United States District Court, D. Delaware
REPORT AND RECOMMENDATION
R. FALLON, UNITED STATES MAGISTRATE JUDGE.
October 26, 2017, Realtime Adaptive Streaming LLC
("Realtime") filed a complaint against Haivision
Network Video Inc. ("Haivision"), asserting
infringement of United States Patent Numbers 8, 934, 535
("the '535 patent"), 9, 769, 477 ("the
'477 patent"), 8, 929, 442 ("the '442
patent"), 9, 762, 907 ("the '907 patent"),
and 7, 386, 046 ("the '046 patent")
(collectively, the "Fallon patents"). (D.I. 1; D.I.
22) Additionally, Realtime asserts infringement of United
States Patent Numbers 8, 634, 462 ("the '462
patent") and 9, 578, 298 ("the '298
patent") (collectively, the "Non-Fallon
patents"). (D.I. 22 at ¶¶ 161-211) Realtime is
the owner by assignment of the patents-in-suit, which relate
to the concept of encoding and decoding data, and the digital
compression of data. (D.I. 22 at ¶¶ 7, 38, 69, 100,
131, 162, 190) Pending before the court is the motion to
dismiss the Fallon patent claims for failure to state a claim
pursuant to Federal Rule of Civil Procedure 12(b)(6) and 35
U.S.C. § 101 and the Non-Fallon patent claims pursuant
to Federal Rule of Civil Procedure 12(b)(6). (D.I. 23) For
the following reasons, I recommend granting-in-part and
denying-in-part Haivision's motion to dismiss.
February 20, 2018, Haivision filed this pending motion to
dismiss for failure to state a claim. (D.I. 23) On April 10,
2018, Realtime filed a motion to transfer pursuant to 28
U.S.C. § 1407 with the United States Judicial Panel on
Multidistrict Litigation ("the Panel") to
consolidate in the District of Colorado actions it originally
brought in Delaware, California, Texas, Massachusetts, and
Colorado. (D.I. 32) On August 1, 2018, the Panel denied
Realtime's motion due to the need for
defendant-by-defendant analysis of individual design
elements. (D.I. 33) On October 2, 2018, the court heard oral
argument on the pending motion to dismiss. (D.I. 38)
is a related Realtime case currently pending before the
court, Realtime Adaptive Streaming LLC v. Netflix, Inc.,
et al., C.A. No. 17-1520-CFC-SRF (the "Netflix
Litigation").In the Netflix Litigation, Realtime asserts
claims for infringement of all of the Fallon patents, except
the '442 patent. (C.A. No. 17-1692-CFC-SRF, D.I. 1) There
is a pending motion to dismiss the complaint for failure to
state a claim pursuant to Rule 12(b)(6) and 35 U.S.C. §
101 filed by defendant Netflix. (C.A. No. 17-1692-CFC-SRF, D.I.
'535 patent is titled "Systems and Methods for Video
and Audio Data Storage and Distribution." (D.I. 22 at
¶ 7) Representative claim 15 recites:
15. A method, comprising:
Determining a parameter of at least a portion of a data
block; Selecting one or more asymmetric compressors from
among a plurality of compressors based upon the determined
parameter or attribute; Compressing the at least the portion
of the data block with the selected one or more asymmetric
compressors to provide one or more compressed data blocks;
and Storing at least a portion of the one or more compressed
('535 patent, col. 22:1-12) The '046 patent is titled
"Bandwidth Sensitive Data Compression and
Decompression." (D.I. 22 at ¶ 131) Representative
claim 40 recites:
40. A system comprising:
A data compression system for compressing and decompressing
data input; A plurality of compression routines selectively
utilized by the data compression system, wherein a first one
of the plurality of compression routines includes a first
compression algorithm and a second one of the plurality of
compression routines includes a second compression algorithm;
A controller for tracking throughput and generating a control
signal to select a compression routine based on the
throughput, wherein said tracking throughput comprises
tracking a number of pending access requests to a storage
Wherein when the controller determines that the throughput
falls below a predetermined throughput threshold, the
controller commands the data compression engine to use one of
the plurality of compression routines to provide a faster
rate of compression so as to increase the throughput.
('046 patent, col. 27:25-28:10)
Federal Pleading Standard under Rule 12(b)(6)
12(b)(6) permits a party to move to dismiss 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.
Inc., 542 F.3d 59, 64 (3d Cir. 2008).
state a claim upon which relief can be granted pursuant to
Rule 12(b)(6), a complaint must contain a "short and
plain statement of the claim showing that the pleader is
entitled to relief." Fed.R.Civ.P. 8(a)(2). Although
detailed factual allegations are not required, the complaint
must set forth sufficient factual matter, accepted as true,
to "state a claim to relief that is plausible on its
face." Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007); see also Ashcroft v. Iqbal, 556
U.S. 662, 663 (2009). A claim is facially plausible when the
factual allegations allow the court to draw the reasonable
inference that the defendant is liable for the misconduct
alleged. Iqbal, 556 U.S. at 663; Twombly,
550 U.S. at 555-56.
determining whether dismissal is appropriate, the court must
take three steps. See Santiago v. Warminster Twp.,
629 F.3d 121, 130 (3d Cir. 2010). First, the court must
identify the elements of the claim. Iqbal, 556 U.S.
at 675. Second, the court must identify and reject conclusory
allegations. Id. at 678. Third, the court should
assume the veracity of the well-pleaded factual allegations
identified under the first prong of the analysis, and
determine whether they are sufficiently alleged to state a
claim for relief. Id; see also Malleus v. George,
641 F.3d 560, 563 (3d Cir. 2011). The third prong presents a
context-specific inquiry that "draw[s] on [the
court's] experience and common sense."
Iqbal, 556 U.S. at 663-64; see also Fowler v.
UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). As the
Supreme Court instructed in Iqbal, "where the
well-pleaded facts do not permit the court to infer more than
the mere possibility of misconduct, the complaint has alleged
- but it has not 'show[n]' - 'that the pleader is
entitled to relief.'" Iqbal, 556 U.S. at
679 (quoting Fed.R.Civ.P. 8(a)(2)).
Patent Eligibility under 35 U.S.C. § 101
101 provides that patentable subject matter extends to four
broad categories, including "new and useful processes],
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 (internal quotations omitted). 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 Bank
lnt'l, 134 S.Ct. 2347, 2355 (2014) (internal
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, such as an abstract
idea. 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. (internal citation 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.
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
quotations and citations 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)
(alteration in original). "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 quotations omitted).
Federal Circuit looks to the claims as well as the
specification in performing the "inventive concept"
inquiry. See Affinity Labs, 838 F.3d at 1271
("[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 patent adequately alleged an ordered
combination of these limitations to be patent-eligible under
step 2 at the pleading stage. Id. at 1349.
"mere recitation of a generic computer cannot transform
a patent-ineligible abstract idea into a patent-eligible
invention" under step two. Alice, 134 S.Ct. at
2358. "Given the ubiquity of computers . . . wholly
generic computer implementation is not generally the sort of
additional feature that provides any practical assurance that
the process is more than a drafting effort designed to
monopolize the abstract idea itself." Id.
(internal quotations and citations omitted). The Federal
Circuit has held that certain improvements in computer
software are not abstract ideas under Alice step
one. Enfish, LLC v. Microsoft Corp.,822 F.3d 1327,
1335 (Fed. Cir. 2016); see also Visual Memory LLC v.
NVIDIA Corp.,867 F.3d 1253, 1259 (Fed. Cir. 2017). The
relevant question in determining if computer technology is
directed to an abstract ...