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United States District Court, D. Delaware

September 16, 2019

OOYALA, INC., Defendant. COOLTVNETWORK.COM, INC., Plaintiff,
SNAP INC., Defendant. COOLTVNETWORK.COM, INC., Plaintiff,
TRAPELO CORP., Defendant.



         Plaintiff, 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 patent”).

         Seven of the Defendants moved to dismiss the operative[1] complaints under Federal Rule of Civil Procedure 12(b)(6), and those motions are now pending before the Court.[2] (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.

         For the 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).

         I. BACKGROUND

         The '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.[3]

         According 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.)

         What 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.”).)

         The 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.)

         The '696 patent has four independent claims. In its operative complaints, Plaintiff compares the limitations of claim 17 with Defendants' products. That claim recites:

         A 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 accessible network;
performing at least one of a plurality of predetermined functions executed with the selection of each particular hot spot;
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 control;
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 mode;
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 Spot.

(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).[4] The remaining limitations of claims 1, 15, and 18 almost exactly mirror the limitations of claim 17.


         A 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).

         In 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).


         A. Sufficiency of the Infringement Allegations

         Defendants 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' arguments.[5]

         According 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. 2012)).[6]

         The 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.[7] 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”).

         On the 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 chelating agent).

         To 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).

         Each of the ʼ696 patent claims requires a “bid mode.” Defendants IBM, Microsoft, Ooyala, and Trapelo each contend that CTN's operative complaint fails to plausibly ...

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