Thunder Power New Energy Vehicle Dev. Co. v. Byton N. Am. Corp., Case No. 18-cv-03115-JST

340 F.Supp.3d 922

THUNDER POWER NEW ENERGY VEHICLE DEVELOPMENT COMPANY LIMITED, Plaintiff,

v.BYTON NORTH AMERICA CORPORATION, et al., Defendants.

Case No. 18-cv-03115-JST

United States District Court, N.D. California.

Signed October 31, 2018

Matthew Christian Holohan, David E. Sipiora, Kristopher Lane Reed, Kilpatrick Townsend & Stockton LLP, Denver, CO, Dario A. Machleidt, Pro Hac Vice, Kilpatrick Townsend & Stockton LLP, Seattle, WA, Darius C. Samerotte, Kilpatrick Townsend & Stockton LLP, San Francisco, CA, for Plaintiff.

John F. Morrow, Jr., Pro Hac Vice, Womble Bond Dickinson (US) LLP, Winston-Salem, NC, David Rufus Boaz, Pro Hac Vice, Womble Bond Dickinson (US) LLP, Raleigh, NC, Joshua Jack Kenneth Anderson, Womble Bond Dickinson, Costa Mesa, CA, for Defendants.

ORDER GRANTING DEFENDANT BYTON NORTH AMERICA'S MOTION TO DISMISS

Re: ECF Nos. 37, 47

JON S. TIGAR, United States District Judge

Two motions are now before the Court: (1) Plaintiff Thunder Power New Energy Vehicle Development Company Limited ("Thunder Power")'s motion for a preliminary injunction prohibiting Defendants Byton North America Corporation ("Byton N.A." or "Byton") and Nanjing Byton New Energy Vehicle Technology Development Co., Ltd. ("Nanjing Byton") from making, using, offering to sell, or selling within the United States, or importing into the United States, vehicles employing the accused functionality, ECF No. 47 at 2; and (2) Defendant Byton's motion to dismiss Thunder Power's patent infringement claims for U.S. Patent Nos. 9,547,373 ("the '373 patent") ; 9,563,329 ("the '329 patent") ; and 9,561,724 ("the '724 patent"), as directed toward patent-ineligible subject matter. ECF No. 37. The Court will grant the motion to dismiss and deny the preliminary injunction motion as moot.

I. BACKGROUND

Both Thunder Power and Byton are foreign companies focused on developing and manufacturing electric vehicles; Thunder Power is based in Hong Kong, and Byton N.A. designs and develops electric vehicles under the direction of Defendant Nanjing Byton New Energy Vehicle Technology Development Co., Ltd., which is based in mainland China. ECF No. 35 ("first amended complaint" or "FAC") ¶¶ 4, 7, 8; ECF No. 20-1 ¶ 3. Thunder Power alleges that several concept cars imported and advertised by Byton N.A. include operating and display systems that infringe its patents: specifically, Byton's "Gesture Control" system ( '373 patent) and "Shared Experience Display" system ( '329 patent and '724 patent ). Id. ¶¶ 7-9, 39, 44, 49.

Generally, the '373 patent claims a vehicle operating system that captures and processes gesture signals from both a driver and a passenger, prioritizing signals from the driver where the two conflict. FAC ¶ 20. The '724 patent claims an in-vehicle display system that shows two information panels on an LCD screen, switches the position of the panels in response to a user signal, then switches them back after a set period of time ("switch-back feature"). Id. ¶ 31. The '329 patent claims a similar display system, without specifying an LCD screen, which duplicates the first information panel at a third position on the dashboard in response to a user instruction ("screen-duplication feature"). Id. ¶ 32.

Byton N.A. now moves to dismiss all three of the patents at issue as abstract and therefore ineligible. ECF No. 37. Thunder Power opposes the motion. ECF No. 44.

II. LEGAL STANDARD

"To survive a 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). "Dismissal under Rule 12(b)(6) is appropriate ... where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory." Mendiondo v. Centinela Hosp. Med. Ctr. , 521 F.3d 1097, 1104 (9th Cir. 2008). "[A]ll allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party." Cahill v. Liberty Mut. Ins. Co. , 80 F.3d 336, 337-38 (9th Cir. 1996). "While a complaint ... does not need detailed factual allegations, [it] requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). In other words, a pleading must allege "enough facts to state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955.

Under section 101 of the Patent Act, "abstract ideas are not patentable." Alice Corp. Pty. v. CLS Bank Int'l , 573 U.S. 208, 134 S.Ct. 2347, 2354, 189 L.Ed.2d 296 (2014). A However, "an invention is not rendered ineligible for patent simply because it involves an abstract concept." Id. 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. at 2355. 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. at 2356-57. For instance, courts ask whether claims are "directed to a specific improvement" or "to a specific implementation of a solution to a problem." Enfish, LLC v. Microsoft Corp. , 822 F.3d 1327, 1338, 1339 (Fed. Cir. 2016). In cases involving computer-powered innovations, this inquiry "often turns on whether the claims focus on ‘the specific asserted improvement in computer capabilities’ " or "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) (quotation omitted). "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). 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) ("[A]utomation of a process using a computer is ... insufficient to save the asserted claims from abstractness.")

If the court concludes that the claims are directed to an abstract idea, the court must proceed to step two and "consider the elements of each claim both individually and as an ordered combination" to determine "whether it contains an inventive concept sufficient to transform the claimed abstract idea into a patent-eligible application." Alice , 134 S.Ct. at 2355, 2357 (internal quotation marks omitted). A claim recites an inventive concept "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) (quotation omitted). Both steps of the Alice inquiry are informed by the claims and the specification. See Amdocs (Israel) Ltd. v. Openet Telecom, Inc. , 841 F.3d 1288, 1299 (Fed. Cir. 2016).

Although the Federal Circuit has stated some patent eligibility challenges must await claim construction, Aatrix Software, Inc. v. Green Shades Software, Inc. , 882 F.3d 1121, 1125 (Fed. Cir. 2018), that court also made plain that in some instances "patent eligibility can [still] be determined at the Rule 12(b)(6) stage." Id. And courts in this district and elsewhere continue to grant motions to dismiss on the grounds of patent ineligibility. See MyMail, Ltd. v. ooVoo, LLC , 313 F.Supp.3d 1095, 1102 (N.D. Cal. 2018) (dismissing claims as ineligible without claim construction after Aatrix ); Kaavo Inc. v. Amazon.com Inc. , 323 F.Supp.3d 630, 638 (D. Del. 2018) ("None of the Federal Circuit cases cited by Plaintiff[, including Aatrix and Berkheimer ,] constitutes a change in the law pertaining to § 101.").

III. DISCUSSION

Citing Aatrix and Berkheimer , Thunder Power argues that there is a factual dispute around inventiveness as to all three patents-in-suit, such that validity cannot be resolved on a motion to dismiss. ECF No. 44 at 8, 12. However, "not every § 101 determination contains genuine disputes over the underlying facts material to the § 101 inquiry." Berkheimer , 881 F.3d at 1368. Here, the Court resolves the motion as a matter of law based on Thunder Power's own descriptions of the patent.

A. The '373 Patent

The '373 patent is titled "Vehicle Operating System Using Motion Capture." ECF No. 35-1 at 2. The patent describes a vehicle operating system that captures and processes gesture signals from a driver and a passenger, determines whether the signals are consistent, and executes only the signal from the driver where they are inconsistent. FAC ¶ 20. According to Thunder Power, the patent improves the automotive arts by addressing a problem unique to that sector: "driver and passenger safety associated with inattentive or distracted driving." Id. The specification explains that the patent improved on the prior art by "provid[ing] a relatively safe, reliable and convenient operating atmosphere, with reduced driver distraction and less focused attention requirements." ECF No. 35-1 at 10. "[V]ehicle components may be operated by gesture actions, avoiding direct button touch or screen selection, so that the operation is made more convenient, less intensely focused, and overall safety improved." Id. "[W]hen the driver needs to focus their attention to driving, the right of operating the execution devices can be transferred to the passenger, so as to avoid distraction of the driver and improve vehicle driving safety." Id. at 11.

Thunder Power asserts "at least Claim 1" of the patent, which the Court will treat as representative.¹ FAC ¶ 39.

Claim 1 recites:

A vehicle operating system for operating a vehicle including a driving seat for

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