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Align Technology, Inc. v. 3Shape A/S and 3Shape Inc.

United States District Court, D. Delaware

September 7, 2018

ALIGN TECHNOLOGY, INC., Plaintiff,
v.
3SHAPE A/S and 3SHAPE INC., Defendants. ALIGN TECHNOLOGY, INC., Plaintiff,
v.
3SHAPE A/S and 3SHAPE INC., Defendants.

          John W. Shaw and Karen E. Keller, SHAW KELLER LLP, Wilmington, DE Blair M. Jacobs, Christina A. Ondrick, Patrick J. Stafford, John S. Holley, and Diva Ranade, PAUL HASTINGS LLP, Washington, DC Thomas A. Counts, PAUL HASTINGS LLP, San Francisco, CA Attorneys for Plaintiff

          Geoffrey Grivner, BUCHANAN INGERSOLL & ROONEY PC, Wilmington, DE S. Lloyd Smith and Kimberly E. Coghill, BUCHANAN INGERSOLL & ROONEY PC, Alexandria, VA Attorneys for Defendants

          MEMORANDUM OPINION

          STARK, U.S. DISTRICT JUDGE.

         Plaintiff Align Technology, Inc. ("Align") filed four separate suits against Defendants 3Shape A/S and 3Shape Inc. (together, "3Shape" or "Defendants") on November 14, 2017. On February 2, 2018, 3Shape moved to dismiss the complaints in Civil Action Nos. 17-1646-LPS-CJB and 17-1647-LPS-CJB (the "Complaints") for failure to state a claim, pursuant to Federal Rule of Civil Procedure 12(b)(6), based on its contention that Align failed to plausibly allege direct, indirect, and willful infringement of all asserted patents and that certain of the asserted patents are not directed to patent-eligible subject matter under 35 U.S.C. § 101. (C.A. No. 17-1646-LPS-CJB D.I. 21; C.A. No. 17-1647-LPS-CJB D.I. 21) 3Shape's motions are fully briefed and the Court heard oral argument on July 20, 2018. (See D.I. 55 ("Tr."))

         For the reasons stated below, the Court will grant in part and deny in part Defendants' motions to dismiss.

         I. BACKGROUND

         The parties are competitors in the field of intraoral scanners and software. (D.I. 1 at ¶ 29) Align is a global medical device company selling products such as the iTero intraoral scanner and OrthoCAD software, both of which "help dental and orthodontic professionals deliver effective, cutting-edge dental and orthodontic options to their patients." (D.I. 1 at ¶ 23; D.I. 25 at 2) 3Shape "designs, develops, manufactures, and markets the TRIOS and TRIOS 3 scanners, as well as related Dental Software products" such as the Implant Studio, Ortho System, Ortho Analyzer, Ortho Planner, Appliance Designer, and Ortho Control Patent. (D.I. 1 at ¶ 28; D.I. 25 at 2)

         On November 14, 2017, Align filed four actions against 3Shape in this District. The patents asserted in each action are as follows:

C.A. No. 17-1646-LPS-CJB: United States Patent Nos. 9, 510, 757; 7, 112, 065 ('"065 patent"); 9, 451, 873 ('"873 patent"); 9, 299, 192; 9, 427, 916; 8, 454, 364; and 8, 845, 330. (C.A. No. 17-1646-LPS-CJB D.I. 1 at ¶¶ 16-22)
C.A. No. 17-1647-LPS-CJB: U.S. Patent Nos. 9, 566, 132; 8, 545, 221; 8, 092, 215; 7, 056, 115; 8, 734, 149 ("'149 patent"); and 6, 227, 850 ("'850 patent"). (C.A. No. 17-1647-LPS-CJB D.I. 1 at ¶¶ 16-21)
C.A. No. 17-1648-LPS-CJB: U.S. Patent Nos. 7, 092, 107 ("'107 patent"); 9, 615, 901; 8, 638, 448; 8, 638, 447; 6, 845, 175; and 6, 334, 853. (C.A. No. 17-1648-LPS-CJB D.I. 1 at ¶¶ 16-21)
C.A. No. 17-1649-LPS-CJB: U.S. Patent Nos. 6, 948, 931; 6, 685, 470; 6, 514, 074 ("'074 patent"); 8, 363, 228; 8, 451, 456; 8, 675, 207; and 9, 101, 433. (C.A. No. 17-1649-LPS-CJB D.I. 1 at ¶¶ 16-22)

         In total, Align asserts 26 patents, all of which relate to "dental scanning technology." (C.A. No. 17-1646-LPS-CJB D.I. 22 at 1)

         Align also filed two complaints with the International Trade Commission ("ITC"), involving 11 of the 26 patents also at issue here. The ITC instituted investigations as to those 11 patents on December 14, 2017. (C.A. No. 17-1646-LPS-CJB D.I. 15 at 1) The 11 patents involved in the ITC proceedings include all but one of the patents at issue in C.A. No. 17-1648-LPS-CJB (the '107 patent) and all but one at issue in C.A. No. 17-1649-LPS-CJB (the '074 patent).

         3 Shape moved to stay all four District Court actions pending the ITC investigations. All of the patents subject to the ITC investigations were subject to a mandatory stay; Align stipulated on January 23, 2018 to a stay of both C.A. Nos. 17-1648-LPS-CJB and 17-1649-LPS-CJB as to all claims, pending resolution of the ITC investigations. (C.A. No. 17-1648-LPS-CJB D.I. 19; C.A. No. 17-1649-LPS-CJB D.I. 20) 3Shape's motions to stay as to C.A. Nos. 17-1646-LPS-CJB and 17-1647-LPS-CJB remained pending.[1]

         On February 1, 2018, 3Shape moved to dismiss the Complaints in C.A. Nos. 17-1646-LPS-CJB and 17-1647-LPS-CJB for failing to plausibly allege direct, indirect, and willful infringement of any of the 13 patents asserted in those actions (hereinafter, the "asserted patents" or "patents-in-suit"). (C.A. No. 17-1646-LPS-CJB D.I. 21; C.A. No. 17-1647-LPS-CJB D.I. 21) 3Shape's motions further sought to dismiss patent infringement claims as to some of the asserted patents on the grounds that they claim ineligible subject matter under Section 101. Specifically, this portion of 3Shape's motions is directed to the '873 and '065 patents in C.A. No. 17-1646-LPS-CJB and the '850 and' 149 patents in C.A. No. 17-1647-LPS-CJB.[2]

         II. LEGAL STANDARDS

         A. Rule 12(b)(6) Motion to Dismiss

         Evaluating a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) requires the Court to accept as true all material allegations of the complaint. See Spruill v. Gillis, 372 F.3d 218, 223 (3d Cir. 2004). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims." In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1420 (3d Cir. 1997) (internal quotation marks omitted). Thus, the Court may grant such a motion to dismiss only if, after "accepting all well-pleaded allegations in the complaint as true, and viewing them in the light most favorable to plaintiff, plaintiff is not entitled to relief." Maio v. Aetna, Inc., 221 F.3d 472, 481-82 (3d Cir. 2000) (internal quotation marks omitted).

         A well-pleaded complaint must contain more than mere labels and conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). A plaintiff must plead facts sufficient to show that a claim has substantive plausibility. See Johnson v. City of Shelby, 135 S.Ct. 346, 347 (2014). A complaint may not be dismissed, however, for imperfect statements of the legal theory supporting the claim asserted. See Id. at 346.

         "To survive a motion to dismiss, a civil plaintiff must allege facts that 'raise a right to relief above the speculative level on the assumption that the allegations in the complaint are true (even if doubtful in fact).'" Victaulic Co. v. Tieman, 499 F.3d 227, 234 (3d Cir. 2007) (quoting Twombly, 550 U.S. at 555). A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 556 U.S. at 678. At bottom, "[t]he complaint must state enough facts to raise a reasonable expectation that discovery will reveal evidence of [each] necessary element" of a plaintiff s claim. Wilkerson v. New Media Tech. Charter Sch. Inc., 522 F.3d 315, 321 (3d Cir. 2008) (internal quotation marks omitted).

         The Court is not obligated to accept as true "bald assertions," Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997) (internal quotation marks omitted), "unsupported conclusions and unwarranted inferences," Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997), or allegations that are "self-evidently false," Nami v. Fauver, 82 F.3d 63, 69 (3d Cir. 1996).

         B. 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 Int'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) ("Affinity Labs I'') (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").

         In conducting the step one analysis, courts should not "oversimplif[y]" key inventive concepts or "downplay" an invention's benefits. 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)).

         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." McRo, 837 F.3d 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 A lice, 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; emphasis in original).

         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 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., 723 Fed.Appx. 989, 995 (Fed. Cir. 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; see also Exergen Corp. v. Kaz USA Inc., 725 Fed.Appx. 959, 965 (Fed. Cir. 2018) ("Something is not well-understood, routine, and conventional merely because it is disclosed in a prior art reference. There are many obscure references that nonetheless qualify as prior art.").

         As part of the step two "inventive concept" inquiry, the Federal Circuit has looked to the claims as well as the specification. See Affinity Labs of Texas, LLC v. Amazon.com Inc., 838 F.3d 1266, 1271 (Fed. Cir. 2016) ("Affinity Labs II'') ("[N]either the claim nor the specification reveals any concrete way of employing a customized user interface."). Still, it is not enough just to disclose the improvement in the specification; instead, the Court's task becomes to "analyze the asserted claims and determine whether they capture these improvements.'" Berkheimer, 881 F.3d at 1369 (emphasis added). In other words, "[t]o save a patent at step two, an inventive concept must be evident in the claims.'" RecogniCorp, LLC v. Nintendo Co., Ltd., 855 F.3d 1322, 1327 (Fed. Cir. 2017) (emphasis added); see also Alice, 134 S.Ct. at 2357 ("[W]e must examine the elements of the claim to determine whether it contains an 'inventive concept.'") (emphasis added); Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138, 1149 (Fed. Cir. 2016) ("The § 101 inquiry must focus on the language of the Asserted Claims themselves.").

         At both steps one and two, it is often useful for the Court to compare the claims at issue with claims that have been considered in the now considerably large body of decisions applying § 101. See Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1294 (Fed. Cir. 2016).

         Finally, as a procedural matter, the Federal Circuit has observed frequently that § 101 disputes may be amenable to resolution on motions for judgment on the pleadings, motions to dismiss, or summary judgment. See, e.g., Berkheimer, 881 F.3d at 1368 ("Whether a claim recites patent eligible subject matter is a question of law which may contain disputes over underlying facts. Patent eligibility has in many cases been resolved on motions to dismiss or summary judgment. Nothing in this decision should be viewed as casting doubt on the propriety of those cases. When there is no genuine issue of material fact regarding whether the claim element or claimed combination is well-understood, routine, conventional to a skilled artisan in the relevant field, this issue can be decided on summary judgment as a matter of law.") (emphasis added); buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1351-52 (Fed. Cir. 2014) (affirming grant of Rule 12(c) motion for judgment on pleadings for lack of patentable subject matter).

         IV. DISCUSSION

         A. Plausibly Pleaded Allegations of Infringement

         3Shape challenges the sufficiency of Align's allegations regarding direct, indirect, and willful infringement of the asserted patents on numerous grounds. The Court will address each in turn.

         1. Direct Infringement of All Asserted Patents

         In order to "survive a motion to dismiss under 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." Nalco Co. v. Chem-Mod, LLC, 883 F.3d 1337, 1347 (Fed. Cir. 2018) (internal quotation marks and citation omitted). This does not require that a plaintiff'"prove its case at the pleading stage.'" Id. at 1350 (citation omitted). Additionally, the '"Federal Rules of Civil Procedure do not require a plaintiff to plead facts establishing that each element of an asserted claim is met.'" Id. (citation omitted). Instead, the complaint must merely "place the potential infringer ... on notice of what activity ... is being accused of infringement." Id. (internal quotation marks and citation omitted).

         3 Shape argues that the allegations of direct infringement in the Complaints are insufficient because they "fail to tie the Accused Products or actions of any part to the elements of the asserted patent claims." (D.I. 22 at 5) Align responds that its allegations give 3Shape "fair notice of what activity is being accused of infringement" and that "[n]o greater detail is required." (D.I. 25 at 6) The Court concludes that Align has sufficiently alleged direct infringement.

         Each of the counts in the Complaints follows essentially the same format: reciting the language of a representative claim, alleging that the accused products practice that claim, and providing examples drawn from "product documentation, demonstration and informational videos, user manuals, and/or promotional materials" demonstrating the alleged use of some aspect of the accused product of the products performing at least some of the requirements of the representative claim. For example, Count Two in CA. 17-1646-LPS-CJB alleges infringement of at least claim 28 the '192 patent. (D.I. 1 at ¶ 49) As described in that Complaint, "[t]he '192 patent is directed to modifying a virtual model of a physical structure with additional 3D data obtained from the physical structure to provide a modified virtual model." (Id. at ¶ 48) That paragraph goes on to recite the language of claim 28, which claims:

28. A system to generate a modified virtual model of a physical structure, comprising:
a display to display images of said modified virtual model; and
a computer system operatively connected to the display and comprising a program that, when executed by the computer system, causes the computer system to, display an image of a first virtual model generated from
first 3D scan data of the physical structure on the display, wherein said first virtual model fails to properly represent a first physical part of the physical structure,
receive user input identifying at least a portion of the first virtual model that is desired to be modified, the user input generated by user interaction with the image of the first virtual model on the display,
receive a second virtual model of the physical structure, the second virtual model generated from second 3D scan data of ...

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