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CG Technology Development, LLC v. William Hill U.S. Holdco, Inc.

United States District Court, D. Delaware

August 28, 2019



         Presently before the Court is Defendants' motion to dismiss. (D.I. 37). I have reviewed the parties' briefing. (D.I. 38, 39, 48). For the following reasons, Defendants' motion is DENIED-IN-PART and GRANTED-IN-PART.

         I. BACKGROUND

         On April 10, 2018, Plaintiff, a Nevada corporation based in Las Vegas, filed this action asserting infringement of U.S. Patent Nos. 9, 240, 098 ("the '098 patent"), 9, 269, 224 ("the '224 patent"), and 9, 076, 305 ("the '305 patent") relating to sports gambling. (D.I. 1). Defendants, a Delaware corporation based in Las Vegas, [1] moved to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), on the basis that the '305 patent claims are invalid under 35 U.S.C. § 101. (D.I. 16). I dismissed the complaint in an oral order "for failure to state a claim inasmuch as its allegations treat the two remaining defendants as one entity without providing any plausible basis for the assertion," and gave leave to file an amended complaint. (D.I. 33). Plaintiff filed a first amended complaint ("FAC"), which added a claim for infringement of U.S. Patent No. 10, 096, 207 ("the '207 patent"). (D.I. 35). Defendants now move to dismiss the FAC pursuant to Rule 12(b)(6), again on the basis that the '305 patent claims are invalid under § 101, as well as for failure to state a claim of pre-suit willful infringement or pre-suit induced infringement. (D.I. 37, 38).


         A. Rule 12(b)(6)

         When reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the complaint's factual allegations as true. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56 (2007). Rule 8(a) requires "a short and plain statement of the claim showing that the pleader is entitled to relief." Id. at 555. The factual allegations do not have to be detailed, but they must provide more than labels, conclusions, or a "formulaic recitation" of the claim elements. Id. ("Factual allegations must be enough to raise a right to relief above the speculative level... on the assumption that all the allegations in the complaint are true (even if doubtful in fact)."). Moreover, there must be sufficient factual matter to state a facially plausible claim to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The facial plausibility standard is satisfied when the complaint's factual content "allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. ("Where a complaint pleads facts that are merely consistent with a defendant's liability, it stops short of the line between possibility and plausibility of entitlement to relief." (internal quotation marks omitted)).

         B. Section 101

         Section 101 of the Patent Act defines patent-eligible subject matter. It provides: "Whoever 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." 35 U.S.C. § 101. The Supreme Court has recognized an implicit exception for three categories of subject matter not eligible for patentability-laws of nature, natural phenomena, and abstract ideas. Alice Corp. Pty. v. CLS Bank lnt'l, 134 S.Ct. 2347, 2354 (2014). The purpose of these carve outs is to protect the "basic tools of scientific and technological work." Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289, 1293 (2012). "[A] process is not unpatentable simply because it contains a law of nature or a mathematical algorithm," as "an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection." Id. at 1293-94 (internal quotation marks and emphasis omitted). In order "to transform an unpatentable law of nature into a patent-eligible application of such a law, one must do more than simply state the law of nature while adding the words 'apply it.'" Id. at 1294 (emphasis omitted).

         In Alice, the Supreme Court reaffirmed the framework laid out in Mayo "for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts." 134 S.Ct. at 2355. First, a court must determine whether the claims are directed to a patent-ineligible concept. Id. If the answer is yes, the court must look to "the elements of the claim both individually and as an 'ordered combination'" to see if there is 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. "A claim that recites an abstract idea must include 'additional features' to ensure that the [claim] is more than a drafting effort designed to monopolize the [abstract idea]." Id. at 2357. Further, "the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a particular technological environment." Id. at 2358 (quoting Bilski v. Kappos, 561 U.S. 593, 610-11 (2010)). Thus, "the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention." Id. For this second step, the machine-or-transformation test can be a "useful clue," although it is not determinative. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014).

         "[F]actual disputes about whether an aspect of the claims is inventive may preclude dismissal at the pleadings stage." Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1318 (Fed. Cir. 2019). While not "any allegation about inventiveness, wholly divorced from the claims or the specification, defeats a motion to dismiss, plausible and specific factual allegations that aspects of the claims are inventive are sufficient. As long as what makes the claims inventive is recited by the claims, the specification need not expressly list all the reasons why this claimed structure is unconventional." Id. at 1317.

         "Whether a claim is drawn to patent-eligible subject matter under § 101 is an issue of law," and "is a matter of both claim construction and statutory construction." In re Bilski, 545 F.3d 943, 951 (Fed. Cir. 2008), aff'd sub nom. Bilski v. Kappos, 561 U.S. 593 (2010). "Claim construction is a question of law." In re Nuijten, 500 F.3d 1346, 1352 (Fed. Cir. 2007).

         A court is not required to individually address claims not asserted or identified by the non-moving party, so long as the court identifies a representative claim and "all the claims are substantially similar and linked to the same abstract idea." Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass'n, 776 F.3d 1343, 1348 (Fed. Cir. 2014) (quotation marks omitted).


         The '305 patent relates to systems and methods for betting on a sporting event. Claims 1, 19, 20 and 22 are independent claims.

         A. Representative Claim

         Defendant argues that claim 1 is representative. (D.I. 38 at 2). Plaintiff does not dispute that claim 1 is representative for independent claims 20 and 22. (See D.I. 39 at 15-16). For the following reasons, I find all the asserted claims "substantially similar" to claim 1 and thus treat claim 1 as representative. See Content Extraction, 176 F.3d at 1348.

         Claim 1 provides:

1. A method, comprising:
receiving by at least one processor state information of a live event in substantially real time, in which the live event comprises a sporting event played by human players according to predetermined rules that are used to determine at least one winner of the sporting event;
after a start of the sporting event, determining by the at least one processor a plurality of possible future states of the sporting event based on the state information, the possible future states occurring before an end of the sporting event;
after a start of the sporting event, creating by the processor a first betting market for betting on at least one of the plurality of possible future states, in which the plurality of users comprises a first user, and in which the act of creating a first betting market comprises:
determining by the processor a probability for each of the plurality of possible future states based on probability information, in which the act of determining a probability comprises determining a probability for at least one of the plurality of possible future states based on probability ...

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