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Search and Social Media Partners, LLC v. Facebook, Inc.

United States District Court, D. Delaware

September 28, 2018

SEARCH AND SOCIAL MEDIA PARTNERS, LLC, Plaintiff,
v.
FACEBOOK, INC., INSTAGRAM, INC., and INSTAGRAM LLC, Defendants.

          Stephen B. Brauerman, Sara E. Bussiere, BAYARD, P.A., Wilmington, Delaware

          Seth H. Ostrow, Jeffrey P. Weingart, Antonio Papageorgiou, MEISTER SEELIG & FEIN LLP, New York, New York Attorneys for Plaintiff

          Jack B. Blumenfeld, Karen Jacobs, MORRIS, NICHOLS, ARSHT & TUNNELL LLP, Wilmington, Delaware

          Heidi L. Keefe, Mark R. Weinstein, Benjamin G. Damstedt, COOLEY LLP, Palo Alto, California Emily Terrell, COOLEY LLP, Washington, D.C. Attorneys for Defendants

          MEMORANDUM OPINION

          STARK U.S. DISTRICT JUDGE

         Presently before the Court is Defendants' Facebook Inc. ("Facebook") and Instagram LLC's ("Instagram" and collectively with Facebook, "Defendants") motion to dismiss for failure to state a claim (the "Motion"), filed pursuant to Federal Rule of Civil Procedure 12(b)(6). (D.I. 8)[1] Defendants argue that Plaintiff Search and Social Media Partners, LLC's ("SSMP" or "Plaintiff) asserted United States Patents Nos. 8, 620, 828 (the '"828 patent") and 8, 719, 176 (the '"176 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 will grant the Motion as to the asserted claims of the '828 patent and deny it as to the asserted claims of the '176 patent, without prejudice to Defendants' ability to re-present the latter § 101 challenge at the summary judgment stage.

         I. BACKGROUND

         The '828 patent, entitled "Social Networking System, Method and Device," issued on December 31, 2013. (D.I. 1 Ex. A) The '176 patent, entitled "Social News Gathering, Prioritizing, Tagging, Searching and Syndication," issued on May 6, 2014. (Id. Ex. B) The '878 patent is a continuation application of the '176 patent, and the patents therefore share a specification. (See D.I. 15 at 3 n.7) Both patents claim priority to application No. 60/486, 630, filed on July 11, 2003.

         The Abstract of the '828 patent explains that its claims recite "[a] social networking system, method and device [that] provides a social network environment in which one user subscribes to a newsfeed or ticker related to another user." ('828 patent at Abstract) The Abstract of the '176 patent explains that the claims are directed to "[a] search method [that] allows user-definition of search algorithms and includes a ranking method that assigns relevancy scores to documents by polling users[, ] [a] user-generated news service [that] allows users to syndicate news[, and] [a] user-generated resource [that] allows users to create, approve and disapprove of submissions." (' 176 patent at Abstract)

         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 plaintiffs 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 F) (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 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; 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 Solutions, 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 IF) ("[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. SeeAmdocs (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); Intellectual Ventures ILLC v. Symantec Corp., 725 Fed.Appx. 976, 978 n. 1 (Fed. Cir. 2018) (affirming grant of summary judgment of patent ineligibility and stating Berkheimer "does not compel a different conclusion").

         III. DISCUSSION

         A. '828 Patent

          Plaintiff asserts that Facebook directly and indirectly infringes claims 11-14 and 18-20 of the '828 patent. (D.I. 1 at ¶¶ 37, 38, 44-45) Claims 11 and 18 are independent claims, and they are reproduced below:

         11. A system for use in a social network environment comprising:

a first computer system communicatively coupled to a first computer network, said first computer system comprising a data processor and a memory and being configured for at least partly providing a first social network environment, the first social network environment having a multitude of different social groups;
an account component configured for storing a first user account in said memory and storing a second user account, said second user account being different from said first user account;
a subscription component for establishing a first subscription in which said second user account is subscribed to said first user account;
a real-time news ticker component configured for providing, per said first subscription, a plurality of real-time news items pertaining to said first user account when said second user account is in use; and wherein:
said first social network environment comprises a first social group that is one of said multitude of different social groups, said first social group being selected from the group consisting of:
(i) a group pertaining to a first academic institution;
(ii) a group pertaining to a first religious ...

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