T-Jat Sys. 2006, Ltd. v. Expedia, Inc.

T-JAT SYSTEMS 2006, LTD., Plaintiff, v. EXPEDIA, INC. (DE), EXPEDIA, INC. (WA), and ORBITZ WORLDWIDE, INC., Defendants.

Civil Action No. 16-581-RGA

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

March 26, 2018

MEMORANDUM OPINION

John G. Day, Andrew C. Mayo, ASHBY & GEDDES, Wilmington, DE; Guy Yonay (argued), Daniel Melman, PEARL COHEN ZEDEK LATZER BARATZ LLP, New York, NY.

Attorneys for Plaintiff.

Steven L. Caponi, K&L GATES LLP, Wilmington, DE; Theodore Angelis (argued), K&L GATES LLP, Seattle, WA; Eric A. Prager, K&L GATES LLP, New York, NY.

Attorneys for Defendants.

ANDREWS, U.S. DISTRICT JUDGE:

Presently before the Court is Defendants' Motion to Dismiss for Failure to State a Claim and for Improper Venue (D.I. 25) and related briefing (D.I. 26, 28, 30). The Court held oral argument on November 16, 2017. (D.I. 43 ("Tr.")). On December 22, 2017, Plaintiff filed a Motion for Leave to File a Supplemental Brief in Opposition to Defendants' Motion to Dismiss. (D.I. 36). The parties submitted additional briefing. (D.I. 36-2, 37, 40).

For the reasons that follow, the Court will deny without prejudice Defendants' Motion to Dismiss for Failure to State a Claim and for Improper Venue, as to failure to state a claim, and will grant that motion as to improper venue over Expedia, Inc. (WA). (D.I. 25). The remaining Defendants may re-raise the § 101 issue at summary judgment. The Court will dismiss as moot Plaintiff's Motion for Leave to File a Supplemental Brief in Opposition to Defendants' Motion to Dismiss. (D.I. 36).

I. BACKGROUND

Plaintiff filed a patent infringement action on July 7, 2016 against Defendant, alleging infringement of U.S. Patent No. 8,064,434 ("the '434 patent") and U.S Patent No. 9,210,142 ("the '142 patent"). (D.I. 1). Plaintiff filed an amended complaint on July 7, 2017. (D.I. 24).

Plaintiff alleges infringement of claim 1 of the '434 patent and claims 1, 9, and 12 of the '142 patent. (Id.). Claim 1 of the '434 patent provides:

1. A method for providing a user of a telephone device with a capability to use Internet-based applications, which method comprises the steps of:

transmitting from said telephone device an indication towards a first server, denoting a request to be connected to an Internet-based application residing at a second server;providing said user with a menu from which the user selects a requested Internet-based application;

after selecting an application, establishing a communication path that extends between said telephone device and said second server via said first server;

at said first server, creating a virtual client entity specific to said telephone device and said Internet-based application to be used, created specifically to allow communication between said telephone device and said Internet-based application residing at said second server, and maintained only for the duration of a communication session that is about to take place between said user and said Internet-based application, thereby providing the user of said telephone device with the capability to use said Internet-based application; and

exchanging communications between said second server and said telephone device.

('434 patent, claim 1). On July 21, 2017, Defendants filed a Motion to Dismiss for Failure to State a Claim and for Improper Venue. (D.I. 25).

II. LEGAL STANDARD

A. Motion to Dismiss

Rule 8 requires a complainant to provide "a short and plain statement of the claim showing that the pleader is entitled to relief . . . ." Fed. R. Civ. P. 8(a)(2). Rule 12(b)(6) allows the accused party to bring a motion to dismiss the claim for failing to meet this standard. A Rule 12(b)(6) motion may be granted only if, accepting the well-pleaded allegations in the complaint as true and viewing them in the light most favorable to the complainant, a court concludes that those allegations "could not raise a claim of entitlement to relief." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 558 (2007).

"Though 'detailed factual allegations' are not required, a complaint must do more than simply provide 'labels and conclusions' or 'a formulaic recitation of the elements of a cause of action.'" Davis v. Abington Mem'l Hosp., 765 F.3d 236, 241 (3d Cir. 2014) (quoting Twombly,550 U.S. at 555). I am "not required to credit bald assertions or legal conclusions improperly alleged in the complaint." In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002). A complaint may not be dismissed, however, "for imperfect statement of the legal theory supporting the claim asserted." See Johnson v. City of Shelby, 135 S. Ct. 346, 346 (2014).

A complainant must plead facts sufficient to show that a claim has "substantive plausibility." Id. at 347. That plausibility must be found on the face of the complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "A claim has facial plausibility when the [complainant] pleads factual content that allows the court to draw the reasonable inference that the [accused] is liable for the misconduct alleged." Id. Deciding whether a claim is plausible will be a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679.

B. Patent-Eligible Subject Matter

Section 101 of the Patent Act defines patent-eligible subject matter. It provides: "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 has recognized an implicit exception for three categories of subject matter not eligible for patentability—laws of nature, natural phenomena, and abstract ideas. Alice Corp. Pty. v. CLS Bank Int'l, 134 S. Ct. 2347, 2354 (2014). The purpose of these carve outs is to protect the "basic tools of scientific and technological work." Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71 (2012). "[A] process is not unpatentable simply because it contains a law of nature or a mathematical algorithm," as "an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection." Id.(emphasis omitted). In order "to transform an unpatentable law of nature into a patent-eligible application of such a law, one must do more than simply state the law of nature while adding the words 'apply it.'" Id. at 72 (emphasis omitted).

The Supreme Court recently reaffirmed the framework laid out in Mayo "for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts." Alice, 134 S. Ct. at 2355. First, the court must determine whether the claims are drawn to a patent-ineligible concept. Id. If the answer is yes, the court must look to "the elements of the claim both individually and 'as an ordered combination'" to see if there is 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.'" Id. (alteration in original). "A claim that recites an abstract idea must include 'additional features' to ensure 'that the [claim] is more than a drafting effort designed to monopolize the [abstract idea].'" Id. at 2357 (alterations in original) (quoting Mayo, 566 U.S. at 77). "[S]imply appending conventional steps, specified at a high level of generality, to . . . abstract ideas cannot make those . . . ideas patentable." Mayo, 566 U.S. at 82. Further, "the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of [the idea] to a particular technological environment." Alice, 134 S. Ct. at 2358 (quoting Bilski v. Kappos, 561 U.S. 593, 610-11 (2010)). Thus, "the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention." Alice, 134 S. Ct. at 2358. For this second step, the machine-or-trans formation test can be a "useful clue," although it is not determinative. Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 716 (Fed. Cir. 2014), cert. denied, 135 S. Ct. 2907 (2015).

Patent eligibility under § 101 is a question of law suitable for resolution on a motion to dismiss. See OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362 (Fed. Cir. 2015); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass'n, 776 F.3d 1343, 1346 (Fed. Cir. 2014), cert. denied, 136 S. Ct. 119 (2015). The Federal Circuit follows regional circuit law for motions to dismiss. Content Extraction, 776 F.3d at 1346.

The Federal Circuit has held that the district court is not required to individually address claims not asserted or identified by the non-moving party, so long as the court identifies a representative claim and "all the claims are substantially similar and linked to the same abstract idea." Content Extraction, 776 F.3d at 1348.

III. DISCUSSION

A. Patentable Subject Matter

Defendants assert that claims 1, 9, and 12 of the '134 patent are equivalent to of claim 1 of the '434 patent for purposes of this motion. (D.I. 26 at 2, n.1; Tr. 4:22-24). Plaintiff does not dispute this assertion. (D.I. 28 at 1, n.1; Tr. 17:14-19). Consequently, the parties limit their arguments to claim 1 of the '434 patent.

1. Abstract Idea

"First, we determine whether the claims at issue are directed to [an abstract idea]." Alice, 134 S. Ct. at 2355. "The 'abstract ideas' category embodies 'the longstanding rule that [a]n idea of itself is not patentable.'" Id. (quoting Gottschalk v. Benson, 409 U.S. 63, 67 (1972)). "The Supreme Court has not established a definitive rule to determine what constitutes an 'abstract idea' sufficient to satisfy the first step of the Mayo/Alice inquiry." Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1334 (Fed. Cir. 2016). The Supreme Court has recognized,...