United States District Court, D. Delaware
REPORT AND RECOMMENDATION
JENNIFER L. HALL, UNITED STATES MAGISTRATE JUDGE
CoolTVNetwork.com, Inc. (“CTN” or
“Plaintiff”) filed nine patent infringement suits
against Defendants Blackboard, Inc.
(“Blackboard”), C.A. No. 19-291-LPS-JLH;
Facebook, Inc. (“Facebook”), C.A. No.
19-292-LPS-JLH; International Business Machines Corporation
(“IBM”), C.A. No. 19-293-LPS-JLH; Kaltura, Inc.
(“Kaltura”), C.A. No. 19-294-LPS-JLH; Limelight
Networks, Inc. (“Limelight”), C.A. No.
19-295-LPS-JLH; Microsoft Corporation
(“Microsoft”), C.A. No. 19-296-LPS-JLH; Ooyala,
Inc. (“Ooyala”), C.A. No. 19-297-LPS-JLH; Snap
Inc. (“Snap”), C.A. No. 19-534-LPS-JLH; and
Trapelo Corporation (“Trapelo”) C.A. No.
19-535-LPS-JLH. Each of the suits alleges infringement of
CTN's U.S. Patent No. 7, 162, 696 (“'696
of the Defendants moved to dismiss the
operative complaints under Federal Rule of Civil
Procedure 12(b)(6), and those motions are now pending before
the Court. (No. 19-292, D.I. 17; No. 19-293, D.I. 25;
No. 19-295, D.I. 16; No. 19-296, D.I. 13; No. 19-297, D.I.
11; No. 19-534, D.I. 15; No. 19-535, D.I. 14.) All seven
motions argue that CTN failed to plausibly allege direct and
indirect infringement, but the arguments vary. Two of the
motions-filed by Defendants Limelight and Trapelo-also argue
that the '696 patent is invalid as ineligible under 35
U.S.C. § 101.
reasons stated below, I recommend that the motions to dismiss
filed by Limelight, Microsoft, Ooyala, and Trapelo be DENIED.
I recommend that the motions to dismiss filed by Facebook,
IBM, and Snap be GRANTED-IN-PART (with respect to CTN's
claims of pre-suit induced infringement) and DENIED-IN-PART
(with respect to CTN's other claims).
'696 patent is entitled “Method and System for
Creating, Using and Modifying Multifunctional Website Hot
Spots.” It was issued on January 9, 2017, and claims
priority to U.S. Pat. App. No. 60/210, 300, filed on June 8,
2000. The claims cover an apparatus and method for using
hyperlinks embedded in audio and video files.
to the specification, the invention “relates generally
to multifunctional website hot spots, i.e.[, ] hyperlinks,
and more particularly, to a program or software based tool
for creating, using, modifying and/or modifying [sic]
multifunctional hot spots in web applications that run over a
globally accessible network[, ] and a function expanding menu
bar” for “creating, using, and modifying website
hot spots.” ('696 patent, cols. 1:29-34, 2:22-24.)
The patent does not claim to have invented the use of hot
spots/hyperlinks to navigate to websites or to perform
functions. (Id., col. 1:36-38 (“Interactive
digital media and the use of hyper-linking tools to visit a
designated location or perform a pre-defined function ... are
generally known in the art.”).) And while the patent
states that hot spots “have not been widely adapted or
incorporated into video files, ” it doesn't claim
to have invented the idea of embedding hot spots in such
files either. (Id., col. 1:52-53.)
the patent does claim to have invented is a particular method
and apparatus whereby “multifunctional” hot spots
are embedded in audio and video files. According to the
specification, the hot spots “preferably” allow
the user to access “related or targeted
information” to the audio/video file being played.
(Id., col. 2:43-48.) The hot spots are
“multifunctional” because they can be programmed
to perform different functions (referred to as
“modes”) depending either on when they are
accessed during the audio/video playback or on which function
a user has selected. (Id., col. 3:47-50 (“The
action of the hot spots could be determined by a length of
time into a video, or beginning and ending time stamps within
the video or software correlating to the video.”), col.
3:29-31 (“Clicking an option in the menu bar determines
the action to be taken when a user clicks on a
multifunctional hot spot.”).)
specification teaches that the hot spots can be programmed to
activate a number of different modes. For example, if a user
clicks on a video hot spot in “shop mode, ” the
user can “fill a shopping cart with digital media
files, the object or merchandise that was highlighted by the
hot spot and other items for purchase.” (Id.,
col. 3:5, 3:12-16.) As another example, if a user clicks on a
video hot spot in “link mode, ” the invention
uses hyperlinks to direct the user to “related or
targeted web pages and/or web sites in an auxiliary
browser.” (Id., col. 3:26-28.)
'696 patent has four independent claims. In its operative
complaints, Plaintiff compares the limitations of claim 17
with Defendants' products. That claim recites:
Multifunctional Hot Spot method comprising:
defining at least one hot spot by a communication with
instructions stored on a tangible retaining medium;
accessing at least one of the hot spots from a globally
performing at least one of a plurality of predetermined
functions executed with the selection of each particular hot
wherein said hot spots reside on and are accessible from a
digital video or audio file;
wherein said predetermined functions are selected from a mode
wherein the mode control comprises a plurality of modes;
wherein the plurality of modes comprise a shop mode, a bid
mode, an interact mode, an entertainment mode, and a link
wherein a specific mode is selected by a user through an
expandable graphical user interface bar;
wherein said specific mode further toggles based on time
stamps in said digital video or digital audio file;
wherein said hot spots are visualized by outlines, shading,
or illumination or a combination of each, at a predetermined
area on the display;
wherein said Multifunctional Hot Spot apparatus is made to
reside on and is executing on a computing system;
selecting and activating at least one of said predetermined
functions by clicking on each particular Multifunctional Hot
(Id., cl. 17.) The other three independent claims
cover “[a] Multifunctional Hot Spot apparatus”
(claim 1), and “[a] tangible computer readable storage
medium having computer readable program code portions stored
therein, such that, when executed in a computer causes the
computer to perform [certain steps listed in the
limitations]” (claims 15 and 18). The remaining
limitations of claims 1, 15, and 18 almost exactly mirror the
limitations of claim 17.
defendant may move to dismiss a complaint under Federal Rule
of Civil Procedure 12(b)(6) for failure to state a claim.
“To survive a motion to dismiss, a complaint must
contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its
face.'” Ashcroft v. Iqbal, 556 U.S. 662,
678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A claim is plausible on its face when
the complaint contains “factual content that allows the
court to draw the reasonable inference that the defendant is
liable for the misconduct alleged.” Id.
(citing Twombly, 550 U.S. at 556). A possibility of
relief is not enough. 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.'” Id. (quoting Twombly,
550 U.S. at 557).
determining the sufficiency of the complaint under the
plausibility standard, all “well-pleaded facts”
are assumed to be true, but legal conclusions are not.
Id. at 679. “[W]hen the allegations in a
complaint, however true, could not raise a claim of
entitlement to relief, this basic deficiency should be
exposed at the point of minimum expenditure of time and money
by the parties and the court.” Twombly, 550
U.S. at 558 (internal marks omitted).
Sufficiency of the Infringement Allegations
Facebook, IBM, Limelight, Microsoft, Ooyala, Snap, and
Trapelo each argue that CTN has failed to plausibly allege
direct infringement by Defendants or anyone else, thereby
preventing CTN from moving forward on either a direct
infringement or indirect infringement theory. For the most
part, Defendants challenge the viability of CTN's
infringement theories, not the adequacy of notice of what
those theories are. For the reasons set forth below, I
recommend that the Court reject Defendants'
to a recent Federal Circuit decision, a complaint
sufficiently pleads direct infringement when it puts the
defendant “on notice of what activity ... is being
accused of infringement.” Nalco Co. v. Chem-Mod,
LLC, 883 F.3d 1337, 1350 (Fed. Cir. 2018) (quoting
K-Tech Telecomms., Inc. v. Time Warner Cable, Inc.,
714 F.3d 1277, 1284 (Fed. Cir. 2013)); see also
BioMérieux, S.A. v. Hologic, Inc., No. 18-21-LPS,
2018 WL 4603267, at *3 (D. Del. Sept. 25, 2018). There is no
requirement that the plaintiff “plead facts
establishing that each element of an asserted claim is
met.” Nalco, 883 F.3d at 1350 (quoting In
re Bill of Lading Transmission & Processing Sys. Patent
Litig., 681 F.3d 1323, 1335 (Fed. Cir.
Federal Circuit has further directed that, at this stage of
the litigation, the plaintiff is “entitled to all
inferences in its favor on its theory [of
infringement].” Id. at 1349. And district
courts have been cautioned against resolving claim
construction disputes at this stage. Id. (reversing the
district court's dismissal because “Defendants'
arguments boil down to objections to [Plaintiff's]
proposed claim construction ..., a dispute not suitable for
resolution on a motion to dismiss”).
other hand, it is not improper for a district court to
dismiss an infringement claim when there are no relevant
facts in dispute and, in the context of the case, it is clear
as a matter of law that the defendant cannot infringe.
Ottah v. Fiat Chrysler, 884 F.3d 1135, 1141-42 (Fed.
Cir. 2018) (affirming dismissal when the claims required a
“book holder, ” the defendants' products were
mobile cameras, and prosecution history estoppel barred a
finding of infringement under the doctrine of equivalents);
Amgen Inc. v. Coherus Biosciences Inc., No.
17-546-LPS-CJB, 2018 WL 1517689, at *4 (D. Del. Mar. 26,
2018) (dismissing direct infringement claim when the
plaintiff admitted there was no literal infringement and the
undisputed facts established as a matter of law that
prosecution history estoppel applied, which precluded a
finding of infringement under the doctrine of equivalents),
aff'd, 931 F.3d 1154 (Fed. Cir. 2019);
Cumberland Pharm. Inc. v. Sagent Agila LLC, No.
12-825-LPS, 2013 WL 5913742, at *3 (D. Del. Nov. 1, 2013)
(dismissing an infringement claim when the patent expressly
required a formulation “free of a chelating agent,
” and the accused product admittedly contained a
state a claim of induced infringement that can survive a
motion to dismiss, the complaint must plead (1) an underlying
act of direct infringement (judged by the standard above),
(2) facts plausibly supporting an inference that the
defendant intended another to take the acts that are alleged
to constitute infringement, and (3) facts plausibly
supporting an inference that the defendant knew that the
induced acts constituted infringement. Nalco, 883
F.3d at 1355-56; DoDots Licensing Sols. LLC v. Lenovo
Holding Co., Inc., No. 18-98-MN, 2019 WL 3069773, at *2
(D. Del. July 12, 2019).
the ʼ696 patent claims requires a “bid
mode.” Defendants IBM, Microsoft, Ooyala, and Trapelo
each contend that CTN's operative complaint fails to