Savvy Dog Sys. v. Pa. Coin, LLC

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SAVVY DOG SYSTEMS, LLC, and POM OF PENNSYLVANIA, LLC, Plaintiffs, v. PENNSYLVANIA COIN, LLC, and PA COIN HOLDINGS, LLC, Defendants.

CIVIL No. 3:19-CV-01470

United States District Court, M.D. Pennsylvania

September 19, 2022

MEMORANDUM

JENNIFER P. WILSON UNITED STATES DISTRICT COURT JUDGE MIDDLE DISTRICT OF PENNSYLVANIA

Before the court is a motion for summary judgment filed by Defendants Pennsylvania Coin, LLC and PA Coin Holdings, LLC. (Doc. 155.) Defendants argue that the patent at issue claims patent-ineligible subject matter pursuant to 35 U.S.C. § 101. Applying the standard established by the Supreme Court in Alice Corporation Pty. Ltd. v. CLS Bank International, and incorporating this court's prior holding that the ‘223 Patent fails Alice step one, the court holds that the ‘223 Patent does not transform the abstract idea of rules for playing a game into an inventive concept as required by Alice step two. For the reasons that follow, the court will grant Defendants' motion. (Doc. 155.)

Procedural History

Plaintiffs Savvy Dog Systems, LLC (“Savvy Dog”) and POM of Pennsylvania, LLC (“POM”) (collectively “Plaintiffs”) initiated this action via complaint on August 23, 2019, against Defendants Pennsylvania Coin, LLC and PA Coin Holdings, LLC (collectively “Defendants”). Defendants filed a motion to dismiss, prompting Plaintiffs to file an amended complaint on November 1, 2019. (Docs. 21, 25.) The single count in the amended complaint sets forth a claim for patent infringement under 35 U.S.C. § 271 of Savvy Dog's Patent Number: U.S. 7,736,233 (“‘223 Patent”). (Doc. 25.)

On November 15, 2019, Defendants filed a motion to dismiss Plaintiffs' amended complaint, arguing that the ‘223 Patent claims patent-ineligible subject matter under 35 U.S.C. § 101 and, alternatively, that Plaintiffs failed to plead a plausible direct infringement claim and willful infringement claim.^[1] (Doc. 31.) Following briefing and oral argument, the court held that claim 44, which the parties agreed was representative of the ‘223 Patent, describes the rules for playing a game and was an abstract idea under step one of Alice Corporation Pty. Ltd. v. CLS Bank International, 573 U.S. 208 (2014). (Doc. 61, pp. 9-15.)^[2] Moving to Alice step two, the court concluded that “[w]hether the technology embedded into the game processor is an improvement and ‘inventive concept' is a question of fact” that could not be decided at the motion to dismiss stage. (Id. at 15-19.) Ultimately, the court denied the motion to dismiss in its entirety. (Docs. 61, 62.)

Defendants subsequently answered the complaint and filed counterclaims for noninfringement and invalidity of the ‘223 Patent. (Doc. 63.)

On September 15, 2020, the court held a claim construction hearing and issued its ruling on December 21, 2020. (Docs. 111, 112.) Based on the court's claim construction ruling, Plaintiffs moved the court to enter judgment in favor of Defendants on Plaintiffs' infringement claim and to certify the judgment under Federal Rule of Civil Procedure 54(b) so that they could immediately appeal the court's claim construction ruling. (Doc. 117.) Therein, Plaintiffs disagreed with the court's ruling but conceded that, based on the court's claim construction ruling, they could not establish that Defendants infringed the ‘223 Patent. (Doc. 118, p. 2.) After the motion was fully briefed and argued, the court denied the motion and permitted this case to proceed to a final judgment. (Doc. 136.)

On January 28, 2022, Defendants timely filed a motion for summary judgment on the ground that the ‘223 Patent is invalid under 35 U.S.C. § 101, as well as a statement of facts and brief in support.^[3] (Docs. 155, 161, 162.) Plaintiffs timely opposed the motion, and Defendants filed a reply. (Docs. 169, 170, 172, 173.) On March 15, 2022, Defendants requested oral argument on their motion, which the court granted. (Docs. 175, 177, 182.) The court held oral argument on July 19, 2022, and ordered supplemental letter briefs following oral argument to permit Defendants to respond to newly identified case law discussed by Plaintiffs and provide the parties' positions on whether the court should revisit its ruling on Alice step one. (Doc. 184.) Following submission of the letter briefs, the motion for summary judgment is ripe for disposition. (Docs. 186, 187, 189.)

On March 31, 2022, the parties filed a joint motion for partial judgment and to realign the parties for trial, which the court granted the following day. (Docs. 179, 180.) Important to the resolution of this case, the parties agreed that Plaintiffs cannot prevail on their patent infringement claim based on the court's claim construction of “actual game to be played,” and that judgment be entered in favor of Defendants on Count I of the amended complaint for patent infringement. (Doc. 180, p. 1.) They further agreed that Defendants be granted declaratory judgment in their favor on their counterclaim of noninfringement of the ‘223 Patent.^[4] (Id. at 2.)

Factual Background^[5]

Savvy Dog is the record title owner of the ‘223 Patent, and POM has an exclusive license to the ‘223 Patent in Pennsylvania. (Doc. 25, ¶ 13.) The ‘223 Patent was filed on June 30, 2006, and issued on June 15, 2010, with the title of “Electronic Gaming Method and System Having Preview Screen.” (Id. ¶ 14.) The abstract of the ‘223 Patent describes it as follows:

An electronic gaming method and system with a game preview display. A field of game symbols is presented on the game display to the player as a preview for deciding whether or not to play the displayed game. If the player decides to play the game, the player selects a field element to turn the symbol displayed into a wild symbol. The player's selection of the field element for the wild symbol location is received by the game software which determines and displays each winning combination of symbols that is formed by such wild symbol location selection. A new game field can then be constructed and previewed on the game display.

(Doc. 25-1, p. 2.) Thus, the processor “test[s] the field for compliance with at least one of the preceding selections prior to presenting the field to the player. The displayed game field cannot contain a winning combination before play.” (Id. at 16.)

An expert report by Nick Farley and Associates dated March 7, 2005, is prior art to the ‘223 Patent. (Doc. 161, ¶ 1.) This report describes the prior art Tic- Tac-Fruit game as having a “video screen [that] presents nine symbols in a 3x3 array to the player, similar to a t[i]c-tac-toe arrangement.” (Id. ¶ 2.) Plaintiffs' expert, Kevin Harrigan, Ph.D. (“Dr. Harrigan”), testified that the prior art Tic-Tac-Fruit game disclosed testing and that the processor claimed in the ‘223 Patent is specially configured to run the Tic-Tac-Fruit game. (Doc. 170, ¶¶ 3-4.) Dr. Harrigan further testified that the invention created by Michael Pace (“Mr. Pace”), the inventor of the Tic-Tac-Fruit game and the ‘223 Patent, could be implemented using a “conventional, off-the-shelf CPU or microprocessor.” (Doc. 161, ¶ 5.) Mr. Pace testified that the “preview” feature was created to work around legal obstacles and that the embodiment of his invention could have been implemented on a game board existing in the 1990s. (Id. ¶¶ 8, 10.)

Jurisdiction

Because this case raises a federal question of patent infringement under 35 U.S.C. § 271, the court has original jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a). Further, venue is appropriate under 28 U.S.C. §§ 1391 and 1400(b).

Standard of Review

A court may grant a motion for summary judgment when “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P 56(a). A dispute of fact is material if resolution of the dispute “might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Summary judgment is not precluded by “[f]actual disputes that are irrelevant or unnecessary.” Id. “‘A dispute is genuine if a reasonable trier-of-fact could find in favor of the nonmovant' and ‘material if it could affect the outcome of the case.'” Thomas v. Tice, 943 F.3d 145, 149 (3d Cir. 2019) (quoting Lichtenstein v. Univ. of Pittsburgh Med. Ctr., 691 F.3d 294, 300 (3d Cir. 2012)).

In reviewing a motion for summary judgment, the court must view the facts in the light most favorable to the non-moving party and draw all reasonable inferences in that party's favor. Jutrowski v. Twp. of Riverdale, 904 F.3d 280, 288 (3d Cir. 2018) (citing Scheidemantle v. Slippery Rock Univ. State Sys. of Higher Educ., 470 F.3d 535, 538 (3d Cir. 2006)). The court may not “weigh the evidence” or “determine the truth of the matter.” Anderson, 477 U.S. at 249. Instead, the court's role in reviewing the facts of the case is “to determine whether there is a genuine issue for trial.” Id.

The party moving for summary judgment “bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (internal quotation marks and citation omitted); see also Fed. R. Civ. P. 56(c)(4) (establishing requirements for affidavits or declarations filed in support of or opposition to a motion for summary judgment). The non-moving party must then oppose the motion, and in doing so “‘may not rest upon the mere allegations or denials of [its] pleadings' but, instead, ‘must set forth specific facts showing that there is a genuine...