OPINION
These are a patent infringement, cases filed by Intellectual Ventures I LLC and Intellectual Ventures II LLC (“Intellectual Ventures,” “IV,” or “Plaintiffs”) against three separate groups of Defendants: the Erie Defendants,
The Erie and Highmark Defendants have moved to dismiss for lack of subject matter jurisdiction as to one patent (the '581 Patent), Dkt. No. 14-220, ECF No. 74, for failure to state a claim as to two patents (the '581 Patent and the '434 Patent) based' on allegations that the patents are directed to patent ineligible subject
The Old Republic Defendants have moved to dismiss all claims against them, alleging that three patents (the '581 Patent, the '434 Patent, and the '002 Patent) are directed to patent-ineligible subject matter, and have requested that the Court take judicial notice of certain documents submitted in support of their Motion. Dkt. No. 14-1130, ECF Nos. 30, 33.
After reviewing the papers filed by all parties and the relevant law, and after extensive, day-long oral argument on April 14, 2015, the Court will grant the Motions to Dismiss for the reasons that follow.
I. BACKGROUND
The patents at issue in these suits are: (a) U.S. Patent No. 6,519,581 B1 (“'581 Patent”), entitled “Collection of Information Regarding a Device or a User of a Device Across a Communication Link,” (b) U.S. Patent No. 6,510,434 B1 (“'434 Patent”), entitled “System and Method for Retrieving Information From a Database Using an Index of XML Tags and Metaf-iles,” (c) U.S. Patent No. 6,546,002 B1 (“'002 Patent”), entitled “System and Method for Implementing an Intelligent and Mobile Menu-Interface Agent,” and (d) U.S. Patent No. 7,757,298 (“'298 Patent”), entitled “Method and Apparatus for Identifying and Characterizing Errant Electronic Files.”
The Erie and Highmark Defendants have moved to dismiss infringement claims relating to the '581 Patent on the grounds that this Court lacks subject matter jurisdiction over Plaintiffs’ infringement claims as to that Patent because Intellectual Ventures does not own the Patent and therefore lacks standing to assert infringement of it.
Whether this Court has subject matter jurisdiction over the instant action as to the '581 Patent is determined by the law of the Third Circuit because it is a procedural question “not unique to patent law.” Univ. of Utah v. Max-Planck-Gesellschaft Zur Forderung Der Wissenschaften E.V.,
The Third Circuit would categorize the challenge here as a factual one
In the patent context, plaintiffs suing for infringement bear “the burden to show necessary ownership rights to support standing to sue.” Abbott Point of Care Inc. v. Epocal, Inc.,
A. The Contentions of The Parties
The Patent Assignment (“Assignment Agreement”) at issue here contains a list of seventeen (17) enumerated “patents and patent applications” owned by AllAdvan-táge.eom
Assignor [AJIAdvantage], does hereby assign unto the Assignee [Alset, Inc.], all right, including common law rights, title and interest in the United States of America, Canada, the European Union, and all other countries and jurisdictions of the world in and to said patents together with the goodwill of the business symbolized by said patents and applications and registrations thereof.
Dkt. No. 14-220, ECF No. 76-1, at 5-6 (emphasis added).
The Erie and Highmark Defendants have moved to dismiss all claims relating to the '581 patent, arguing that the Court lacks subject matter jurisdiction because TV cannot carry its burden of showing ownership, and thus has no standing to sue.
IV counters by arguing that in the first place, a presumption of validity applies to the Assignment Agreement because it was recorded with the U.S. Patent and Trademark Office (“USPTO”), and Defendants have not met their burden of disproving ownership. Dkt. No. 14-220, ECF No. 81, at 8, 9. Moreover, Plaintiffs contend that the involved Assignment Agreement by its terms is sufficient to show a transfer of title to the '581 Patent’s application (the '858 application) for either of two (2) reasons. First, because the '581 Patent’s parent (the '983 Patent), was specifically listed in the Assignment Agreement, and because the '858 application was a direct continuation of that patent, the future patent right in the '581 Patent was contained within the '983 Patent, thus automatically
Furthermore, Plaintiffs argue, the Court is required to at least provisionally accept extrinsic evidence to determine if the contract is susceptible to either party’s interpretation, id. at 16, and the extrinsic evidence illustrates the parties’ intent to transfer. The extrinsic evidence IV offers to prove intent to transfer the '581 Patent’s application through the Assignment Agreement from AUAdvantage to Alset is: (1) a Declaration of Paul Hurley, co-founder of the Assignee, Alset, Inc.; (2) an excerpt from the deposition transcript of Lisa Benado, the attorney who prosecuted the '581 Patent’s application; and (3) documents showing actions taken by the parties to the Assignment Agreement after it was executed.
Defendants reply by arguing that the presumption of validity cited by Plaintiffs is purely ministerial and has no effect on the Court’s interpretation of what rights were transferred through the Assignment Agreement. Dkt. No. 14-220, ECF No. 84, at 7-8. As a result, they claim that Plaintiffs are simply wrong when they argue that Defendants must disprove intent to transfer ownership — rather, IV retains the burden of demonstrating ownership of the Patent to sustain jurisdiction of this Court. Id. at 8. Defendants further argue that there is no rule of law that automatically transfers related patent applications with their parent patents, and that the cases Plaintiffs cite in that regard are inapposite — in contrast, pending applications must be transferred by a written instrument in the same way as are patents.
B. The Rules of The Decisional Road
As an initial matter, recording an Assignment Agreement which lists multiple patents and applications with the USP-TO does not create a presumption that a patent omitted from that express list of assigned property was in fact transferred. “While recording [a patent assignment with the USPTO] creates a presumption in [plaintiffs] favor if the validity of the Agreement is challenged, it has no bearing on the question of what substantive rights
The parties agree that whether an assignment of rights dealing with the ' '581 Patent application occurred is a matter of California contract law. Dkt. No. 14-220, ECF Nos. 75, at 18-19; 81, at 8-9. However, their views diverge substantially on the question of what California law requires the Court to now do.
California positive law requires that “[t]he language of a contract is to govern its interpretation, if the language is clear and explicit, and does not involve an absurdity,” Cal. Civ.Code § 1638 (2015), and states that “[w]hen a contract is reduced to writing, the intention of the parties is to be ascertained from the writing alone, if possible,” id. § 1639. These statements read like the rules of contract interpretation in many other states by which courts preliminarily decide whether a contract is clear on its face and will accept parol (extrinsic) evidence if the contract’s terms are ambiguous. See Murphy v. Duquesne Univ. of The Holy Ghost,
However, California law adds a bit more spice to the contract interpretation recipe: while the familiar rule for many courts is that extrinsic evidence is wholly secondary, and should not be considered absent an ambiguity in the contract’s terms, California law seemingly requires courts to consider extrinsic evidence at least a little bit in the first instance, along with the contract text at issue, to determine whether the contract is open to ambiguity. See Pac. Gas & Elec. Co. v. G.W. Thomas Drayage & Rigging Co.,
First the court provisionally receives (without actually admitting) all credible evidence concerning the parties’ intentions to determine “ambiguity,” i.e., whether the language is “reasonably susceptible” to the interpretation urged by a party. If in light of the extrinsic evidence the court decides the language is “reasonably susceptible” to the interpretation urged, the extrinsic evidence is then admitted to aid in the second step- — interpreting the contract.
Wolf,
Despite these broad statements, the extrinsic evidence offered must be “relevant to prove a meaning to which the language of the instrument is reasonably susceptible.” Pacific Gas,
C. Interpretation of The Assignment Agreement
In the context of this case, the Court concludes that the Assignment Agreement is not reasonably susceptible to multiple interpretations, with or without the benefit of extrinsic evidence. The Assignment Agreement clearly and unambiguously points to the conclusion that the '581 Patent (or, as is more relevant, its application at the time of transfer) was not among the patents and applications transferred, and the proffered extrinsic evidence shows a bald effort to add the Patent to a list from which it is excluded. The Assignment Agreement is simply not “reasonably susceptible” to. that alternate interpretation. Curry,
With regard to Plaintiffs’ first proposed construction of the Assignment, that “said patents” does not actually mean the patents and applications expressly listed but instead means the patents and applications listed in addition to their continuation applications, the Court concludes that saying it is so does not make it so, and the Court simply cannot read that additional language into the Assignment Agreement
The Assignment Agreement here assigns the patents listed. It also assigns many patent applications, also specifically listed. Continuation or not, the Court cannot assume that a patent application meant to be conveyed would not be explicitly listed when fifteen (15) others are expressly included on the list. While the Court recognizes IV’s argument, supported by Attorney Benado’s deposition testimony that “[t]here’s no particular set of assignment language that is universal so there’s lots of ways of conveying title,” Dkt. No. 14-220, ECF Nos. 81, at 19; 81-3, at 8; see also Minco, Inc. v. Combustion Engineering, Inc.,
1. An “Automatic Transfer” Rule?
IV does in fact contend that there is an áutomatie rule of transfer whereby continuation applications of existing patents move with their parent patents by operation of law when an assignment is executed.
There simply is no legal rule mandating that every time a parent patent is assigned, that patent’s continuation application automatically follows. Rather, that “automatic transfer” would have to be based on the agreement of the parties, and generally includes language that transfers all future rights in an invention or an idea, rather than just a patent itself.
That opinion was issued after the Federal Circuit remanded the case in the first instance. In the Federal Circuit’s initial (unpublished) opinion, that court wrote:
[T]he January 1, 1996 assignment only assigns the invention claimed in the issued '410 patent, and the pending counterpart foreign applications. It lists no continuing or related domestic applications based on the '410 patent. At oral argument, Bellehumeur’s counsel conceded that the '161 patent was not expressly mentioned in the January 1, 1996 assignment. Because patent rights must be transferred by written instrument, 35 U.S.C. § 261 (2000), any alleged intention by the named inventors of the '410 patent to transfer rights to the '161 patent is ineffective and is insufficient to establish Bellehumeur’s standing.
Bellehumeur v. Bonnett,
2. Does The Assignment of Goodwill Save The Day?
TV’s second argument, that the phrase “goodwill of the business symbolized by said patents and applications and registrations thereof’ encompasses the '581 Patent’s application, is similarly unavailing. For this proposed interpretation to be potentially reasonable, the '581 Patent’s application would need to be included in the definition of “goodwill.” That the Agreement states the “goodwill of the business” is “symbolized by said patents ...” is unhelpful to IV because it follows the same legal fallacy as the previous argument: if only the “said,” or listed, patents are transferred, and there is no automatic rule of law that transfers child patent applications along with their parent patents, then the “goodwill of the business symbolized by said patents” refers to the goodwill associated with those said patents only and not unenumerated others. The remaining part of the phrase, “... said patents and applications and registrations thereof’ again only references the applications and registrations of the listed (“said”) patents.
With regard to Plaintiffs’ argument that the '581 Patent’s application is necessarily part of the “goodwill” of its parent patent (the '983 Patent) because it is the same intellectual property underlying the parent patent whose goodwill is being transferred, Dkt. No. 14-220, ECF No. 81, at 13-14, the Court has not discerned, nor has IV pointed to, any legal authority which treats pending patent applications synonymously with a general notion of “goodwill.” See id. at 13-14 (asserting that the '581 Patent’s application is “necessarily included” in the definition of goodwill without citation to authority). Instead, TV only argues that the “goodwill” term is similar enough to language conveying all interest in an “invention,” which other courts have interpreted as conveying future rights. Id. at 14.
While a patent application is a form of intangible property, as is goodwill, the argument that the two are the same thing simply does not comport with a reasonable understanding of the term. See generally Weston Anson, The Intangible Assets Handbook 7 (ABA Section of Business Law 2007) (explaining the differences between finite-lived intangible assets like patents and copyrights and those that are indefinite-lived, such as goodwill and many trademarks). While recognizing that this case does not arise in the tax context, it is also notable that in tax matters, patent rights are treated as distinct from “goodwill.” Compare 26 U.S.C. § 197(d)(1)(A) with 26 U.S.C. § 197(d)(1)(C)(iii); see also id. § 167(g) (6) (distinguishing depreciation deduction method allowed when dealing with “patents” rather than other intangibles); Newark Morning Ledger Co. v. United States,
Similar interpretive concepts underlie the principles that courts are not to apply general provisions when a matter is more specifically dealt with in the same enactment, Fourco Glass Co. v. Transmirra Products Corp.,
3. The A voidance of Illusory Contracts
IV also argues that the Court should not “ ‘read [the Assignment Agreement] to render a provision or'term meaningless or illusory.’ ” Dkt. No. 14-220, ECF No. 81, at 13 (quoting Walker Digital, LLC v. Expedia, Inc., 2014 U.S.App. LEXIS 24712, at *10 (Fed.Cir. Dec. 30, 2014)). The Court agrees, and therefore concludes that it cannot read the Agreement in such a way that would make “said patents” and their “goodwill” essentially interchangeable terms (since according to IV, “goodwill” includes the intellectual property itself), thus rendering one or the other of them meaningless. That Plaintiffs argue the '581 Patent’s application could fit within the categories of both “said patents” and “goodwill” proves the point.
Appellants urge us to interpret the plain language in their release agreements discharging respondents from “any and all claims, demands, actions and causes of actions” to mean “all claims except claims for bad faith, unfair practices or violations of the Insurance Code.” Under the circumstances presented here, we decline to rewrite appellants’ release agreements to include a concept they failed to enunciate at the time they accepted the terms of the settlement with their insurer.
Edwards v. Comstock Ins. Co.,
4. Consideration of a “California Quantity” of Extrinsic Evidence
Neither the terms of the Assignment Agreement, nor the extrinsic evidence offered by IV, allow the Court to accept Plaintiffs’ proposed interpretation of the Assignment Agreement. That proposal essentially boils down to this: (1) Alset meant to negotiate an agreement that included the '581 Patent’s application; (2)(a) Alset forgot, when negotiating an agreement that explicitly lists every patent and application being conveyed, to include any reference to the '581 Patent’s application, or alternatively, or (2)(b) Alset did not believe it needed to list that application, because it mistakenly believed that transfer of the parent patent would effect a transfer of the continuation child application; and as a result, (3) this Court should somehow read the '581 Patent’s application into the Assignment Agreement because that was the subjective intent of one party to the Agreement.
Offered in support of those premises is (i) the declaration of Alset’s co-founder saying he meant to own the '581 Patent’s application by virtue of this Agreement. But as the moving Defendants point out, that Declaration does not aid the Court in understanding All Advantage’s intent as the assignor of rights. Dkt. No. 14-220, ECF No. 84, at 16. And even if it did, the language in the Agreement is not “reasonably susceptible” to that interpretation. Pacific Gas,
Lastly, IV offers (iii) evidence of actions taken after the parties executed the Assignment Agreement: (1) a Revocation of Prior Powers of Attorney, Power of Attorney by Applicant and Notification of Change of Fee and Correspondence Address filed in the prosecution of Patent Application No. 09/844/858 [the '581 Patent’s application]; (2) a copy of the '581 Patent, which issued on February 11, 2003; (3) a copy of a Terminal Disclaimer filed in
Notwithstanding this, however, the Court simply cannot conclude that the Assignment Agreement is reasonably susceptible to an interpretation, by its terms, that it conveyed ownership of the '581 Patent’s application. Had Plaintiffs provided evidence of AllAdvantage’s intent aside from its decision to do nothing to assert a further ownership interest (which is admittedly, not nothing), this might be a closer call. But even under California’s wide-ranging “at least take a look at the parol evidence” rule, the evidence offered must be relevant to a reasonable interpretation of the plain terms of the Agreement — it cannot be only relevant to a request to insert further language into the written document. Even conditionally accepting and reviewing the extrinsic evidence offered by Plaintiffs, the Court concludes that it does not provide a reasonable alternative interpretation to the plain terms of the contract. Thus, the contract cannot be deemed ambiguous, and the extrinsic evidence is not admissible to aid in further interpretation.
Additionally, some extrinsic evidence more firmly supports Defendants’ position than Plaintiffs’. For one thing, Mr. Hurley’s Declaration, while stating he intended to obtain by this acquisition all assets he held in a different company, also states that he negotiated a previous assignment in the '581 Patent’s chain of title. Dkt. No. 14-220, ECF No. 81-2, at ¶4. That previous assignment, negotiated by Mr. Hurley, specifically lists as part of the assets transferred, both the '983 Patent (’581 Patent’s parent) and the '858 application (’581 Patent’s application). Dkt. No. 14-220, ECF No. 76-4, at 8. Mr. Hurley did not seem to believe that transfers of parent patents automatically conveyed their child applications at that prior time, so why now? Moreover, Defendants point to the fact that the Assignment Agreement “expressly transferred three family applications of the '983 patent by name and patent number,” but did not include the '581 Patent’s application.
After appropriately considering the extrinsic evidence within the perhaps unique context of California law, along with the language of the Assignment Agreement, the Court concludes that the Agreement is not reasonably susceptible to any of IV’s proposed interpretations. The relevant Assignment Agreement does not transfer the '581 Patent or its application. Thus, there was a break in the chain of ownership of the '581 Patent. This means that IV lacks standing to assert patent infringement claims based on it and the Court
III. PATENT-INELIGIBLE SUBJECT MATTER CHALLENGE
Some iteration of this part of the case is being litigated daily (if not hourly) in federal courts across the country.
Parties asserting infringement, hoping to save their cases and pursue their infringement contentions,
All of these eligibility arguments dejour are presented in this case, at least to some extent, and the Court will address them as appropriate here. Because many of the arguments
A. Legal Standard
Federal Rule of Civil Procedure 12(b)(6) provides for dismissal when a complaint fails to allege facts “sufficient to show that the plaintiff has a ‘plausible- claim for relief.’ ” Fowler v. UPMC Shadyside,
B. Patent Eligibility Pursuant to 35 U.S.C. § 101
35 U.S.C. § 101 authorizes the grant of a patent to anyone who “invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof....” One exception to these general categories has been the focus of a great deal of litigation. That exception sounds simple: “Maws of nature, natural phenomena, and abstract ideas are not patentable.” Alice,
The Supreme Court has instructed the lower courts to apply the following general framework:
(1) Are the claims at issue “directed to a patent-ineligible concept” a law of nature, natural phenomenon, or abstract idea)? (“Alice Step One”)
If no, the claims are patent eligible. If yes, then courts are to ask:
(2) “[C]onsider[ing] the elements of each claim both individually and as an ordered combination,” are there “additional elements” which present an “inventive concept” that “transform the nature of the claim into a patent-eligible application” by demonstrating it is “significantly more than a patent upon the ineligible concept itself ” ? (“Alice Step Two”)
Alice,
Abstract ideas, a concept relevant to the first step, may be “preexisting, fundamental truth[s]” such as mathematical equations, and also encompass “method[s] of organizing human activity” or “longstanding commercial practice^]” like intermedi-ated settlement or risk hedging. Alice,
The second step requires more than stating the abstract idea and adding the words “apply it,” Alice,
C. Relevant Supreme Court Precedent Through Alice
In order to assess the patent eligibility of the patents at issue here and to address the parties’ enthusiastic arguments in those regards, it is necessary to place them in the context of the evolved legal principles applicable to the task.
In Gottschalk v. Benson, the Supreme Court held that a patent claiming a mathematical formula,
If one of the steps of a process be that a certain substance is to be reduced to a powder, it may not be at all material what instrument or machinery is used to effect that object, whether a hammer, a pestle and mortar, or a mill. Either may be pointed out; but if the patent is not confined to that particular tool or machine, the use of the others would be an infringement, the general process being the same.
Id. at 70,
Similarly, in Parker v. Flook,
The Court contrasted the claims in Benson and Flook with those at issue in Diamond v. Diehr to there hold that a “process for curing synthetic rubber which includes in several of its steps the use of a mathematical formula and a programmed digital computer is patentable subject matter.”
Unlike the claims at issue in Benson and Flook, which essentially purported to patent mathematical formulas themselves, the Court concluded that while the process in Diehr “admittedly employs a well-known mathematical equation, [it] do[es] not seek to pre-empt the use of that equation.” Id. at 187,
The Supreme Court’s consideration of patent eligibility issues next came in Bilski v. Kappos,
Then, in Mayo Collaborative Servs. v. Prometheus Labs., Inc., — U.S. —,
Court unanimously held that process claims drawn to aiding doctors in determining the adequate dosage levels of certain drugs on autoimmune disease patients by applying natural laws
Finally, in Alice, a unanimous Supreme Court applied its holdings in these cases and held patents which “disclose a computer-implemented scheme for mitigating ‘settlement risk’ ” ineligible for patent protection.
law.” Id. Since “[a]t some level, all inventions embody, use, reflect, rest upon, or apply” these excluded categories of subject matter, courts assessing claims against § 101 must “distinguish between patents that claim the building blocks of human ingenuity and those that integrate the building blocks into something more, thereby transforming them into a patent-eligible invention.” Id. (internal quotation marks, citations, and alterations omitted). The Alice Court concluded that (1) the claims at issue there were drawn to an abstract idea, intermediated settlement, id. at 2355, and (2) the claims included no “inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application,” id. at 2357 (internal quotation marks and citations omitted). With regard to its conclusion at Alice Step One, the Alice Court analogized the idea of intermediated settlement to patent claims struck down in previous cases, reiterating that mathematical formulas (like Benson’s “algorithm for converting binary-coded decimal numerals into pure binary form” and Flook’s “mathematical formula for computing ‘alarm limits’ in a catalytic conversion process”) and “fundamental economic, practicefs]” (such as Bilski’s “basic
At Alice Step Two, the Alice Court concluded that the claims recited nothing more than instructions to “implement the abstract idea of intermediated settlement on a generic computer” because the steps directing a computer to “create electronic records, track multiple transactions, and issue simultaneous instructions” are “purely conventional” tasks performed by computers. Id. at 2359. Recognizing that the Alice Step Two inquiry incorporates the Court’s pre-emption concerns, the Court reasoned that using a computer to “obtain data, adjust account balances, and issue automated instructions” did not change the analysis, as those functions are all “well-understood, routine, conventional activities previously known to the industry.” Id. The Court distinguished Diehr from Benson, Flook, and Mayo, explaining that the mathematical equation in Diehr was not patented on its own, but was instead used “in a process designed to solve a technological problem in ‘conventional industry practice.’ ” Id. at 2358. The Court further counseled that neither adding a generic computer along with the words “apply it,” nor “limiting the use of an abstract idea to a particular technological environment,” will transform an abstract idea into patent-eligible subject matter, id., but claims which “purport to improve the functioning of the computer itself’ or “effect an improvement in any other technology or technical field” may withstand scrutiny. Id. at 2359.
D. The Post-Alice Legal Landscape
Shortly after the Supreme Court ruled in Alice, the Federal Circuit decided Digitech Image Techs., LLC v. Electronics for Imaging, Inc.,
In buySAFE, Inc. v. Google, Inc.,
Then, in Ultramercial, Inc. v. Hulu, LLC,
The Federal Circuit has also held ineligible four (4) patents which had been asserted against banks based on check deposit software in Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n,
Concluding that the patents were abstract at Alice Step One since they were directed to the basic concepts of “data recognition and storage,” id., the Content Extraction court turned to Alice Step Two and concluded that none of the patents’ limitations made them patent-eligible because they “merely recite the use of this existing scanning and processing technology to recognize and store data from specif-ie data fields such as amounts, addresses, and dates,” which involved nothing more than the use of generic computer components “to perform well-understood, routine, and conventional activities commonly used in industry.” Id. at 1348. Attempts to limit the abstract idea to “a particular technological environment” were held insufficient. Id. Moreover, the court found it unnecessary to review each and every claim of the patent to make its determination, reasoning that (1) the district court’s own analysis led it to conclude the representative claim sufficed because “all the claims are ‘substantially similar and linked to the same abstract idea,’ ” (2) the plaintiff never opposed the designation of specific representative claims in the court below, and (3) the plaintiff failed to identify any other claims that “purportedly contained] an inventive concept.” Id.
The singular case from the Federal Circuit to uphold patent eligibility post is DDR Holdings, LLC v. Hotels.com, L.P.,
Distinguishing Ultramercial, the DDR court explained that “the claims at issue here specify how interactions with the Internet are manipulated to yield a desired result — a result that overrides the routine and conventional sequence of events ordinarily triggered by the click of a hyperlink.” Id. at 1258. Because the claims viewed together “recite an invention that is not merely the routine or conventional use of the Internet,” and since those claims do not threaten preemption of “every application of the idea of increasing sales by making two web pages look the same,” the court held the claims patent-eligible,
The DDR dissent by Judge Mayer posited that the patents “fail to meet the demands of section 101 because they describe a goal-confusing consumers by making two web pages look alike — but disclose no new technology, or inventive concept, for achieving that goal.” Id. at 1264 (Mayer, J., dissenting) (internal quotation marks and citation omitted). Judge Mayer criticized the patents as “long on obfuscation but short on substance,” as they include no more than generic computer elements which are “long-used in e-commerce.” Constraining an abstract idea’s use to a “particular technological environment” does not necessarily transform it into patent-eligible subject matter. Id. at 1266. Lastly, his dissent focused on preemption concerns: “[t]he potential scope of DDR’s patents is staggering, arguably covering vast swaths of Internet commerce.” Id. at 1266.
In OIP Technologies, Inc. v. Amazon.com, Inc.,
In Internet Patents Corp. v. Active Network, Inc.,
Finally and most recently, the Federal Circuit upheld a district court’s determination that claims at issue were not patent eligible in Intellectual Ventures I LLC v. Capital One Bank (USA),
The Federal Circuit disagreed, explaining that “nowhere does Intellectual Ventures assert that it invented an interactive interface that manages web site content. Rather, the interactive interface limitation is a generic computer element,” specifically a “a generic web server with attendant software, tasked with providing web pages to and communicating with the user’s computer.”
The Court will now assess the pending Motions in the context of this body of authority, but first must address IV’s procedural arguments, which are common to its presentations as to each Patent.
E. Plaintiffs’ Procedural Arguments
As an initial matter, IVs arguments can be broken down into procedural and substantive categories. On the procedural end, IV asserts that the Court should not even conduct the § 101 inquiry because the case is not adequately teed up for such analysis. In addition to arguing that Defendants bear a heightened burden of proof to rebut the presumption of validity, IV also argues that (1) claim construction is necessary before the Court can resolve any issues under § 101, and (2) courts cannot rely on representative claims when conducting the § 101 analysis but must instead review each and every individual claim. Dkt. No. 14-220, ECF No. 52, at 16-20.
As to the latter argument, the Federal Circuit has held it permissible to assess
As to the former argument, the Federal Circuit seems to have concluded that claim construction is desirable, unless in reviewing the patents at issue, a district court concludes that it isn’t. Compare Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.),
In considering the patents at issue here, the Court concludes that claim construction is not necessary prior to conducting the § 101 inquiry. First, Federal Circuit precedent does not mandate that approach, but instead counsels that it is generally desirable only when needed to understand the basic character of the claimed subject matter. Bancorp Servs., L.L.C.,
Second, the terms that might need to be construed in this case are largely defined in the Patents, and those definitions amount to “little more than synonyms for generic conventional computer processing steps,” Tranxition,
Third, as was the case in Content Extraction, to the extent that the Court would identify a “factual dispute” during the course of the Court’s analysis that was outcome-determinative, the Court would resolve any such dispute in the Plaintiffs’ favor at this procedural stage.
Fourth, and bearing on the last point, Plaintiffs had ample time in their extensive briefing and during the marathon oral argument to the Court to identify any claim terms they believed required construction and to then proffer preferred constructions to the Court. They did not do that. While Plaintiffs have generally referenced terms that they thought may require construction, Dkt. No. 14-220, ECF No. 52, at 19, they have not proffered any proposed constructions or explained how any proposed construction would affect the analysis, see Cyberfone Sys., LLC v. CNN Interactive Grp., Inc.,
Because the Court concludes that it is proper to proceed with the § 101 analysis without Markman claim construction, and having addressed and resolved IV’s procedural arguments, the Court will now address the Defendants’ substantive challenges to the Patents at issue.
F. The'581 Patent
1. Claims and Description of the '581 Patent
The'581 Patent, entitled “Collection of Information Regarding a Device or a User of a Device Across a Communication
I. A method of collecting information, the method comprising:
transmitting a discovery rule across a communication link to a computer system, wherein the discovery rule is to be applied to data about the computer system or a user to generate information, and wherein the data is collected by a discovery agent located in the computer system, and receiving the information from the computer system.
II. In a computer system, method of collecting information comprising:
receiving a discovery rule across a communication link from a sender, applying the discovery rule to data about the computer system or a user to generate information, and wherein the data is collected by a discovery agent located in the computer system when the discovery agent is activated and without requiring action by the user; and communicating the information across the communication link back to the sender of the discovery rule.
These two claims show the method from both sides: while both are drawn to “a method of collecting information,” one contains the steps which occur on the “sending” end and the other deals with the “receiving” and responding end. The Court concludes that these claims are representative because the other independent claims are “substantially similar and linked to the same abstract idea” as that of the representative claims. Content Extraction,
2. Analysis of the '581 Patent
The Erie and Highmark Defendants argue with regard to Alice Step One that the '581 Patent “contemplates [both] broad and trivial uses” of the abstract idea of “collecting information regarding a device or a user of a device.” Dkt. No. 14-220, ECF No. 47, at 16. The Old Republic Defendants also contend that the Patent claims an abstract idea, characterizing that idea as “[c]ollecting information across a network and applying a predetermined rule to the collected information to make a decision.” Dkt. No. 14-1130, ECF No. 31, at 5. Plaintiffs counter that contrary to Defendants’ interpretation, the '581 Patent is in fact not directed to an abstract idea, but instead “to a computer system in which a discovery agent — a specific computer process — residing on a computer system collects computer data using a different computer program or code segment, known as a discovery rule.” Dkt. No. 14-220, ECF No. 52, at 20. Arguing that the claims are drawn to “concrete computer technology” including “a computer-readable medium,” IV contends that the claims are patent eligible under (citing '581 Patent, at Claim 29).
Further, IV attempts to distinguish the patents at issue in Digitech, buySAFE, Accenture, and Alice, arguing that those patents fell within a narrow class of recognized “abstract legal, business, and economic ideas,” as well as one “drawn to a
Claim 1 recites a method for collecting information by (1) transmitting a discovery rule, which is essentially any code sequence, across a communication link, which is essentially any type of network; and (2) applying the code sequence to data about a computer system; in order to (3) generate information that is collected by a different code sequence, a “discovery agent”; and (4) receiving the information from the computer system.
Claim 11 recites the complementary method of (1) receiving a discovery rule, or code sequence, across a communication link, or any network; (2) applying the code sequence to data about a computer system or a user; in order to (3) generate information that is collected by a different code sequence, a “discovery agent,” when that code sequence is activated without prompting by a user; and (4) sending the information back across the network to the sender of the discovery rule.
Considering the '581 Patent as a whole, the Court concludes that the idea at the “heart” of the Patent, Ultramercial,
Indeed, the Patent merely claims use of mathematical formulas (and is not even limited to specific mathematical formulas) and networked computers to “generate information” and then make decisions based on that information. Using mathematical equations or code sequences (which are unlimited and unspecified) called “discovery rules” and “discovery agents” and implementing those code sequences on a generic computer does not make the underlying idea to which the Patent is directed any less abstract.
Nevertheless, even claims drawn to abstract ideas may be patent-eligible if they contain a sufficient “inventive concept” that would make the claimed material significantly more than a patent on the ab
The Old Republic Defendants also point out that a discovery rule can be any “comparison or evaluation of the collected data,” Dkt. No. 14-1130, ECF No. 31, at 10 (citing '581 Patent, at 3:19-21), and the Patent’s application is not limited in any meaningful way, but can instead collect data on “wide ranging examples” spanning from “the font size used in windows that display text; or the user’s hobbies, gender, or vacation preferences,” id. at 11 (citing '581 Patent, at Fig. 3). Defendants specifically compare Claim 1 of the '581 Patent to the claim held inadequate in buySAFE,
On the other hand, Plaintiffs state:
While the invention can be implemented on a general-purpose client and server computers, '581 Patent, [at 10:12-14], the programming of those computers to perform the claimed computer data transmission and collection methods places enough of a limit on the claims such that they do not preempt all uses of an abstract idea — the specific software disclosed and claimed in the '581 Patent is a technological innovation.
Dkt. No. 14-220, ECF No. 52, at 22-23. IV also argues that the claims satisfy the machine-or-transformation test, as they are “expressly tied to a networked computer system and, via the specific claimed software, transform a general computer into a special purpose computer.” Id. at 21 (citing Aristocrat Techs. Austral. Pty Ltd. v. Int’l Game Tech.,
The Court concludes that the '581 Patent is extraordinarily broadly drawn. The terms of the Patent itself indicate that “the invention may be practiced without these specific details.” '581 Patent, at 2:67-3:1. But in discussing some details, the Patent also states that a “communication link can be any type of communication link using any type of communication medium,” describing only one particular embodiment as coupling the client and server “across a network, such as a local area network (LAN), a wide area network (WAN), or the Internet,” id. at 5:20-25; “[t]he computer system [shown in a particular figure] may be any type of computer, including a general purpose computer,” id.
Additional limitations, while adding “a degree of particularity,” do not change the fact that the “concept embodied by the majority of the limitations describes only [an] abstract idea.” Ultramercial,
IV points to language contained in the Patent’s specification and figures in an effort to salvage the Patent, arguing that terms like “modules” and “discovery engine” are “specific computer processes].” Dkt. No. 14-220, ECF No. 52, at 20 (a “discovery engine” apparently connects discovery agents to discovery rules and “modules” are “specific computer programs which reside within the discovery engine” and perform various functions). But these terms do not save the Patent for two reasons: first, because they also do not appear to be any more limited in scope than terms such as “discovery agent” and “discovery rule”; second, they are not referenced anywhere inside the Patent claims themselves, but are only included in the specification. It is the Patent claims which must contain sufficient limitations to provide an inventive concept to an abstract idea, and while the specification may be useful in informing a court’s understanding of the claims, see Internet Patents Corp.,
The '581 Patent lays out a broad method, and in doing so, it claims and thus seeks to preempt the other use of nearly any code sequence or mathematical equation transmitted over any communication network and applied to any data set to trigger pretty much any response. While the '581 Patent states that one example of a “particular discovery rule” in action would be to “generate a warning to the user ... if the available disk space or
Where the claims are so “exceptionally broad and the computer implementation limitations do so little to limit their scope,” they are simply not patent eligible. Techs., Inc. v. Amazon.com, Inc.,
Prior to oral argument, IV filed a supplemental brief addressing what it says are the implications of the Federal Circuit’s decision in Dkt. No. 14-220, ECF No. 55.
As a preliminary matter, the Court disagrees with PVs reading of the Federal Circuit’s opinion in DDR. Although Plaintiffs assert that the court there held the claims at issue were not drawn to an abstract idea, see Dkt. No. 14-220, ECF No. 55, at 4 (“[T]he Court held that the challenged claims were not directed to an abstract idea.”), this Court sees no such holding in the opinion.
That said, DDR offers guidance with regard to Alice Step Two. The Federal Circuit upheld the claims under § 101 be-causé they “claimed [a] solution [that] is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” DDR Holdings,
Although IV attempts to point out specific “software problems” addressed by the '581 Patent, that argument alone is insufficient to hold a claim patent eligible. See BASCOM,
Finally, IVs own characterization of Claim 1 of the '581 Patent states that it “claims a method transmitting a ‘discovery rule,’ a specific computer process, across a communication link in a computer system to collect information about the computer system.” Dkt. No. 14-220, ECF No. 52, at 20. That said, the claim, even as defined by Plaintiffs, describes an abstract idea with insufficient limitations that would amount to less than claiming the abstract idea itself. To explain why, the Court will address with brackets where and how the limitations fail in order to illustrate this conclusion: IV claims a “a method transmitting a discovery rule, a specific computer process [but not just one specific computer process, rather any discovery rule, which is defined in the Patent as “a series of Boolean operations, mathematical equations, or other comparisons or evaluations of the collected data”; anything matching the definition counts, according to the Patent, and is therefore claimed as part of the method], across a communication link in a computer system [and again, any communication link will do], to collect information about the computer system [there is similarly no limit on the type of information that could be collected].”
The '581 Patent is drawn to the abstract idea of gathering, storing, and acting on data based on predetermined rules, and its claims
G. The '434 Patent
1. Claims and Description of the '434 Patent
The '434 Patent, entitled “System and Method for Retrieving Information from a Database Using an Index of XML Tags and Metafiles,” includes the following representative claims:
1. A method for creating a database and an index to search the database, comprising the steps of:
creating the index by defining a plurality of XML tags including domain tags and category tags;
creating a first metafile that corresponds to a first domain tag; and
creating the database by providing a plurality of records, each record having an XML index component.
7. A method for searching a database of records using an index including a plurality of tags, comprising the steps of:
receiving a request for information; identifying a first tag that is associated with the request; determining whether a first metafile comprising a second tag corresponds to the first tag;
if the first metafile corresponds to the first tag, then determining whether the second tag is relevant to the request;
if the second tag is relevant to the request, then combining the first tag and the second tag to create a key; and
using the key to search the database to locate at least one record that includes the first tag and the second tag.
This Patent is generally drawn to methods for creating a database using tags to identify various records and then for searching that database. Claims 1 through 6, as well as Claim 25, deal with methods for creating a database and index, while all others deal with methods of searching the database using the index. The Court concludes that Claims 1 and 7 are “substantially similar and linked to the same abstract idea” as the other claims in the Patent, and thus will assess them as representative. Content Extraction,
2. Analysis of the '434 Patent
Claim 1 generally recites a method for creating a database and an index to search that database. It specifically claims the method of (1) creating an index by picking some number of XML tags “including domain tags and category tags;” (2) creating a metafile, or essentially adding additional identifying information onto the tags; and (3) creating a database by compiling some number of records, which can relate back to the index.
Claim 7 generally recites a method for searching a database created with the help of- an index and tags. The method claims (1) receiving a request for information; (2) identifying a tag, or some proxy for the information associated with that request; (3) determining whether any other tags are also associated with the request, or whether the request could fall into multiple categories; (4) if multiple tags or other specific information are relevant, combining them; and (5) using the combination to search the database for a record.
Addressing Alice Step One on whether the claims are directed to an abstract idea the Court asks, “[W]hat are the claims generally trying to achieve?” Tranxition,
But even when framed as a “computer solution” employed on a “computer database system,” the Court concludes that the heart of the patented invention, or the true nature of the claims, are indeed drawn to an abstract idea. Alice,
At bottom, these claims are directed to creating an index and using it to search for and retrieve data, which numerous courts have held to be an abstract idea. See, e.g., Cyberfone,
The steps of Claim 1 (and Claims 2-6) go to the “creating an index” portion of the idea: XML tags are designated (and “XML tags” are nothing more than “patent-ese” for an information identifier, see '434 Patent, at 7:20-22 (“A tag is generally associated with data or text and conveys information about the data or text.”), written in a commonly-used programming language, “extensible Markup Language,” id., Abstract), a “metafile” is created (a metaf-ile “is associated with a tag and provides additional information about the data or text described by the tag,” id. at 7:22-24), and a database is created and the information sought has its own “XML index component” (an “index is essentially a guide that is used to locate information stored in a database,” id. at 2:39-41). These steps can be boiled down to (1) identifying categories that will be used to search; (2) adding sub-categories, or further detail to those categories; and (3) placing records or information that can be identified by those categories into a database.
The steps of Claim 7 are directed to using the index to search for and retrieve information, but are similarly abstract in their explanation. When the patent-ese is stripped away, Claim 7 simply recites the method of (1) receiving a request; (2) identifying the request’s relevant category; (3) determining if a subcategory applies; (4) if it does, then determining if another category is also relevant; (5) if a second category is relevant, combine both categories to create one search; and (6) using that single search to find one or more records that fit both categories.
This method, of searching a database and retrieving information, claims an abstract idea. Content Extraction,
Turning to Alice Step Two, the Court again “considers the elements of each claim both individually and as an ordered combination” to determine whether they present an “inventive concept” that transforms the claim’s abstract nature into something “significantly more than a patent upon the ineligible concept itself.” Alice,
The Erie and Highmark Defendants argue that the '434 Patent fails this test because the abstract idea’s implementation on a generic computer using XML tags is not inventive, nor does it purport to improve the underlying technology, but rather uses “a combination of well-known and conventional components already present in ‘most conventional computer systems.’ ” ECF No. 47, at 23 & n. 10 (quoting '434 Patent, at 5:61-64). The Old Republic Defendants add that the claims are incredibly broad, and the Patent’s “preference for implementation on a conventional computer” along with limitations including a “computer-readable medium” do nothing to render it significantly more than a patent on the abstract idea itself. Dkt. No. 14-1130, ECF No. 31, at 14-15.
IV counters that Defendants ignore concrete claim limitations which satisfy the maehine-or-transformation test, and attempts to distinguish its '434 Patent from that at issue in cases like Accenture, arguing that this invention “is a new database architecture that employs inventive computer software and data structures.” Dkt. No. 14-220, ECF No. 52, at 24. IV also argues that the XML-based database system adds a meaningful limitation in that it shows “the claims do not preempt all uses or organizing information in a database.” Id. at 25.
The claims of the '434 Patent, considered both individually and as an ordered combination, fail to provide an additional feature that would transform the abstract idea of creating an index and using that index to search for and retrieve data into patent eligible subject matter. Indeed, the Court concludes from reviewing the claims that the Patent includes little more than the abstract idea itself, and to the extent there are additional limitations, they are “little more than synonyms for generic conventional computer processing steps,” Tranxition,
Of course, there is an argument that the '434 Patent claims computer-specific solutions to problems of slow and inefficient searches of databases, in that it seeks to “eliminate the need to conduct multiple searches” or “maintain multiple databases” by implementing a “universal search vocabulary” that efficiently retrieves search results for users without returning too much irrelevant information. See '434 Patent, at 2:11-12; 22-23. But unlike’the claims at issue in DDR, upon which IV relies, efficiently searching for information is not a solution that “is necessarily rooted in computer technology in order to overcome a problem specifically arising in the realm of computer networks.” DDR Holdings,
The need and desire to efficiently search for records and obtain only the most relevant ones are not made any less abstract when claims that purport to do so are implemented on a computer database. There are manual processes that could achieve the same result — the fact that they would be slower and less accurate does not change the analysis. OIP Techs., Inc. v. Amazon.com, Inc.,
That the Patent claims a method in reaction to the huge amount of information stored and searched in today’s world similarly does not make the claims patent eligible. See MicroStrategy Inc.,
'434 Patent, at 5:5-6 (emphasis added), and does not even require the use of certain limitations, such as XML and metaf-iles. See e.g., '434 Patent, at Claims 7-18; 27-28 (claims not including XML limitation); id. at 9:22-24 (“Although each XML tag can have an associated metafile, in some implementations there may be XML tags that do not have associated metaf-iles.”). Even assuming these limitations existed in each and every claim, they are no more than “conventional computer components” and are insufficient to confer patent eligibility. Additionally, steps such as receiving a request for information and identifying a tag, then using a key to search the database are “routine, conventional processing steps that any generic computer can perform, and are not, therefore, an inventive concept.” Tranxition,
The claims in the '434 Patent are stated at such a high level of generality that the Court has difficulty contemplating any methods of creating an index and using that index to search for and retrieve data on a computer database that would not be preempted by them. It certainly seeks to preempt use of XML tags to create and then search a database on a generic computer, but then also is not limited to using XML tags. Claim 7, which is representative of the searching portion of the Patent, identifies steps that do no more than identify a request for information, narrow the request down to a category (and subcategory if necessary) and then search to locate results. The potential preemptive effect of such claims is extreme, and limitations are lacking which could avoid “preempting] use of this approach in all fields” in order to confer patent eligibility. Alice,
The Court concludes that the '434 Patent is directed to an abstract idea and that it does not contain a sufficient inventive concept to remove it from the abstract realm and render it patent eligible under § 101. Defendants’ Motions to Dismiss on those grounds will therefore be granted.
H. The '002 Patent
1. Claims and Description of the '002 Patent
The '002 Patent, entitled “System and Method for Implementing an Intelligent and Mobile Menu-Interface Agent” includes the following representative claim:
I. A method for retrieving user specific resources and information stored eitheron a local device or a network server, the method comprising the steps of:
retrieving a mobile interface from the network server to the local device; displaying the mobile interface on the local device, the mobile interface including a plurality of pointers corresponding to the user specific resources and information; and retrieving the user specific resources and information using the plurality of pointers displayed on the mobile interface.
The '002 Patent claims an invention for “dynamically accessing] programs, applications, bookmarked URLs, IP addresses, telephone numbers, television channels, radio stations, user profiles, and the like that are specific to a user via any computer type device.” '002 Patent,
Abstract. The method claimed is that for accessing a mobile interface that incorporates pointers tied to user specific information that can be retrieved using pointers contained in the interface. Id. at Claim 1. Dependent Claims 2-5 explain what types of user-specific information can be accessed and is drafted broadly, ranging from “programs, applications, files, documents, bookmarked URLs, and user profiles” to “television channels” to “telephone numbers” to “television program listings.” Claim 6 contains an added “step of licensing the user specific resources based on a per- user licensing model.” Dependent Claims 7-10 contemplate the way in which the mobile interface agent is accessed— through the Internet, a LAN, MAN, or WAN, a cellular network, or a television network (e.g., pretty much anything). These generic dependent claims are then repeated at various times throughout the Patent, e.g., Claims 26-33; 35-39; 41-46. The remaining independent claims are “substantially similar and linked” to the same underlying idea as that of the representative claim. Content Extraction,
2. Analysis of the '002 Patent
Claim 1 recites a method for accessing user specific information that is stored either on a device or on a network server. The claimed method is comprised of (1) retrieving a mobile interface (stored on a network server); (2) displaying the mobile interface, which includes pointers to the user specific information, on some local device; and (3) retrieving, or accessing, user specific information using pointers on the interface.
The Court concludes that the '002 Patent as a whole claims the abstract idea of remotely accessing user specific information. At bottom, courts are to get to the heart of the patent, Alice,
The Court will assess the use of the “mobile interface” and other limitations claimed in the Patent on Alice Step Two, but at Alice Step One the '002 Patent is directed to an abstraction. That it is not directed to a mathematical equation or commercial practice does not make the concept of remote access to a user’s stored information any more concrete. See Accenture,
At the most basic level, the Court concludes that the claims at issue can be loosely analogized to calling a person from one location in order to obtain information located in another place; this type of interaction amounts to a general “method of organizing human activity.” Alice,
Another district court came to this conclusion in addressing the '002 Patent. See Intellectual Ventures I LLC v. Capital One Financial Corp., No. 14-111,
Alice Step Two requires courts to assess whether each claim’s elements, considered “both individually and as an ordered combination,” present an “inventive concept” that shows the claims are “significantly more than a patent upon the ineligible concept itself.” Alice,
In reviewing the claims of the '002 Patent, the Court concludes that they lack the requisite inventive concept that would
Apart from the mobile interface, which on its own is not inventive, the Court concludes that limitations such as a “local device,” a “network server,” and “pointers” are similarly conventional and well-known computer technology. See '002 Patent, at 1:36^41 (defining a “pointer” as a “reference to a type of menu item that can be accessible on the computer, [portable digital assistant], or a server” and stating that “pointers are commonly used to retrieve/access menu items.”). That the mobile interface can be retrieved and used “via the Internet,” “via a cellular network,” “via a television network,” or by commonly used networks does not change the analysis. Id. at Claims 7, 9, 10. “[Exporting user profile and configuration data from a first network to a second network” also fails to provide an inventive concept. See buySAFE,
Considering the issue of preemption, the '002 Patent explicitly states that it governs “dynamic access” to a broad swath of information “via any computer type device.” '002 Patent, Abstract (emphasis added). As the Old Republic Defendants point out, the '002 Patent states that there are “countless uses of the present invention,” and the Patent specifically enumerates broad categories of covered usage from “conducting] online financial transactions more efficiently” to “us[ing] the user profile on the network for online advertising or promotional services.” Id. at 8:7-13; Dkt. No. 14-1130, ECF No. 31, at 16. The claims do not lend themselves, either individually or as an ordered combination, to concluding that the invention would not preclude any attempt to design another invention for remote access to user-specific
A desire to remotely access user-specific information also is not a problem arising only in the computer context. As noted above, the abstract idea underlying the '002 Patent existed long before computer technology existed and has analogues in the brick and mortar context — it therefore does not contain the type of claims held patent eligible in DDR Holdings,
The Court concludes that the claims of the '002 Patent are directed to patent ineligible subject matter. The Old Republic Defendants’ Motion to Dismiss claims relating to that Patent will therefore be granted.
IV. CONCLUSION
For the foregoing reasons, and upon review of the Patents at issue, the parties’ briefs, and the arguments raised in open Court, the Court grants the Motion to Dismiss the claims as to the '581 Patent without prejudice for lack of subject matter jurisdiction, and also grants the Erie and Highmark Defendants’ Motion to Dismiss based on patent ineligibility as to the '434 Patent with prejudice. Moreover, if the Court concluded that it had jurisdiction as to the '581 Patent, it would also grant the Motions to Dismiss on patent ineligibility grounds with prejudice. Finally, the Court grants the Old Republic Defendants’ Motion to Dismiss as to the '434 Patent and the '002 Patent with prejudice. Because the Court concludes the '002 Patent is not directed to patent eligible subject matter, claims based on infringement of it against the Erie and Highmark Defendants must also dismissed with prejudice.
An appropriate Order will issue.
Notes
. These Defendants are Erie Indemnity Company; Erie Insurance Exchange; Erie Insurance Property & Casualty Company; Erie Insurance Company; Flagship City Insurance Company; and Erie Family Life Insurance Company.
. These Defendants are Highmark, Inc.; HM Insurance Group, Inc.; HM Life Insurance Company; Highmark Casualty Insurance Company; and HM Casualty Insurance Company.
. These Defendants are Old Republic General Insurance Group, Inc.; Old Republic Insur-anee Company; Old Republic Title Insurance Group, Inc.; and Old Republic National Title Insurance Company.
.The Court had previously consolidated the three actions for pretrial purposes and refers to ECF filing numbers in the 14-220 action unless otherwise indicated. They have since been deconsolidated. Due to the interlocking nature of the arguments presented by the parties, and resolved by this Opinion, it is filed as to each case.
. This multi-party, multi-patent, multi-argument case squarely implicates the state law of California, and federal law as announced by the Supreme Court, and the Third and Federal Circuits. The Opinion here, out of necessity, is of commensurate explanation and length.
. In Case No. 14-220, IV alleges infringement of the '581 Patent, '002 Patent, '434 Patent, and '298 Patent against the Erie Defendants. In Case No. 14-1130, IV alleges infringement of the '581 Patent, '002 Patent, and '434 Patent against the Old Republic Defendants. In Case No. 14-1131, IV alleges infringement of the '581 Patent, '002 Patent, and '434 Patent against the Highmark Defendants.
. The Old Republic Defendants have joined that standing Motion. Dkt. No. 14-220, ECF No. 77.
. The Erie and Highmark Defendants stated that they did not challenge the '002 Patent or the' '298 Patent (asserted against the Erie Defendants only) in this Court because those Patents were subject to review before the USPTO. Dkt. No. 14-220, ECF No. 47, at 9 n. 2. Based upon Old Republic's challenges, however, this Court concludes, for the rea
. The other, possibility is a facial challenge, which is based on the sufficiency of the allegations of the Complaint alone. Id. at 358.
. The purported chain of ownership proceeded with the following assignments: (1) the inventors to Aveo, Inc.; (2) Aveo, Inc. to Sherwood Partners; (3) Sherwood Partners to AllAdvantage; (4) AllAdvantage to Alset, Inc.; (5) Alset, Inc. to Expeditionary Sound; and (6) Expeditionary Sound to Intellectual Ventures. Dkt. No. 14-220, ECF Nos. 76; 76-1-5; 76-8-9. Defendants only challenge the fourth transfer in this chain.
. After Defendants informed the Court of their intent to move to dismiss on these grounds, the Court gave Plaintiffs an opportunity to consider substituting the '581 Patent’s parent, over which there is no articulated dispute as to ownership, for the '581 Patent in these lawsuits. Dkt. No. 14-220, ECF No. 68, at 2. On March 6, 2015, Plaintiffs filed a Notice of Asserted Patents in which they notified the Court that they “do[] not intend to substitute the parent of the '581 patent for the '581 patent.” Dkt. No. 14-220, ECF No. 80.
. Defendants argue that because seventeen (17) patents and applications are specifically listed in the Assignment Agreement and then the document refers to “said patents” in transferring them, there is no ambiguity in the failure to include the '581 Patent’s application in that contract. Rather, the document clearly shows the '581 patent was not included in the transfer. Dkt. No. 14-220, ECF No. 75, at 9. This is so even though the '581 Patent’s parent was expressly listed and transferred in the document, because other pending applications related to the parent were listed and thus transferred. Id. at 10, 14.
. Those documents are: (1) a Revocation of Prior Powers of Attorney, Power of Attorney by Applicant and Notification of Change of Fee and Correspondence Address filed in the prosecution of Patent Application No. 09/844/858 [the '581 Patent's application]; (2) a copy of the '581 Patent, which issued on February 11, 2003; (3) a copy of a Terminal Disclaimer filed in the prosecution of the '581 Patent’s application; and (4) a copy of a fee transmittal form filed with regard to the '581 Patent’s application. Dkt. No. 14-220, ECF Nos. 81-5-8.
. They also take issue with IV’s assertion that "goodwill” includes the underlying intellectual property. Id. at 12.
. Even if some presumption of ownership arose from the face of the '581 Patent listing Alset as the Assignee, the Court concludes that any preliminary burden on Defendants to rebut any presumption arising from the listing of Alset as the assignee on the face of the '581 Patent, SiRF Tech., Inc. v. Int’l Trade Comm’n,
. And the Court cannot fault them for that divergence, because for the reasons that follow, the California Supreme Court’s own precedent is not a font of clarity on the general rules of contract interpretation.
. This rule calling for the provisional acceptance of extrinsic evidence has been strongly and more recently criticized by the California Supreme Court. For instance, in Dore v. Arnold Worldwide, Inc.,
However, as Justice Baxter explained in Dore, the majority, at least in that case, no longer appeared to adopt quite as broad a view of Pacific Gas, and instead seemed to hold that "a latent' ambiguity is simply one that becomes manifest when one attempts to apply the contract’s language to the specific facts that gave rise to the parties’ legal dispute. Even then, extrinsic evidence is admissible only to prove a meaning the contract’s language will reasonably accommodate.” Dore,
Of note, even the court in Pacific Gas recognized that “extrinsic evidence is not admissible to add to, detract from, or vary the terms of a written contract” — the court stated only that courts should at least take a quick look at extrinsic evidence before recognizing its relevance or irrelevance in a given scenario.
.As one California Court of Appeals has stated:
[E]vidence of the meaning the parties gave to the contract language is only relevant if the contract language itself is reasonably susceptible to that meaning. Thus, extrinsic evidence cannot be used to show that when the parties said "Bunker Hill Monument” they meant "the Old South Church” or that when they said “pencils” they really meant "car batteries.”
Curry v. Moody,
. Which indicates only that the contract was not comprised of hundreds of pages of technical terms, and that a drafting' error is arguably less likely to be made in these circumstances.
. The Court addresses this in more detail below.
. As Abraham Lincoln once explained, "[T]here had been an attempt made to show that a calf had five legs — the way the point was to be established was by calling the tail a leg, but the decision of the judge was that calling the tail a leg, did not make it a leg, and the calf had but four legs after all.” Michael Burlingame’s Abraham Lincoln: A Life, Volume 2 468 (2008 The Johns Hopkins University Press).
. "The question of whether or not an agreement provides for automatic assignment is a matter of federal [patent] law.” SiRF Tech., Inc. v. Int’l Trade Comm’n,
. IV also cited several cases for the proposition that "future rights may automatically transfer with the transfer of a parent patent.” Id. at 11 (citing Gerber Scientific Int'l, Inc. v. Satisloh AG, Satisloh N. Am., Inc., No. 07-1382,
A deed of assignment ... by which a paten-tee of an invention conveys all the right, title, and interest which he has in the ‘said invention’ ... and also all right, title, and interest which may be secured to him from time to time ... carries the entire invention and all alterations and improvements and all patents whatsoever, issued and extensions alike[.]
Hendrie,
An assignment of an invention secured by letters-patent ... is a contract, and, like all other contracts, is to be construed so as to carry out the intention of the parties to it ... it is well settled that the title of an inventor to obtain an extension may be the subject of a contract of sale, and when it is, the instrument by which the sale was effected is the proper subject of construction, in order to determine whether it secures to the purchaser any subsequent extension of the patent, or merely the patent for the original term.
Id. at 554 (emphasis added).
What this demonstrates is that the terms of an assignment are what govern the scope of what is transferred, not some "automatic” rule. And the Court agrees with Defendants that there are meaningful distinctions between the contractual language in cases like Okuley (transferring "the entire right, title, and interest in an invention”) and DDB Technologies (conveying “ideas, inventions and improvements”) which broadly conveys "inventions” or "ideas” to effect transfers of future rights by the agreement of the parties, as opposed to specifically enumerated patents and patent applications as in this case. See Dkt. No. 14-220, ECF No. 84, at 9-10 (comparing language of the Assignment Agreement with that in other cases).
. Plaintiffs and Defendants both cite Euclid Chem. Co. v. Vector Corrosion Technologies, Inc.,
So while the district court in Euclid had concluded that the agreement was unambiguous and conveyed all continuations-in-part of the listed patent (including the continuation-in-part which had issued before the agreement was executed), the Federal Circuit held that the assignment was ambiguous because it included all continuations-in-part, but also included a specific list which omitted the already-issued patent. Id. at 1343. Here, by contrast, the Assignment Agreement does not include language which would convey all continuations of listed patents, and also does not include the '581 Patent or its application. The Assignment Agreement therefore lacks the type of contradiction which the Federal Circuit determined to be ambiguous in Euclid.
. The relevant part of this case dealt with the issue of inequitable conduct based on, inter alia, misrepresentations to the USPTO regarding ownership of a patent. The district court had conducted a bench trial on infringement and awarded damages to the plaintiff, but the Federal Circuit subsequently vacated the judgment and remanded. Bellehumeur v. Bonnett,
. With regard to extrinsic evidence, IV’s attorneys contend that the '581 Patent application was automatically transferred with the parent patent, and submit Mr. Hurley's Declaration to argue that at least one party to the transfer (Mr. Hurley) believed that such a legal rule applied (if he did not, one may wonder why he did not just include the patent application at issue in the list of seventeen (17) others patents and applications) because he apparently thought, as Alset’s co-founder, that he negotiated an agreement to transfer ownership of "all assets” previously owned by his other company, Aveo, Inc. See ECF No. 81-2, at 3. Even if so, then that position essentially amounts to the premise underlying a unilateral mistake of law in which one side misunderstands the law at the time of con--tracting. Cal. Civ.Code § 1578. However, the other requirement for finding a unilateral mistake of law-is that the other side-knows the correct law but does not rectify the other party’s misunderstanding. Id. No one argues that such was the case here.
. Such distinct treatment indicates the general meaning of the terms do not necessarily overlap. Moreover, the very fact that there is an entire‘area of law devoted to protecting patent rights, see Patent Act, 35 U.S.C. § 100 et seq., would seem to counsel against also lumping patent rights into the generic definition- of goodwill, which is more of a catchall category containing essentially common law legal rules applicable to intangible rights not otherwise protected.
. Patent rights and goodwill appear to be distinct under California law as well. The Court would note that in Allen v. Shaver,
.This may be an example of the parties’ intent shining through when that intent is contrary to the general understanding of a term used in business.
. Because of this conclusion, the Court will deny Defendants’ Motion ¿o Strike Hearsay Declaration of Paul Hurley, Dkt. No. 14-220, ECF No. 82.
. The Court considers this assertion to be extrinsic because it is not evident from the face of the Assignment Agreement. IV did not dispute assertions regarding inclusion of '983 Patent "family members,” though it had the opportunity both in its Opposition and at oral argument.
.If this was in actuality a drafting error, that is regrettable, but it is a slippery slope for courts to allow themselves to be persuaded to implant additional language (and in this case, another piece of property) into a contract that expressly enumerates the other pieces of property it purports to convey.
. Even if IV had carried its burden to show ownership of the '581 Patent and thus to achieve standing, it would make no difference because the '581 Patent is also directed to an abstract idea ineligible for patent protection, as the Court explains in greater detail below. Because it is not out of the question that an . appeal to the Federal Circuit lies ahead, this Court finds it prudent to address both the standing and .patent-eligibility questions as to the '581 Patent.
. Courts and litigants label this challenge differently, with some describing it as a challenge to a patent's validity and others characterizing it as a threshold issue of patent eligibility, different from the affirmative defenses contained in other sections of the Patent Act. This Court labels the challenge as one dealing with whether the claims at issue are patent eligible. See DDR Holdings, LLC v. Hotels.com, L.P.,
. The Court can safely observe that some version of this part of the case is now playing out daily in courtrooms “from California to the New York island.” Woody Guthrie, This Land is Your Land (Smithsonian Folkways Recordings 1997); compare Enfish, LLC v. Microsoft Corp.,
. Or as noted by one Circuit Judge, to at least fend off any case-ending motions long enough to pursue settlement talks. . Ultramercial, Inc. v. Hulu, LLC,
. An examination of the Complaints in these cases reveals that they plead few facts but plenty of conclusions. There is a debate as to whether the 35 U.S.C. § 101 inquiry on patent eligibility is looped in with invalidity defenses that must be proved by defendants by clear and convincing evidence, and whether the presumption of validity contained in 35 U.S.C. § 282 applies. See, e.g., Execware, LLC v. BJ's Wholesale Club, Inc., No. 14-233,
That debate does not cariy over to this lawsuit, however, because no Defendant contests that the presumption of validity and the clear and the convicting evidence standard apply. See Dkt. No. 14-220, ECF No. 47, at 13 (Erie and Highmark Defendants' opening brief assuming the attachment of the presumption of validity and the application of the clear and convincing evidence standard); Dkt. No. 14—220, ECF No. 97, at 59:18-23 (Old Republic Defendants' statement that presentation assumes the presumption applies); Dkt. No. 14— 1130, ECF No. 31, at 10 n. 3 ("Old Republic’s argument is presented herein as if the 'clear and convincing evidence’ standard somehow applies”); Dkt. No. 14-220, ECF No. 56, at 20 (same). See DataTern, Inc. v. Microstrategy, Inc., No. 11-12220,
The Court will therefore assume that the patents at issue are presumptively valid and that the Defendants have the burden of demonstrating they are not directed to patent-eligible subject matter by clear and convincing evidence. The Court notes, however, that the clear and convincing standard also likely only applies to factual disputes which may underlie the § 101 analysis and not to the ultimate legal question. Execware,
. The parties do not dispute that the claims at issue fall into one of the statutory classes, but only whether the patent claims are drawn to an abstract idea. The Court will therefore so confine its analysis.
. As compared, for instance, with the "tangible, industrial process” at issue in Drilling Technology Ltd. v. Trinidad Drilling Ltd., No. 15-656,
. "The patent sought is on a method of programming a general-purpose digital computer to convert signals from binary-coded decimal form into pure binary form.” Gottschalk v. Benson,
. The Court also stated that "[njeither the dearth of precedent, nor this decision, should ... be interpreted as reflecting a judgment that patent protection of certain novel and useful computer programs will not promote the progress of science and the useful arts, or that such protection is undesirable as a matter of policy.” Id. at 595,
. The Court continued:
Rather, they seek only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process. These include installing rubber in a press, closing the mold, constantly determining the temperature of the mold, constantly recalculating the appropriate cure time through the use of the formula and a digital computer, and automatically opening the press at the proper time.
Id.
. The laws of nature in the claims described “the relationships between the concentration in the blood of certain thiopurine metabolites and the likelihood that the drug dosage will be ineffective or induce harmful side-effects.” Id. at 1294.
. "The upshot is that the three steps simply tell doctors to gather data from which they may draw an inference in light of the correlations.” Id. at 1298.
. The Court set out and analyzed the following method claim, which the parties agreed was representative:
"A method of exchanging obligations as between parties, each party holding a credit record and a debit record with an exchange institution, the credit records and debit records for exchange of predetermined obligations, the method comprising the steps of:
"(a) creating a shadow credit record and a shadow debit record for each stakeholder party to be held independently by a supervisory institution from the exchange institutions;
"(b) obtaining from each exchange institution a start-of-day balance for each shadow credit record and shadow debit record;
“(c) for every transaction resulting in an exchange obligation, the supervisory institution adjusting each respective party's shadow credit record or shadow debit record, allowing only these transactions that do not result in the value of the shadow debit record being less than the value of the shadow credit record at any time, each said adjustment taking place in chronological order, and
“(d) at the end-of-day, the supervisory institution instructing on[e] of the exchange institutions to exchange credits or debits to the credit record and debit .record of the respective parties in accordance with the adjustments of the said permitted transactions, the credits and debits being irrevocable, time invariant obligations placed on the exchange institutions.”
Alice,
. The Mayo Court also explicitly addressed these concerns:
Patent protection is, after all, a two-edged sword. On the one hand, the promise of exclusive rights provides monetary incentives that lead to creation, invention, and discovery. On the other hand, that very exclusivity can impede the flow of information that might permit, indeed spur, invention, by, for example, raising the price of using the patented ideas once created, requiring potential users to conduct costly and time-consuming searches of existing patents and pending patent applications, and requiring the negotiation of complex licensing arrangements. At the same time, patent law’s general rules must govern inventive activity in many different fields of human endeavor, with the result that the practical effects of rules that reflect a general effort to balance these considerations may differ from one field to another.
Mayo,
. The Supreme Court issued its opinion in Ass’n for Molecular Pathology v. Myriad Genetics, Inc., - U.S. -,
. The claim analyzed by the Federal Circuit provided:
10. A method of generating a device profile that describes properties of a device in a digital image reproduction system for capturing, transforming or rendering an image, said method comprising: generating first data for describing a device dependent transformation of color information content of the image to a device independent color space through use of measured chromatic stimuli and device response characteristic functions;
generating second data for describing a device dependent transformation of spatial information content of the image in said device independent color space through use of spatial stimuli and device response characteristic functions; and combining said first and second data into the device profile.
Id. at 1351.
. In summary, the claim was a method whereby a program receives a request for obtaining a transaction performance guaranty service involving an online commercial transaction, processes the request and underwrites the first party, and the transaction service provider offers the performance guaranty service that binds the party. Id at 1352. The district court had described the idea as "a third party guarantee of a sales transaction” which was applied "using conventional computer technology and the Internet.” Id. at 1352 (quoting buySAFE, Inc. v. Google, Inc.,
. After the district court dismissed the complaint, the Federal Circuit reversed, only to have that decision vacated and the case remanded by the Supreme Court, after which point the Federal Circuit reversed the district court again, and then once more had its decision vacated and the case remanded by the Supreme Court. Id. at 713.
. In his concurring opinion, Judge Mayer wrote that (1) the § 101 inquiry is a threshold issue that should be addressed at the outset of litigation because it deals with whether "claimed subject matter is even eligible for patent protection before addressing questions of invalidity or infringement,” id. at 718 (Mayer, J., concurring); (2) the presumption of validity should not apply to § 101 challenges "[b]ecause the PTO has for many years applied an insufficiently rigorous subject matter eligibility standard,” id. at 720 (Mayer, J., concurring); and (3) the Supreme Court essentially articulated a "technological arts test” in Alice which requires claims to "harness natural laws and scientific principles ... and use them to solve seemingly intractable problems” to be patent eligible, and must "not only describe a technological objective, but set out a precise set of instructions for achieving it,” id. at 721-22 (Mayer, J., concurring).
. The court also rejected the plaintiff’s argument that "claims are not drawn to an abstract idea because human minds are unable to process and recognize the stream of bits output by a scanner," noting that a similar argument did not stop the Supreme Court from invalidating the computer-implemented claims at issue in Alice. Id. at 1347.
. The court also rejected the plaintiff’s argument that dependent claims recited additional steps that transformed the claims and made them patent-eligible. Id.
.The allegedly infringing system allows visitors on a "cruise-oriented (host) website” to click on a cruise advertisement, causing the system to "generate[ ] and directf ] the visitor to a composite web page that incorporates 'look and feel' elements from the host website and product information from the cruise line (merchant).” Id. at 1250.
. "Although the claims address a business challenge (retaining website visitors) [and "performance of an abstract business practice on the Internet or using a conventional computers” have been held patent-ineligible], it is a challenge particular to the Internet.” Id. at 1257.
. The court did "caution ... that not all claims purporting to address Internet-centric challenges are eligible for patent.” Id. at 1258.
. For instance, the court assessed one claim as follows:
[C]laim 1 recites "sending a first set of electronic messages over a network to devices,” the devices being "programmed to communicate,” storing test results in a "machine-readable medium,” and "using a computerized system ... to automatically determine” an estimated outcome and setting a price. Just as in Alice, “all of these computer functions are 'well-understood, routine, conventional activities]’ previously known to the industry.” Alice,134 S.Ct. at 2359 (quoting Mayo,132 S.Ct. at 1294 ) (alterations in original); see also buySAFE,765 F.3d at 1355 ("That a computer receives and sends the information over a network — with no further specification — is not even arguably inventive.”).
Id.
. In a concurring opinion, Judge Mayer noted that “we have repeatedly sanctioned a district court’s decision to dispose of them on the pleadings.” Id. at 1365 (Mayer, J., concurring).
. The representative claim analyzed was:
A method comprising:
storing, in a database, a profile keyed to a user identity and containing one or more user-selected categories to track transactions associated with said user identity, wherein individual user-selected categories include a user pre-set limit; and causing communication, over a communication medium and to a receiving device, of transaction summary data in the database for at least one of the one or more user-selected categories, said transaction summary data containing said at least one user-selected category’s user pre-set limit.
Id. at 1367.
. A representative claim for that patent states:
A system for providing web pages accessed from a web site in a manner which presents the web pages tailored to an individual user, comprising:
an interactive interface configured to provide dynamic web site navigation data to the user, the interactive interface comprising:
a display depicting portions of the web site visited by the user as a function of the web site navigation data; and
a display depicting portions of the web site visited by the user as a function of the user’s personal characteristics.
Id. at 1369.
. This type of claim element appears to the Court to be similar to the "mobile interface” claimed in the '002 Patent.
. While Plaintiff opposes the use of representative claims, it has identified no claim that is distinguishable in any material way, or the consideration of which would yield a different result.
. As noted above, this Court has concluded that IV lacks standing to assert an infringement claim as to the '581 Patent. Because this Court cannot rule out the possibility that this is not the last court which will consider these matters, it believes it appropriate to set out its § 101 analysis as to the '581 Patent as well.
. Plaintiffs’ brief was not limited to discussion of the '581 Patent but argued that DDR similarly applies to the '434 and '002 Patents as well.
. To the extent the Federal Circuit addressed the patent with regard to Alice Step One, it merely explained that it did not fall within certain categories of abstract ideas such as "longstanding commercial practice[s]” or "mathematical algorithm[s].” DDR Holdings,
. The Court also concludes that IV’s reliance on Aristocrat Techs. Austral. Pty Ltd. v. Int’l Game Tech.,
Unlike the "particular,” "disclosed” algorithms summarized by the Federal Circuit, id., one of the primary Alice problems with the '581 Patent is the limitless nature of the term “discovery rules,” which according to the Patent covers a broad swath of possibilities, as discovery rules "may be a series of Boolean operations, mathematical equations, or other comparisons or evaluations of the collected data,” '581 Patent, at 3:19-22.
Akin to other claims held patent ineligible, the '581 Patent "expressly disavows any requirement for specific programming or architecture.” Mkt. Track, LLC v. Efficient Collaborative Retail Mktg., LLC, No. 14-4957,
. This Court's review and consideration of various dependent claims of the representative claims of the '581 Patent do not alter the conclusion that they are each not patent eligible under § 101. Apart from the reality that it is the obligation of the Plaintiff to demonstrate how and why that would be the case, the dependent claims do not narrow or limit the impermissible breadth of the independent claims, nor do they alter their essential scope.
. For instance, Claim 14 is largely similar to Claim 7 except that it also recites "[a] computer-readable medium having stored thereon computer-executable instructions for” performing a slightly altered version of the method in Claim 7.
. The Court declines to take judicial notice of any documents attached to further explain the Library of Congress’s system, as requested by the Old Republic Defendants. Dkt. No. 14-1130, ECF No. 33. There is no need to review such information when any system of organization that uses tags and searches and implements steps on computer would likely be covered under this Patent.
. ”[C]ourts must be careful to avoid allowing the typically convoluted claim language— “patent-ese” — to obfuscate the general purpose and real essence of software patent
. And the Court’s consideration of the dependent claims demonstrates that they do not save the day, as they do not dimmish the abstract nature of what is claimed, nor do they generate the requisite inventive concept to make the Patent "patent eligible” under § 101.
. Because the Court concludes that both the '581 Patent and the '434 Patent are not directed to patent eligible subject matter, the Court does not address the portions of the Erie and Highmark Defendants' Motions arguing that IV’s infringement claims should be dismissed for failure to set forth sufficient facts to state a claim, or alternatively that this Court should compel IV to provide a more definite statement. Dkt. No. 14-220, ECF No. 47, at 26-32.
. This means that IV's claims relying on the '002 Patent as to the Erie and Highmark Defendants would similarly fail. See ThermoPly, Inc. v. Ohio Willow Wood Co., No. 05-779,