Cisco Sys., Inc. v. Uniloc United States, Inc.

386 F.Supp.3d 1185

CISCO SYSTEMS, INC., Plaintiff/Counter-Defendant,

v.UNILOC USA, INC., et al., Defendants/Counter-Claimants.

Case No. 18-cv-04991-SI

United States District Court, N.D. California.

Signed May 6, 2019

David P. Enzminger, Katherine Vidal, Matthew R. McCullough, Winston & Strawn LLP, Menlo Park, CA, Krishnan Padmanabhan, Krishnan Padmanabhan, Winston & Strawn LLP, New York, NY, Vivek Vijay Krishnan, Pro Hac Vice, Winston Strawn LLP, Chicago, IL, for Plaintiff/Counter-Defendant.

Marc Christopher Belloli, Margaret Elizabeth Day, Hong Lin, Jeremiah Aaron Armstrong, David L. Alberti, Sal Lim, Feinberg Day Alberti & Thompson LLP, Menlo Park, CA, for Defendants/Counter-Claimants.

ORDER GRANTING PLAINTIFF/COUNTER-DEFENDANT'S MOTION FOR JUDGMENT ON THE PLEADINGS

Re: Dkt. No. 43

SUSAN ILLSTON, United States District Judge

Now before the Court is plaintiff/counter-defendant's motion for judgment on the pleadings, which seeks a finding that U.S. Patent No. 6,980,522 is patent-ineligible under 35 U.S.C. § 101. Dkt. No. 43. This matter came on for hearing on May 3, 2019.

BACKGROUND

On August 15, 2018, plaintiff/counter-defendant Cisco Systems, Inc. ("Cisco") filed this action against Uniloc USA, Inc., Uniloc 2017 LLC, and Uniloc Licensing USA LLC (collectively, "Uniloc" or "defendants/counter-claimants") seeking a declaration of non-infringement of U.S. Patent No. 6,980,522 ("the '522 patent"). Dkt. No. 1. On October 12, 2018, Cisco filed an amended complaint. Dkt. No. 16 ("FAC"). On October 26, 2018, Uniloc answered and counterclaimed against Cisco for infringement of at least claim 6 of the '522 patent. Dkt. No. 19. In January 2019, upon Uniloc's unopposed motion and with the Court's approval, Uniloc filed an answer and supplemental counterclaim, removing Uniloc Licensing USA LLC as a counter-claimant. Dkt. Nos. 27, 28, 29, 30 ("Suppl. Countercl.").

The '522 patent, titled "Ad Hoc Radio Communication System," contains the following abstract:

In an ad-hoc radio communication system comprising a plurality of stations formed into at least one network, each station is assigned a rank representative of its suitability for performing the role of master station in a network. The rank may for example be assessed depending on the performance of the station's antenna or its access to mains power. It is arranged that the station having the highest rank in a network performs the role of master for that network, thereby improving the efficiency of communication in the network.

FAC, Ex. A ("Patent") at cover page.¹ The patent "relates to a radio communication system comprising a plurality of stations capable of forming an ad-hoc network" as typified in a Bluetooth system. Id. at 1:4-8. "Such a network is intended to provide low-cost, short range radio links between mobile PC's, mobile phones and other devices, whether portable or not." Id. at 1:14-17. "Stations form ad-hoc networks which are known as piconets, each comprising a master station and up to seven slave stations. All stations are identical and capable of acting as master or slave as required. A station can take part in more than one piconet, thereby linking piconets and enabling communication over an extended range." Id. at 1:19-25.

According to the specification, a problem with the prior art "is that it is possible for a station having an inefficient antenna to operate as the master." Id. at 2:63-66. This can happen for a "wide range of reasons[,]" including inherently poor efficiency of the antenna, the antenna's radiation pattern, "antenna mismatch" that may be caused by the station's local environment, shadowing of the antenna by the host device or a user's body, and "polarization coupling loss, if the polarization of antenna in the master is not aligned with that in one or more of the slaves." Id. at 2:66-3:10. The patent proposes to solve this problem "by ranking each station in terms of its antenna performance. A station having the best antenna ranking then preferentially becomes the master. The antenna ranking can be determined under static conditions, or it may be adjusted dynamically depending on the local environment of a station...." Id. at 3:11-18. Ranking of stations may be based on other criteria beyond antenna performance: "other facts might usefully be taken into account in the ranking, either instead of or in addition to the antenna performance[,]" such as access to mains electricity versus battery power. Id. at 4:35-44.

Figure 3 of the patent "is a flow chart illustrating a method in accordance with the present invention for a new station joining an ad-hoc wireless network." Id. at 2:11-13.

Claim 6 of the '522 patent reads as follows:

A method of operating an ad-hoc radio communication system having a plurality of stations formed into at least one network, the method comprising the step of:

determining a master/slave rank of each station in the network representative of the station's suitability for acting as master in the network using antenna performance characteristics of each station in view of the antenna's local environment; and enabling a station with the highest rank to be master.

Id. at 6:4-13.

In its counter-claim, Uniloc alleges that Cisco infringed at least claim 6 of the '522 patent. Cisco now moves for judgment on the pleadings, arguing that claim 6 of the '522 patent is invalid under 35 U.S.C. § 101. Dkt. No. 43 ("Pl.'s Mot."). Uniloc opposes, and Cisco has filed a reply brief. Dkt. Nos. 45 ("Defs.' Opp'n"), 46 ("Pl.'s Reply").

LEGAL STANDARD

I. Judgment on the Pleadings

Rule 12(c) of the Federal Rules of Civil Procedure permits a party to move to dismiss a suit "[a]fter the pleadings are closed ... but early enough not to delay trial." Fed. R. Civ. P. 12(c). A motion for judgment on the pleadings is "functionally identical" to a Rule 12(b)(6) motion to dismiss for failure to state a claim. Dworkin v. Hustler Magazine, Inc. , 867 F.2d 1188, 1192 (9th Cir. 1989). The court must accept "all factual allegations in the complaint as true and construe them in the light most favorable to the non-moving party." Fleming v. Pickard , 581 F.3d 922, 925 (9th Cir. 2009) (citing Turner v. Cook , 362 F.3d 1219, 1225 (9th Cir. 2004) ). "A judgment on the pleadings is properly granted when, taking all the allegations in the pleadings as true, [a] party is entitled to judgment as a matter of law." Lyon v. Chase Bank, USA, N.A. , 656 F.3d 877, 883 (9th Cir. 2011) (quoting Dunlap v. Credit Protection Ass'n, L.P. , 419 F.3d 1011, 1012 n.1 (9th Cir. 2005) ).

Under § 282 of the Patent Act, issued patents are presumed to be valid. 35 U.S.C. § 282. As such, an alleged infringer asserting an invalidity defense pursuant to § 101 bears the burden of proving invalidity by clear and convincing evidence. Microsoft Corp. v. i4i Ltd. P'ship , 564 U.S. 91, 95, 131 S.Ct. 2238, 180 L.Ed.2d 131 (2011).

II. Subject Matter Eligibility Under § 101

Under Section 101 of Title 35 of the United States Code, the scope of patentable subject matter encompasses "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." Bilski v. Kappos , 561 U.S. 593, 601, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010) (quoting 35 U.S.C. § 101 ). Section 101 "contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable." Alice Corp. v. CLS Bank Int'l , 573 U.S. 208, 216, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014) (quoting Ass'n for Molecular Pathology v. Myriad Genetics, Inc. , 569 U.S. 576, 589, 133 S.Ct. 2107, 186 L.Ed.2d 124 (2013) ). They are not patent-eligible because "they are the basic tools of scientific and technological work," which are "free to all men and reserved exclusively to none." Mayo Collaborative Servs. v. Prometheus Labs., Inc. , 566 U.S. 66, 71, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012) (citations omitted). The United States Supreme Court has explained that allowing patents for such purported inventions "might tend to impede innovation more than it would tend to promote it[,]" thereby thwarting the primary objective of patent laws. Id.

Alice provides the relevant analytical framework for "distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts." 573 U.S. at 217, 134 S.Ct. 2347. First, the court must determine whether the claims at issue are directed to one of the patent-ineligible concepts. Id. Second, if the claims are directed to a patent-ineligible concept, such as an abstract idea, the court must "consider the elements of each claim both individually and as an ordered combination to determine whether the additional elements transform the nature of the claim into a patent-eligible application." Id. (citation and quotation marks omitted). Step two is often described "as a search for an ‘inventive concept[.]’ " Id. at 217-18, 134 S.Ct. 2347. "When viewing claim elements individually, the court must remember that recitation of conventional, routine, or well-understood activity will not save an abstract claim." California Inst. of Tech. v. Hughes Commc'ns, Inc. , 59 F. Supp. 3d 974, 980 (C.D.Cal.2014) (citing Alice , 573 U.S. at 223, 134 S.Ct. 2347 ). However, "[w]hen viewing claim elements as an ordered combination, the court should not ignore the presence of any element, even if the element, viewed separately, is abstract." Id. "If the ordered combination of elements constitutes conventional activity, the claim is not patentable, but courts should remember that a series of conventional elements may together form an unconventional, patentable combination." Id.

The Federal Circuit has recently held that "[w]hether something is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination." Berkheimer v. HP Inc. , 881 F.3d 1360, 1369 (Fed. Cir. 2018). However, the Berkheimer court also clarified that "[n]othing in this decision...