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M2M Solutions LLC v. Amazon.Com, Inc.

United States District Court, D. Delaware

December 11, 2017

AMAZON.COM, INC., Defendant.



         Presently pending before the Court is Defendant, 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.

         I. BACKGROUND

         A. Factual Background

         The 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.

         In 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)[1] 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." (Id)

         It is 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 exemplary claims.[2]

         B. Procedural Background

         M2M 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)

         Amazon 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).[3] 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)


         A. Standard of Review Regarding a Rule 12 Motion that Challenges Patent Eligibility Pursuant to Section 101

         Pursuant 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 citation omitted).

         Here 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).

         Patentability 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)).

         There 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).

         B. Assessing Patentable Subject Matter

         Patent-eligible 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, 308 (1980).

         Yet 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)).

         The 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).

         In 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).

         C. 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

         In 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).

         D. Need for Claim Construction

         There 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).


         M2M 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. §101."))

         In its 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)[4] 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 omitted))

         In the 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 ...

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