United States District Court, D. Delaware
REPORT AND RECOMMENDATION
R. FALLON UNITED STATES MAGISTRATE JUDGE
before the court in these related patent infringement actions
are the motions to dismiss for failure to state a claim upon
which relief can be granted pursuant to Federal Rule of Civil
Procedure 12(b)(6), filed by defendants Gyft, Inc. and
Transaction Wireless, Inc. (collectively
"Defendants"). (C.A. No. 17-777-JFB-SRF, D.I. 9;
C.A. No. 17-778-JFB-SRF, D.I. 9) For the following reasons, I
recommend that the court grant the motions to dismiss.
filed these actions on June 16, 2017, claiming the
infringement of United States Patent No. 7, 580, 864
("the '864 patent"). (D.I. 1) Coqui accuses
Defendants of infringing the '864 patent by
"directly or through intermediaries, making, using,
selling, and/or offering for sale apparatuses and systems,
i.e., Gyft e-Gift Cards (the "Accused
Instrumentality"), covered by one or more claims of the
'864 Patent." (Id. at ¶ 10) Coqui is
the owner by assignment of the '864 patent titled
"Method for Circulating an Electronic Gift Certificate
in Online and Offline System," which claims a method of
circulating electronic gift certificates and managing sales
of electronic gift certificates according to requests made
through wired and wireless networks. (Id. at ¶
6; Ex. A at Abstract) Specifically, the disclosed system and
method operate by
receiving a user's purchase request from the
communication terminal; checking a settlement state of the
electronic gift certificate bought by the user; settling the
electronic gift certificate bought by the user, and issuing
the bought electronic gift certificate to the user, when the
user requests settlement; storing the issued gift certificate
information in the gift certificate database; and notifying
the user of the gift certificate purchase particulars in a
(Id., Ex. A at Abstract) By "unifying an
electronic gift certificate management system and a mobile
communication system into a single system," the
invention "simplif[ies] an electronic gift certificate
circulation system and allow[s] the electronic gift
certificates to be quickly and accurately purchased, gifted,
and used." ('864 patent, col. 2:33-37)
move to dismiss the pending action pursuant to Rule 12(b)(6),
which permits a party to seek dismissal of a complaint for
failure to state a claim upon which relief can be granted.
Fed.R.Civ.P. 12(b)(6). When considering a Rule 12(b)(6)
motion to dismiss, the court must accept as true all factual
allegations in the complaint and view them in the light most
favorable to the plaintiff. Umland v. Planco Fin.
Servs., 542 F.3d 59, 64 (3d Cir. 2008). According to
Defendants, Coqui's complaint fails to state a claim
because the patents-in-suit are ineligible for patent
protection under 35 U.S.C. § 101.
101 provides that patentable subject matter extends to four
broad categories, including "new and useful process[es],
machine[s], manufacture, or composition[s] of matter."
35 U.S.C. § 101; see also Bilski v. Kappos, 561
U.S. 593, 601 (2010) ("Bilski IF); Diamond v.
Chakrabarty, 447 U.S. 303, 308 (1980). The Supreme Court
recognizes three exceptions to the statutory subject matter
eligibility requirements: "laws of nature, physical
phenomena, and abstract ideas." Bilski II, 561
U.S. at 601. In this regard, the Supreme Court has held that
"[t]he concepts covered by these exceptions are
'part of the storehouse of knowledge of all men... free
to all men and reserved exclusively to none.'"
Id. at 602 (quoting Funk Bros. Seed Co. v. Kalo
Inoculant Co., 333 U.S. 127, 130 (1948)). At issue in
the present case is the third category pertaining to abstract
ideas, which "embodies the longstanding rule that an
idea of itself is not patentable." Alice Corp. Pty.
Ltd. v. CLS BankInt'l, 134 S.Ct. 2347, 2355 (2014)
(internal quotations omitted).
Mayo Collaborative Services v. Prometheus Laboratories,
Inc., 566 U.S. 66 (2012), the Supreme Court articulated
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, 134 S.Ct. at 2355. In
accordance with the first step of the Alice test,
the court must determine whether the claims at issue are
directed to a patent-ineligible concept. See Id. If
so, the court must turn to the second step, under which the
court must identify 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. (certain
quotation marks omitted). 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).
1, "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); see also Affinity Labs of Texas, LLC v. DIRECTV,
LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) ("The
'abstract idea' step of the inquiry 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.").
However, "courts must be careful to avoid
oversimplifying the claims by looking at them generally and
failing to account for the specific requirements of the
claims." McRO, Inc. v. Bandai Namco Games Am.
Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016) (internal
quotation marks omitted). "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." Enfish, LLC v.
Microsoft, 822 F.3d 1327, 1338 (Fed. Cir. 2016).
2, the Federal Circuit instructs courts to "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). Under the step 2 inquiry, the court
must consider 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).
Federal Circuit looks to the claims as well as the
specification in performing the "inventive concept"
inquiry. See Affinity Labs of Texas v. Amazon.comInc.,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 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 the ...