Universal Secure Registry LLC v. Apple Inc.

469 F.Supp.3d 231

UNIVERSAL SECURE REGISTRY LLC, Plaintiff,

v.APPLE INC., Visa Inc., and Visa U.S.A., Inc., Defendants.

Civ. No. 17-585-CFC-SRF

United States District Court, D. Delaware.

Signed June 30, 2020

Jack B. Blumenfeld and Jeremy A. Tigan, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE. Harold Barza, Tigran Guledjian, Valerie Roddy, and Jordan Kaericher, Quinn Emanuel Urquhart & Sullivan, LLP, Los Angeles, CA. Sean Pak and Brian E. Mack, Quinn Emanuel Urquhart & Sullivan, LLP, San Francisco, CA. Attorneys for Universal Secure Registry LLC.

David E. Moore and Bindu Palapura, Potter Anderson & Corroon LLP, Wilmington, DE. James C. Yoon, Jamie Y. Otto, and Jacqueline Lyandres, Wilson Sonsini Goodrich & Rosati, Palo Alto, CA. Lucy Yen, Wilson Sonsini Goodrich & Rosati, New York, NY. Ian Liston, Wilson Sonsini Goodrich & Rosati, Wilmington, DE. Attorneys for Defendants Visa Inc. and Visa U.S.A., Inc.

Frederick L. Cottrell, III and Jason J. Rawnsley, Richards, Layton & Finger, P.A., Wilmington, DE. Mark D. Selwyn and Liv Herriot, Wilmer Cutler Pickering Hale and Dorr LLP, Palo Alto, CA. Monica Grewal, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA. Derek A. Gosma, Wilmer Cutler Pickering Hale and Dorr LLP, Los Angeles, CA. Attorneys for Defendant Apple Inc.

MEMORANDUM OPINION

CONNOLLY, UNITED STATES DISTRICT JUDGE

Plaintiff Universal Secure Registry LLC (USR) has sued Defendants Apple Inc., Visa Inc., and Visa U.S.A., Inc. for infringement of U.S. Patent Nos. 8,856,539 (the #539 patent), 9,100,826 (the #826 patent), 8,577,813 (the #813 patent), and 9,530,137 (the #137 patent). Defendants moved to dismiss the Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that the asserted patents claim unpatentable subject matter and are therefore invalid under 35 U.S.C. § 101. D.I. 16. In a Report and Recommendation issued pursuant to 28 U.S.C. § 636(b), the Magistrate Judge recommended that I deny Defendants’ motion. D.I. 137.

Pending before me are Defendants’ objections to the Magistrate Judge's recommendation. D.I. 147. I have studied the Report and Recommendation, the objections, Plaintiff's response to the objections, D.I. 150, and the parties’ briefs filed in support and opposition to the underlying motions, D.I. 17, D.I. 30, D.I. 37. I review the Magistrate Judge's recommendation de novo. § 636(b)(1) ; Fed. R. Civ. P. 72(b)(3).

I. BACKGROUND

The four asserted patents are directed to the secure authentication (i.e., verification) of a person's identity. In the words of the Complaint: "USR's patented innovations allow a user to securely authenticate his or her identity using technology built into a personal electronic device combined with the user's own secret and/or biometric information." D.I. 1 ¶ 21.

USR alleged in the Complaint that each patent has an "exemplary" claim. D.I. 1 ¶¶ 43, 65, 84, 106. Exemplary claim 22 of the #539 patent provides:

A method for providing information to a provider to enable transactions between the provider and entities who have secure data stored in a secure registry in which each entity is identified by a time-varying multi character code, the method comprising:

receiving a transaction request including at least the time varying multicharacter code for an entity on whose behalf a transaction is to take place and an indication of the provider requesting the transaction;

mapping the time-varying multicharacter code to an identity of the entity using the time-varying multicharacter code; determining compliance with any access restrictions for the provider to secure data of the entity for completing the transaction based at least in part on the indication of the provider and the time-varying multicharacter code of the transaction request;

accessing information of the entity required to perform the transaction based on the determined compliance with any access restrictions for the provider, the information including account identifying information;

providing the account identifying information to a third party without providing the account identifying information to the provider to enable or deny the transaction; and

enabling or denying the provider to perform the transaction without the provider's knowledge of the account identifying information.

#539 patent at 20:4-31.

Exemplary claim 10 of the #826 patent provides:

A computer implemented method of authenticating an identity of a first entity, comprising acts of:

authenticating, with a first handheld device, a user of the first handheld device as the first entity based on authentication information;

retrieving or receiving first biometric information of the user of the first handheld device;

determining a first authentication information from the first biometric information;

receiving with a second device, the first authentication information of the first entity wirelessly transmitted from the first handheld device;

retrieving or receiving respective second authentication information for the user of the first handheld device; and

authenticating the identity of the first entity based upon the first authentication information and the second authentication information.

#826 patent at 45:30-47.

Exemplary claim 1 of the #813 patent, which has been reformatted for clarity, provides:

An electronic ID device configured to allow a user to select any one of a plurality of accounts associated with the user to employ in a financial transaction, comprising:

a biometric sensor configured to receive a biometric input provided by the user;

a user interface configured to receive a user input including secret information known to the user and identifying information concerning an account selected by the user from the plurality of accounts;

a communication interface configured to communicate with a secure registry;

a processor coupled to the biometric sensor to receive information concerning the biometric input, the user interface and the communication interface,

the processor being programmed to activate the electronic ID device based on successful authentication by the electronic ID device of at least one of the biometric input and the secret information,

the processor also being programmed such that once the electronic ID device is activated the processor is configured to generate a nonpredictable value and to generate encrypted authentication information from the nonpredictable value, information associated with at least a portion of the biometric input, and the secret information, and to communicate the encrypted authentication information via the communication interface to the secure registry; and

wherein the communication interface is configured to wirelessly transmit the encrypted authentication information to a point-of-sale (POS) device, and

wherein the secure registry is configured to receive at least a portion of the encrypted authentication information from the POS device.

#813 patent at 51:65-29.

Finally, exemplary claim 12 of the #137 patent provides:

A system for authenticating a user for enabling a transaction, the system comprising:

a first device including:

a biometric sensor configured to capture a first biometric information of the user;

a first processor programmed to: 1) authenticate a user of the first device based on secret information, 2) retrieve or receive first biometric information of the user of the first device, 3) authenticate the user of the first device based on the first biometric, and 4) generate one or more signals including first authentication information, an indicator of biometric authentication of the user of the first device, and a time varying value; and

a first wireless transceiver coupled to the first processor and programmed to wirelessly transmit the one or more signals to a second device for processing;

wherein generating the one or more signals occurs responsive to valid authentication of the first biometric information; and

wherein the first processor is further programmed to receive an enablement signal indicating an approved transaction from the second device,

wherein the enablement signal is provided from the second device based on acceptance of the indicator of biometric authentication and use of the first authentication information and use of second authentication information to enable the transaction.

#137 patent at 46:55-47:14.

Defendants argue that these exemplary claims are directed to an abstract idea and therefore claim unpatentable subject matter under § 101. The Magistrate Judge found that the patents are "not directed to an abstract idea because ‘the plain focus of the claims is on an improvement to computer functionality, not on economic or other tasks for which a computer is used in its ordinary capacity.’ " D.I. 137 at 18, 19, 21, 23 (quoting Visual Memory LLC v. NVIDIA Corp. , 867 F.3d 1253, 1258 (Fed. Cir. 2017) ).

II. LEGAL STANDARDS

A. Rule 12(b)(6)

To state a claim on which relief can be granted, a complaint must contain "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). Detailed factual allegations are not required, but the complaint must include more than mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (citation omitted). The complaint must set forth enough facts, accepted as true, to "state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955. A claim is facially plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). Deciding whether a claim is plausible is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id. at 679, 129 S.Ct. 1937 (citation omitted).

B. Patent-Eligible Subject Matter

Section 101...