Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

D&M Holdings, Inc., v. Sonos, Inc.

United States District Court, D. Delaware

April 18, 2017

D&M HOLDINGS INC. d/b/a THE D GROUP, D&M HOLDINGS U.S. INC., Plaintiffs,
v.
SONOS, INC., Defendant.

          Jack B. Blumenfeld, Esq., MORRIS NICHOLS ARSHT & TUNNELL LLP, Wilmington, DE; Michael J. Flynn, Esq., MORRIS NICHOLS ARSHT & TUNNELL LLP, Wilmington, DE; John M. Jackson, Esq., JACKSON WALKER LLP, Dallas, TX; Matthew C. Acosta, Esq. (argued), JACKSON WALKER LLP, Dallas, TX; Blake T. Dietrich, Esq., JACKSON WALKER LLP, Dallas, TX; David Folsom, Esq., JACKSON WALKER LLP, Texarkana, TX.

          Attorneys for Plaintiffs Phillip A. Rovner, Esq., POTTER ANDERSON & CORROON LLP, Wilmington, DE; Jonathan A. Choa, Esq., POTTER ANDERSON & CORROON LLP, Wilmington, DE; George I. Lee, Esq., LEE SULLIVAN SHEA & SMITH, LLP, Chicago, IL; Sean M. Sullivan, Esq., LEE SULLIVAN SHEA & SMITH, LLP, Chicago, IL; Rory P. Shea, Esq. (argued), LEE SULLIVAN SHEA & SMITH, LLP, Chicago, IL; J. Dan Smith, Esq., LEE SULLIVAN SHEA & SMITH, LLP, Chicago, IL; Michael P. Boyea, Esq., LEE SULLIVAN SHEA & SMITH, LLP, Chicago, IL.

          MEMORANDUM OPINION

          ANDREWS, U.S DISTRICT JUDGE

         Presently before the Court is Defendant's Motion to Dismiss Plaintiffs' First, Second, Third, Fourth, Fifth, Seventh, and Eighth Counterclaims. (D.I. 9). The issues have been fully briefed. (D.I. 10, 17, 19). The Court held oral argument on November 14, 2016. (D.I. 41) ("Hr'g Tr."). For the reasons that follow, the Court will deny Defendants' motion.

         I. BACKGROUND

         This patent infringement lawsuit began when Plaintiffs requested leave to add counterclaims in a related action filed by Defendant against Plaintiffs on October 21, 2014. (Civ. Act. No. 14-1330, D.I. 81). The Court granted leave but severed these infringement counterclaims into the instant case. (Civ. Act. No. 14-1330, D.I. 100). Plaintiffs assert nine patents in their counterclaims. (D.I. 1). Defendants have moved to dismiss seven of these counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (D.I. 9). Defendant alleges that four of the asserted patents are invalid under 35 U.S.C. § 101 because each of these patents claims an unpatentable abstract idea. (D.I. 10 at 6). These patents are U.S. Patent Nos. 7, 343, 435 ("the '435 patent"), 7, 734, 850 ("the '850 patent"), 6, 539, 210 ("the '210 patent"), and 7, 305, 694 ("the '694 patent"). (Id.). Defendant further alleges that three of Plaintiffs' counterclaims fail to state a plausible claim for infringement. (Id. at 7). These counterclaims relate to U.S. Patent Nos. 8, 755, 667 ("the '677 patent"), 6, 469, 633 ("the '633 patent"), and 7, 995, 899 ("the '899 patent"). (Id.).

         II. LEGAL STANDARD

         A. Patentable Subject Matter under 35 U.S.C. § 101

         Section 101 of the Patent Act defines patent-eligible subject matter. It provides: "Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." 35 U.S.C. § 101. The Supreme Court has recognized an implicit exception for three categories of subject matter not eligible for patentability-laws of nature, natural phenomena, and abstract ideas. Alice Corp. Pty. v. CLS Banklnt'l, 134 S.Ct. 2347, 2354 (2014). The purpose of these carve outs is to protect the "basic tools of scientific and technological work." Mayo Collaborative Servs. v. Prometheus Labs., Inc., 556 U.S. 66, 71 (2012). "[A] process is not unpatentable simply because it contains a law of nature or a mathematical algorithm, " as "an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection." Id. at 1293-94 (internal quotation marks and emphasis omitted). In order "to transform an unpatentable law of nature into a patent-eligible application of such a law, one must do more than simply state the law of nature while adding the words 'apply it.'" Id. at 1294 (emphasis omitted).

         The Supreme Court recently reaffirmed the framework laid out in Mayo "for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts." Alice, 134 S.Ct. at 2355. First, the court must determine whether the claims are drawn to a patent-ineligible concept. Id. If the answer is yes, the court must look to "the elements of the claim both individually and as an 'ordered combination'" to see if there is an "'inventive concept'-i.e., an element or combination of elements that is 'sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.'" Id. (alteration in original). "A claim that recites an abstract idea must include 'additional features' to ensure 'that the [claim] is more than a drafting effort designed to monopolize the [abstract idea].'" Id. at 2357 (alterations in original) (quoting Mayo, 556 U.S. at 77). "[S]imply appending conventional steps, specified at a high level of generality, to ... abstract ideas cannot make those ... ideas patentable." Mayo, 556 U.S. at 82. Further, "the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a particular technological environment." Alice, 134 S.Ct. at 2358 (quoting Bilski v. Kappos, 561 U.S. 593, 610-11 (2010)). Thus, "the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention." Id. For this second step, the machine-or-transformation test can be a "useful clue, " although it is not determinative. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014), cert, denied, 135 S.Ct. 2907 (2015).

         Patent eligibility under § 101 is a question of law suitable for resolution on a motion to dismiss. See OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362 (Fed. Cir. 2015); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass'n, 776 F.3d 1343, 1346 (Fed. Cir. 2014), cert, denied, 136 S.Ct. 119 (2015). The Federal Circuit follows regional circuit law for motions to dismiss. Content Extraction, 776 F.3d at 1346. When reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), this Court must accept the complaint's factual allegations as true. See Bell Ail. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007).

         The Federal Circuit has held that the district court is not required to individually address claims not asserted or identified by the non-moving party, so long as the court identifies a representative claim and "all the claims are substantially similar and linked to the same abstract idea." Content Extraction, 776 F.3d at 1348 (internal quotation marks omitted).

         B. Patent Infringement Pleading Standards

         Rule 8 requires a complainant to provide "a short and plain statement of the claim showing that the pleader is entitled to relief" Fed.R.Civ.P. 8(a)(2). Rule 12(b)(6) allows the accused party to bring a motion to dismiss the claim for failing to meet this standard. Prior to December 1, 2015, Form 18 directed plaintiffs in patent infringement suits to plead their infringement allegations in a particular way. Fed.R.Civ.P. Form 18 (abrogated Dec. 1, 2015). Specifically, Form 18 enabled plaintiffs to meet a four-part pleading standard requiring them to allege (1) jurisdiction; (2) ownership of the patent; (3) defendant's infringement "by making, selling, and using [the device] embodying the patent"; and (4) a demand for relief. In re Bill of Lading Transmission and Processing Sys. Patent Litig., 681 F.3d 1323, 1334 (Fed. Cir. 2012).

         On December 1, 2015, amendments to the Federal Rules went into effect abrogating Form 18. The order adopting the amendments explained that the changes "shall govern in all proceedings in civil cases thereafter commenced and, insofar as just and practicable, all proceedings then pending." Supreme Court of the United States, Order Regarding Amendments to the Federal Rules of Civil Procedure (U.S. Apr. 29, 2015).

         For cases filed after Form 18 was abrogated, patent infringement allegations are evaluated under the plausibility standard of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). Under this standard, a Rule 12(b)(6) motion may be granted only if, accepting the well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the complainant, a court concludes that those allegations "could not raise a claim of entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007).

         "Though 'detailed factual allegations' are not required, a complaint must do more than simply provide 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action.'" Davis v. Abington Mem 'IHosp., 765 F.3d 236, 241 (3d Cir. 2014) (quoting Twombly, 550 U.S. at 555). The Court is "not required to credit bald assertions or legal conclusions improperly alleged in the complaint." In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002). A complaint may not be dismissed, however, "for imperfect statement of the legal theory supporting the claim asserted." Johnson v. City of Shelby, 135 S.Ct. 346, 346 (2014).

         A complainant must plead facts sufficient to show that a claim has "substantive plausibility." Id. at 347. That plausibility must be found on the face of the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "A claim has facial plausibility when the [complainant] pleads factual content that allows the court to draw the reasonable inference that the [defendant] is liable for the misconduct alleged." Id. Deciding whether a claim is plausible will be a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

         III. DISCUSSION

         A. Motion to Dismiss Plaintiffs' First Counterclaim for Infringement of the '435 Patent

         In their First Counterclaim, Plaintiffs assert both direct and indirect infringement of the '435 patent. (D.I. 1, ¶¶ 19-27). The '435 patent contains two independent claims: claim 1 and claim 9. In briefing, Defendant argued that claim 1 is representative.[1] (D.I. 10 at 11). Claim 1 reads:

1. A method of determining a recovery state in a data stream, comprising:
receiving a compressed data stream;
detecting a compression block boundary in the compressed data stream;
detecting an archive block boundary in the compressed data stream;
detecting a file boundary in the compressed data stream;
and in response to the detection of the compression block boundary, the archive block boundary, and the file boundary, saving a recovery state for the compressed data stream; wherein the recovery state includes a position of the compression block boundary, and a position of the file boundary.

('435 patent, claim 1).

         "First, we determine whether the claims at issue are directed to [an abstract idea]." Alice, 134 S.Ct. at 2355. "The 'abstract ideas' category embodies 'the longstanding rule that an idea of itself is not patentable.'" Id. (internal quotation marks omitted) (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972)). "The Supreme Court has not established a definitive rule to determine what constitutes an 'abstract idea' sufficient to satisfy the first step of the Mayo/Alice inquiry." Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334 (Fed. Cir. 2016). The Supreme Court has recognized, however, that "fundamental economic practice[s], " Bilski, 561 U.S. at 611, "method[s] of organizing human activity, " Alice, 134 S.Ct. at 2356, and mathematical algorithms, Benson, 409 U.S. at 64, are abstract ideas. In navigating the parameters of such categories, courts have generally sought to "compare claims at issue to those claims already found to be directed to an abstract idea in previous cases." Enfish, 822 F.3d at 1334. "But in determining whether the claims are directed to an abstract idea, we must be careful to avoid oversimplifying the claims because '[a]t some level, all inventions ... embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.'" In re TLI Commc'ns LLC Patent Litig., 823 F.3d 607, 611 (Fed. Cir. 2016) (alterations in original) (quoting Alice, 134 S.Ct. at 2354).

         Defendant asserts that, like the concept of gathering and combining data in Digitech, the '435 patent seeks to claim "an abstract process of receiving, detecting, and storing data that is not tied to any device whatsoever." (D.I. 10 at 11-12). Defendant further analogizes the claims of the '435 patent to those at issue in Content Extraction, where the Federal Circuit invalidated a patent that claimed the abstract idea of collecting, recognizing, and storing data. (Id. at 12).

         Plaintiffs counter that Defendant is oversimplifying in characterizing the invention. (D.I. 17 at 10-11). Plaintiffs assert that the invention is "directed to a method of determining and using recovery state information to recover from interruptions occurring during a data stream transfer." (Id. at 11). Plaintiffs cite no cases in support of their contention that this patent is not directed to an abstract idea. Instead, Plaintiffs attempt to distinguish this case from those cited by Defendant. (Id.).

         I agree with Defendant that claim 1 of the '435 patent is directed to an abstract idea. As the Federal Circuit has held numerous times, collecting information is "within the realm of abstract ideas." Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016). Claim 1 of the '435 patent requires: 1) receiving a compressed data stream; 2) detecting compression block, archive block, and file boundaries; and 3) saving the information detected in step 2. This is precisely the kind of claim that the Federal Circuit has found to be an abstract idea, as it is directed to the concept of collecting and storing data. See Electric Power Group, 830 F.3d at 1353 (claims directed to abstract idea of collecting and analyzing information, and displaying results); TLI Commc'ns, 823 F.3d at 613 (claims directed to abstract idea of classifying, organizing, and storing digital images"); Content Extraction, 776 F.3d at 1347 (claims drawn to abstract idea of collecting, recognizing, and storing data); Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1350 (Fed. Cir. 2014) (claims drawn to abstract idea of "organizing information through mathematical correlations"). Furthermore, the method is not tied to a specific device or structure. Digitech, 758 F.3d at 1350.

         Plaintiffs contend that claim 1 of the '435 patent is distinguishable from the claims found patent ineligible in Content Extraction. (D.I. 17 at 11). According to Plaintiffs, "the '435 patent describes specific methods of monitoring data transfers and communications among various devices and recovering from potential interruptions to the data streams." (Id.). Plaintiffs state this conclusion without any argument in support. I disagree with Plaintiffs' characterization of claim 1. Nowhere in this claim is there any mention of "recovering from potential interruptions." Furthermore, data transfers and communications between devices are well-known and conventional, as are compressed archive files; Plaintiffs do not contend otherwise. (Hr'g Tr. at 30:9-11). There is simply nothing more "specific" about the method in this claim than the fact that it is to be applied to transfers of compressed data streams.

         There is also nothing new or improved about the type of data that is received or how it is stored according to the claimed method. The patent specifies that "data files are often downloaded in ... compressed format." ('435 patent at 1:8-9). As detailed in the specification, the claimed method operates on "a conventional compressed archive." (Id. at 1:40). The specification details how a conventional compressed archive is formed and reveals that the archive block, compression block, and file boundaries are also conventional. (Id. at 1:40-54). The claimed method requires only that the information about file, archive block, and compression block boundaries be detected and stored. The method does not claim anything new or inventive about how this conventional information is stored, does not require any analysis or manipulation of the data, and does not even specify that the data that is stored ever be used for anything. In other words, the method claimed in the '435 patent claims nothing more than receiving a conventional compressed archive, detecting conventional information about file, archive block, and compression block boundaries within the data stream, and storing this detected information.

         There is also nothing in the claim that represents an improvement in existing technology. See Enfish, 822 F.3d at 1337 (finding claims directed to new type of database that represented "an improvement of an existing technology" not abstract). The specification purports to provide an improved method for compressed file downloads that solves problems associated with interruptions of such downloads. ('435 patent at 2:4-24). Claim 1, however, does not address this problem; there is nothing in the claim language that is directed to recovering from an interruption.

         Therefore, I find that the '435 patent is directed to the abstract idea of receiving, ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.