Quad City Patent, LLC v. Zoosk, Inc.

498 F.Supp.3d 1178

QUAD CITY PATENT, LLC, Plaintiff,

v.ZOOSK, INC., Defendant.

Quad City Patent, LLC, Plaintiff,

v.EC Services Corporation, et al., Defendants.

Case No. 20-cv-01996-JST

Case No. 20-cv-02442-JST

United States District Court, N.D. California.

Signed November 3, 2020

Frederic March Douglas, Attorney at Law, Irvine, CA, for Plaintiff.

Andrew T. Oliver, Michael C. Ting, Amin, Turocy & Watson, LLP, San Jose, CA, for Defendants.

ORDER GRANTING MOTIONS TO DISMISS

Re: ECF No. 17

JON S. TIGAR, United States District Judge Before the Court are Defendant Zoosk, Inc.’s motion to dismiss the first amended complaint in case number 20-cv-11996, ECF No. 17, and Defendant EC Services Corporation's motion to dismiss in case number 20-cv-2442, ECF No. 17. The Court will grant both motions.

I. BACKGROUND

A. Procedural Posture

Plaintiff Quad City Patent LLC ("Quad City") brings two patent infringement cases against Defendants Zoosk, Inc. and EC Services Corporation, respectively, for alleged infringement of U.S. Patent No. 7,272,575 (the "’575 Patent"). Both Defendants now move to dismiss on the ground of patent ineligible subject matter under 35 U.S.C. § 101. Defendants also move to dismiss on other grounds for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

B. The Asserted Patent

The ’575 patent, "Method and System for Facilitating Service Transactions," is directed to "facilitating service transactions" and "provid[ing] a service marketplace." ’575 Patent at 1:7-12.¹ In particular, the ’575 patent seeks to make services "[as] freely tradeable as goods via a set of standardizing material terms." Id. at 1:12-15.

The specification explains that in "conventional seller-driven service transaction systems," buyers are "inundated with blank offers from service providers." Id. at 5:54-57. However, in "conventional buyer-driven systems," such as in government procurement, service providers incur costs in collecting and reviewing non-standard specifications from different buyers. Id. at 5:57-62. To solve this problem, the ’575 Patent proposes an "automated retaining system" that "adopts a common set of terms" to match offers and requests for services. Id. at 5:62-67.

First, a retaining engine – which is a type of computer network – registers participants and verifies their credentials. Id. at 7:37-49, 9:25-49. Second, the retaining engine compiles offers and requests for offers using a standardized terminology, such as price and available dates. Id. at 9:51-67. The offers may be collected using computerized techniques or more traditional ones, such as telephone or email. Id. at 10:1-54. Third, the retaining engine matches offers to requests for offers by comparing material terms. Id. at 11:56-12:3. For example, the buyer may receive a list of viable offers sorted by price. Id. at 10:29-39. Past that point, the transaction may be settled in various ways, including by automatically accepting the first matching offer or by holding an auction. See id. at 12:4-19, 12:46-54, 14:25-37.

Because the service marketplace is computerized, the invention allows for various useful data mining operations. See id. at 15:21-19:39. A buyer may use data mining to screen potential service providers. Id. at 15:22-24. At the same time, a service provider may use data mining to target particular customers or build predictive models. Id. at 15:27-39, 16:31-67. The data may be aggregated to provide an integrated business management solution that predicts markets and optimizes business decisions. Id. at 19:41-25:2. Although the retaining engine does not allow participants to know others’ undisclosed prices or flexibility in material terms, to prevent altering negotiating power, id. at 7:67-8:8; 12:59-63, it does contemplate measuring participants’ "speech, language, emotion, intelligence, character, and characteristics" to determine their emotions and social intelligence. Id. at 25:4-28:17. The resulting analysis can be used for such diverse applications as tele-medicine and facilitating a negotiation. Id. at 26:44-46, 26:55-62.

Claim 1, the only independent claim in the ’575 patent, recites:

A computer-implemented method for facilitating a services marketplace between multiple buyers and sellers of services, comprising:

defining a set of service classification and material terms;

registering a plurality of participants of the service marketplace;

compiling offers to sell services and requests to buy services provided by said participants, wherein the offers and the requests are described in said set of service classification and material terms;

automatically evaluating and matching the offers and the requests, without human intervention, based upon the degree of identicalness of said set of service classification and material terms recited in the offers and the requests;

communicating to matched participants of the result generated by the evaluating and matching step;

the offers being unknown to service buyers and requests being unknown to service sellers prior to the communicating step; and

recognizing at least one of speech, language, emotion, social intelligent, character and characteristics of at least one of the participants by analyzing acoustic or imagery signals collated with the at least one of the participants.

Dependent claim 7 further recites:

A computer-implemented method for facilitating a services marketplace according to claim 1, further comprising a step of data-mining the offers and the requests to discover at least one transactional attribute of one, a portion, or all of the participants.

II. JURISDICTION

This Court has jurisdiction pursuant to 28 U.S.C. § 1331.

III. LEGAL STANDARD

To survive a Rule 12(b)(6) 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, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. While this standard is not a probability requirement, "[w]here 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. (internal quotation marks and citation omitted). In determining whether a plaintiff has met this plausibility standard, the Court must "accept all factual allegations in the complaint as true and construe the pleadings in the light most favorable" to the plaintiff. Knievel v. ESPN , 393 F.3d 1068, 1072 (9th Cir. 2005).

"Section 101 of the Patent Act defines the subject matter eligible for patent protection" by providing that "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof" may be patented. Alice Corp. Pty. Ltd. v. CLS Bank Int'l , 573 U.S. 208, 216, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014) ; 35 U.S.C. § 101. It is well-established that "abstract ideas are not patentable." Alice , 573 U.S. at 216, 134 S.Ct. 2347 (internal quotation marks and citation omitted). However, "an invention is not rendered ineligible for patent simply because it involves an abstract concept." Id. at 217, 134 S.Ct. 2347. Courts must distinguish between patents that claim abstract ideas, on the one hand, and patents "that claim patent-eligible applications of those concepts," on the other hand. Id.

To draw this distinction, courts engage in a two-step analysis. At step one, courts determine whether the claims at issue are "directed to" an abstract idea. Id. Claims that are "directed to a specific improvement in computer functionality" or "to a specific implementation of a solution to a problem in the software arts" are not directed to an abstract idea. Enfish, LLC v. Microsoft Corp. , 822 F.3d 1327, 1338, 1339 (Fed. Cir. 2016). "In cases involving software innovations, this inquiry often turns on whether the claims focus on ‘the specific asserted improvement in computer capabilities ... or, instead, on a process that qualifies as an "abstract idea" for which computers are invoked merely as a tool.’ " Finjan, Inc. v. Blue Coat Sys., Inc. , 879 F.3d 1299, 1303 (Fed. Cir. 2018) (quoting Enfish , 822 F.3d at 1335-36 ). "The purely functional nature of [a] claim confirms that it is directed to an abstract idea, not to a concrete embodiment of that idea." Affinity Labs of Texas, LLC v. Amazon.com Inc. , 838 F.3d 1266, 1269 (Fed. Cir. 2016).

Additionally, a claim that could be performed by a human, excising generic computer-implemented steps, is often abstract. Intellectual Ventures I LLC v. Symantec Corp. , 838 F.3d 1307, 1318 (Fed. Cir. 2016) ; see also Papst Licensing GmbH & Co. KG v. Xilinx Inc. , 193 F. Supp. 3d 1069, 1090 (N.D. Cal. 2016), aff'd , 684 F. App'x 971 (Fed. Cir. 2017) ("[A]utomation of a process using a computer is ... insufficient to save the asserted claims from abstractness.").

If the claims are directed to an abstract idea, courts proceed to step two and "consider the elements of each claim both individually and as an ordered combination" to determine "whether [the claim] contains an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application." Alice , 573 U.S. at 217, 221, 134 S.Ct. 2347 (internal quotation marks and citation omitted). "Stating an abstract idea while adding the words ‘apply it’ is not enough for patent eligibility. Nor is limiting the use of an abstract idea to a particular technological environment." Id. at 223, 134 S.Ct. 2347 (internal quotation marks and citations omitted). Instead, this test "is satisfied when the claim limitations involve more than performance of well-understood, routine, and conventional activities previously known to the industry."...