RingCentral, Inc. v. Dialpad, Inc.

372 F.Supp.3d 988

RINGCENTRAL, INC., Plaintiff,

v.DIALPAD, INC., Defendant.

Case No. 18-cv-05242-JST

United States District Court, N.D. California.

Signed March 8, 2019

Clement S. Roberts, Orrick, Herrington & Sutcliffe LLP, San Francisco, CA, Amy Kathleen VanZant, Evan David Brewer, Lillian J. Mao, Orrick, Herrington & Sutcliffe LLP, Menlo Park, CA, Johanna Lynn Jacob, Orrick, Herrington & Sutcliffe LLP, Los Angeles, CA, Will Hussein Melehani, Orrick Herrington & Sutcliffe LLP, Irvine, CA, for Plaintiff.

Jose Luis Martinez, Joseph Taylor Gooch, Maya Perelman, Ryan K.M. Wong, Sharif E. Jacob, Stuart L. Gasner, Warren Andrew Braunig, Keker, Van Nest and Peters LLP, San Francisco, CA, for Defendant.

ORDER GRANTING MOTION TO DISMISS

Re: ECF No. 29

JON S. TIGAR, United States District Judge

Before the Court is Defendant Dialpad, Inc.'s motion to dismiss. ECF No. 29. The Court will grant the motion.

I. BACKGROUND

Plaintiff RingCentral, Inc. and Defendant Dialpad, Inc. are competitors in the "cloud-based unified communications" market. ECF No. 24 ¶¶ 1-2. Both offer voice, video, and messaging services. Id. RingCentral alleges that Dialpad offers four levels of "a business PBX [private branch exchange] cloud based VoIP [Voice over Internet Protocol] service":

(1) Dialpad Standard includes unlimited calling and text-based messaging in the United States and Canada, unlimited conferencing with up to 10 participants, HD video calling, single sign-on, softphones, and VoiceAI; (2) Dialpad Pro includes these same features plus call center, international offices, department audio recording, and voice transcription; and (3) Dialpad Enterprise includes all of the features of Dialpad Pro plus Enterprise SLA and Admin APIs.... In December 2017, Dialpad launched Dialpad Free, which purports to be a zero-cost Web-based free business VoIP phone system for businesses with five employees or less. Dialpad Free is a scaled-down version of Dialpad Pro and does not include certain features, including the ability to send and receive fax messages.

Id. ¶¶ 11-12. In its first amended complaint, RingCentral alleges that these products infringe four of RingCentral's patents: U.S. Patent Nos. 8,483,367 ("the '367 patent") ; 8,355,496 ("the '496 patent") ; 7,702,669 ("the '669 patent") ; and 8,600,363 ("the '363 patent"). Id.

Dialpad contends that the asserted claims are patent-ineligible subject matter under 35 U.S.C. § 101 and now moves to dismiss all four patent infringement causes of action under Federal Rule of Civil Procedure 12(b)(6).

II. LEGAL STANDARD

To survive a Rule 12(b)(6) motion to dismiss, a complaint must contain sufficient factual matter that, when accepted as true, states a claim that is plausible on its face. Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). "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." Berkheimer v. HP Inc. , 881 F.3d 1360, 1367 (Fed. Cir. 2018) (internal quotation marks, alteration, and citation omitted). Both steps of the Alice inquiry are informed by "the claims in light of the written description." Amdocs (Israel) Ltd. v. Openet Telecom, Inc. , 841 F.3d 1288, 1299 (Fed. Cir. 2016).

"Whether a claim recites patent eligible subject matter is a question of law which may contain disputes over underlying facts." Berkheimer , 881 F.3d at 1368. But this does not mean that patent eligibility cannot be decided on a motion to dismiss or motion for summary judgment, as "not every § 101 determination contains genuine disputes over the underlying facts material to the § 101 inquiry." Id. "[P]atent 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). In some cases, for example, the factual question of "[w]hether the claim elements or the claimed combination are well-understood, routine, [or] conventional" may "be answered adversely to the patentee based on the sources properly considered on a motion to dismiss, such as the complaint, the patent, and materials subject to judicial notice."¹ Id. at 1128. "If there are claim construction disputes at the Rule 12(b)(6) stage, ... either the court must proceed by adopting the non-moving party's constructions, or the court must resolve the disputes to whatever extent is needed to conduct the § 101 analysis, which may well be less than a full, formal claim construction." Id. at 1125 (citations omitted).

III. DISCUSSION

A. Preliminary Matters

Before addressing each of the patents in detail, the Court resolves two issues that concern more than one patent. First, RingCentral notes that the Patent and Trademark Office found aspects of the '367, '496, and '669 patents to be distinguishable from the prior art. ECF No. 32-1 at 7 (notice of intent to issue inter partes reexamination certificate from '669 patent file history); ECF No. 32-2 at 3 (notice of allowability from '496 patent file history); ECF No. 32-3 at 3-4 (notice of allowability from '367 patent file history). However, these determinations are not relevant to the Court's analysis of patent eligibility.

SAP America, Inc. v. InvestPic, LLC , 898 F.3d 1161, 1163 (Fed. Cir. 2018) ("Nor is it enough for subject-matter eligibility that claimed techniques be novel and nonobvious in light of prior art, passing muster under 35 U.S.C. §§ 102 and 103."); Intellectual Ventures I v. Symantec , 838 F.3d at 1315 (holding that a "finding that Symantec did not prove by clear and convincing evidence that three particular prior art references do not disclose all the limitations of or render obvious the asserted claims does not resolve the question of whether the claims embody an inventive concept").

Second, relying on Aatrix , 882 F.3d at 1125, RingCentral argues that the Court must assume as true the complaint's allegations that the patents use "unconventional techniques." ECF No. 31 at 16 (citing ECF No. 24 ¶ 36); id. at 21 (citing ECF No. 24 ¶ 28); id. at 29 ...