United States District Court, D. Delaware
D&M HOLDINGS INC. d/b/a THE D GROUP, D&M HOLDINGS U.S. INC., Plaintiffs,
SONOS, INC., Defendant.
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,
ANDREWS, U.S DISTRICT JUDGE
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
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").
Patentable Subject Matter under 35 U.S.C. § 101
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
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).
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).
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).
Patent Infringement Pleading Standards
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).
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).
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).
'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).
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
Motion to Dismiss Plaintiffs' First Counterclaim for
Infringement of the '435 Patent
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. (D.I. 10 at 11). Claim 1 reads:
1. A method of determining a recovery state in a data stream,
receiving a compressed data stream;
detecting a compression block boundary in the compressed data
detecting an archive block boundary in the compressed data
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
('435 patent, claim 1).
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).
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).
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.).
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.
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.
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
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.
I find that the '435 patent is directed to the abstract
idea of receiving, ...