem, would prevent others from performing research and achieving actual solutions. See 134 S.Ct. at 2354. A person may have invented an entirely new and useful advance, but if the patent claims sweep too broadly, or only claim the idea that was achieved rather than implementation of the idea, § 101 directs that the patent is invalid. Amdocs's asserted claims recite such conventional operation, in such a general way, that even if the inventor had developed an actual working system, the patent claims could foreclose fields of research beyond the actual invention. Accordingly, all asserted claims are invalid as patent-ineligible.
For the reasons stated above, Defendants' Motion for Judgment on the Pleadings [Dkt. No. 293] will be GRANTED by an appropriate Order to be issued with this Memorandum Opinion.