Peloton Interactive, Inc. v. Echelon Fitness, LLC

Filing 27

MEMORANDUM OPINION. Signed by Judge Richard G. Andrews on 7/6/2020. (nms)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

PELOTON INTERACTIVE, INC.,
Plaintiff,
v.

Civil Action No. 19-cv-1903-RGA

ECHELON FITNESS, LLC,
Defendant.

MEMORANDUM OPINION

Michael Flynn, Anthony D. Raucci, MORRIS, NICHOLS, ARSHT & TUNNELL LLP,
Wilmington, DE; Steven N. Feldman, Christina V. Rayburn, Karen Younkins, Kevin X. Wang,
Maxwell K. Coll, HUESTON HENNIGAN LLP, Los Angeles, CA;
Attorneys for Plaintiff

Benjamin J. Schladweiler, GREENBERG TRAURIG, LLP, Wilmington, DE; Douglas R. Weider,
James L. Ryerson, GREENBERG TRAURIG, Florham Park, NJ;

Attorneys for Defendant

July 6, 2020

/s/ Richard G. Andrews
ANDREWS, U.S. DISTRICT JUDGE:
Before the Court is Defendant’s Renewed Motion to Dismiss Plaintiff’s Patent
Infringement Claims. (D.I. 17). The Court has considered the parties’ briefing. (D.I. 18, 19,
20).
I.

BACKGROUND
Plaintiff filed the instant suit on October 8, 2019 alleging that Defendant (a) infringes two

of Plaintiff’s patents, (b) infringes and dilutes Plaintiff’s trademarks, and (c) has engaged in
unfair competition and deceptive business practices. (D.I. 1). Plaintiff amended the complaint in
January 2020 to assert a third, newly-issued, patent against Defendant. (D.I. 16). The patents in
suit, which share a common specification, are U.S. Patent Nos. 10,022,590 (“the ’590 patent”),
10,322,315 (“the ’315 patent”), and 10,486,026 (“the ’026 patent”). (Id.). The ’590 patent is
directed to a system of displaying live and archived cycling classes. (’590 patent, claim 1). The
’315 patent is directed to a method of displaying live and archived exercise classes. (’315 patent,
claim 1). The ’026 patent is directed to a system for displaying computer-augmented, archived
exercise classes. (’026 patent, claim 1). Defendant contends that claim 1 of the ’315 patent is
representative, but Plaintiff counters that it is not. (D.I. 18 at 6; D.I. 19 at 6 n.3). It may
nevertheless be illustrative:
1. A method for displaying live and archived exercise classes comprising:
displaying information about available live and archived exercise classes that
can be accessed by a first user via a digital communication network on a
display screen at a first location, wherein the first user can select either a live
exercise class or select among a plurality of archived exercise classes;
receiving a selection of one of the available live or archived exercise classes
by the first user;
outputting digital video and audio content comprising the selected exercise
class at the first location to the first user;

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determining one or more performance parameters for the first user at the first
location at a plurality of points in the selected exercise class;
displaying at least one performance parameter for the first user at the first
location on the display screen; and
dynamically displaying one or more performance parameters for a second
user at a second location on the display screen at the first location such that at
least one of the performance parameters for the first user at the plurality of
points in the selected exercise class and at least one of the performance
parameters for the second user at the same points in the selected exercise class
are presented for comparison on the display screen at the first location.
(’315 patent, claim 1).
Defendant argues that the patents in suit are directed to patent ineligible subject matter
under 35 U.S.C. § 101. (D.I. 18 at 1). Thus, Defendant seeks to dismiss Counts I, II, and III of
Plaintiff’s amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). (Id.).
II.

LEGAL STANDARD
A. 12(b)(6)
When reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure

12(b)(6), the Court must accept the complaint’s factual allegations as true. See Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555-56 (2007). Rule 8(a) requires “a short and plain statement of the
claim showing that the pleader is entitled to relief.” Id. at 555. The factual allegations do not
have to be detailed, but they must provide more than labels, conclusions, or a “formulaic
recitation” of the claim elements. Id. (“Factual allegations must be enough to raise a right to
relief above the speculative level . . . on the assumption that all the allegations in the complaint
are true (even if doubtful in fact).”). Moreover, there must be sufficient factual matter to state a
facially plausible claim to relief. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The facial
plausibility standard is satisfied when the complaint’s factual content “allows the court to draw

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the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (“Where a
complaint pleads facts that are merely consistent with a defendant’s liability, it stops short of the
line between possibility and plausibility of entitlement to relief.” (internal quotation marks
omitted)).
B. 35 U.S.C. § 101
Patentability under 35 U.S.C. § 101 is a threshold legal issue. Bilski, 561 U.S. at 602.
Accordingly, the § 101 inquiry is properly raised at the pleading stage if it is apparent from the
face of the patent that the asserted claims are not directed to eligible subject matter. See
Cleveland Clinic Found. v. True Health Diagnostics LLC, 859 F.3d 1352, 1360 (Fed. Cir. 2017),
cert. denied, 138 S. Ct. 2621 (2018). This is, however, appropriate “only when there are no
factual allegations that, taken as true, prevent resolving the eligibility question as a matter of
law.” Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1125 (Fed. Cir.
2018).
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
recognizes three categories of subject matter that are not eligible for patents—laws of nature,
natural phenomena, and abstract ideas. Alice Corp. Pty. v. CLS Bank Int’l, 573 U.S. 208, 216
(2014). The purpose of these exceptions 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

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known structure or process may well be deserving of patent protection.” Id. (internal quotation
marks and emphasis omitted). In order “to transform an unpatentable law of nature into a patenteligible 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).
In Alice, the Supreme Court 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.” 573 U.S. at 217. 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. at 217-18 (cleaned up). “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 221 (cleaned up). Claim elements that
recite “well-understood, routine, and conventional activities previously” known to the industry
“do not constitute an inventive concept.” Aatrix, 882 F.3d at 1128 (cleaned up). Alice step two
is therefore “satisfied when the claim limitations involve more than performance of wellunderstood, routine, and conventional activities previously known to the industry.” Id. (cleaned
up). Further, “the prohibition against patenting abstract ideas cannot be circumvented by
attempting to limit the use of [the idea] to a particular technological environment.” Id. at 222
(alteration in original) (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 patenteligible invention.” Id. at 223.

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“Whether a claim is drawn to patent-eligible subject matter under § 101 is an issue of
law,” and “is a matter of both claim construction and statutory construction.” In re Bilski, 545
F.3d 943, 951 (Fed. Cir. 2008), aff’d sub nom. Bilski v. Kappos, 561 U.S. 593 (2010). “Claim
construction is a question of law . . . .” In re Nuijten, 500 F.3d 1346, 1352 (Fed. Cir. 2007). At
Alice step two, however, “[w]hether something is well-understood, routine, and conventional to a
skilled artisan at the time of the patent is a factual determination.” Berkheimer v. HP Inc., 881
F.3d 1360, 1369 (Fed. Cir. 2018).
III.

DISCUSSION
Defendant asserts that, at step one of the Alice inquiry, the patents in suit are directed to

the abstract idea of making exercise classes available online. (D.I. 18 at 11). Defendant
contends that exercise classes are a form of organizing human activity, which is a category of
abstract ideas. (Id.). Defendant continues that the claims lack an “inventive concept” at the
second step of the Alice inquiry because they do not claim something unconventional or more
than an abstract idea. (Id. at 13, 15). Defendant argues that Plaintiff’s amended complaint does
not plausibly allege an inventive concept. (Id. at 17-20). Plaintiff counters that Defendant
“oversimplifies” its inventions, which are not directed to an abstract idea. (D.I. 19 at 10).
Plaintiff argues that its patents instead claim “significant, specific technological solutions to
then-existing problems and tangible improvements over then-existing exercise technology.” (Id.
at 12). Further, Plaintiff argues that its amended complaint and the patents’ shared specification
“contain plausible and specific factual allegations that aspects of the claims are inventive.” (Id.
at 15-16).

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Plaintiff’s amended complaint plausibly pleads that the ’590, ’315, and ’026 patents
claim an inventive concept at Alice step two. Thus, I need not and do not decide whether the
patents are directed to an abstract idea at Alice step one.
Plaintiff’s amended complaint clearly alleges that the inventions of the ’590 and ’315
patents are improvements over prior art by providing a user networked access to both live and
archived classes. (D.I. 16 at ¶ 50, 52; see also ¶¶ 3, 17, 23). Plaintiff also alleges in its amended
complaint that the ’590 and ’315 patent claims incorporate “inventive concepts that were not
well-understood, routine, or conventional at the time” of invention. (Id. at ¶ 48). For example,
the amended complaint alleges that some claims teach ways of displaying performance
parameters so that users of both live and archived classes can compete with one another. (Id. at
¶¶ 54-57). The amended complaint alleges that these functionalities were nonroutine and
unconventional at the time of the invention and helped to solve the problem of “rider boredom.”
(Id.). Further, Plaintiff alleges that several claims teach the implementation of competitive
performance parameters by time-synchronization mechanisms that were not well-understood,
routine, or conventional at the time of the invention. (Id. at ¶ 58).
Plaintiff’s amended complaint similarly alleges that the ’026 patent “describes and claims
concepts that were not well-understood, routine, or conventional” at the time of the patent. (Id.
at ¶ 61). For example, it alleges that claims 1 and 11 of the ’026 patent recite unconventional
technological advancements over the prior art that synchronize performance parameters to
simulate the feeling of live competition for the user of an archived class. (Id. at ¶¶ 62-63). The
amended complaint also alleges that the dependent claims add additional inventive concepts and
unconventional capabilities. (Id. at ¶ 64). One of these alleged functionalities is to “permit two
people in different locations to take an archived class at the same time and to compete against

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each other in real time, with their respective performance parameters being displayed to each
other.” (Id.). The amended complaint further alleges that claims 8 and 13 teach the display of
the competitive performance parameters in an unconventional leaderboard. (Id. at ¶ 65).
Plaintiff alleges that several claims “describe particular types of information to be displayed on
the user interface, and the particular ways in which that information should be displayed,” which
were not well-understood, routine, or conventional at the time of the ’026 patent. (Id. at ¶ 66).
Accepting the allegations in Plaintiff’s amended complaint as true, Plaintiff has made
“specific, plausible factual allegations about why aspects of its claimed inventions were not
conventional.” Cellspin Soft, Inc. v. Fitbit, Inc., 927 F.3d 1306, 1317 (Fed. Cir. 2019). The fact
that Plaintiff’s amended complaint does not contain citations to the specification does not
preclude my finding that the complaint plausibly alleges an inventive concept. See id. at 1317.
The fact that the specification does not “expressly list all the reasons why this claimed
[invention] is unconventional” is also of no relevance, because the claims of the patents at issue
recite the aspects that Plaintiff alleges in the amended complaint make them inventive. Id.
Therefore, I will not grant Defendant’s motion to dismiss Counts I, II, and III of Plaintiff’s
amended complaint.
IV.

CONCLUSION
For the foregoing reasons, the Court DENIES Defendant’s Renewed Motion to Dismiss

Plaintiff’s Patent Infringement Claims. (D.I. 17). An accompanying order will issue.

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