D&M Holdings, Inc., et al. v. Sonos, Inc.

Filing 58

MEMORANDUM OPINION regarding MOTION to Dismiss First, Second, Third, Fourth, Fifth, Seventh, and Eighth Counterclaims (D.I. 9 ). Signed by Judge Richard G. Andrews on 4/18/2017. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

D&M HOLDINGS INC. d/b/a THE D+M
GROUP, D&M HOLDINGS U.S. INC.,
Plaintiffs,
Civil Action No. 16-141-RGA

V.

SONOS, INC.,
Defendant.

MEMORANDUM OPINION

Jack B. Blumenfeld, Esq., MORRIS NICHOLS ARSHT & TUNNELL LLP, Wilmington, DE;
Michael J. Flynn, Esq., MORRIS NICHOLS ARSHT & TUNNELL LLP, Wilmington, DE; John
M. Jackson, Esq., JACKSON WALKER LLP, Dallas, TX; Matthew C. Acosta, Esq. (argued),
JACKSON WALKER LLP, Dallas, TX; Blake T. Dietrich, Esq., JACKSON WALKER LLP,
Dallas, TX; David Folsom, Esq., JACKSON WALKER LLP, Texarkana, TX.
Attorneys for Plaintiffs
Phillip A. Rovner, Esq., POTTER ANDERSON & CORROON LLP, Wilmington, DE; Jonathan
A. Choa, Esq., POTTER ANDERSON & CORROON LLP, Wilmington, DE; George I. Lee, Esq.,
LEE SULLIVAN SHEA & SMITH, LLP, Chicago, IL; Sean M. Sullivan, Esq., LEE SULLIVAN
SHEA & SMITH, LLP, Chicago, IL; Rory P. Shea, Esq. (argued), LEE SULLIVAN SHEA &
SMITH, LLP, Chicago, IL; J. Dan Smith, Esq., LEE SULLIVAN SHEA & SMITH, LLP, Chicago,
IL; Michael P. Boyea, Esq., LEE SULLIVAN SHEA & SMITH, LLP, Chicago, IL.
Attorneys for Defendant

April _IB_, 2017

AND~~UDGE:
Presently before the Court is Defendant's Motion to Dismiss Plaintiffs' First, Second,
Third, Fourth, Fifth, Seventh, and Eighth Counterclaims. (D.I. 9). The issues have been fully
briefed. (D.I. 10, 17, 19). The Court held oral argument on November 14, 2016. (D.I. 41)
("Hr'g Tr."). For the reasons that follow, the Court will deny Defendants' motion.

I.

BACKGROUND
This patent infringement lawsuit began when Plaintiffs requested leave to add

counterclaims in a related action filed by Defendant against Plaintiffs on October 21, 2014. (Civ.
Act. No. 14-1330, D.I. 81). The Court granted leave but severed these infringement
counterclaims into the instant case. (Civ. Act. No. 14-1330, D.I. 100). Plaintiffs assert nine
patents in their counterclaims. (D.I. 1). Defendants have moved to dismiss seven of these
counterclaims pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim.
(D.I. 9). Defendant alleges that four of the asserted patents are invalid under 35 U.S.C. § 101
because each of these patents claims an unpatentable abstract idea. (D.I. 10 at 6). These patents
are U.S. Patent Nos. 7,343,435 ("the '435 patent"), 7,734,850 ("the '850 patent"), 6,539,210
("the '210 patent"), and 7,305,694 ("the '694 patent"). (Id.). Defendant further alleges that three
of Plaintiffs' counterclaims fail to state a plausible claim for infringement. (Id. at 7). These
counterclaims relate to U.S. Patent Nos. 8,755,667 (''the '677 patent"), 6,469,633 (''the '633
patent"), and 7,995,899 ("the '899 patent"). (Id.).

II.

LEGAL STANDARD

A.

Patentable Subject Matter under 35 U.S.C. § 101
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., 556 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. at
1293-94 (internal quotation marks and 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 1294 (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 ifthere 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 23 57

2

(alterations in original) (quoting Mayo, 556 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, 556 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. Kappas, 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." Id. For this second step, the machine-ortransformation 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. When reviewing a motion to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), this Court must accept the
complaint's factual allegations as true. See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555-56
(2007).
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 (internal quotation marks omitted).

3

B.

Patent Infringement Pleading Standards
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. Prior to
December 1, 2015, Form 18 directed plaintiffs in patent infringement suits to plead their
infringement allegations in a particular way. Fed. R. Civ. P. Form 18 (abrogated Dec. 1, 2015).
Specifically, Form 18 enabled plaintiffs to meet a four-part pleading standard requiring them to
allege (1) jurisdiction; (2) ownership of the patent; (3) defendant's infringement "by making,
selling, and using [the device] embodying the patent"; and (4) a demand for relief. In re Bill of
Lading Transmission and Processing Sys. Patent Litig., 681 F.3d 1323, 1334 (Fed. Cir. 2012).
On December 1, 2015, amendments to the Federal Rules went into effect abrogating
Form 18. The order adopting the amendments explained that the changes "shall govern in all
proceedings in civil cases thereafter commenced and, insofar as just and practicable, all
proceedings then pending." Supreme Court of the United States, Order Regarding Amendments
to the Federal Rules of Civil Procedure (U.S. Apr. 29, 2015).
For cases filed after Form 18 was abrogated, patent infringement allegations are
evaluated under the plausibility standard of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).
Under 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

4

action."' Davis v. Abington Mem 'l Hosp., 765 F.3d 236, 241 (3d Cir. 2014) (quoting Twombly,
550 U.S. at 555). The Court is "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." Johnson v. City ofShelby, 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 [defendant]
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.

III.

DISCUSSION

A.

Motion to Dismiss Plaintiffs' First Counterclaim for Infringement of the '435 Patent
In their First Counterclaim, Plaintiffs assert both direct and indirect infringement of the

'435 patent. (D.I. 1, ifif 19-27). The '435 patent contains two independent claims: claim 1 and
claim 9. In briefing, Defendant argued that claim 1 is representative. 1 (D.I. 10 at 11). Claim 1
reads:

1
In their initial infringement contentions, Plaintiffs asserted claims 1-3. (D.1. 1-2 at 4-11). In briefing and at oral
argument, Plaintiffs argued that Defendant had not shown that claim 1 is representative. (D.I. 17 at 6; Hr' g Tr. at
27:14-17). Plaintiffs did not offer any argument as to why claim 1 is not representative. At oral argument in the
companion case, Civ. Act. No. 14-1330, on November 14, 2016 (later in the same day as oral argument in this case),
the parties were directed to submit additional briefing to the extent that they felt the claims of each of the patents
that were argued at the hearing were not representative. (Civ. Act. No. 14-1330, D.I. 206 at 62:5-8). The parties
waited until February 1, 2017 to propose substantial additional briefing on this issue in a Joint Stipulation. (D.1. 46).
On February 2, I denied the parties' Joint Stipulation, finding that the parties had waived any argument that the
claims of each patent addressed in briefing and at oral argument are not representative. (D.I. 47).

5

1. A method of determining a recovery state in a data stream, comprising:
receiving a compressed data stream;
detecting a compression block boundary in the compressed data stream;
detecting an archive block boundary in the compressed data stream;
detecting a file boundary in the compressed data stream; and
in response to the detection of the compression block boundary, the
archive block boundary, and the file boundary, saving a recovery state for the
compressed data stream;
wherein the recovery state includes a position of the compression block
boundary, and a position of the file boundary.
('435 patent, claim 1).
"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 an idea
of itself is not patentable."' Id. (internal quotation marks omitted) (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, however, that "fundamental economic practice[s]," Bilski, 561 U.S. at 611,
"method[s] of organizing human activity," Alice, 134 S. Ct. at 2356, and mathematical
algorithms, Benson, 409 U.S. at 64, are abstract ideas. In navigating the parameters of such
categories, courts have generally sought to "compare claims at issue to those claims already
found to be directed to an abstract idea in previous cases." Enfish, 822 F.3d at 1334. "But in
determining whether the claims are directed to an abstract idea, we must be careful to avoid
oversimplifying the claims because '[a]t some level, all inventions ... embody, use, reflect, rest
upon, or apply laws of nature, natural phenomena, or abstract ideas."' In re TLI Commc 'ns LLC
Patent Litig., 823 F.3d 607, 611 (Fed. Cir. 2016) (alterations in original) (quoting Alice, 134 S.
Ct. at 2354).

6

Defendant asserts that, like the concept of gathering and combining data in Digitech, the
'435 patent seeks to claim "an abstract process of receiving, detecting, and storing data that is not
tied to any device whatsoever." (D.I. 10 at 11-12). Defendant further analogizes the claims of
the '435 patent to those at issue in Content Extraction, where the Federal Circuit invalidated a
patent that claimed the abstract idea of collecting, recognizing, and storing data. (Id. at 12).
Plaintiffs counter that Defendant is oversimplifying in characterizing the invention. (D.I.
17 at 10-11). Plaintiffs assert that the invention is "directed to a method of determining and
using recovery state information to recover from interruptions occurring during a data stream
transfer." (Id. at 11). Plaintiffs cite no cases in support of their contention that this patent is not
directed to an abstract idea. Instead, Plaintiffs attempt to distinguish this case from those cited
by Defendant. (Id.).
I agree with Defendant that claim 1 of the '435 patent is directed to an abstract idea. As
the Federal Circuit has held numerous times, collecting information is "within the realm of
abstract ideas." Electric Power Group, LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir.
2016). Claim 1 of the '435 patent requires: 1) receiving a compressed data stream; 2) detecting
compression block, archive block, and file boundaries; and 3) saving the information detected in
step 2. This is precisely the kind of claim that the Federal Circuit has found to be an abstract
idea, as it is directed to the concept of collecting and storing data. See Electric Power Group,
830 F.3d at 1353 (claims directed to abstract idea of collecting and analyzing information, and
displaying results); TL! Commc'ns, 823 F.3d at 613 (claims directed to abstract idea of
classifying, organizing, and storing digital images"); Content Extraction, 776 F.3d at 1347
(claims drawn to abstract idea of collecting, recognizing, and storing data); Digitech Image
Techs., LLC v. Elecs.for Imaging, Inc., 758 F.3d 1344, 1350 (Fed. Cir. 2014) (claims drawn to

7

abstract idea of"organizing information through mathematical correlations"). Furthermore, the
method is not tied to a specific device or structure. Digitech, 758 F.3d at 1350.
Plaintiffs contend that claim 1 of the '435 patent is distinguishable from the claims found
patent ineligible in Content Extraction. (D.I. 17 at 11). According to Plaintiffs, "the '435 patent
describes specific methods of monitoring data transfers and communications among various
devices and recovering from potential interruptions to the data streams." (Id.). Plaintiffs state
this conclusion without any argument in support. I disagree with Plaintiffs' characterization of
claim 1. Nowhere in this claim is there any mention of"recovering from potential
interruptions." Furthermore, data transfers and communications between devices are wellknown and conventional, as are compressed archive files; Plaintiffs do not contend otherwise.
(Hr' g Tr. at 30:9-11 ). There is simply nothing more "specific" about the method in this claim
than the fact that it is to be applied to transfers of compressed data streams.
There is also nothing new or improved about the type of data that is received or how it is
stored according to the claimed method. The patent specifies that "data files are often
downloaded in ... compressed format." (' 435 patent at 1:8-9). As detailed in the specification,
the claimed method operates on "a conventional compressed archive." (Id. at 1:40). The
specification details how a conventional compressed archive is formed and reveals that the
archive block, compression block, and file boundaries are also conventional. (Id. at 1:40-54).
The claimed method requires only that the information about file, archive block, and
compression block boundaries be detected and stored. The method does not claim anything new
or inventive about how this conventional information is stored, does not require any analysis or
manipulation of the data, and does not even specify that the data that is stored ever be used for
anything. In other words, the method claimed in the '435 patent claims nothing more than

8

receiving a conventional compressed archive, detecting conventional information about file,
archive block, and compression block boundaries within the data stream, and storing this
detected information.
There is also nothing in the claim that represents an improvement in existing technology.

See Enjish, 822 F.3d at 1337 (finding claims directed to new type of database that represented
"an improvement of an existing technology" not abstract). The specification purports to provide
an improved method for compressed file downloads that solves problems associated with
interruptions of such downloads. ('435 patent at 2:4-24). Claim 1, however, does not address
this problem; there is nothing in the claim language that is directed to recovering from an
interruption.
Therefore, I find that the '435 patent is directed to the abstract idea of receiving,
detecting, and storing information.
The determination that a patent is directed to an abstract idea "does not render the subject
matter ineligible." Internet Patents, 790 F.3d at 1346. Having decided that the patent's claims
are directed to an abstract idea, the Court must next "determine whether the claims do
significantly more than simply describe the abstract method." Ultramercial, 772 F.3d at 715.
Since "a known idea, or one that is routine and conventional, is not inventive in patent terms,"
this analysis "favors inquiries analogous to those undertaken for determination of patentable
invention." Internet Patents, 790 F.3d at 1346. Indeed, the Federal Circuit has noted that the
two stages of the Alice two-step inquiry "are plainly related" and "involve overlapping scrutiny
of the content of the claims .... " Elec. Power Grp., 830 F.3d at 1353. Furthermore, neither "[a]
simple instruction to apply an abstract idea on a computer," nor "claiming the improved speed or

9

efficiency inherent with applying the abstract idea on a computer" satisfies the requirement of an
"inventive concept." Intellectual Ventures, 792 F.3d at 1367.
Defendant argues that claim 1 lacks an inventive concept because the claim "do[ es] not
recite any specific, non-conventional steps" and because the claim is "not tied to any machine let alone a specific machine." (D.I. 10 at 13 (emphasis omitted)). Plaintiffs have not stated what
inventive concept they believe is embodied in this claim. Instead, Plaintiffs argue that Defendant
has not met its burden under step two. (D.I. 17 at 11).
Plaintiffs first contend that Defendant's argument relies "on an unsupported construction
of the term 'compressed data stream."' (Id. at 11-12). Plaintiffs do not, however, explain how a
different construction of the term would make any difference in this analysis. Indeed,
Defendant's analysis rests on Plaintiffs' proposed construction of the term. (D.I. 18-1 at 2).
Plaintiffs even acknowledged at oral argument that the compressed data archive of the claim is
conventional and well-known. (Hr'g Tr. at 30:8-11). Therefore, I find this argument irrelevant.
Plaintiffs next complain that Defendant "ignores the claim term 'recovery state."' (Id. at
12). Plaintiffs do not, however, explain how the inclusion of the term "recovery state" imparts
an inventive concept to this claim. Nor could they. The claim itself makes clear that "recovery
state" is simply the name given to the information detected in the data stream that is then stored.
Plaintiffs have not proposed any different interpretation of the term, nor have they provided any
explanation of how the "recovery state" injects an inventive concept into this claim. I am not
persuaded that simply giving this conventional information a name imparts an inventive concept
to this claim.
Plaintiffs next contend that Defendant's "arguments routinely bleed over to issues of
novelty and obviousness." (D.I. 17 at 12). Plaintiffs fail to identify a single specific argument

10

made by Defendant, however, that would constitute an attack on novelty or obviousness rather
than patentable subject matter. I fail to see such an argument in Defendant's step two analysis.
Plaintiffs next argue that Defendant has not shown that claim 1 "unreasonably preempts
the abstract concept of 'receiving, detecting, and storing data.'" (Id.). Plaintiffs appear to be
arguing that an abstract idea is only patent ineligible if it would preempt the field. This is
incorrect. The Supreme Court has described preemption as a policy concern underlying the
determination of patent eligibility. Alice, 134 S.Ct. at 2354. Preemption is not the test for
patentability, however. Furthermore, I am not convinced that this claim is specific enough to
alleviate any preemption concerns. According to Plaintiffs, "The specificity of the recovery state
and associated method alleviates any concerns of unreasonable [preemption]." (D.I. 17 at 12). I
disagree. Plaintiffs contend that this patent "provide[ s] a specific solution for a specific problem
... that arises in the computer specific context." (Id.). The problem Plaintiffs identify is
"recovery of data stream transmission after interruptions." (Id.). This purported specificity is
completely missing from the claim, however. Claim 1 is not tethered to any specific devices.
Rather, this claim mentions only a data stream. The specification states that the "method
described can be applied to the transfer of data between any two electronic devices." ('435
patent at 5:59-60). In other words, this claim is broadly directed to a generic computer
environment. Elec. Power Grp., 830 F.3d at 1355. The claim "do[es] not even require a new
source or type of information, or new technology for analyzing it." Id. Furthermore, "Where a
patent's claims are deemed only to disclose patent ineligible subject matter under the Mayo
framework, as they are in this case, preemption concerns are fully addressed and made moot."
Ariosa Diagnostics, Inc. v. Sequenom, Inc., 788 F.3d 1371, 1379 (Fed. Cir. 2015). Therefore,

11

having found that this claim is directed to an abstract idea, I find that Plaintiffs' preemption
argument is moot.
Finally, Plaintiffs argue that Defendant did not address the machine-or-transformation
test, application of which, Plaintiffs contend, confirms that claim 1 is patent-eligible. (D.I. 17 at
12-13). The Supreme Court has held that although the machine-or-transformation test is not
determinative in a § 101 analysis, it may provide guidance in the MayolAlice step two analysis.
Ultramercial, 772 F.3d at 716. Under this test, a claimed process is patent-eligible if, "(1) it is

tied to a particular machine or apparatus, or (2) it transforms a particular article into a different
state or thing." In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008). Plaintiffs argue that the claimed
method of the '435 patent "transform[s] a particular article into a different state or thing, namely
conversion of a compressed data stream into a set of independently functioning parameters such
as recovery state." (D.I. 17 at 13). I disagree. Even if the data stream could be considered an
"article," I do not think that extracting information from that data stream, which is essentially a
data gathering step, constitutes a transformation of anything. The Federal Circuit has cautioned
that, "at least in most cases, gathering data would not constitute a transformation of any article."
Bilski, 545 F.3d at 963. Therefore, I find that this claim fails the machine-or-transformation test.

For the reasons given above, I find that claim 1 of the '435 patent is drawn to an abstract
idea and the claim does not provide an inventive concept. Therefore, I will grant Defendant's
Motion to Dismiss Plaintiffs' First Counterclaim.
B.

Motion to Dismiss Plaintiffs' Seventh Counterclaim for Infringement of the '850
Patent
In their Seventh Counterclaim, Plaintiffs assert both direct and indirect infringement of

the '850 patent. (D.I. 1, ~~ 73-81). The '850 patent contains three independent claims: claim 1,

12

claim 5, and claim 10. In briefing Defendant argued that claim 1 is representative. 2 (D.I. 10 at
14). Claim 1 reads:
1. A method of resuming an interrupted data stream transfer comprising:
obtaining recovery state information, including a stored compression
block boundary position and a stored file boundary position of the interrupted
data stream transfer;
resuming the data stream transfer by requesting a compressed data stream
starting with the stored compression block boundary position;
advancing through the resumed data stream transfer to reach the stored file
boundary position by decompressing data from the stored compression block
boundary position to the stored file boundary position;
once the file boundary position has been reached, decompressing and dearchiving data after the file boundary position; and
storing the de-archived data in a destination filesystem.
('850 patent, claim 1).
Defendant's only argument that this claim is directed to an abstract idea is that it is
"similar to the asserted '435 claims - it is directed to the bare concept of receiving, manipulating,
and storing data." (D.I. 10 at 14). Defendant offers nothing in its Alice step one analysis beyond
this conclusory statement.
Plaintiffs counter that Defendant's argument fails for the same reasons discussed above
for the '435 patent. (D.I. 17 at 13-14). Plaintiffs also note that Defendant's characterization of
the abstract idea differs from what was offered for the '435 patent. (Id. at 14). While Defendant
characterized the '435 patent as directed to the abstract idea of receiving, detecting, and storing
data, Defendant characterizes the '850 patent as directed to receiving, manipulating, and storing
data. (Id.). Defendant responds that the basic concepts of data detection and manipulation "are
both abstract ideas." (D .I. 19 at 7).
I agree with Plaintiffs that Defendant has oversimplified and ignored specific limitations
in this claim. This claim is more specific than claim 1 of the '435 patent and calls for more than

2

The parties have waived any argument that claim 1 is not representative. See supra note 1.

13

simply receiving, manipulating, and storing data. The claimed method requires: 1) retrieving
stored information about compression block, archive block, and file boundaries; 2) using the
retrieved compression block boundary to determine a starting position for resumption of a data
stream transfer; 3) actually resuming the data stream transfer starting at the position determined
in step 2; 4) using the retrieved file boundary to determine where to resume data decompression;
5) decompressing and de-archiving data beginning at the position determined in step 4; 6) storing
the de-archived data from step 5. To characterize this process as nothing more than receiving,
manipulating, and storing data ignores the limitations of at least steps 3, 4, and 5.
It seems to me that the data that is retrieved in step 1 is then used to accomplish
something tangible - the resumption of an interrupted file download. This is distinguishable
:from the claim at issue in Electric Power Group which claimed a method of "gathering and
analyzing information ... and not any particular assertedly inventive technology for performing
these functions." Electric Power Group, 830 F.3d at 1354. In contrast, this claim is more like
the one at issue in Enfish as it represents a specific improvement in a computer's capabilities;
specifically, this claim represents an improvement in resuming interrupted downloads. Enjish,
822 F.3d at 1339.
This claim is also distinguishable :from the claim at issue in Digitech. While this claim is
not tied to a specific structure or machine, like the claim in Digitech, the difference lies in the
way the data is used in this claim. In Digitech, the claimed method involved "taking two data
sets and combining them into a single data set." Digitech, 758 F.3d at 1351. The claimed
process consisted of nothing more than "manipulat[ing] existing information to generate
additional information." Id. In contrast, the process of claim 1 of the '850 patent is not directed

14

merely to generating information. Rather, it is directed to the use of information in a very
specific way to solve the problem of interrupted file downloads.
For the reasons given above, I find that the '850 patent claims patent-eligible subject
matter under § 101. Having found that the claims are not drawn to an abstract idea under step
one, it is unnecessary for me to proceed to step two.

C.

Motion to Dismiss Plaintiffs' Second Counterclaim for Infringement of the '210
Patent
In their Second Counterclaim, Plaintiffs assert both direct and indirect infringement of

the '210 patent. (D.I. 1, ~~ 28-36). The '210 patent contains ten independent claims: claims 1,
14-16, 30, 31, and 41-44. In briefing Defendant argued that claim 1 is representative. (D .I. 10 at
15). Claim 1 reads:
1. A method of identifying signal sources, comprising:
selecting a communication medium from a plurality of communication media, to
supply a signal;
storing medium selection data identifying the communication medium;
obtaining the signal from a signal source via the communication medium; and
accessing at least one database from a data source separate from the signal source
to obtain signal information about the signal source.
('210 patent, claim 1).
Defendant contends that the '210 patent is "directed to the abstract idea of obtaining
information about a signal source." (D.I. 10 at 15). According to Defendant, this is an abstract
idea because the claimed method can be "performed entirely by a human without a computer."

(Id. at 16). Plaintiffs counter that Defendant's characterization of the abstract idea represents a
"moving target" that makes "clear that [Defendant] has raised a dispute that requires formal
claim construction." (D.I. 17 at 14-15). Plaintiffs contend that their proposed constructions
"inject sufficient specificity and concreteness" to render the claims patent-eligible. (Id. at 15).

15

I have reviewed the parties' proposed claim constructions for this patent. (D.I. 49-1 at 510). It seems to me that construction of at least some of the disputed terms could impact the
§ 101 analysis, particularly as there is a dispute over whether the structure in several of the
means-plus-function terms, which are found in claims that were not briefed or argued, is a
specific device or merely a general purpose computer. (Id.). Therefore, I decline to opine on
whether this patent is directed to an abstract idea at this stage of the litigation and I will deny
Defendant's Motion to Dismiss Plaintiffs' Second Counterclaim.

D.

Motion to Dismiss Plaintiffs' Third Counterclaim for Infringement of the '694
Patent
In their Third Counterclaim, Plaintiffs assert both direct and indirect infringement of the

'694 patent. (D.I. 1, ifif 37-45). The '694 patent contains four independent claims: claims 1, 14,
18, and 29. In briefing Defendant argued that claim 18 is representative. 3 (D.I. 10 at 18). Claim
18 reads:
18. A method for controlling a receiver having a plurality of receiver connections, the
method comprising:
querying a user to select a receiver connection of the plurality of receiver
connections to correspond with each encoding format of a plurality of encoding
formats;
retrieving media unit data that identifies an encoding format of a playable piece of
media selected to be played by the receiver, wherein the identified encoding format is
one of the plurality of encoding formats;
retrieving receiver-connection data that identifies the receiver connection
corresponding with the identified encoding format; and
sending to the receiver a control signal instructing the receiver to use the
identified receiver connection for receiving a media signal of the selected media.
('694 patent, claim 18).

3

The parties have waived any argument that claim 18 is not representative. See supra note 1. Defendant briefed
claim 18 as representative because at the time this motion was briefed, that was the only independent claim Plaintiffs
had asserted. (Hr'g Tr. at 37:9-11). Plaintiffs later asserted claim l. (Hr'g Tr. at 37:12-14). Claim 1 is directed to
an apparatus for carrying out the method of claim 18. Since the parties addressed claim 18 in briefing and at oral
argument, this is the claim I will address as representative for the purposes of this opinion.

16

Defendant contends that claim 18 "is directed to the practice of selecting a receiver
connection for a playable piece of media based on the media's encoding format." (D.I. 10 at 18).
According to Defendant, this is an abstract idea because it can be "performed entirely by a
human." (Id.). Plaintiffs respond that "this characterization represents only a fraction of the
claimed invention." (D.I. 17 at 16). Plaintiffs further contend that Defendant "overlooks
important claim limitations" in arguing that the claimed method could be performed by a human.
(Id. at 17). Plaintiffs contend that the method of claim 18 is directed to "analyz[ing] an encoding
format, analyz[ing] data from a receiver, and based on that, choos[ing] the actual media that is
being played." (Hr'g Tr. at 39:16-18). This, according to Plaintiffs, is not something a human
could do. (Hr'g Tr. at 39:18-19).
I agree with Defendant that this claim is directed to the automation of a process that can
be (and has been) performed by humans. Performing the method of claim 18 requires the
following steps: 1) asking a user to match a receiver connection with an encoding format; 2)
identifying the encoding format of a selected piece of media; 3) identifying the receiver
connection matched to the encoding format in step 1; 4) telling the receiver to use the receiver
connection found in step 3. The patent's specification confirms that this process is typically
performed manually by the user each time a piece of media is selected for playback in a media
management system. (' 435 patent at 1:59-61 ). The patent describes such manual configuration
as "burdensome to the user" and suggests that "a need exists for automatically configuring
receivers to play media ... according to the characteristics of the media." (Id. at 1:66-2:3).
Plaintiffs argue that the claimed method cannot be performed by a human because the
claim requires analysis of an encoding format and analysis of data from a receiver (i.e., steps 2
and 3 above). (Hr' g Tr. at 39: 14-19). It seems to me that suggesting that retrieving data, which

17

is all the claim recites, involves analysis of that data is overstating what the claim calls for.
Claim 18 calls for "retrieving media unit data that identifies and encoding format." There is no
analysis explicitly mentioned in this claim, nor is any analysis implied. Therefore, I find that this
claim is drawn to the abstract idea of selecting a receiver connection for a piece of media based
on the media's encoding format.
Moving to step two of the Alice framework, Defendant asserts that the claim fails to
provide an inventive concept because it is directed to automating the abstract idea "through the
use of generic, conventional technology." (D.I. 10 at 19). Plaintiffs do not identify any
inventive concept embodied in this claim; instead, Plaintiffs cite to their proposed claim
constructions, which they claim "demonstrates the inventive concept recited in Claim 18." (D.I.
17 at 18). Plaintiffs do not explain, however, how their proposed constructions impart an
inventive concept. Nor could they. The limitations in claim 18 simply represent the automation
of a conventional process using a conventional receiver.
Plaintiffs analogize this claim to the claim at issue in AMDOCS, arguing that this claim
solves a problem in a narrow technological environment. (Hr' g Tr. at 41 :9-21 ). I disagree. The
claim in AMDOCS did indeed offer a solution to a technological problem in which generic
computers "operate[d] in an unconventional manner to achieve an improvement in computer
functionality." AMDOCS (Israel) Limited v. Opennet Telecom, Inc., 841 F.3d 1288, 1300-01
(Fed. Cir. 2016). The problem with Plaintiffs' argument is that they have not identified what
problem is being solved by this claim. The only problem the patent itself speaks to is the burden
on the user of having to manually configure a receiver each time a piece of media is played.
('435 patent at 1:56-67). This problem is solved through automation of the process. (Id. at 2:13). Another problem with Plaintiffs' analogy is that the technology in this claim is not being

18

operated in an unconventional manner. The patent itself discloses that the claimed process was
conventionally performed manually. (Id. at 1:56-67).
Plaintiffs also attempt to draw an analogy with DDR, arguing that this claim is directed to
"a more specific technological environment" than in that case where the claims were found
patent-eligible. (Hr' g Tr. at 42:2-5). DDR, however, involved a method directed to a specific
problem, retaining customers who click a hyperlink that would typically take them to another
merchant's website. DDR, 773 F.3d at 1258. Here, as I have already stated, Plaintiffs have not
identified a specific problem solved by this patent. Furthermore, although DDR involved the
generic technological environment of the Internet, the claimed method produced "a result that
overrides the routine and conventional sequence of events ordinarily triggered by the click of a
hyperlink." Id. In this case, the result of the claimed method is exactly the "routine and
conventional" result that one would obtain when manually configuring a receiver.
Finally, Plaintiffs argue that there are no preemption issues "because claim 18 describes
use of technology that overrides the routine and conventional sequence of events to communicate
where it was previously impossible." This argument is moot, however, since I have already
determined that this claim is directed to an abstract idea. Ariosa Diagnostics, 788 F.3d at 1379.
For the reasons given above, I find that the '694 patent is drawn to an abstract idea and
the claims do not provide an inventive concept. Therefore, I will grant Defendant's Motion to
Dismiss Plaintiffs' Third Counterclaim.

E.

Motion to Dismiss Plaintiffs' Fourth, Fifth, and Eighth Counterclaims for Failure to
State a Claim
The counterclaims that form the basis for this case were docketed on March 7, 2016, four

months after the rule changes took effect. (D.I. 1). Therefore, Plaintiffs must meet the

Twombly/Iqbal standard for facial plausibility.
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To determine whether Plaintiffs have plausibly alleged a claim for patent infringement, I
begin with the language of the claims. Fantasy Sports Properties, Inc. v. Sportsline.com, Inc.,
287 F.3d 1108, 1118 (Fed. Cir. 2002). On a motion to dismiss, I will not engage in claim
construction or look beyond the four comers of the complaint.
The '633 patent contains three independent claims: claims 1-3. Claim 1 reads:
1.

An apparatus controlling at least one electrical device, comprising:
a display device to display representations of controls for a currently selected
device and one of video signals from the currently selected device and a
representation of the currently selected device;
a remote control transmitter, including a user interface consisting of only a cursor
moving control and buttons to select one of icons and text displayed on said display
device and what is displayed at a cursor position, to transmit a user generated signal
indicating selection of a position on said display device corresponding to a selected
control representation;
a remote control receiver to receive the user generated signal from said remote
control transmitter;
a processor, coupled to said remote control receiver, to determine the position on
said display device selected by the user generated signal and control operations
corresponding thereto; and
a device controller, coupled to said processor and the at least one electrical
device, to control operation of the at least one electrical device in accordance with the
control operations corresponding to the position selected by the user generated signal.

('633 patent, claim 1). Plaintiffs' preliminary infringement chart provides detailed factual
allegations specifying how Defendant's devices infringe each element of claims 1 and 3 of the
'633 patent. (D.I. 1-2 at 25-31 ). Defendant argues, however, that Plaintiffs have not plausibly
alleged infringement of several limitations of these claims. (D.I. 10 at 22). Plaintiffs counter
that Defendant's arguments rely on a narrow construction of the claim limitations. (D.I. 17 at
21-23).
I agree with Plaintiffs. For example, Defendant points to the remote control transmitter

limitation and argues that the claim language "consisting of only a cursor moving control and
buttons to select one of icons and text displayed on said display device and what is displayed at a

20

cursor position" necessarily means that the remote control transmitter and display device must be
separate and distinct devices. (D.I. 10 at 22-23). I do not think this claim language is so clear
that this issue can be resolved as a matter of law on a motion to dismiss. Whether the two
devices must be separate and distinct is an issue that will be resolved during claim construction.
Defendant's arguments about other claim limitations, such as whether the devices play "video
signals" (Id. at 22) and whether the devices have a "full screen mode" (Id. at 24), fail for the
same reason. Plaintiffs' allegations address each limitation of the asserted claims and these
allegations are plausible.
Defendant's arguments with respect to the '667 patent are similarly unavailing. Claim 1
of the '667 patent reads:
1. A method of inputting text associated with a recording, comprising:
playing the recording on a video screen;
during playback of the recording, detecting a first text character entered by a
keyboard;
in response to detection of the first text character, determining whether a title of
the recording is previously stored, and then only if the title of the recording is not
previously stored, entering a text input mode, wherein in text input mode playback of
the recording is continued on at least a portion of the video screen, and wherein the
first text character is displayed on the video screen;
if text input mode is entered, then during the text input mode, receiving
subsequent text characters entered by the keyboard and displaying the subsequent text
characters on the video screen; and
if text input mode is entered, then storing the first text character and subsequent
text characters as text associated with the recording.
('667 patent, claim 1). Defendant argues that its device is an audio system and that Plaintiffs
have failed to plausibly allege that its device plays a "recording on a video screen" as required by
the claim. (D.I. 10 at 21). Defendant's argument is premised on its contention that the claim
requires playing a "video recording," something its device is not capable of doing. (Id.).
Plaintiffs counter that the claim makes no mention of a "video recording." (D.I. 17 at 19).

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According to Plaintiffs, Defendant's argument goes to the "merits of [Plaintiffs'] allegations; not
their plausibility." Again, I agree with Plaintiffs.
Plaintiffs have alleged that the Defendant's product "includes a controller that displays
images of album art for song playing on one speaker, which requires a digital video processor."
(D.I. 1-2 at 83). In addition to the claim language, Plaintiffs point to language from the
specification that refers to a "video output signal ... generated by [a] video processor." (Id.). In
other words, Plaintiffs have alleged that Defendant's product infringes this claim because it plays
a recording and produces video output using a video processor. Without engaging in claim
construction and findings of fact related to Defendant's product, I cannot say as a matter oflaw
that the accused product does not infringe this claim. The allegation that it does infringe is
therefore sufficiently plausible to withstand a motion to dismiss.
Defendant's arguments with respect to the '899 patent carry more weight, however.
Claim 1, the only independent claim addressed in Plaintiffs' preliminary infringement
contentions, reads:
1. A method of playing back a recorded signal, comprising:
obtaining a recording identifier corresponding to the recorded signal; comparing
the recording identifier with previously stored identifiers in a playback preference
database; and
reproducing the recorded signal using previously stored preferences if the
recording identifier is found in the playback preference database and using default
preferences if the recording identifier is not found in the playback preference
database.
('899 patent, claim 1). Defendant argues that Plaintiffs have not plausibly alleged infringement
of the "recording identifier" limitation of this claim because the "identifier" Plaintiffs specify is a
"room identifier," something Defendant contends identifies a room rather than a recording. (D.I.
10 at 24-25). Plaintiffs have alleged that Defendant's product "includes components that obtain
a recording identifier (room identifier) corresponding to the recorded signal (music that is
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already playing)." (D.I. 1-2 at 79). This plausibly alleges infringement of this limitation. As I
have already stated, I will not engage in claim construction or fact finding in the context of a
motion to dismiss. Therefore, I will not opine on the merits of Plaintiffs' allegation that the
"room identifier" meets the definition of "recording identifier" as contemplated by this patent;
rather, I simply find that the allegation is sufficient to meet the Twombly/Iqbal pleading
standards.
In the alternative, Defendant argues that Plaintiffs have not plausibly alleged

infringement of limitation requiring "comparing the recording identifier with previously stored
identifiers in a playback preference database." (D.I. 10 at 25). According to Defendant,
Plaintiffs "fail to identify any 'comparing' between the alleged 'identifier' and the alleged
'playback preference database."' (Id.). In briefing, Plaintiffs did not respond to this argument.
With respect to this limitation, Plaintiffs have alleged only that Defendant's product "includes
room sound settings [that] can be changed from preset levels." I agree with Defendant that this
is insufficient. This allegation fails to describe a "recording identifier" that is compared with
"previously stored identifiers." In fact, this statement is devoid of any allegation that any
comparing is done at all. Therefore, I will dismiss Plaintiffs' Eighth Counterclaim with leave to
amend.
IV.

CONCLUSION
For the reasons set forth above, Defendant's Motion to Dismiss (D.I. 9) is granted as to

the First, Third, and Eighth Counterclaims and denied as to the Second, Fourth, Fifth, and
Seventh Counterclaims. An appropriate order will be entered.

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