Nice Ltd. v. Callminer, Inc.

NICE LTD., NICE SYSTEMS INC., andMATTERSIGHT CORP. Plaintiffs, v. CALLMINER, INC., Defendant.

Civil Action No. 18-2024-RGA-SRF

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

February 3, 2020

REPORT AND RECOMMENDATION

I. INTRODUCTION

Presently before the court in this patent infringement action is the partial¹ motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6), filed by defendant CallMiner, Inc. ("CallMiner").² (D.I. 18) For the following reasons, I recommend that the court DENY the pending motion.

II. BACKGROUND

Plaintiffs NICE Ltd., NICE Systems Inc., and Mattersight Corporation (collectively, "plaintiffs" or "NICE") filed this suit on December 19, 2018, alleging infringement of fourteen patents directed to improving call recording systems. (D.I. 1) NICE is the assignee of U.S. Patent Nos. 6,246,752 ("the '752 patent"), 6,252,946 ("the '946 patent"), 6,785,370 ("the '370 patent"), and 6,937,706 ("the '706 patent") (collectively, the "Data Collection Patents"); U.S. Patent Nos. 8,611,523 ("the '523 patent") and 8,023,639 ("the '639 patent") (collectively, the "Call Classification Patents"); U.S. Patent Nos. 8,553,872 ("the '872 patent"), 9,942,400 ("the'400 patent, and 10,021,248 ("the '248 patent") (collectively, the "Call Evaluation Patents"); and five other patents which are not at issue in CallMiner's pending motion to dismiss: U.S. Patent Nos. 7,599,475, 7,714,878, 8,204,884, 8,694,307, and 10,104,233 (together with the Data Collection Patents, the Call Classification Patents, and the Call Evaluation Patents, the "patents-in-suit"). (D.I. 16 at ¶ 1) In the amended complaint, NICE alleges that CallMiner infringes claim 1 of each of the fourteen patents-in-suit. (D.I. 16)

On March 25, 2019, CallMiner filed the instant partial motion to dismiss, alleging that nine of the fourteen patents-in-suit are directed to unpatentable subject matter pursuant to 35 U.S.C. § 101. (D.I. 18) Specifically, CallMiner contends that the '872, '752, '706, '370, '946, '248, '523, '639, and '400 patents should be rendered invalid. (Id.; 9/5/19 Tr. at 5:1-3)

III. LEGAL STANDARDS

A. Failure to State a Claim

CallMiner moves to dismiss the pending action pursuant to Rule 12(b)(6), which permits a party to seek dismissal of a complaint for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). According to CallMiner, NICE's amended complaint fails to state a claim because the asserted claims of the patents-in-suit are ineligible for patent protection under 35 U.S.C. § 101. Patent eligibility under 35 U.S.C. § 101 is a threshold test. Bilski v. Kappos, 561 U.S. 593, 602 (2010). Therefore, "patent eligibility can be determined at the Rule 12(b)(6) stage . . . when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law." Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1125 (Fed. Cir. 2018).

When considering a Rule 12(b)(6) motion to dismiss, the court must accept as true all factual allegations in the complaint and view them in the light most favorable to the plaintiff.Umland v. Planco Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008). Dismissal under Rule 12(b)(6) is only appropriate if the complaint does not 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)); see also Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009). However, "a court need not 'accept as true allegations that contradict matters properly subject to judicial notice or by exhibit,' such as the claims and the patent specification." Secured Mail Solutions LLC v. Universal Wilde, Inc., 873 F.3d 905, 913 (Fed. Cir. 2017) (quoting Anderson v. Kimberly-Clark Corp., 570 F. App'x 927, 931 (Fed. Cir. 2014)).

B. Patent-Eligible Subject Matter

Section 101 of the Patent Act provides that patentable subject matter extends to four broad categories: "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. The Supreme Court recognizes three exceptions to the subject matter eligibility requirements of § 101: laws of nature, physical phenomena, and abstract ideas. Alice Corp. Pty. v. CLS Bank Int'l, 573 U.S. 208, 218 (2014). The purpose of these exceptions is to protect the "basic tools of scientific and technological work," Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66 (2012), which are "part of the storehouse of knowledge of all men . . . free to all men and reserved exclusively to none," Bilski, 561 U.S. at 602 (internal quotation marks and citations omitted).

The Supreme Court articulated a two-step "framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligibleapplications of those concepts." Alice, 573 U.S. at 217; see also Mayo, 566 U.S. at 77-78. At step one, the court must determine whether the claims are directed to one of the three patent-ineligible concepts. Alice, 573 U.S. at 217. If the claims are not directed to a patent-ineligible concept, "the claims satisfy § 101 and [the court] need not proceed to the second step." Core Wireless Licensing S.A.R.L. v. LG Elecs., Inc., 880 F.3d 1356, 1361 (Fed. Cir. 2018). If the claims are directed to a patent-ineligible concept, the court must proceed to the second step by identifying an "'inventive concept'—i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself." Alice, 573 U.S. at 218-19 (quoting Mayo, 566 U.S. at 72-73).

At step one, "the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter." Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015); see also Affinity Labs of Texas, LLC v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) ("The 'abstract idea' step of the inquiry calls upon us to look at the 'focus of the claimed advance over the prior art' to determine if the claim's 'character as a whole' is directed to excluded subject matter."). However, "courts must be careful to avoid oversimplifying the claims by looking at them generally and failing to account for the specific requirements of the claims." McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016) (internal quotation marks omitted). "At step one, therefore, it is not enough to merely identify a patent-ineligible concept underlying the claim; [courts] must determine whether that patent-ineligible concept is what the claim is 'directed to.'" Rapid Litig. Mgmt. Ltd. v. CellzDirect, Inc., 827 F.3d 1042, 1050 (Fed. Cir. 2016).

At step two, the court must "look to both the claim as a whole and the individual claim elements" to determine whether they "amount[ ] to significantly more than a patent upon theineligible concept itself." McRO, 837 F.3d at 1312. "Simply appending conventional steps, specified at a high level of generality, [is] not enough to supply an inventive concept." Alice, 573 U.S. at 222 (internal quotation marks omitted). Instead, the claim elements must "involve more than performance of 'well-understood, routine, [and] conventional activities previously known to the industry.'" Berkheimer v. HP Inc., 881 F.3d 1360, 1367 (Fed. Cir. 2018) (citation and internal quotation marks omitted); see also Mayo, 566 U.S. at 73. "The inventive concept inquiry requires more than recognizing that each claim element, by itself, was known in the art. . . . [A]n inventive concept can be found in the non-conventional and non-generic arrangement of known, conventional pieces." Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350 (Fed. Cir. 2016).

IV. DISCUSSION

In resolving CallMiner's motion to dismiss, the court will first discuss which claims are sufficiently representative. Thereafter, it will analyze the relevant claims under both steps of the test for patent eligibility set out in Alice Corp. Pty. Ltd. v. CLS Bank International, 573 U.S. 208 (2014), taking into account whether any factual disputes preclude granting CallMiner's motion.

A. Representative Claims

As a preliminary matter, the court addresses the parties' disagreement regarding whether the seven claims specifically addressed by CallMiner in its briefing are adequately representative of the remaining claims of the nine patents subject to CallMiner's motion to dismiss.³ The Federal Circuit has held that "[c]ourts may treat a claim as representative in certain situations, such as if the patentee does not present any meaningful argument for the distinctive significanceof any claim limitations not found in the representative claim or if the parties agree to treat a claim as representative." Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018) (citing Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1352 (Fed. Cir. 2016); Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1316 & n.9 (Fed. Cir. 2016)). Although not much has been written regarding which party bears the burden to show claim representativeness, at least one court in the Eastern District of Texas has recently proposed a burden-shifting analysis to resolve disputes regarding the representativeness of a particular claim. See PPS Data, LLC v. Jack Henry & Assocs., Inc., 404 F. Supp. 3d 1021, 1029-30 (E.D. Tex. 2019). The court finds persuasive this burden-shifting framework, which is intended to protect the procedural due process rights of patentees by protecting against the deprivation of property...