Nm, Llc v. Purch Group, Inc.

REPLY BRIEF re MOTION to Dismiss for Failure to State a Claim

D. Del.May 15, 2017

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE NM, LLC, Plaintiff, v. PURCH GROUP, INC. Defendant. ) ) ) ) ) ) ) ) ) C.A. No. 16-1310-LPS-CJB DEFENDANT’S REPLY BRIEF IN SUPPORT OF ITS RULE 12(b)(6) MOTION TO DISMISS FOR FAILURE TO ALLEGE INFRINGEMENT OF A PATENTABLE CLAIM UNDER 35 U.S.C. § 101 OF COUNSEL: Ian G. DiBernardo Kenneth L. Stein STROOCK & STROOCK & LAVAN LLP 180 Maiden Lane New York, NY 10038 (212) 806-5400 Dated: May 15, 2017 Philip A. Rovner (#3215) Jonathan A. Choa (#5319) POTTER ANDERSON & CORROON LLP Hercules Plaza P.O. Box 951 Wilmington, DE 1989 (302) 984-6000 provner@potteranderson.com jchoa@potteranderson.com Attorneys for Defendant Purch Group, Inc. Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 1 of 14 PageID #: 263 i TABLE OF CONTENTS I. NM’s Objections To Purch’s Statement Of Facts Are Without Merit.................................1 II. The Claims Of The ‘554 Patent Are Unpatentable Under 35 U.S.C. § 101. .......................3 A. Contrary to NM’s Assertion, The Claims of the ‘554 Patent are Directed to an Abstract Idea. ...........................................................................................................3 B. Contrary to NM’s Assertion, The Claims of the ‘554 Patent Do Not Contain an Inventive Concept. ...................................................................................................6 III. The Claims Of The ‘053 Patent Are Unpatentable Under 35 U.S.C. § 101. .......................9 IV. No Claim Construction Is Needed To Decide This Motion ................................................9 Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 2 of 14 PageID #: 264 ii TABLE OF AUTHORITIES Page(s) Cases Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347 (2014) ........................................................................................................4, 6, 7 Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371 (Fed. Cir. 2015)..................................................................................................8 Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d 1341 (Fed. Cir. 2016)..................................................................................................8 Content Aggregation Solutions LLC v. Blu Products, Inc., No. 3:16-cv-00527, 2016 WL 6995490 (S.D. Cal. Nov. 29, 2016) .......................................4, 7 Content Extraction and Transmission LLC v. Wells Fargo Bank, National Assoc., 776 F.3d 1343 (Fed. Cir. 2014)........................................................................................4, 7, 10 Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. 2016)..........................................................................................4, 5, 8 Enfish, LLC v. Microsoft Corporation, 822 F.3d 1327 (Fed. Cir. 2016)..........................................................................................4, 5, 6 Intellectual Ventures I LLC v. AT&T Mobility LLC, No. 12-193-LPS, 2016 WL 7491806 (D. Del. Dec. 30, 2016) ..................................................8 Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363 (Fed. Cir. 2015)..................................................................................................7 Intellectual Ventures I, LLC v. Motorola Mobility LLC, 81 F. Supp. 3d 356, 367 (D. Del. 2015) .....................................................................................7 Intellectual Ventures I LLC v. Symantec Corp, 838 F.3d 1307 (Fed. Cir. 2016)..................................................................................................8 McRO, Inc. v. Bandai Namco Games America, Inc., 837 F.3d 1299 (Fed. Cir. 2016)..................................................................................................6 Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d. 1138 (Fed. Cir. 2016).............................................................................................3, 8 Statutes 35 U.S.C. § 101 ...................................................................................................................... passim Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 3 of 14 PageID #: 265 NM’s opposition to Purch’s motion to dismiss ignores Purch’s actual arguments and relies upon purported issues that have no relevance to the present case. First, NM asserts that Purch presented “no analysis of the claims as a whole” (D.I. 16. at 1)—yet, Purch did precisely that on pages 12-13 of its opening brief (D.I. 12 at 12 (“Furthermore, viewing the steps as a whole also reveals a lack of inventive concept.”)). Second, NM asserts that Purch “improperly over-simplifies the elements of the asserted claims” and improperly relies on “unsupported and factually erroneous attorney argument” that elements are “well-known” or add “nothing of significance.” D.I. 16 at 2. Yet Purch supported its statements with citations to the NM patents and their file histories. And notably, NM does not dispute that the claim elements were well-known and never even attempts to explain how any of those elements add something of significance to the purported invention. Further, contrary to NM’s assertion, the fact that the claims issued over the prior art is irrelevant—that is true for every case in which patent eligibility under § 101 is at issue. Third, NM asserts that Purch has “failed to show that this Motion can be decided without claim construction or further discovery.” Id. at 2. However, Purch has not identified a single claim construction issue that bears on this motion, nor has it identified any specific need for further discovery. I. NM’S OBJECTIONS TO PURCH’S STATEMENT OF FACTS ARE WITHOUT MERIT NM asserts that Purch “repeatedly errs in its statement of facts” (D.I. 16 at 3), yet does not identify a single actual factual dispute. Notably, NM does not dispute that the ‘554 and ‘053 patents contain only generic components—namely, a server 14; a database 11; a terminal 10 ( “typically a desktop computer 12 and modem connection 13”); a hand-held barcode scanner; a portable digital assistant (PDA) 20; and the Internet or other network 18. See D.I. 12 at 3; D.I. Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 4 of 14 PageID #: 266 2 16 at 3-5. NM also does not dispute that the NM patents use common software components, such as a database and generic search capabilities. Id. Further, NM does not dispute that it was known in the prior art to (i) search a database to obtain URLs (websites) related to a UPC; and (ii) search websites for product information. See D.I. 12 at 3, 7-8, 10; D.I. 16 at 3-5. NM asserts, however, that the “claims require specialized hardware and/or software in order to carry out the claimed method”—specifically, (i) the use of a “coded input,” (ii) a “specifically configured database,” and (iii) software “able to conduct the [two] querying steps.” D.I. 16 at 3. The phrase “coded input” appears only in the claims, but plainly refers to, for example, a UPC code. See Exhibit A to D.I. 12 at 10:10-11 (“The method of claim 15 wherein said coded input comprises a UPC code.”) (emphasis added); see also id. at 7:18-24 (describing that a user “inputs selected barcode information …, e.g., a UPC number” and databases relate “the input coded information and product category to other web sites”) (emphasis added). The NM patents acknowledge that coded inputs, such as a UPC codes, were well-known in the art, which NM does not dispute. See Exhibit A to D.I. 12 at 1:30-49; see also D.I. 12 at 7, 13, 17. With respect to the “database,” the NM patents do not describe how it is “specifically configured,” as NM asserts, but simply state that the “implementing server contain[s] databases relating the input coded information [e.g. UPCs] and product category to other web sites on a global network.” Exhibit A to D.I. 12 at 7:22-24. However, the NM patents acknowledge that such databases (relating UPCs to websites) were well known in the art, which, again NM does not dispute. See D.I. 12 at 3, 10; D.I. 16 at 3-5. With respect to software “able to conduct the [two] querying steps,” there is no dispute that those steps were individually well-known. See D.I. 12 at 3, 7-8, 10; D.I. 16 at 3-5. The question before this Court, however, is whether performing those two steps using a general Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 5 of 14 PageID #: 267 3 purpose computer and other well-known components is patent-eligible subject matter under § 101. NM has not identified any factual disputes that bear on that question. In fact, while NM fills almost three pages of its brief with supposed factual issues, they all boil down to the same two arguments—both of which are irrelevant and wrong. D.I. 16 at 3- 5. First, NM asserts that the claims as a whole must be patent-eligible, because “the combination of the claim elements was found patentable over the prior art.” See, e.g., .id. at 4 (emphasis added). However, it is always the case that § 101 issues arise in the context of claims that have been found patentable over the prior art—otherwise the claims would not be included in the patent in suit. See Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d. 1138, 1151 (Fed. Cir. 2016) (rejecting argument that claims contain an inventive concept because they were not shown to have been anticipated or obvious). Second, NM disagrees with Purch’s description of the claims as “a conventional method of searching the Internet for product information, based on a product identifier, such as a Uniform Product Code (‘UPC’).” See, e.g., D.I. 16 at 3. That amounts to nothing more than a dispute over the characterization of the abstract idea underlying the claims. It is not a factual dispute, but a legal issue for the Court to determine in the course of deciding this motion. II. THE CLAIMS OF THE ‘554 PATENT ARE UNPATENTABLE UNDER 35 U.S.C. § 101. A. Contrary to NM’s Assertion, The Claims of the ‘554 Patent are Directed to an Abstract Idea. NM disputes Purch’s assertion that the claims of the ‘554 patent are directed to an abstract idea (“performing a search on the Internet for product information—in particular, based on a product identifier, such as a UPC” (D.I. 12 at 7)) and instead proposes a more detailed description of the claimed invention, which it asserts constitutes a “concrete technological invention.” D.I. 16 at 10. The Federal Circuit has routinely rejected similar responses to § 101 Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 6 of 14 PageID #: 268 4 challenges. See Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350, 1351-52, 1353 (Fed. Cir. 2016) (holding that the abstract idea of the claims is “collecting information, analyzing it, and displaying certain results of the collection and analysis,” despite more detailed claim language); Content Extraction and Transmission LLC v. Wells Fargo Bank, National Assoc., 776 F.3d 1343, 1347 (Fed. Cir. 2014) (holding that “the claims of the asserted patents are drawn to the abstract idea of 1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory,” despite more detailed claim language); see also Content Aggregation Solutions LLC v. Blu Products, Inc., No. 3:16-cv-00527, 2016 WL 6995490, at *3-4 (S.D. Cal. Nov. 29, 2016) (rejecting plaintiffs claim that the Defendants are “stripping away the language of the claims”). As the Federal Circuit has explained, the Alice step one inquiry is to “look[] at the ‘focus’ of the claims, their ‘character as a whole,’” while the step two inquiry is to “look[] more precisely at what the claim elements add,” i.e.,, the “inventive concept.” Electric Power Group, 830 F.3d at 1353. Notably, the Federal Circuit has repeatedly held that patent claims focused on “collecting” and “analyzing” information, and “merely presenting the results …, without more (such as identifying a particular tool for presentation),” are directed to abstract ideas. Id. at 1353-54 (collecting cases). That is essentially what the claims of the ‘554 patent do—collect product information based on a product identifier, such as a UPC, and display the results. NM cites Enfish for the proposition that “it is relevant to ask whether the claims are directed to an improvement in computer functionality versus being directed to an abstract idea.” D.I. 16 at 11. However, Enfish supports Purch, not NM. Enfish involved claims directed to a “specific asserted improvement in computer capabilities”—namely, a “self-referential table for a computer database”—not a process “for which computers are invoked merely as a tool.” Enfish, Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 7 of 14 PageID #: 269 5 LLC v. Microsoft Corporation, 822 F.3d 1327, 1336 (Fed. Cir. 2016); see also id. at 1339 (“In sum, the self-referential table recited in the claims on appeal is a specific type of data structure designed to improve the way a computer stores and retrieves data in memory.”). In the present case, however, a computer (i.e., the implementing server) is used merely as a tool to conduct searches. See Exhibit A to D.I. 12 at 7:18-24, 39-42, 50-53. The ‘554 patent does not describe any specific improvement to a computer functionality (such as the improved computer database in Enfish), but instead relies on generic computer search capabilities to search a database and the Internet. See, e.g. DI 12 at 7-8, 11; Enfish, 822 F.3d at 1335-36; see Electric Power Group, 830 F.3d at 1354 (distinguishing Enfish on the basis that “the focus of the claims [in Electric Power] is not on such an improvement in computers as tools [as in Enfish], but on certain independently abstract ideas that use computers as tools.”). Notably, contrary to NM’s reliance on Enfish, the ‘554 patent never specifically explains how the database search or Internet search are performed, much less an improvement to those capabilities. As such, this case falls squarely among those cases in which courts have found computer-related claims to be directed to abstract ideas. See, e.g., id. (finding claims directed to an abstract idea where “[t]he advance they purport to make is a process of gathering and analyzing information of a specified content, then displaying the results, and not any particular assertedly inventive technology for performing those functions.”). This is not a case, like Enfish, in which the claims are directed to “a specific implementation of a solution to a problem in the software arts.” Enfish, 822 F.3d at 1339.1 1 Moreover, the Federal Circuit has recognized that in “cases involving computer-related claims, there may be close calls about how to characterize what the claims are directed to,” and that, “[i]n such cases, an analysis of whether there are arguably concrete improvements in the recited Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 8 of 14 PageID #: 270 6 B. Contrary to NM’s Assertion, The Claims of the ‘554 Patent Do Not Contain an Inventive Concept. NM baldly asserts that Purch “over-simplifie[d]” the asserted claims and “ignore[d] multiple elements,” in particular, “the two claimed querying steps.” D.I. 16 at 12. NM is wrong—Purch methodically considered all the steps of claim 15, including the two querying steps, and showed that claim 15 contains no inventive concept whether those steps are viewed individually or as a whole. D.I. 12 at 9-13. NM cites McRO, Inc. v. Bandai Namco Games America, Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016) for the proposition that “[C]ourts must be careful to avoid oversimplifying the claims” (D.I. 16 at 12 (internal quotation marks omitted), but never explains—because it cannot—how Purch supposedly did so here. Notably, NM does not dispute that the five steps of claim 15, viewed individually, were each well-known and do not contain an inventive concept. Compare D.I. 12 at 9-11 and D.I. 16 at 12. Instead, NM asserts that the two querying steps, in combination, constitute an inventive concept. See D.I. 16 at 12-13. However, as explained in D.I. 12 at 12, which NM does not dispute, each of those querying steps were well-known steps initiated by a user—a first querying step to look up websites, such as a manufacturer website, that may have product information relating to a UPC, and a second querying step to search those websites for the product information. As Purch explained, initiating those two steps automatically on a computer, instead of initiating them by hand by a user, does not constitute an inventive concept. Id. at 12. Indeed, the only purported benefit of having a computer initiate those steps rather than a person is speed and efficiency (Exhibit A to D.I. 12 at 5:45-50 (“the system of the invention permits the individual to avoid the time-consuming hassle of performing multiple ‘key word’ searches … computer technology could take place under step two.” Id. Thus, the Court should, at minimum, proceed to Alice step two and determine whether there is an inventive concept. Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 9 of 14 PageID #: 271 7 [on a] step-by-step basis”), 2:6-25), but the Federal Circuit has held that such improvement is “insufficient to provide an inventive concept.” Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1367 (Fed. Cir. 2015) (“improved speed or efficiency inherent with applying the abstract idea on a computer” is insufficient to provide an inventive concept); Content Aggregation, 2016 WL 6995490, at *6 (“The automation of human activity using conventional technology is not an a inventive concept.”). Hence, considered “as an ordered combination,” the steps of claim 15 “ad[d] nothing ... that is not already present when the steps are considered separately” and do not give rise to a patent-eligible invention. See Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S.Ct. 2347, 2359 (2014). NM entirely ignores that point. Further, NM does not dispute that the prior-art process, described in D.I. 12 at 12-13, for looking up product information based on a part number was well-known. See D.I. 16 at 12-13. Instead, NM argues only that the claims do not “preclude” all forms of “looking up product information,” “product codes” or UPCs on the Internet. Id. at 13. In so doing, NM conflates two principles in § 101 analysis: (i) “[f]or the role of a computer in a computer-implemented invention to be deemed meaningful in the context of this analysis, it must involve more than performance of ‘well-understood, routine, [and] conventional activities previously known to the industry’”( Content Extraction, 776 F.3d at 1347-48 (citing Alice, 134 S.Ct. at 2359)); and (ii) “[t]he pre-emption inquiry,” which “focuses on whether the patent ‘would risk disproportionately tying up the use of the underlying ideas.’” Intellectual Ventures I, LLC v. Motorola Mobility LLC, 81 F. Supp. 3d 356, 367 (D. Del. 2015) (citing Alice, 134 S.Ct. at 2354). NM focuses only on preemption, while ignoring Purch’s point that the claims involve the performance on a computer of a well-understood, routine, and conventional process. Notably, the Federal Circuit has held that preemption is not dispositive and, in particular, that “[w]hile preemption may signal Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 10 of 14 PageID #: 272 8 patent ineligible subject matter, the absence of complete preemption does not demonstrate patent eligibility.” Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015) (emphasis added). Accordingly, even assuming that the claims here do not preclude all forms of looking up product information, product codes or UPCs on the Internet, that does not make them patent-eligible under § 101. The Bascom case cited by NM is distinguishable. As the Federal Circuit explained in Intellectual Ventures I LLC v. Symantec Corp, in Bascom, the claims allegedly improved an existing technological process by describing “how [a] particular arrangement of elements is a technical improvement over prior art ways of filtering [Internet] content.” Intellectual Ventures I LLC v. Symantec Corp, 838 F.3d 1307, 1316 (Fed. Cir. 2016) (distinguishing Bascom Global Internet Services, Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016)) (brackets in original) (emphasis added). Whereas the Bascom patent emphasized the technological improvement—intrinsic evidence heavily relied upon by the court—the ‘554 patent, like the patent found invalid in Intellectual Ventures I v. Symantec, does not describe any “specific or limiting recitation of improved computer technology” (id. (ellipses omitted)), but instead involves only the routine and conventional use of technology and improved ease and speed. See id.; see also Synopsys, 839 F.3d. at 1151-52 (Fed. Cir. 2016) (distinguishing Bascom); Electric Power Group, 830 F.3d at 1355-56 (same); and Intellectual Ventures I LLC v. AT&T Mobility LLC, No. 12-193-LPS, 2016 WL 7491806, at *11 (D. Del. Dec. 30, 2016) (same). Accordingly, NM’s reliance on Bascom is misplaced. Lastly, NM does not dispute that independent system claim 1 rises or falls with claim 15, offering no arguments to the contrary. In addition, NM does not identify anything in any dependent claim that it contends adds something of significance to the purported invention. D.I. Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 11 of 14 PageID #: 273 9 16 at 13-14. Accordingly, the dependent claims also rise or fall with claim 15. III. THE CLAIMS OF THE ‘053 PATENT ARE UNPATENTABLE UNDER 35 U.S.C. § 101. On pages 15-17 of Purch’s opening brief (D.I. 12), Purch explained in detail how the independent claims of the ‘053 patent are essentially the same as the independent claims of the ‘554 patent except for trivial, well-known features that add nothing of significance to the purported invention. In response, NM offers nothing but a conclusory denial that fails to specifically dispute a single one of Purch’s points and, significantly, fails to identify (because it cannot) a single element or combination of elements in those claims that adds something of significance to the purported invention. See D.I. 16 at 14-15. Likewise on pages 17-20 of Purch’s opening brief (D.I. 12), Purch explained how the dependent claims of the ‘053 patent also recite commonplace features that add nothing of significance to the purported invention. Again, NM offers nothing but a conclusory denial in response, failing to specifically dispute a single one of Purch’s points and failing to identify (again because it cannot) a single element or combination of elements in those claims that adds something of significance to the purported invention. See D.I. 16 at 15. IV. NO CLAIM CONSTRUCTION IS NEEDED TO DECIDE THIS MOTION NM asserts that this motion should be denied because certain claim terms “may require claim construction” and give rise to “factual disputes … for which a full factual record should be developed.” D.I. 16 at 16 (emphasis added). However, NM has not identified a single term actually requiring construction nor a single factual dispute bearing on claim construction or anything else. NM identified only three terms that supposedly may require construction: (i) “coded input,” (ii) “database,” and (iii) “check-sum.” See D.I. 16 at 16-19. Those terms all have their Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 12 of 14 PageID #: 274 10 plain and ordinary meaning and are readily understood in the context of the NM patents. A “coded input” refers to, for example, a “UPC” or “barcode” (or similar identifier) that provides information about a product, such as its manufacturer and/or category. See Exhibit A to D.I. 12 at 10:8-14; see also id. at 7:18-24. “Database” is a common term that simply refers to an organized collection of data. “Check-sum” is typically a digit in an identifier, such as a UPC, that is used to verify that the identifier is valid. Id., 7:25-30 (“The server is programmed to run extensive checks to verify that the UPC number entered is valid,” including “that the checksum digit [in the UPC number] is correct.”). At a minimum, these terms encompass these ordinary meanings, which provide a sufficient basis for invalidity under § 101, so a full claim construction is unnecessary. NM does not even attempt to explain why these terms must be construed before the Court can rule on this motion. NM also asserts that “contours of [the two] querying steps may be a subject for claim construction,” but does not attempt to explain what the claim construction dispute may be or why it would prevent the Court from ruling on this motion. D.I. 16 at 17-18 (italics added). In addition, NM asserts that certain “means” terms “may require claim construction,” but once again does not attempt to explain their relevance to the present motion. Id. at 18 (emphasis added). The Federal Circuit has held that “claim construction is not an inviolable prerequisite” to determining validity under § 101. Content Extraction, 776 F.3d at 1349. Where there is a claim construction dispute, the court can proceed by construing the terms in the manner most favorable to the plaintiff. Id. Here, however, NM has not even identified an actual claim construction dispute. There is no reason for the Court to await claim construction proceedings before ruling on this motion. Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 13 of 14 PageID #: 275 11 OF COUNSEL: Ian G. DiBernardo Kenneth L. Stein STROOCK & STROOCK & LAVAN LLP 180 Maiden Lane New York, NY 10038 (212) 806-5400 Dated: May 15, 2017 5161370 POTTER ANDERSON & CORROON LLP By: /s/ Philip A. Rovner Philip A. Rovner (#3215) Jonathan A. Choa (#5319) Hercules Plaza P.O. Box 951 Wilmington, DE 19899 (302) 984-6000 provner@potteranderson.com jchoa@potteranderson.com Attorneys for Defendant Purch Group, Inc. Case 1:16-cv-01310-LPS-CJB Document 18 Filed 05/15/17 Page 14 of 14 PageID #: 276