NetSoc, LLC v. Oath Inc.

NETSOC, LLC, Plaintiff, v. OATH INC., Defendant.

No. 18-CV-12267 (RA)

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

January 24, 2020

MEMORANDUM OPINION & ORDER

RONNIE ABRAMS, United States District Judge:

Plaintiff NetSoc, LLC filed claims for patent infringement against Defendants Chegg Inc., LinkedIn Corp., Quora Inc., and Oath Inc., in four separate actions that were consolidated through claim construction. See Dkt. 26.¹ The actions against Quora and LinkedIn were transferred to the Northern District of California on October 2, 2019 and January 14, 2020, respectively. See No. 18-CV-12250, Dkt. 72; No. 18-CV-12215, Dkt. 73. The action against Chegg was dismissed on collateral estoppel grounds on January 13, 2020. See No. 18-CV-10262, Dkt. 111. Now before the Court is Defendant Oath's motion to dismiss, also on grounds of collateral estoppel. For the following reasons, the motion is granted and this action is dismissed as well.

BACKGROUND²

I. Procedural History

On December 27, 2018, Plaintiff filed this action, naming Yahoo! Inc. as the sole defendant. Plaintiff sought "relief from patent infringement of the claims of U.S. Patent No. 9,978,107" (the "'107 Patent"), alleging that "Yahoo maintains, operates, and administers a website at www.yahoo.com that infringes one or more claims of the '107 patent." Dkt. 1, Compl. at 1, ¶ 9. The complaint described the '107 Patent as "relat[ing] generally to a method and system for establishing and using a social network to facilitate people in life issues." Id. ¶ 8.

On March 12, 2019, Plaintiff filed an amended complaint (the "FAC"). Plaintiff again sought "relief from patent infringement of the claims of U.S. Patent No. 9,978,107." Dkt. 22, Compl. at 1, ¶ 9. The FAC, however, named Oath - rather than Yahoo! - as the sole defendant, alleging that "Oath maintains, operates, and administers a website at www.Oath.com that infringes one or more claims of the '107 patent."³ Id. ¶ 9. On March 26, Oath filed a motion to dismiss the FAC on several grounds, including that the '107 Patent claims were directed to patent-ineligible subject matter under 35 U.S.C. § 101. See Dkt. 28. Shortly thereafter, the Court consolidated this action with the three other patent actions recently filed by Plaintiff in this district, see Dkt. 26, and, on July 3, granted a stay of discovery in the cases pending resolution of several motions, including Oath's motion to dismiss the FAC, see Dkt. 42.

On July 10, without either seeking permission from or giving notice to the Court, Plaintiff filed a second amended complaint (the "SAC"). See Dkt. 44. In contrast to its prior complaints,the SAC now seeks "relief from patent infringement of the claims of U.S. Patent No. 9,218,591" (the "'591 Patent"). Id. at 1. While Plaintiff asserted the infringement of a different patent, Plaintiff made no other changes to the complaint. For instance, Plaintiff described the '591 Patent as the FAC described the '107 Patent: "relat[ing] generally to a method and system for establishing and using a social network to facilitate people in life issues." Id. ¶ 8. After Oath objected to the filing of the SAC, Plaintiff responded by explaining that "the '107 patent is a continuation application of the application that issues as the '591 patent" and that the amendment is "no surprise as both the '107 patent and the '591 patent are highly related."⁴ Dkt. 46; see also id. (explaining that there is "extreme similarity in the independent Claim 1 of the '107 patent as compared to the '591 patent").

Shortly after filing the SAC, Plaintiff "inform[ed] the Court of a decision in a related case that materially impacts several of the cases before this Court[.]" Dkt. 50. In the United States District Court of the Northern District of Texas, Plaintiff had brought similar patent infringement claims involving the '107 Patent against several other defendants. See NetSoc, LLC v. Match Grp., LLC et al., No. 18-CV-1809 (N.D. Tex. July 13, 2018). On July 22, 2019, the Northern District of Texas concluded that Plaintiff's "patent claims are directed to only ineligible subject matter under 35 U.S.C. § 101" and granted the defendants' motion to dismiss. NetSoc, LLC v. Match Grp., LLC et al., No. 18-CV-1809, 2019 WL 3304704, at *1 (N.D. Tex. July 22, 2019). The court first summarized the '107 Patent claims as "(1) maintaining a list of participants, (2) presenting a user with a list of other participants based on selection criteria, (3) allowing the user to have limited contact with chosen participants, and (4) updating the rating of a participant based on tracked response times." Id. at *2. It then explained that these claims failed the two-step test articulated in Alice Corp. Pty. Ltd. v. CLS Bank International, 537 U.S. 208 (2014), used to determine patent eligibility under 35 U.S.C. § 101. At step one, it held that the '107 Patent is "not directed to the creation of something physical," but, "[i]nstead, they are predicated on presenting results of data collection and analysis," which "resides squarely in the realm of abstract ideas." Match Grp., LLC et al., 2019 WL 3304704, at *2. Upon finding the claims to involve an unpatentable abstract idea, the court held at the second step that the '107 Patent claims falls "well below the threshold that the Federal Circuit has established for an inventive concept" because "NetSoc makes no suggestion - in the patent or in its briefing - that its system for collecting participant data, analyzing it, and presenting it to the users requires anything other than conventional computer hardware." Id. at *2-3.

Following the Northern District of Texas's decision, Plaintiff acknowledged that its claims based on the '107 Patent in other pending actions were now collaterally estopped. See, e.g., Dkt. 88 ("Plaintiff agrees that collateral estoppel may be applied to assertions of infringement of the '107 patent in light of the Texas Decision[.]"). Nonetheless, Plaintiff disputes that the Texas court's decision was "dispositive as to the claims of the '591 patent[.]" Dkt. 50; see also Dkt. 83 ("Plaintiff . . . disagrees that collateral estoppel would apply to claims of infringement on any other NetSoc patent, including the '591 patent and the '344 patent.").

On September 6, Oath filed the present motion to dismiss the SAC. It first contends that Plaintiff is collaterally estopped from asserting infringement claims based on the '591 Patent in light of the Northern District of Texas's decision. Oath also argues, in the alternative, that the '591 Patent does not satisfy 35 U.S.C. § 101 and Plaintiff's claims are not sufficiently plead under Federal Rule of Civil Procedure 12(b)(6).

II. Summary of the Relevant Patents

On December 22, 2015, the '591 Patent, entitled "Method and System for Establishing and Using a Social Network to Facilitate People in Life Issues," was issued by the United States Patent and Trademark Office (the "USPTO"). Dkt. 44, Ex. A. The patent's abstract describes its invention as follows:

Embodiments described herein provide numerous applications and implementations of a social network to facilitate individuals to resolve various life issues. These issues may include issues that arise when individuals or families relocate, including logistic problems, assimilation of family members in a community, and roommate pairings. As will be described, embodiments described herein greatly facilitate corporations in relocating their employees logistically, and also assist employees and their families with life issues that may determine whether the employees' relocation will be a success.

Dkt. 44, Ex. A.

The '591 Patent contains 8 claims. Claim 1 describes "[a] method for establishing a social network," which is - broadly speaking - "compris[ed]" of (1) "maintaining a list comprising a plurality of participants," (2) "presenting a user with a plurality of categories from which the user may make a selection of a category," (3) "receiving an electronic communication from the user for an unidentified respondent" and "sending the inquiry to the selected one or more participants," (4) "receiving a response to the inquiry" and "publishing at least a portion of the response," and (5) "tracking feedback for each of the selected one or more participants based at least in part on the published portion of the response." Id. Claims 2-4 - the dependent claims - provide specifications for the method described in Claim 1. Claim 5 then describes the system - "[a] non-transitory computer-readable medium that stores instructions which can be executed by one or more processors to perform operations compris[ed]" - to implement the method described in Claim 1. Id. Claims 6-8 - dependent claims - provide specifications for the system explained in Claim 5.

On May 22, 2018, the USPTO issued the '107 Patent, also entitled "Method and System for Establishing and Using a Social Network to Facilitate People in Life Issues." See Dkt. 1, Ex. A. The '107 Patent is listed as a continuation of the '591 Patent. It contains 11 claims, with Claim 1 describing a similar "method for establishing a social network" that is "compris[ed]" of (1) "maintaining a list comprising a plurality of participants," (2) "presenting a user with an interface from which the user makes a selection of a category," (3) "displaying, for the user, some of the information associated with each of the multiple participants from the plurality of participants which match the selection of the category by the user," (4) "enabling the user to send an inquiry message to one or more of the multiple participants," and (5) "tracking a response time of each of the one or more participants who received the message from the user." Id. Like the '591 Patent, Claims 2-5 further specify Claim 1's method, and Claims 5-8 describe a system - here, "[a] computer system" - for implementing the method described in Claim 1. Id. The abstract describing the '107 Patent is identical - word-for-word...