Swarm Tech. LLC v. Amazon.Com Inc.

561 F.Supp.3d 861

SWARM TECHNOLOGY LLC, Plaintiff,

v.AMAZON.COM INCORPORATED, et al., Defendants.

No. CV-21-00438-PHX-DJH

United States District Court, D. Arizona.

Signed September 20, 2021

Christine Newman Jones, Daniel Joseph Anderson, Kenneth Reed Willis, Leo R. Beus, Michael K. Kelly, Timothy James Casey, Beus Gilbert McGroder PLLC, Phoenix, AZ, for Plaintiff.

Adam Michael Greenfield, Pro Hac Vice, David A. Zucker, Pro Hac Vice, Gabriel K. Bell, Pro Hac Vice, Maximilian A. Grant, Pro Hac Vice, Latham & Watkins, Washington, DC, Andrew Mark Federhar, Jessica Anne Gale, Spencer Fane LLP, Phoenix, AZ, Kimberly Q. Li, Pro Hac Vice, Latham & Watkins LLP, Boston, MA, for Defendants.

ORDER

Diane J. Humetewa, United States District Judge

Pending before the Court is Defendants’ (collectively "Amazon") Motion to Dismiss (Doc. 29). Plaintiff ("Swarm") filed a Response (Doc. 36), and Amazon filed a Reply (Doc. 37). On July 9, 2021, the Court heard oral argument on the matter. The Court now issues its decision.

I. Background

Swarm's Complaint alleges that Amazon infringed on two of Swarm's patents, U.S. Patent No. 9,852,004 (the " ‘004 Patent") and No. 10,592,275 (the " ‘275 Patent") (collectively, the "Patents"). (Doc. 1 at ¶¶ 137–52). The ‘275 Patent is a continuation of the ‘004 Patent, which purports to cover a "processing architecture" whereby "autonomous co-processors ... proactively retrieve tasks from a task pool populated by a central processing unit." ‘004 Patent, col. 1 ll. 15–18; see ‘275 Patent, col. 1 ll. 17–23.

Swarm alleges Amazon's "AWS IoT Core" and "AWS IoT Greengrass" products infringe on the Patents. (Doc. 1 at ¶ 113). These products are alleged to have infringed upon the first independent claims from both Patents. The claim, as stated in the ‘004 Patent is as follows:

1. A processing system, comprising:

a task pool;

a controller configured to populate the task pool with a plurality of first tasks and a plurality of second tasks;

a first co-processor configured to successively: retrieve a first task from the task pool; deliver the first task to the first co-processor; process the first task; generate first resulting data; and update the task pool to reflect completion of the first task, all without any communication between the first co-processor and the controller; and

a second co-processor configured to successively: retrieve a second task from the task pool; deliver the second task to the second co-processor; process the second task; generate second resulting data; and update the task pool to reflect completion of the second task, all without any communication between the second co-processor and the controller;

wherein the processing system is configured to dynamically accept the first co-processor, the second co-processor, and an additional co-processor into the processing system on a plug-and-play basis without any communication with the controller.

‘004 Patent, col. 14 ll. 10–32. The ‘275 Patent ’s first claim is substantially similar, except that it describes a "collaborative intelligence system" instead of a processing system, and it adds that the tasks are designed to accomplish a "common objective." ‘275 Patent, col 14 ll. 24, 45–49.

The Complaint ultimately brings two claims for infringement of the ‘004 Patent and the ‘275 Patent. (Doc. 1 at ¶¶ 137–52). Amazon moves to dismiss Swarm's Complaint under Federal Rule of Civil Procedure 12(b)(6), arguing that both Patents are ineligible under 35 U.S.C. § 101. (Doc. 29 at 6).

II. Legal Standard

A motion to dismiss pursuant to Rule 12(b)(6) tests the legal sufficiency of a claim. Cook v. Brewer , 637 F.3d 1002, 1004 (9th Cir. 2011). Dismissal of a complaint for failure to state a claim can be based on either the "lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't , 901 F.2d 696, 699 (9th Cir. 1990).

In reviewing a motion to dismiss, "all factual allegations set forth in the complaint ‘are taken as true and construed in the light most favorable to the plaintiffs.’ " Lee v. City of Los Angeles , 250 F.3d 668, 679 (9th Cir.2001) (quoting Epstein v. Wash. Energy Co. , 83 F.3d 1136, 1140 (9th Cir. 1996) ). But courts are not required "to accept as true a legal conclusion couched as a factual allegation." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ). A patent's 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.’ " Universal Secure Registry LLC v. Apple Inc. , 10 F.4th 1342, 1346 (Fed. Cir. 2021) (quoting Aatrix Software, Inc. v. Green Shades Software, Inc. , 882 F.3d 1121, 1125 (Fed. Cir. 2018) ).

III. Patent Eligibility

Every idea is not eligible for a patent, even if it is a good one. To be eligible, a patent must provide a "new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." 35 U.S.C. § 101. "Laws of nature, natural phenomena, and abstract ideas" are not patentable because to do otherwise would inhibit the basic tools of technological advancement. Alice Corp. Pty. v. CLS Bank Int'l , 573 U.S. 208, 216, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014). Even if the application of an abstract idea to a particular field is "novel and nonobvious in light of prior art," a claim may still be ineligible. SAP Am., Inc. v. InvestPic, LLC , 898 F.3d 1161, 1163 (Fed. Cir. 2018).

In Alice , the Court set forth a two-step analysis to determine a patent's eligibility. 573 U.S. at 217, 134 S.Ct. 2347. First, courts assess whether the "claims at issue are directed to a patent-ineligible concept," such as an abstract idea. Id. at 218, 134 S.Ct. 2347. If so, then courts must ask the second question, whether the elements of the claim contain an "inventive concept ... that is ‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’ " Id. at 217–18, 134 S.Ct. 2347 (quoting Mayo Collaborative Servs. v. Prometheus Lab'ys, Inc. , 566 U.S. 66, 73, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012) ). The Court begins with step one.

a. Abstract Idea

Under this first step, courts must evaluate "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." Intell. Ventures I LLC v. Erie Indem. Co. , 850 F.3d 1315, 1325 (Fed. Cir. 2017) (cleaned up). This step "depends on an accurate characterization of what the claims require and of what the patent asserts to be the claimed advance." TecSec, Inc. v. Adobe Inc. , 978 F.3d 1278, 1294 (Fed. Cir. 2020). Although Alice declined to define what constitutes an abstract idea, courts have held that "some fundamental economic and conventional business practices are also abstract ideas." DDR Holdings, LLC v. Hotels.com, L.P. , 773 F.3d 1245, 1256 (Fed. Cir. 2014). Hedging, for example, or protecting against risk, is a basic economic practice that is an abstract idea. Bilski v. Kappos , 561 U.S. 593, 611, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010). Likewise, intermediated settlement, or using a third party to mitigate settlement risk, is an abstract idea. Alice , 573 U.S. at 220, 134 S.Ct. 2347.

Much of the caselaw surrounding Alice , including Alice itself, considers whether a claimed improvement to computers or software is an abstract idea. It is certainly not the case that "all improvements in computer-related technology are inherently abstract ...." Enfish, LLC v. Microsoft Corp. , 822 F.3d 1327, 1335 (Fed. Cir. 2016). However, "[a]n abstract idea does not become nonabstract by limiting the invention to a particular field of use or technological environment," such as a computer. Intell. Ventures I LLC v. Capital One Bank (USA) , 792 F.3d 1363, 1366 (Fed. Cir. 2015). Claims that simply consist of " ‘generalized steps to be performed on a computer using conventional computer activity’ are abstract."

RecogniCorp, LLC v. Nintendo Co. , 855 F.3d 1322, 1326 (Fed. Cir. 2017) (quoting Enfish , 822 F.3d at 1338 ). A software claim can be non-abstract when it is " ‘directed to a specific implementation of a solution to a problem in the software arts,’ such as an improvement in the functioning of a computer." Id. (quoting Enfish , 822 F.3d at 1338–39 ).

Amazon argues the ‘004 Patent is abstract because it simply computerizes a well-known project management technique known as a "scrum board." (Docs. 29 at 13; 42-1 at 14). A scrum board works by first having a project manager list tasks on sticky notes and post them on one side of a board. As the team members collect and perform each task, they individually move the notes from the "incomplete" side of the board to the other side, the "complete" side of the board. By comparison, Amazon argues the ‘004 Patent ’s "controller" lists tasks like a project manager in a "task pool," which the first and second "co-processor" perform and then update the "task pool to reflect completion," just as a team member would move a sticky note to indicate completion. (Doc. 29 at 13) (quoting ‘004 Patent, col. 14 ll. 10–32).

Swarm argues the scrum board comparison is a mischaracterization of its Patents. (Doc. 36 at 7). It argues it is more than a scrum board because it provides a "multiprocessor system with the speed of parallel processing" without traditional downsides. (Id. ) Swarm claims the Patents "involve a revolutionary new chip architecture which improves the operation of the computers and computer networks themselves." (Id. at 10–11). In addition, Swarm argues that no human would be able to "populate a task pool, proactively dispatch a plurality of respective agents from a plurality of corresponding co-processors to retrieve, complete, and update the task pool as called for in...