Whitserve LLC v. Dropbox, Inc.

WHITSERVE LLC, Plaintiff, v. DROPBOX, INC., Dropbox.

Civ. No. 18-665-CFC

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE

July 25, 2019

MEMORANDUM

Plaintiff WhitServe LLC (WhitServe) alleges that Defendant Dropbox, Inc. (Dropbox) infringes U.S. Patent No. 8,812,437 ("the #437 patent") titled "Onsite Backup for Third Party Internet-Based Systems." The Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338(a). Dropbox has moved to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) on the grounds that the #437 patent recites patent ineligible subject matter under 35 U.S.C. § 101. D.I. 9. For the reasons discussed below, I will grant Dropbox's motion.

I. BACKGROUND

The #437 patent states that "[i]n an effort to improve customer service, companies are increasingly moving their data processing systems onto the Internet and providing web interfaces for their customers to see and manipulate their own data." D.I. 1-1 at 1:13-16. At the same time, companies are outsourcing the processing of customers' data to third parties, which "cuts costs and relieves companies of having to hire software expertise [and] ... having to maintain hardware." Id. at 1:21-28.

One problem with outsourcing data processing to third parties that use Internet-based systems is "the safeguarding of their and their clients' data." Id. at 1:32-34. "Another difficulty companies face in deciding [whether] to outsource is continuity of service if, for example, the third party were to go out of business." Id. at 1:38-40. The #437 patent purports to solve these problems by disclosing, among other things, "[a] system for onsite backup for internet-based data processing systems." Id. at 3:20, 4:13-14. The system is comprised of a "central computer," "a client computer," a "communications link" between each computer and the internet, and a database containing a plurality of data records. Id. at Abstract. "Software executing on the central computer receives a data backup request, and ... transmits the data backup to the client computer." Id. There are no other details in the patent regarding how the system works.

There are three independent claims in the #437 patent: claims 1, 10, and 19. WhitServe contends that Dropbox has infringed claims 10 and 19. Claim 10, which has been reformatted for clarity, recites:

A system for onsite backup for internet-based data processing systems, comprising:

a central computer accessible by at least one client computer at a client site via the Internet for outsourced data processing;

at least one database containing a plurality of data records accessible by said central computer, the plurality of data records including internet-based data that is modifiable over the Internet from the client computer;

data processing software executing on said central computer for outsourcing data processing to the Internet from the at least one client computer, said data processing software modifying the internet-based data in the plurality of data records according to instructions received from the at least one client computer, the modifying including updating and deleting the internet-based data in the plurality of data records;

a client data request, sent from at least one client computer via the Internet to said central computer, the client data request comprising a request for a backup copy of at least one of the plurality of data records;

software executing on said central computer to receive, via the Internet from the at least one client computer, the request for a backup copy of at least one of the plurality of data records including the internet-based data in the at least one of the plurality of data records that has been modified by said data processing software; and

software executing on said central computer to transmit the backup copy of the at least one of the plurality of data record including the internet-based data in the at least one of the plurality of data records that has been modified by said data processing software to the client site for storage of the internet-based data from the at least one of the plurality of data record in a location accessible via the at least one client computer;

wherein the location is accessible by the at least one client computer without using the Internet.

Id. at 4:14-50.

Claim 1 is essentially the same as claim 10 except that the internet-based data processing system is "managed by a third-party." Id. at 3:20, 3:33. Claim 19 rewrites claim 10 as a pure software claim. The preamble to claim 19 recites: "[a] non-transient computer readable medium containing software executed by at least one processor for causing a central computer to perform the following steps." Id. at 5:7-9. The software (which is written to operate on the "central computer") performs the same steps as the system recited in claim 10. The dependent claims narrow the independent claims by, for example, specifying the location of the central computer (a third-party site or not the client site), or adding a requirement that the data be reformatted, encrypted, or susceptible to manipulation using a web interface. See, e.g., id. at 3:53-4:13.

II. STANDARD OF REVIEW

Under Rule 12(b)(6), a party may move to dismiss a complaint for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). To survive the motion to dismiss, the complaint need not contain "detailed factual allegations," but it must contain sufficient factual matter to "state a claim to relief that is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl Corp v. Twombly, 550 U.S. 544, 555, 570 (2007)). In assessing the plausibility of a claim, the court must accept all well-pleaded factual allegations inthe complaint as true and draw all reasonable inferences in favor of the plaintiff. In re Rockefeller Ctr. Prop., Inc. Sec. Litig., 311 F.3d 198, 215 (3d Cir. 2002). The Court's review is limited to the allegations in the complaint, exhibits attached to the complaint, and documents incorporated by reference. Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010).

III. DISCUSSION

Dropbox has moved to dismiss the complaint on the grounds that the asserted claims in the #437 patent are directed to an abstract idea and, therefore, ineligible for patent protection under 35 U.S.C. § 101. WhitServe argues that the motion should be denied because: (1) the #437 patent is eligible under § 101; (2) the #437 patent does not preempt the field of data storage and data modification; (3) Dropbox failed to meet its burden of proof on a motion to dismiss; and (4) the Federal Circuit and United States Patent and Trademark Office ("USPTO") have already determined that the #437 patent is not abstract. D.I. 13.

A. Patent Eligibility under Alice

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.

There are three judicially-created limitations on the literal words of § 101. The Supreme Court has long held that laws of nature, natural phenomena, and abstract ideas are not patentable subject matter. Alice Corp. Pty. v. CLS Bank Int'l, 573 U.S. 208, 216 (2014). These exceptions to patentable subject matter arise from the concern that the monopolization of "these basic tools of scientific and technological work" "might tend to impede innovation more than it would tend to promote it." Id. (internal quotation marks and citations omitted).

"[A]n invention is not rendered ineligible for patent [protection] simply because it involves an abstract concept." Id. at 217. "[A]pplication[s] of such concepts to a new and useful end ... remain eligible for patent protection." Id. (internal quotation marks and citations omitted). But in order "to transform an unpatentable law of nature [or abstract idea] into a patent-eligible application of such law [or abstract idea], one must do more than simply state the law of nature [or abstract idea] while adding the words 'apply it.'" Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 71 (2012) (emphasis omitted).

In Alice, the Supreme Court made clear that the framework laid out in Mayo for determining if a patent claims eligible subject matter involves two steps. The Court must first determine whether the patent's claims are drawn to a patent-ineligible concept — i.e., are the claims directed to a law of nature, natural phenomenon, or abstract idea? 573 U.S. at 217. If the answer to this question isno, then the patent is not invalid for teaching ineligible subject matter. If the answer to this question is yes, then the Court must proceed to step two, where it considers "the elements of each claim both individually and as an ordered combination" to determine 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. at 217-18 (alteration in original) (internal quotations and citations omitted).¹

1. Alice Step One

Dropbox contends that the #437 patent is directed to the abstract idea of backing up data records. D.I. 10 at 10. I agree. For the purposes of this motion, I will treat claim 10 of the #437 patent as representative.²

As the preamble states, claim 10 is a "system for onsite backup for internet-based data." D.I. 1-1 at 4:14-15. "It is undisputed that institutions have long backed up data in general." Intellectual Ventures I LLC v. Symantec Corp., 234 F. Supp. 3d 601, 607 (D. Del. 2017). Thus, courts have frequently found that claims directed to copying and storing information for backup purposes are directed to abstract ideas. See id. (claim for copying data to remote location directed to "the abstract idea of...