United States District Court, D. Delaware
REPORT AND RECOMMENDATION
Christopher J. Burke United States District Judge.
before the Court in these consolidated patent infringement
cases are six motions (the "motions") filed
pursuant to Federal Rule of Civil Procedure 12(b)(6) by
Defendants Quotient Technology Inc. ("Quotient");
Intuit Inc.; HealthEquity, Inc.; WEX Health, Inc.; Xero,
Inc.; and Visa Inc. (collectively "Defendants")
seeking to dismiss Plaintiff Sapphire Crossing LLC's
("Plaintiff) claims of patent infringement for failure
to state a claim upon which relief can be
granted. According to Defendants, asserted U.S.
Patent No. 6, 891, 633 ("the '633 patent" or
"the asserted patent") is directed to ineligible
subject matter under 35 U.S.C. § 101 ("Section
101"). For the reasons set out below, the Court
recommends that the motions be GRANTED without prejudice.
a patent case filed by Plaintiff against the respective
Defendants between October 31, 2018 and December 28, 2018, in
which Plaintiff alleges that those Defendants infringe the
'633 patent. (D.I. 1; Civil Action No. 18-1856, D.I. 1;
Civil Action No. 18-2072, D.I. 1; Civil Action No. 18-2074,
D.I. 1; Civil Action No. 18-2075, D.I. 1; Civil Action No.
18-2076, D.I. 1) Judge Maryellen Noreika thereafter referred
the case to the Court to hear and resolve all pretrial
matters, up to and including expert discovery matters. (D.I.
December 26, 2018 and February 27, 2019, Defendants filed
their respective motions, each seeking to dismiss the
respective Complaints filed against them on Section 101
grounds. (D.I. 6; Civil Action No. 18-1856, D.I. 8; Civil
Action No. 18-2072, D.I. 10; Civil Action No. 18-2074, D.I.
10; Civil Action No. 18-2075, D.I. 10; Civil Action No.
18-2076, D.I. 10) Standard briefing on the motions was
completed by April 26, 2019. (D.I. 33; D.I. 34; D.I. 35; D.I.
36) Pursuant to an order of the Court, the parties also filed
short additional letter briefs that further highlighted some
basic details about the nature of their Section 101
arguments. (D.I. 20; D.I. 22; D.I. 29; D.I. 38; D.I. 39; D.I.
40; D.I. 41; D.I. 42; Civil Action No. 18-1856, D.I. 25)
Defendants also requested oral argument on the motions, (D.I.
37), which the Court granted (D.I. 45). Oral argument was
held on June 26, 2019. (D.I. 46 (hereinafter
'633 patent is entitled "Image Transfer System"
and describes an "electronic assembly comprising an
image transfer device . . . and a computer." (D.I. 1,
ex. A (hereafter '"633 patent") at Abstract)
The figures in the patent are hand-drawn, and Figure 1,
reproduced below, provides a "schematic diagram of an
image transfer system incorporating features of the present
invention[, ]" ('633 patent, col. 2:40-41):
FIG. 1 (illustrating "image transfer system 10,"
"image transfer device 12," and "computer 14
connected to the image transfer device 12 by a cable
36"); see also id., col. 3:6-18)
'633 patent explains that "[t]here are examples in
the prior art of image transfer systems comprising an image
transfer device coupled to one or more computers."
(Id., col. 1:12-14) The patent-in-suit cites U.S.
Patent No. 5, 798, 738, entitled "Printing Manager
System for a Copier in a Network," as an exemplary prior
art system "compris[ing] a terminal connected to a
copying machine." (Id., col. 1:14-17) However,
the'633 patent criticizes such "copying machines in
the prior ar[t, ]" explaining that they are
"capable of performing only a given set of functions
regardless of whether the copying machine is connected to a
computer or not." (Id., col.
'633 patent goes on to distinguish the present invention
from such prior art. It asserts that "[o]ne object of
the present invention is to provide a software and user
interface (UI) solution for enriching personal and desktop
copier feature sets by utilizing the processing power and
memory capacity of a connected personal computer
['PC']." (Id., col. 1:21-25) Indeed,
the '633 patent repeatedly touts this borrowing of a
connected computer's processing power and memory as a key
inventive contribution of the patent. (See, e.g.,
id., col. 14:1-12 ("The present invention provides
a stand alone image transfer device equipped with minimal
memory and processing capabilities to perform basic image
transfer operations, which when connected to a computer such
as a PC, can be quickly expanded to have an extended number
of advanced function[s] which generally are not available in
an image transfer device of that size."); see also
id., cols. 14:42-48, 15:1-9, 15:20-41) The patent also
notes that another object of the present invention is to
"provide for initiation of the job to take place at
the device, so the user need not know the PC is involved in
the process." (Id., col. 1:31-34)
several of the embodiments described in the '633 patent,
a document/image is first scanned at the image transfer
device (also called a "multifunction device").
(Id., cols. 1:25-29, 15:1-9) The scanned data is
then sent to the connected computer to leverage that
computer's processing power, in order to perform
"enriched" functions (e.g., "collation"
or adding a "fixed message" to the document);
thereafter, the enhanced document is sent back to the image
transfer device for "output" or "printing on
[a] sheet medium[.]" (Id., cols. 1:21-31,
2:4-16, 13:16-67, 14:13-15:19)
another embodiment (one particularly relevant to the
discussion below), "data used to effect image transfer .
. . according to the enhanced menu features" is stored
in the connected computer's memory 34A. (id.
col. 11:40-43; see also id. cols. 11:44-12:17, FIG.
9) "[S]uch data may include bitmaps representing time
and date stamps, fixed messages, logos or watermarks to [be]
added to the images as well as the coordinates for printing
the bitmaps[.]" (Id., col. 11:43-46) Unlike
other described embodiments that leverage the attached
computer's processor 32C to perform extended features, in
this embodiment, the central processing unit
("CPU") 20 of the image transfer device itself
performs the enhanced function of "merg[ing] the bitmap
with the image data" after the bitmap has been uploaded
from the connected computer. (id. cols. 11:50-12:8).
This process is further depicted in Figure 9 of the patent,
which is reproduced below:
FIG. 9 (illustrating step "T4" as "Device
[i.e., the image transfer device] merges bitmap with image
read by reader"))
Inter Paries Review of the '633 Patent
March 8, 2016, Unified Patents Inc. ("Petitioner")
petitioned the United States Patent and Trademark
Office's Patent Trial and Appeal Board ("PTAB"
or "Board") to institute inter partes
review ("IPR") of every claim (1-26) of the
'633 patent. (D.I. 13, ex. A (Unified Patents Inc. v.
Ruby Sands LLC, No. IPR2016-00723, Paper No. 7 at 2
(P.T.A.B. August 29, 2016) ("Institution
Decision")) Petitioner asserted five grounds of
unpatentability: three grounds for claims 1-18 and 21-26, and
two grounds for claims 19 and 20. (Id. at 11) The
grounds asserted for claims 19 and 20 were anticipation by
U.S. Patent No. 5, 701, 184 ("Motoyama") and
anticipation by U.S. Patent No. 7, 315, 386
("Shiimori"). (Id. at 10-11)
Board's institution decision found that Petitioner had
established a reasonable likelihood of success in proving
unpatentability for only one of the unpatentability grounds
asserted: obviousness of claims 1-18 and 21-26 over four
references. (Id. at 40, 54) The Board found that
Petitioner had not established a reasonable likelihood of
success of proving unpatentability based on the other four
proposed grounds, and thus issued a partial institution
decision. (Id. at 54) Cf. SAS Inst, Inc. v.
Iancu, 138 S.Ct. 1348 (2018) (forbidding this practice
two years later).
Board rejected Petitioner's challenge to claims 19 and 20
based on Motoyama because the Board was not persuaded that
Motoyama disclosed the claims' requirement that the
processor of the image transfer device must
"automatically merg[e]" electronic data with an
image read by the device's scanner. (D.I. 13, ex. A at
47-49; see also Id. at 41-42 (overview of Motoyama))
As for Petitioner's challenge to claims 19 and 20 based
on Shiimori, the Board similarly found Petitioner's
argument lacking. There, it ruled that Petitioner had
impermissibly attempted to combine two separate embodiments
disclosed in Shiimori in an attempt to show anticipation by a
reference. (Id. at 51-53; see also Id. at
49-50 (overview of Shiimori))
the Patent Owner requested adverse judgment pursuant to 37
C.F.R. § 42.73(b), asking that the Board "cancel
claims 1-18 and 21-26." Unified Patents Inc. v. Ruby
Sands LLC, No. IPR2016-00723, Paper No. 17 (P.T.A.B.
December 2, 2016). Thereafter, the Board granted this
request. Unified Patents Inc. v. Ruby Sands LLC, No.
IPR2016-00723, Paper No. 18 (P.T.A.B. January 6, 2017).
STANDARD OF REVIEW
noted above, these Rule 12(b)(6) motions are premised on the
assertion that the remaining patent claims-in-suit are
directed to patent-ineligible subject matter. The Court has
often set out the relevant legal standards for review of such
a motion, including in Genedics, LLC v. Meta Co.,
Civil Action No. 17-1062, 2018 WL 3991474, at *2-5 (D. Del.
Aug. 21, 2018). The Court hereby incorporates by reference
its discussion in Genedics of these legal standards.
In assessing the motions, the Court will follow this body of
law. To the extent consideration of the motions necessitates
discussion of other, related legal principles, the Court will
set out those principles in Section III below.
resolving Defendants' motions, the Court will first
discuss which claim will be specifically addressed herein as
representative. Thereafter, it will analyze the relevant
claim under both steps of the test for patent eligibility set