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Kaavo Inc. v. Amazon.Com Inc.

United States District Court, D. Delaware

June 18, 2018

KAAVO INC., Plaintiff,
v.
AMAZON.COM INC. and AMAZON WEB SERVICES, INC, Defendants.

          Stamatios Stamoulis, Richard C Weinblatt, Sheekhar Vyas, STAMOULIS & WEINBLATT LLC, Wilmington, DE James T. Bailey, Gregory Pollaro, LAW OFFICES OF JAMES T. BAILEY, New York, NY Attorneys for Plaintiff

          Karen Jacobs, Megan E. Dellinger, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, DE Alan M. Fisch, R. William Sigler, Jeffrey Saltman, Joseph Edell, FISCH SIGLER LLP, Washington, DC Attorneys for Defendants

          MEMORANDUM OPINION

          STARK, U.S. District Judge

         Pending before the Court are: (I) Defendants Amazon.com, Inc. and Amazon Web Services, Inc.'s (collectively, "Amazon" or "Defendants") motion for summary judgment of invalidity under 35 U.S.C. § 101 (D.I. 124); and (ii) Plaintiff Kaavo Inc.'s ("Kaavo" or "Plaintiff) motion for reconsideration of the Court's March 31, 2016 Order in light of subsequently-issued authority (D.I. 131).[1] For the reasons stated below, the Court will grant Defendants' motion and deny Plaintiffs motion.

         I. BACKGROUND

         A. Procedural History

         Plaintiff sued Defendants for infringement of United States Patent No. 8, 271, 974 (the '"974 patent"), which is entitled "Cloud Computing Lifecycle Management for N-tier Applications." In related cases. Magistrate Judge Burke issued a report and recommendation that the asserted independent claims, as well as dependent claim 12, be found patent ineligible under. § 101. (CA. No. 14-1192 D.L 35; C.A. No. 14-1193 D.I. 42) ("R&R") Over Plaintiffs objection (C.A. No. 14-1192 D.I. 39; C.A. No. 14-1193 D.I. 46), the Court adopted the R&R in full (C.A. No. 14-1192 D.I. 44; C.A. No. 14-1193 D.L 52). Later, Magistrate Judge Burke ordered limited discovery as well as claim construction and summary judgment briefing, with respect to the eligibility of the remaining dependent claims, and conducted a hearing on these issues. (See D.I. 116) Thereafter, the Court denied without prejudice Defendants' summary judgment motion and Plaintiffs request to re-file a Rule 60 motion for reconsideration of the Court's ruling on the independent claims, instead ordering new briefing to allow the parties - and the Court - to consider anew all § 101 issues in light of the manifold decisions issued by the Federal Circuit with respect to patent eligibility since this Court's earlier opinion issued in March 2016. (See D.I. 118, 121)

         The parties completed briefing (see D.I. 126, 132, 136) and submitted expert declarations (see D.L 127, 133, 137). On March 12, 2018. the Court held a combined hearing on the motions and claim construction. (See D.I. 140 ("Tr."))[2]

         B. The Patent-in-Suit

         The '974 patent generally relates to "methods, devices, and systems [in] the fields of computers, information technology, virtualization, and cloud computing, " and, more particularly, the "management of a cloud computing environment for use by a software application." '974 patent, col. 1 ll. 6-11. The application may include software "(e.g. a web portal with email functionality, database programs, word processing programs, accounting programs, inventory management programs, numerical analysis programs), " or services "(e.g.. an autonomous unit that is responsible for a transformation, storage and/or retrieval of data, such as a database management service or a database API service)." Id. col. 1 ll. 46-55.

         The patent explains that "[c]loud computing may be used to leverage virtualization of the resources of, for example, datacenters." Id. col. 1 ll.21-22. According to the patent, "[v]irtualization technology facilitates the operation of multiple virtual servers within a single physical server system, such that each virtual sever may operate within its own unique system environment (e.g., operating system, applications)." Id. col. 1 ll. 12-15. "Cloud providers, which may operate resources such as datacenters and/or other information technology-related capabilities, may facilitate the use of such resources by providing users (which may be remote to the cloud provider) with access to their resources." Id. col. 1 ll. 22-26. The patent refers to these "potentially accessible resources" collectively as a "cloud computing environment" or a "cloud environment." Id. col. 1 ll. 27-29.

         The cloud computing environment "may be an N-tier environment." Id. Abstract; Fig. 8. The patent describes the N-tier computing environment as "having any number of tiers (e.g., logical groupings of components directed to a general type of functionality)" that is made available to the application by the cloud environment. Id. col. 5 ll. 22-30; see also Id. col. 5 ll. (noting that "application cloud environment configuration ... may include an environment containing ... 20 or more tiers"). The patent lists some examples of tiers such as "a presentation tier, an application tier (e.g., a logic or business logic tier), and a database tier." Id. col. 5 ll. 34-35.

         The patent explains that "[e]ach individual cloud configuration may contribute all, a portion, or none of each individual tier of the N-tier configuration of application cloud environment configuration." Id. col. 6 ll. 3-5; see also Id. col. 6 ll. 6-10 ("[A]n embodiment of application cloud environment configuration 110 may include application tier that contains servers (e.g., virtual servers, physical servers) from cloud configurations 111 and 112, and a database tier that contains servers from cloud configurations 112-115."). The patent also describes "various modules of an embodiment of an N-tier configuration Hfecycle management engine for managing a cloud computing environment for use by a software application." Id. col. 13 ll. 57-60; see also Id. col. 13 I. 64-col. 16 1. 39 (listing examples of several modules).

         II. LEGAL STANDARDS

         A. Summary Judgment

         Under Rule 56(a) of the Federal Rules of Civil Procedure, "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law, " The moving party bears the burden of demonstrating the absence of a genuine issue of material fact. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 585-86 (1986). An assertion that a fact cannot be - or, alternatively, is - genuinely disputed must be supported either by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials, " or by "showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1)(A) & (B). If the moving party has carried its burden, the nonmovant must then "come forward with specific facts showing that there is a genuine issue for trial." Matsushita, 475 U.S. at 587 (internal quotation marks omitted). The Court will "draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150 (2000).

         To defeat a motion for summary judgment, the nonmoving party must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586; see also Podobnik v. U.S. Postal Sen'., 409 F.3d 584, 594 (3d Cir. 2005) (stating party opposing summary judgment "must present more than just bare assertions, conclusory allegations or suspicions to show the existence of a genuine issue") (internal quotation marks omitted). The "mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment;" a factual dispute is genuine only where “the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Id. at 249-50 (internal citations omitted); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (stating entry of summary judgment is mandated "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial"). Thus, the "mere existence of a scintilla of evidence" in support of the nonmoving party's position is insufficient to defeat a motion for summary judgment; there must be "evidence on which the jury could reasonably find" for the nonmoving party. Anderson, 477 U.S. at 252.

         B. Section 101: Patentable Subject Matter

         Under 35 U.S.C. § 101, "[w]hoever 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." There are three exceptions to § 101 's broad patent-eligibility principles: "laws of nature, physical phenomena, and abstract ideas." Diamond v. Chakrabarty, 447 U.S. 303, 309 (1980). "Whether a claim recites patent eligible subject matter is a question of law which may contain disputes over underlying facts." Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018).

         In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S.Ct. 1289 (2012), the Supreme Court set out 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 lnt'l, 134 S.Ct. 2347, 2355 (2014). First, courts must determine if the claims at issue are directed to a patent-ineligible concept ("step one"). See Id. If so, the next step is to look 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 ("step two"). Id., The two steps are "plainly related" and "involve overlapping scrutiny of the content of the claims." Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016).

         At step one, "the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter." Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015) (emphasis added); see also Affinity Labs of Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) (stating first step "calls upon us to look at the 'focus of the claimed advance over the prior art' to determine if the claim's 'character as a whole' is directed to excluded subject matter").

         Courts should not "oversimplif[y]" key inventive concepts or "downplay" an invention's benefits in conducting a step one analysis. See Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1337-38 (Fed. Cir. 2016); see also McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1313 (Fed. Cir, 2016) ("[C]ourts 'must be careful to avoid oversimplifying the claims' by looking at them generally and failing to account for the specific requirements of the claims.") (quoting In re TLI Commc'ns LLC Patent Litig., 823 F.3d 607, 611 (Fed. Cir. 2016)). "Whether at step one or step two of the Alice test, in determining the patentability of a method, a court must look to the claims as an ordered combination, without ignoring the requirements of the individual steps." McRO, 837 F.3d at 1313.

         At step two. courts must "look to both the claim as a whole and the individual claim elements to determine whether the claims contain 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. at 1312 (internal brackets and quotation marks omitted). The "standard" step two inquiry includes consideration of whether claim elements "simply recite 'well-understood, routine, conventional activities].'" Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016) (quoting Alice, 134 S.Ct. at 2359). "Simply appending conventional steps, specified at a high level of generality, [is] not enough to supply an inventive concept." Alice, 134 S.Ct. at 2357 (internal quotation marks omitted).

         However, "[t]he inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art." Bascom, 827 F.3d at 1350. In Bascom, the Federal Circuit held that "the limitations of the claims, taken individually, recite generic computer, network and Internet components, none of which is inventive by itself, " but nonetheless determined that an ordered combination of these limitations was patent-eligible under step two. Id. at 1349. The Federal Circuit has looked to the claims as well as the specification in performing the "inventive concept" inquiry. See Affinity Labs of Texas, LLC v. Amazon.com Inc., 838 F.3d 1266, 1271 (Fed. Cir. 2016) ("[N]either the claim nor the specification reveals any concrete way of employing a customized user interface.").

         The Federal Circuit recently elaborated on the step two standard, stating that "[t]he question of whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact. Any fact, such as this one, that is pertinent to the invalidity conclusion must be proven by clear and convincing evidence." Berkheimer, 881 F.3d at 1368; see also Aatrix Software, Inc. v. Green Shades Software, Inc.,882 F.3d 1121, 1128 (Fed. Cir. 2018) ("While the ultimate determination of eligibility under § 101 is a question of law, like many legal questions, there can be subsidiary fact questions which must be resolved en route to the ultimate legal determination."); Automated Tracking Sols., LLC v. Coca-Cola Co.,732 Fed.Appx. 989, 2018 WL 935455, at *5 (Fed. Cir. Feb. 16, 2018) ("We have held that 'whether a claim element or combination of elements is well-understood, routine and conventional to a skilled artisan in the relevant field is a question of fact.'") (quoting Berkheimer, 881 F.3d at 1368). "Whether a particular technology is well-understood, routine, and conventional goes beyond what was simply known in the prior art. The mere fact that something is disclosed in a piece of prior art, for example, does not mean it was well-understood, routine, and conventional." Berkheimer, 881 F.3d at 1369. Still, "[w]hen there is no genuine issue of material fact regarding whether the claim element or claimed combination is well-understood, routine, [and] conventional ...


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