Network Apparel Grp., LP v. Airwave Networks Inc.

154 F.Supp.3d 467

Network Apparel Group, LP, Plaintiff,

v.Airwave Networks Incorporated, Defendant.

Network Apparel Group, LP, Plaintiff,

v.Apogee Telecom Inc., Defendant.

Network Apparel Group, LP, Plaintiff,

v.Elauwit, LLC, Defendant.

Network Apparel Group, LP, Plaintiff,

v.Pavlov Media, Inc., Defendant.

Clarus Data, Inc. d/b/a Korcett Holdings, Inc., KHI–TW, LLC, and Network Apparel Group, LP, Plaintiffs,

v.Time Warner Cable Inc. and Time Warner Cable Texas, LLC, Defendants.

Civil Action No. 6:15–CV–00134–WSS–JCM

Civil Action No. 6:15–CV–00135–WSS–JCM

Civil Action No. 6:15–CV–00136–WSS–JCM

Civil Action No. 6:15–CV–00138–WSS–JCM

Civil Action No. 6:15–CV–00139–WSS–JCM

United States District Court, W.D. Texas, Waco Division.

Signed December 30, 2015

David Greer Henry, James L. Reed, Jr., Michael D. Ellis, Gray, Reed & McGraw, P.C., Houston, TX, John P. Palmer, Naman Howell Smith & Lee, Waco, TX, Russell Erin Jumper, Gray Reed, & McGraw, Dallas, TX, for Plaintiff.

James Norman Willi, Tracy J. Willi, Willi Law Firm, P.C., Austin, TX, for Defendant.

REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

JEFFREY C. MANSKE, UNITED STATES MAGISTRATE JUDGE

TO: THE HONORABLE WALTER S. SMITH, JR., UNITED STATES DISTRICT JUDGE

This Report and Recommendation is submitted to the Court pursuant to 28 U.S.C. § 636(b)(1)(c) and Rules 1(h) and 4(b) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges.

Before the Court is Defendants' Motion to Dismiss Pursuant to Fed. R. Civ.P. 12(b)(6). Defs.' Mot. (ECF No. 10). The Motion has been fully briefed (Pl.'s Resp. (ECF No. 13) and Defs.' Reply (ECF No. 21)), and oral argument¹ was held on November 9, 2015. For the reasons that follow, the undersigned RECOMMENDS that Defendants' Motion be GRANTED with respect to all of the asserted claims of U.S. Patent No. 7,631,079.

I. BACKGROUND

Plaintiffs are Clarus Data, Inc., d/b/a Korcett Holdings, Inc. (“Korcett”) and Network Apparel Group, LP (collectively, “Network Apparel”). Network Apparel is the owner of U.S. Patent No. 7,631,079 (“the '079 Patent”), and Korcett is Network Apparel's related entity and licensor of the '079 Patent. Korcett provides managed Internet services to multi-dwelling units (“MDUs”), such as dormitories and apartment complexes. Korcett designs and installs network management systems that practice the claims of the '079 Patent. One of the '079 Patent's inventors, Dave Daugherty, is Korcett's CEO. Defendants are five companies, all providing computer networking services. Network Apparel filed suit against each Defendant individually alleging infringement of the '079 Patent. The cases were assigned to the undersigned for all purposes. Order Reassigning Case, ECF No. 6. The actions were then consolidated for pre-trial purposes. Order Consolidating Actions, ECF No. 17.

The '079 Patent is entitled “System and Method of Messaging and Obtaining Message Acknowledgement on a Network.” '079 Patent (filed May 21, 2007). According to the Specification, the '079 Patent addresses a problem created by the tendency of email recipients to ignore and delete any emails emanating from unknown senders. Id. col. 1, ll. 25–29. This tendency “has made it difficult to communicate via a computer network with some individuals on the network, and to verify that a message was received.” Id. col. 1, ll. 32–34. In the Abstract, the '079 Patent describes the claimed system and method as follows:

The system allows messages to target individual end user devices and receive message acknowledgement from end users. The method allows the recipient of an individually targeted message to prevent service interruption or to be rewarded by acknowledging receipt of a message.

Id. at Abstract.

There are three independent claims in the '079 Patent : claim 1 is a system claim and claims 9 and 15 are method claims. Claim 1 is reproduced below:

1. A system for managing messaging on a limited-area network comprising:

a network management device attached to a wide area network;

a limited area network attached to said network management device, said limited area network capable of connecting network devices identified by a unique attribute to said network management device;

a controller attached to said network management device; wherein said controller authenticates a particular network device identified by its unique attribute;

wherein responsive to authenticating said particular network device identified by its unique attribute, said controller creates a first access rule within said network management device for said particular network device;

wherein said network management device provides a level of access to a wide area network from said limited area network to said particular network device pursuant to said first access rule;

wherein responsive to a message sent to said particular network device identified by its unique attribute, said controller creates a second access rule within said network management device for said particular network device;

wherein said second access rule limits access to the wide area network by said particular network device identified by its unique attribute more than said first access rule;

wherein said network management device provides a level of access to said wide area network from said limited area network pursuant to said second access rule until said message sent to said particular network device is acknowledged by a user of said particular network device; and

wherein responsive to said user acknowledging said message, said network management device provides a level of access to said wide area network from said limited area network pursuant to said first access rule.

'079 Patent col. 8, ll. 6–44.

Defendants jointly seek to dismiss Network Apparel's Complaint pursuant to Fed. R. Civ. P. 12(b)(6) on the grounds that the '079 Patent is invalid under 35 U.S.C. § 101 for failing to claim patentable subject matter. The Court held a hearing on Defendants' motion on November 9, 2015. At the hearing, Network Apparel presented a list of four terms with proposed definitions to be used for the purposes of the 12(b)(6) motion, which included “network management device,” “controller,” “limit,” and “ level of access to said wide area network.” The Court has adopted Network Apparel's proposed definitions for the purposes of this motion and finds that a more extensive claim construction is not necessary prior to ruling. The substance of Network Apparel's proposed definitions will be discussed in Step Two of the Mayo / Alice analysis.

II. RELEVANT LAW

Section 101 of the Patent Act defines patentable subject matter: “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.

Section 101 also “contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.” Alice Corp. Pty. Ltd. v. CLS Bank Int'l, ––– U.S. ––––, 134 S.Ct. 2347, 2354, 189 L.Ed.2d 296 (2014) (quoting Ass'n for Molecular Pathology v. Myriad Genetics, Inc., ––– U.S. ––––, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013) ) (internal quotation marks and brackets omitted). “[T]he concern that drives this exclusionary principle [i]s one of pre-emption.” Alice, 134 S.Ct. at 2354 (citing Bilski v. Kappos, 561 U.S. 593, 611–12, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010) ). These categories are not patent-eligible because “they are the basic tools of scientific and technological work” “free to all men and reserved exclusively to none.”

Mayo Collaborative Servs. v. Prometheus Labs. Inc., ––– U.S. ––––, 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012) (citations omitted). Allowing patent claims for laws of nature, natural phenomena, and abstract ideas “might tend to impede innovation more than it would tend to promote it[,]” thereby thwarting the primary object of the patent laws. Id. The Supreme Court has “repeatedly emphasized this ... concern that patent law not inhibit further discovery by improperly tying up the future use of” these building blocks of human ingenuity. Id. at 1301 ; see also O'Reilly v. Morse, 56 U.S. (15 How.) 62, 14 L.Ed. 601 (1853).

However, the Court has also recognized the need to “tread carefully in construing this exclusionary principle lest it swallow all of patent law.” Alice, 134 S.Ct. at 2354 (citation omitted). The Supreme Court recognized that, at some level, “all inventions ... embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Mayo, 132 S.Ct. at 1293. Thus, an invention is not rendered ineligible for patent simply because it involves a law of nature, natural phenomena, or abstract idea. See Diamond v. Diehr, 450 U.S. 175, 187, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981). Applications of such concepts “to a new and useful end” remain eligible for patent protection. Gottschalk v. Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972). Thus, in applying the § 101 exception, the Court must distinguish between patents that claim the “building block[s]” of human ingenuity and those that integrate the building blocks into something more, thereby transforming them into a patent-eligible invention. Alice, 134 S.Ct. at 2354 (citing Mayo, 132 S.Ct. at 1303, 1294 ).

In Alice, the Supreme Court identified a “framework 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 (citing Mayo, 132 S.Ct. at 1296–97 ). This framework reflects the two-part analysis utilized by the Supreme Court in Mayo.

Under the Mayo /Alice test, a court must first ask if the claim is “directed to one of those patent-ineligible concepts”—a law of nature, natural phenomenon, or abstract idea. Alic...