United States District Court, D. Delaware
SMART METER TECHNOLOGIES, INC. Plaintiff,
DUKE ENERGY CORPORATION, Defendant.
Wilmington this 11th day of July, 2017, having
reviewed the papers submitted in connection with
defendant's motion to dismiss (D.I. 7), the court issues
its decision as follows:
Meter Technologies, Inc. ("plaintiff") is the owner
of U.S. Patent No. 7, 058, 524 ("the '524
patent"). (D.I. 1 at ¶ 8) The '524 patent
relates to an electrical power metering system. (D.I. 1 at
¶ 7) Duke Energy Corporation ("defendant") is
a "power holding company in the United States, supplying
and delivering energy to approximately 7.4 million U.S.
customers." (D.I. 1 at ¶ 2 (quotation omitted))
Plaintiff contends that defendant infringes claim 17 of
the'524 patent. (D.I. 1 at ¶¶ 11-12) Defendant
moved to dismiss for failure to state a claim for relief
under Federal Rules of Civil Procedure 12(b)(6). (D.I. 7) The
court has jurisdiction pursuant to 28 U.S.C. §§
1331 and 1338(a).
Standard of Review.
motion filed under Rule 12(b)(6) tests the sufficiency of a
complaint's factual allegations. Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007); Kost v.
Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). A complaint
must contain "a short and plain statement of the claim
showing that the pleader is entitled to relief, in order to
give the defendant fair notice of what the . . . claim is and
the grounds upon which it rests." Twombly, 550
U.S. at 545 (internal quotation marks omitted) (interpreting
Fed.R.Civ.P. 8(a)). Consistent with the Supreme Court's
rulings in Twombly and Ashcroft v. Iqbal,
556 U.S. 662 (2009), the Third Circuit requires a three-part
analysis when reviewing a Rule 12(b)(6) motion. Connelly
v. Lane Const. Corp., 809 F.3d 780, 787 (3d. Cir. 2016).
In the first step, the court "must tak[e] note of the
elements a plaintiff must plead to state a claim." Next,
the court "should identify allegations that, because
they are no more than conclusions, are not entitled to the
assumption of truth." Lastly, "[w]hen there are
well-pleaded factual allegations, a court should assume their
veracity and then determine whether they plausibly give rise
to an entitlement for relief." Id. (citations
Under Twombly and Iqbal, the complaint must
sufficiently show that the pleader has a plausible claim.
McDermott v. Clondalkin Grp., 2016 WL 2893844, at *3
(3d Cir. May 18, 2016). Although "an exposition of [the]
legal argument" is unnecessary, Skinner v.
Switzer, 562 U.S. 521 (2011), a complaint should provide
reasonable notice under the circumstances. Id. at
530. A filed pleading must be "to the best of the
person's knowledge, information, and belief, formed after
an inquiry reasonable under the circumstances, " such
that "the factual contents have evidentiary support, or
if so identified, will likely have evidentiary support after
a reasonable opportunity for further investigation or
discovery." Anderson v. Bd. of Sch. Directors of
Millcreek Twp. Sch. Dist, 574 F.App'x 169, 174 (3d
Cir. 2014) (quoting Fed.R.Civ.P. 11(b)). So long as
plaintiffs do not use "boilerplate and conclusory
allegations" and "accompany their legal theory with
factual allegations that make their theoretically viable
claim plausible, " the Third Circuit has held
"pleading upon information and belief [to be]
permissible where it can be shown that the requisite factual
information is peculiarly within the defendant's
knowledge or control." McDermott, 2016 WL
2893844, at *4 (quotation marks, citation, and emphasis
part of the analysis, a court must accept all well-pleaded
factual allegations in the complaint as true, and view them
in the light most favorable to the plaintiff. See
Erickson v. Pardus, 551 U.S. 89, 94 (2007);
Christopher v. Harbury, 536 U.S. 403, 406 (2002);
Phillips v. Cnty. of Allegheny, 515 F.3d 224, 231
(3d Cir. 2008). In this regard, a court may consider the
pleadings, public record, orders, exhibits attached to the
complaint, and documents incorporated into the complaint by
reference. Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 322 (2007); Oshiver v. Levin,
Fishbein, Sedran & Berman, 38 F.3d 1380, 1384-85 n.2
(3d Cir. 1994). The court's analysis is a
context-specific task requiring the court "to draw on
its judicial experience and common sense."
Iqbal, 556 U.S. at 663-64.
§ 101. Defendant argues that dismissal is appropriate,
because "claim 17 is ineligible for patent protection
under 35 U.S.C. § 101." (D.I. 8 at 2) The Patent
Act extends patent protection to "any new and useful
process, machine, manufacture, or composition of matter, or
any new and useful improvement thereof. . . subject to the
conditions and requirements of this title." 35 U.S.C.
§ 101. Despite the protections of § 101, the
Supreme Court has held that, "[e]xcluded from such
protection are laws of nature, natural phenomena, and
abstract ideas." Diamond v. Diehr, 450 U.S.
175, 185 (1981). The purpose of these exceptions is to
protect the "basic tools of scientific and technological
work." Mayo Collaborative Servs. v. Prometheus
Labs., Inc., __ U.S. __, 132 S.Ct. 1289, 1293 (2012). In
Alice, the Supreme Court endorsed a two-step
"framework for distinguishing patents that claim laws of
nature, natural phenomena, and abstract ideas from those that
claim patent-eligible applications of those concepts."
Alice Corp. Pty Ltd. v. CLS Bank Int'l, U.S.,
134 S.Ct. 2347, 2355 (2014). First, the court must determine
if the claims at issue are directed to a patent-ineligible
concept. Id. If the answer is no, that ends the
matter and the defendant's motion is denied. See,
e.g., Enfish, LLC v. Microsoft Corp., 822 F.3d 1327,
1337 (Fed. Cir. 2016) (finding in step one that the claims
were not directed to an abstract idea and, therefore, not
addressing step two). If, however, the answer is yes, then
the court must "determine whether the additional
elements transform the nature of the claim into a
patent-eligible application." Alice, 134 S.Ct.
Alice, Step One.
'directed to' inquiry applies a stage-one filter to
claims, considered in light of the specification, based on
whether 'their character as a whole is directed to
excluded subject matter.'" Enfish, 822 F.3d
at 1335 (citing Internet Patents Corp. v. Active Network,
Inc., 790 F.3d 1343, 1346 (Fed.Cir.2015)).
While the Supreme Court "has not established a
definitive rule to determine what constitutes an
'abstract idea' ....[, it is] sufficient to compare
claims at issue to those claims already found to be directed
to an abstract idea in previous cases." Id. at
17 of the'524 patent recites:
A method of measuring power consumption information on a