United States District Court, D. Delaware
REPORT AND RECOMMENDATION
CHRISTOPHER J. BURKE, UNITED STATES MAGISTRATE JUDGE
pending before the Court is Defendant Amazon.com, Inc.'s
("Defendant" or "Amazon") motion to
dismiss for failure to state a claim (the
"Motion"), filed pursuant to Federal Rule of Civil
Procedure 12(b)(6). (D.I. 10) Defendant argues that Plaintiff
M2M Solutions LLC's ("Plaintiff or "M2M")
asserted United States Patent Nos. 8, 504, 007 (the
'"007 patent"), 8, 577, 358 (the "'358
patent"), and 8, 577, 359 (the "'359
patent") (collectively, the "asserted patents"
or the "patents-in-suit") are directed to
non-patent-eligible subject matter pursuant to 35 U.S.C.
§ 101 ("Section 101"). For the reasons that
follow, the Court recommends that Defendant's Motion be
DENIED, in the manner further described below.
three asserted patents in this action, each entitled
"System and Method for Remote Asset Management[, ]"
are related and they share a common specification. (D.I. 1,
exs. A-C; see also D.I. 11 at 4; D.I. 15 at 2 &
n.l) They are among a family of patents that concern
machine-to-machine ("m2m") communication systems.
(D.I. 15 at 2 n.l; D.I. 36 (hereinafter, "Tr.") at
51) All three claim priority to Application No.
PCT/GB03/02171, filed on May 21, 2003, which is now United
States Patent No. 7, 027, 808.
general, "wireless [m2m] applications have historically
involved systems in which various types of technical
equipment wirelessly connected to communications networks
have been monitored, and to varying degrees managed, by
remote computer server platforms." (D.I. 1 at ¶ 9)
The patents purport to disclose a system and method "for
providing a range of consumer services by autonomously
monitoring and managing consumer device assets[.]"
('007 patent, cols. 25:2-4, 27:10-12) The system features
"a plurality of consumer device assets" which are
registered to a remote computer server platform.
(Id., Abstract) The remote computer server platform of
the invention executes software to monitor and manage the
consumer device assets. (Id.) The consumer device
assets automatically "communicate operational status
information and consumer usage information to the remote
computer server platform[, ]" which then automatically
processes that information "according to preprogrammed
conditions." (Id.) Based on the results of
processing "at least some of the received consumer usage
information, the remote computer server platform manages the
consumer device assets by communicating management
instructions that cause the stored data content files of one
or more of the assets to be automatically modified."
undisputed that the three patents' claims share
substantial similarities, as "each [patent] contains a
total of thirty asserted claims having subject matter that is
similar across like numbered claims, except that the '007
patent is drafted as systems claims, the '358 patent as
method claims, and the '359 patent as apparatus
claims." (D.I. 15 at 2-3; see also D.I. 11 at 5
n.2 ("The claims of the '007 patent are system
versions of the '358 patent method claims. The claims of
the '359 patent are a subset of the '007 claims that
recite only the server platform elements.")) Thus, the
parties agree that for present purposes, "the elements
of the '358 patent claims can be treated as fully
analogous to the elements of like-numbered claims in the
'007 and '359 patents." (D.I. 11 at 5 n.2) Below
in Section III the Court will further describe relevant
claims at issue, using the claims of the '007 patent as
comnenced tms patent infringement action on February 28, 2017
(D.I.I) Chief Judge Leonard P. Stark thereafter referred the
case to the Court to resolve any and all matters with regard
to scheduling, as well as any motions to dismiss, stay and/or
transfer venue. (D.I. 5)
filed the instant Motion in lieu of answering on April 21,
2017, (D.I. 10), and briefing was completed on June 2, 2017,
(D.I. 16). Thereafter, M2M filed a notice of
supplemental authority, calling to the Court's attention
the recent decision of the United States Court of Appeals for
the Federal Circuit in Visual Memory LLC v. NVIDIA
Corp., 867 F.3d 1253 (Fed. Cir. 2017). (D.I. 33) The
Court held oral argument on the Motion on September 21, 2017.
(D.I. 36) Thereafter, Amazon also filed a notice of
supplemental authority. (D.I. 42)
STANDARD OF REVIEW
Standard of Review Regarding a Rule 12 Motion that Challenges
Patent Eligibility Pursuant to Section 101
to Rule 12(b)(6), a party may move to dismiss the plaintiffs
complaint based on the failure to state a claim upon which
relief can be granted. Fed.R.Civ.P. 12(b)(6). The sufficiency
of pleadings for non-fraud cases is governed by Federal Rule
of Civil Procedure 8, which requires "a short and plain
statement of the claim showing that the pleader is entitled
to relief[.]" Fed.R.Civ.P. 8(a)(2). In order to survive
a motion to dismiss pursuant to Rule 12(b)(6), "a
complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its
face." Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (internal quotation marks and citation omitted). In
assessing the plausibility of a claim, the court must
"construe the complaint in the light most favorable to
the plaintiff, and determine whether, under any reasonable
reading of the complaint, the plaintiff may be entitled to
relief." Fowler v. UPMC Shadyside, 578 F.3d
203, 210 (3d Cir. 2009) (internal quotation marks and
though, this Rule 12(b)(6) Motion is used to assert an
affirmative defense-that the patents are subject matter
ineligible under Section 101. In that scenario, dismissal is
permitted only if the well-pleaded factual allegations in the
Complaint, construed in the light most favorable to the
plaintiff, suffice to establish the defense. See Jones v.
Bock, 549 U.S. 199, 215 (2007); Bristol-Myers Squibb
Co. v. Merck & Co., Inc., Civil Action No.
15-560-GMS, 2016 WL 1072841, at *1 n.l (D. Del. Mar. 17,
2016); Genetic Techs. Ltd. v. Agilent Techs., Inc.,
24 F.Supp.3d 922, 927 (N.D. Cal. 2014).
under Section 101 is a question of law. In re
Bilski, 545 F.3d 943, 951 (Fed. Cir. 2008),
aff'd, Bilski v. Kappos, 561 U.S. 593 (2010).
Yet this question of law is also one that "may be
informed by subsidiary factual issues." CyberFone
Sys., LLC v. Cellco P'ship, 885 F.Supp.2d 710, 715
(D. Del. 2012) (citing In re Comiskey, 554 F.3d 967,
976 (Fed. Cir. 2009)).
has been some uncertainty regarding the appropriate standard
of proof in Section 101 cases, specifically as to whether a
"clear and convincing" standard of proof applies.
See Intellectual Ventures I LLC v. Symantec Corp.,
100 F.Supp.3d 371, 379-80 (D. Del. 2015) (citing cases),
aff'd in part, rev'd in part, 838 F.3d 1307
(Fed. Cir. 2016). However, assuming that the "clear and
convincing" standard of proof applies to Section 101
challenges (as the Court does here), see Ultramercial,
Inc. v. Hulu, LLC, 722 F.3d 1335, 1342 (Fed. Cir. 2013)
(internal quotation marks and citation omitted) ("[A]ny
attack on an issued patent based on a challenge to the
eligibility of the subject matter must be proven by clear and
convincing evidence."), vacated sub nom.
WildTangent, Inc. v. Ultramercial, LLC, 134 S.Ct. 2870
(2014), it applies only to the resolution of factual
disputes, and not to resolution of pure issues of law,
see MAZ Encryption Techs. LLC v. Blackberry Corp.,
C.A. No. 13-304-LPS, 2016 WL 5661981, at *4 (D. Del. Sept.
29, 2016); TriPlay, Inc. v. WhatsApp Inc., Civil
Action No. 13-1703-LPS, 2015 WL 1927696, at *5 (D. Del. Apr.
28, 2015) (citing cases), adopted in all substantive
respects, 2015 WL 4730907 (D. Del. Aug. 10, 2015). And
as to the instant Motion, which was filed at the pleading
stage (a stage at which any facts of record that are clearly
in dispute are to be construed in the light most favorable to
the plaintiff), the "clear and convincing" standard
of proof should not come into play at all. See Blue
Spike, LLC v. Google Inc., Case No. 14-cv-01650-YGR,
2015 WL 5260506, at *4 (N.D. Cal. Sept. 8, 2015);
Shortridge v. Found. Constr. Payroll Serv., LLC,
Case No. 14-cv- 04850-JCS, 2015 WL 1739256, at *7 (N.D. Cal.
Apr. 14, 2015); Modern Telecom Sys. LLC v. Earthlink,
Inc., No. SA CV 14-0347-DOC, 2015 WL 1239992, at *7-8
(CD. Cal. Mar. 17, 2015); cf. Modern Telecom Sys. LLC v.
Lenovo (United States) Inc., Case No.: SA CV 14-1266-DOC
(JEMx), 2015 WL 7776873, at *5 (CD. Cal. Dec. 2, 2015).
Assessing Patentable Subject Matter
subject matter is defined in Section 101 of the Patent Act:
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. In choosing such expansive terms
"modified by the comprehensive 'any, ' Congress
plainly contemplated that the patent laws would be given wide
scope." Diamond v. Chakrabarty, 447 U.S. 303,
while the scope of Section 101 is broad, there is an
"important implicit exception [to it]: [l]aws of nature,
natural phenomena, and abstract ideas are not
patentable." Alice Corp. Pty. Ltd. v. CLS Bank
lnt'l, 134 S.Ct. 2347, 2354 (2014) (internal
quotation marks and citation omitted); see also Mayo
Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S.
66, 70 (2012). "Phenomena of nature, though
just discovered, mental processes, and abstract intellectual
concepts are not patentable, [because] they are the basic
tools of scientific and technological work."
Prometheus, 566 U.S. at 71 (quoting Gottschalk
v. Benson, 409 U.S. 63, 67 (1972)).
Supreme Court of the United States has also recognized,
however, that "too broad an interpretation of this
exclusionary principle could eviscerate patent law."
Id.; see also Alice, 134 S.Ct. at 2354. This is
because "all inventions at some level embody, use,
reflect, rest upon, or apply laws of nature, natural
phenomena, or abstract ideas." Prometheus, 566
U.S. at 71; see also Alice, 134 S.Ct. at
2354. To that end, it has explained that "an
application of a law of nature, [natural phenomena
or abstract idea] to a known structure or process may well be
deserving of patent protection." Diamond v.
Diehr, 450 U.S. 175, 187 (1981) (emphasis in original).
Alice Corp. Pty. Ltd. v. CLS Bank lnt'l, 134 S.Ct.
2347 (2014), the Supreme Court provided the framework for
assessing whether a patent contains eligible subject matter
under Section 101. Under this now familiar two-step process,
courts "must first determine whether the claims at issue
are directed to a patent-ineligible concept, " such as
an abstract idea. Alice, 134 S.Ct. at 2355. If so,
the courts must then determine "[w]hat else is there in
the claims" by considering "the elements of each
claim both individually and 'as an ordered
combination' to determine whether the additional elements
'transform the nature of the claim' into a
patent-eligible application." Id. (internal
quotation marks and citation omitted). The Supreme Court
describes this test as a search for 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. (internal
quotation marks and citation omitted).
Considerations Relevant to Deciding a Rule 12 Motion that
Challenges the Eligibility of Multiple Patent Claims, Based
on the Analysis of a Single Representative Claim
Cronos Techs., LLC v. Expedia, Inc., C.A. No.
13-1538-LPS, 2015 WL 5234040 (D. Del. Sept. 8, 2015), Chief
Judge Stark noted "several considerations relevant to
deciding a Rule 12 motion that challenges the patent
eligibility of multiple patent claims based on analysis of a
single representative claim." Cronos Techs.,
LLC, 2015 WL 5234040, at *2. The District Court set out
these considerations as follows:
First, are all non-representative claims adequately
represented by the representative claim (i.e., do
all of the challenged claims relate
to the same abstract idea and do
any of the non-representative claims add one or more
inventive concepts that would result in patent eligibility)?
 Second, are there issues of claim construction that must
be decided before resolving the motion? Finally, is there
any set of facts that could be
proven relating to preemption,  questions of patentability,
 or whether the claims "solve a technological problem,
" that would result in a determination that one  or
more of the claims are patent-eligible?
Id. (emphasis in original) (citations and footnotes
omitted); see also Yodlee, Inc. v. Plaid Techs.
Inc., Civil Action No. 14-1445-LPS, 2016 WL 2982503, at
*3 (D. Del. May 23, 2016), adopted by 2017
WL 385039 (D. Del. Jan. 27, 2017).
Need for Claim Construction
is no hard-and-fast rule that a court must construe terms in
the claims at issue before it performs a Section 101
analysis. Bancorp Servs., L.L.C. v. Sun Life Assur. Co.
of Canada (U.S.), 687 F.3d 1266, 1273-74 (Fed. Or. 2012)
("[W]e perceive no flaw in the notion that claim
construction is not an inviolable prerequisite to a validity
determination under [Section] 101."). In some cases,
claim construction is unnecessary because it is not disputed
that the Section 101 eligibility decision does not turn on
disputes regarding claim construction. See, e.g.,
Cyberfone Sys., LLC v. CNN Interactive Grp., Inc., 558
Fed.Appx.. 988, 991-93 & n.l (Fed. Cir. 2014) (holding
that a patent claim was subject matter ineligible under
Section 101, where the district court did not engage in claim
construction, but where the plaintiff "d[id] not explain
which terms require construction or how the analysis would
change"). In other cases, such as when a Section 101
motion would be well-taken even were a plaintiffs proposed
claim construction to be accepted, a court may simply adopt
the plaintiffs construction (or the construction most
favorable to the plaintiff) for the purposes of the motion.
See Content Extraction & Transmission LLC v. Wells
Fargo Bank, Nat'l Ass'n, 116 F.3d 1343, 1349
(Fed. Cir. 2014); Genetic Techs. Ltd. v. Lab. Corp. of
Am. Holdings, Civil Action No. 12-1736-LPS-CJB, 2014 WL
4379587, at *5-6 (D. Del. Sept. 3, 2014) (citing cases).
Alternatively, the Court may decline to rule on a Rule 12
motion prior to engaging in the Markman process,
see, e.g., Loyalty Conversion Sys. Corp. v. Am. Airlines,
Inc., 66 F.Supp.3d 829, 835 (E.D. Tex. 2014) (Bryson,
J., sitting by designation), or may deny the motion if it
appears there are potential constructions of key claim terms
that, if adopted, would render the claims subject matter
eligible, see Execware, LLC v. BJ's Wholesale Club,
Inc., C.A. No. 14-233-LPS, 2015 WL 5734434, at *2-5
(D.Del. Sept. 30, 2015).
alleges infringement of the three asserted patents, each of
which, as noted above, has essentially the same 30 claims;
two of those claims (claims 1 and 20) are independent claims.
(D.I. 1 at ¶¶ 19, 27, 35; see supra pp.
2-3) All 90 of the claims are put at issue by the Motion.
(D.I. 11 at 1 ("[A]ll claims of the asserted patents are
directed to patent-ineligible subject matter under 35 U.S.C.
Complaint, M2M references dependent claims 10 and 27 as
"representative claims" of the patents-in-suit.
(D.I. 1 at ¶ 12) Because of this, Amazon directs the
Court to rely on claims 10 and 27 in making a determination
of patent eligibility under Section 101 for all of
the claims of the three patents. (D.I. 11 at
16-17) M2M, for its part, "disputes [the
idea] that the Complaint's allegation that [c]laims 10
and 27 are 'representative' relative to the
particular claimed technology features being discussed
therein somehow constitutes an admission of the same for the
wholly distinct purpose of the Court's present Section
101 determinations." (D.I. 15 at 20 n.6 (citations
end, this dispute about "representative" claims is
not going to matter much. Because both parties primarily
discussed claims 10 and 27 in their briefs, (D.I. 11 at 4-16;
D.I. 15 at 5 n.2; see also Id. at 5-19), because
both of those claims also incorporate the contents of the two
independent claims in the patents, and in light of the
Court's ultimate decision (which is to deny the Motion),
the Court need only focus on those two claims below. Put
differently, in determining that the Court cannot now find
claims 10 and 27 patent ineligible as a matter of ...