Zyrcuits IP LLC v. Acuity Brands, Inc.

Filing 19

MEMORANDUM OPINION. Signed by Judge Colm F. Connolly on 8/2/2021. Associated Cases: 1:20-cv-01306-CFC, 1:20-cv-01307-CFC(fms)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELA WARE
Zyrcuits IP LLC,
Plaintiff,

v.

Civil Action No. 20-1306-CFC

Acuity Brands, Inc.,
Defendant.

Zyrcuits IP LLC,
Plaintiff,
Civil Action No. 20-1307-CFC

V.

Universal Electronics Inc.,
Defendant.

David W. duBruin, GRA WTHROP GREENWOOD, PC, Wilmington, Delaware

Counsel for Plaintiff
Richard L. Renck, DUANCE MORRIS LLP, Wilmington, Delaware

Counsel for Defendant Acuity Brands Inc.
Jeremy Douglas Anderson, FISH & RICHARDSON, P.C., Wilmington, Delaware;
Neil J. McNabnay, Ricardo J. Bonilla, Rodeen Talebi, FISH & RICHARDSON,
P .C., Dallas, Texas

Counsel for Defendant Universal Electronics Inc.

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MEMORANDUM OPINION

August 2, 2021
Wilmington, Delaware
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coLMFONNoLLY
CIDEF JUDGE
Plaintiff Zyrcuits IP LLC has sued Defendants Acuity Brands, Inc. and
Universal Electronics Inc. for infringement of claim 4 of U.S. Patent No. 6,671,307
(the #307 patent). Zyrcuits IP LLC v. Acuity Brands Inc., No. 20-1306, D.I. 12;
Zyrcuits IP LLCv. Universal Electronics Inc., No. 20-1307, D.I. 12. Pending
before me are Defendants' motions to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(6). No. 20-1306, D.I. 13; No. 20-1307, D.I. 15. Defendants argue
I should dismiss Zyrcuits's complaints because the #307 patent is invalid under 35
U.S.C. § 101 for failing to claim patentable subject matter. Zyrcuits's actions
against Acuity and Universal Electronics are not consolidated, but both motions to
dismiss present identical issues. Accordingly, I address both motions in this
Memorandum Opinion.

I.

BACKGROUND

Zyrcuits filed complaints against Acuity Brands and Universal Electronics as
part of an enforcement campaign asserting the #307 patent. See, e.g., Zyrcuits IP
LLC v. Wink Labs, Inc. No. 19-1607, D.I. 1 (Aug. 29, 2019); Zyrcuits IP LLC v.
IKEA N. Am. Servs., LLC, No. 21-0299, D.I. 1 (Feb. 26, 2021); Zyrcuits IP LLCv.
Zen Within, Inc., No. 21-0758, D.I. 1 (May 26, 2021). The complaints do not

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contain any background allegations about the parties besides jurisdictional facts.
See No. 20-1306, D.I. 12; No. 20-1307, D.I. 12.

The relevant substantive content of the complaints is identical. The #307
patent is titled "Spread-Spectrum High Data Rate System and Method." The
patent describes applying signal codes to blocks of interleaved data for spreadspectrum transmission. #307 patent at 2:25-30. According to the patent's written
description, spread-spectrum transmission was previously accomplished using
parallel codes. #307 patent at 1:21-24.
Zyrcuits alleges that Acuity and Universal Electronics infringe claim 4 of the
#307 patent. No. 20-1.306, D.I. 12; No. 20-1307, D.I. 12. Claim 4 recites
[a] spread-spectrum method improvement for sending
data over a communications channel, comprising the
steps of:
storing, at a transmitter, N bits of interleaved data
as stored data, with N a number of bits in a symbol;
selecting, at said transmitter in response to the N
bits of stored data, a chip-sequence signal from a
plurality of 2N chip-sequence signals, as an output
chip-sequence signal; and
transmitting, at said transmitter, the output chipsequence signal as a radio wave, at a carrier
frequency, over said communications channel, as a
spread-spectrum signal.
In other words, claim 4 describes grouping together data that may come from
multiple sources, applying a single chip-sequence code to the grouped data, and
then transmitting the code by radio wave.

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II.

LEGAL STANDARDS
A.

Stating a Cognizable Claim

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 At/. Corp. v. Twombly, 550
U.S. 544, 555 (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. 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 (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 (citation omitted).
When assessing the merits of a Rule 12(b)( 6) motion to dismiss, a court
must accept as true all factual allegations in the complaint and it must view those
facts in the light most favorable to the plaintiff. See Umland v. Planco Fin. Servs.,
542 F.3d 59, 64 (3d Cir. 2008); Schmidt v. Skolas, 770 F.3d 241,249 (3d Cir.
2014) (internal quotation marks omitted).

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B.

Patent-Eligible Subject Matter

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'/,
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). Abstract ideas
include mathematical formulas and calculations. Gottschalk v. Benson, 409 U.S.
63, 71-72 (1972).
"[A]n invention is not rendered ineligible for patent [protection] simply
because it involves an abstract concept[.]" Alice, 573 U.S. 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-

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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 Lab ys, Inc., 566 U.S. 66, 71 (2012) (emphasis
omitted).
In Alice, the Supreme Court established a two-step framework by which
courts are to distinguish patents that claim eligible subject matter under § 101 from
patents that do not claim eligible subject matter under§ 101. The court must first
determine whether the patent's claims are drawn to a patent-ineligible concepti.e., are the claims directed to a law of nature, natural phenomenon, or abstract
idea? Alice, 573 U.S. at 217. If the answer to this question is no, 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).
Issued patents are presumed to be valid, but this presumption is rebuttable.

Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. 91, 96 (2011). Subject-matter
eligibility is a matter of law, but underlying facts must be shown by clear and

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convincing evidence. Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir.
2018).

III.

DISCUSSION
Applying the two-step framework from Alice, I find that the #307 patent is

invalid under § 101. The #3 07 patent's claims are directed to the abstract idea of
grouping data together with a single code and do not contain any inventive
concept.

A.

Claim 4 Is Representative

Acuity and Universal Electronics argue, and Zyrcuits does not dispute, that
claim 4 is representative of all the patent's claims. No. 20-1306, D.I. 14 at 9; No.
20-1307, D.I. 16 at 8.

B.

Alice Step One - Whether the Claims Are Drawn to PatentIneligible Subject Matter

I begin by determining whether the claims at issue are directed to a patentineligible concept. Alice, 573 U.S. at 217. "[C]laims are considered in their
entirety [at step one] to ascertain whether their character as a whole is directed to
excluded subject matter." Internet Pats. Corp. v. Active Network, Inc., 790 F.3d
1343, 1346 (Fed. Cir. 2015).
"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)
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(citation omitted). The Court has recognized, however, that fundamental economic
practices, methods of organizing human activity, and mathematical formulae are
abstract ideas. See Bilski v. Kappos, 561 U.S. 593, 611 (2010) ("fundamental
economic practice" of hedging is unpatentable abstract idea); Alice, 573 U.S. at
220-21 ("organizing human activity" of intermediated settlement falls "squarely
within realm of 'abstract ideas"'); Gottschalk, 409 U.S.at 68, 71-72 (mathematical
algorithm to convert binary-coded decimal numerals into pure binary code is
unpatentable abstract idea); Parker v. Flook, 437 U.S. 584, 594-95 (1978)
(mathematical formula for computing "alarm limits" in a catalytic conversion
process is unpatentable abstract idea).
To determine whether claims are directed to an abstract idea courts generally
"compare the claims at issue to those claims already found to be directed to an
abstract idea in previous cases." Enfish, 822 F.3d at 1334. The Federal Circuit has
also instructed district courts to consider as part of Alice's step one whether the
claims "focus on a specific means or method that improves the relevant technology
or are instead directed to a result or effect that itself is the abstract idea and merely
invoke generic processes and machinery." McRO, Inc. v. Bandai Namco Games

Am. Inc., 837 F.3d 1299, 1314 (Fed. Cir. 2016) (citing Enfish, 822 F.3d at 1336).
Applying these standards, I find that the #307 patent is directed to the
abstract idea of grouping spread-spectrum data together with a single code instead

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of with parallel codes. The Federal Circuit has explained repeatedly that claims
directed to the manipulation of data are abstract absent additional features, because
"information as such is an intangible." Elec. Power Grp., LLC v. Alstom S.A., 830
F.3d 1350, 1353 (Fed. Cir. 2016); see also, e.g., In re Bd. ofTrs. ofLeland

Stanford Junior Univ., 989 F.3d 1367, 1372 (Fed. Cir. 2021) ("[M]athematical
algorithms for performing calculations, without more, are patent ineligible under §
101"); iLife Techs., Inc. v. Nintendo ofAm., Inc., 839 Fed. App'x 534,537 (Fed.
Cir. 2021) ("We have routinely held that claims directed to gathering and
processing data are directed to an abstract idea."); Two-Way Media Ltd. v. Comcast

Cable Commc 'ns, LLC, 874 F.3d 1329, 1337 (Fed. Cir. 2017) (claims focused on
sending and monitoring information are directed to an abstract idea).
Representative claim 4 is directed to the manipulation of information: It
requires "storing" specified data, "selecting" a signal based on the stored data, and
then "transmitting" the signal. #307 patent at claim 4. Zyrcuits repeatedly refers
to the content of claim 4 as an "algorithm." No. 20-1306, D.I. 16 at 5, 6, 9. "A
process that start[ s] with data, add[s] an algorithm, and end[ s] with a new form of
data [is] directed to an abstract idea." RecogniCorp, LLC v. Nintendo Co., Ltd., 855
F.3d 1322, 1327 (Fed. Cir. 2017) (citing Digitech Image Techs., LLC v. Elecs.for

Imaging, Inc., 758 F.3d 1344 (Fed. Cir. 2014)). This is exactly what is recited in
claim 4.

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Zyrcuits argues that claim 4 teaches a technical solution to the problem of
spread-spectrum signal transmission without using parallel codes. No. 20-1306,
D.I. 14 at 7. According to Zyrcuits, the #307 patent teaches "particular
techniques-with limiting detail-to solve the problem of transmitting spreadspectrum signals without using parallel codes." No. 20-1307, D.I. 19 at 7.
The Federal Circuit has explained that claims directed to forms of data
collection and manipulation are not directed to an abstract idea if they offer
technical improvements to computer technology. Compare Smart Sys.

Innovations, LLC v. Chi. Transit Auth., 873 F.3d 1364, 1372 (Fed. Cir. 2017) ("We
have determined that claims directed to the collection, storage, and recognition of
data are directed to an abstract idea.") with Enfish, 822 F.3d at 1336 (finding
claims subject-matter eligible when directed to the "improvement to computer
functionality itself'). Zycruits relies on the Enfish line of cases to argue that the
#307 patent is subject-matter eligible since, according to Zyrcuits, it describes
specific techniques with limiting detail. No. 20-1306, D.I. 16 at 4, 7.
Claim 4, however, does not provide a technical solution to a technical
problem. Indeed, Zyrcuits fails to identify in its briefing any particular technical
solution disclosed in the #307 patent. No. 20-1306, D.I. 16 at 7. Instead, Zyrcuits
points to unexplained block quotes from the patent and the unsupported,
conclusory statement in the Complaints that "[c]laim 4 addresses the problem of

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interference and output signal distortion with a technical solution." No. 20-1306,
D.I. 12 ,r 10; No. 20-1307, D.I. 12110.
This is not surprising, because the language of claim 4 lacks technical
specificity. The step of storing "N bits of interleaved data as stored data, with N a
number of bits in a symbol" could simply be summarized as "storing data as stored
data." #307 patent at claim 4 (10:20-22). The selection step teaches "selecting ...
a chip-sequence signal from a plurality of2N chip-sequence signals," but provides
no details about how this selection should be made. #307 patent at claim 4 (10:2225). The third and final step requires nothing more than "transmitting ... the
output chip-sequence signal as a radio wave, at a carrier frequency, over said
communications channel, as a spread-spectrum signal"-i.e., transmitting data in a
known way. The "how" information Zyrcuits points to only confirms that the
storing, selecting, and transmitting steps are exactly what they first appear to bei.e., the abstract manipulation of information.
Claim 4 may use technical jargon, but that does not mean it teaches a
technical solution. See Ericsson Inc. v. TCL Commc 'n Tech. Holdings Ltd., 955
F.3d 1317, 1326 (Fed. Cir. 2020) ("Although written in technical jargon, a close
analysis of the claims reveals that they require nothing more than this abstract
idea."), cert. denied sub nom. Ericsson Inc. v. TCL Commc 'n, 209 L. Ed. 2d 752
(U.S. 2021). And it may be true that the #307 patent is directed to a useful idea,

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but a patent is still invalid for lack of subject-matter eligibility when it teaches a
useful abstract idea. See Secured Mail Sols. LLC v. Universal Wilde, Inc., 873
F.3d 905, 910 (Fed. Cir. 2017) ("The fact that an [idea] can be used to make a
process more efficient, however, does not necessarily render an abstract idea less
abstract.").
In short, representative claim 4 is directed to the idea of applying a signal
code to a block of interleaved data (thereby avoiding parallel codes), and the claim
does not provide any guidance on how to accomplish this idea. Therefore the #307
patent is directed to an abstract idea.

C.

Inventive Concept

Having found that the #307 patent is directed to an abstract idea, I must
determine whether its claims contain an '"inventive concept' sufficient to
'transform' the claimed abstract idea into a patent-eligible application." Alice, 573
U.S. at 221 (quoting Mayo, 566 U.S. at 77). It is insufficient for the patent to
"simply state the law of nature while adding the words 'apply it."' Mayo, 566 U.S.
at 72. A claim directed towards an abstract idea must include "'additional
features' to ensure 'that the [claim] is more than a drafting effort designed to
monopolize the [abstract idea]."' Alice, 573 U.S. at 221 (alterations in original)
(quoting Mayo, 566 U.S. at 77). No such additional features exist here, and I find
that, whether considered individually or as an ordered combination, the claim

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elements of the #307 patent do not "transform" the claimed abstract idea into
patent-eligible subject matter.
Claim 4 simply takes an abstract idea for transmitting data and implements it
"at a transmitter" as a "radio wave" over a "communications channel." #307
patent at claim 4 (10:20, 28-29). The invocation of generic communication
technology does not provide an inventive concept. See Alice, 573 U.S. at 222; SAP

Am., 898 F .3d at 1170 (carrying out improved mathematical operations on a
generic computer is not inventive); Elec. Power, 830 F.3d at 1355 (holding the
claims at issue did not contain an inventive step because they did "not require any
nonconventional computer, network, or display components").
Zyrcuits argues that there is a disputed factual issue about whether claim 4
recites "well-understood, routine, and conventional activities." No. 20-1306, D.I.
16 at 8 (citing Berkheimer, 881 F.3d at 1369 and Cellspin Soft, Inc. v. Fitbit, Inc.,
927 F.3d 1306, 1317 (Fed. Cir. 2019), cert. denied sub nom. Garmin USA, Inc. v.

Cellspin Soft, Inc., 140 S. Ct. 907 (2020)). But Zyrcuits cannot artificially create a
dispute of fact by making the conclusory allegation that "claim 4 embodies an
inventive concept," No. 20-1306, D.I. 12 ,r 12; No. 20-1307, D.I. 12 ,r 12, when the
#307 patent itself resolves any possible factual issues. Figures 1 and 2 of the
patents show a prior art system that includes a generic transmitter and a
communication channel. #307 patent at 1:30-50, figs. 1, 2. The patent also

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explains that the claimed process can be implemented on a "general purpose
processor." #307 patent at 3:52. Implementing an abstract idea on a general
purpose processor or a generic transmitter does not constitute an inventive step.

Alice, 573 U.S. at 222.
In arguing that the #307 patent is subject-matter eligible, Zyrcuits asserts
that the claimed process was unconventional. But the alleged unconventional
process is the abstract idea to which claim 4 is directed, and the abstract idea itself
cannot provide the inventive feature required at step two. See Mayo, 566 U.S. at
72-73 (explaining the inventive concept must be "significantly more" than the
abstract idea itself); BSG Tech LLC v. Buyseasons, Inc., 899 F.3d 1281, 1290 (Fed.
Cir. 2018) ("a claimed invention's use of the ineligible concept to which it is
directed cannot supply the inventive concept"); Cellspin Soft, Inc., 927 F .3d at
1316 ("An inventive concept reflects something more than the application of an
abstract idea using well-understood, routine, and conventional activities previously
known to the industry." (internal quotation marks and citation omitted)). The
expert declaration of Dr. Schilling submitted by Zyrcuits in opposition to the
pending motion confirms this conclusion. The inventive concept identified by Dr.
Schilling-i.e., the method for spread-spectrum data transmission without parallel
codes-is the abstract idea to which claim 4 is directed. See No. 20-1306, D.I. 12,
Ex. 3 ,I 18. The #307 patent lacks any additional features that would make the

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claims eligible under § 101, because it simply applies an abstract idea using
conventional technology.

IV.

CONCLUSION
For the reasons stated above, I find that the #307 patent is invalid under§

101 for lack of subject-matter eligibility. Accordingly, I will grant Acuity Brands,
Inc. 's Motion to Dismiss Plaintiffs First Amended Complaint for Failure to State a
Claim, No. 20-1306, D.I. 13, and Universal Electronics Inc.'s Renewed Rule
12(b)(6) Motion to Dismiss for Failure to State a Claim, No. 20-1307, D.I. 15.
The Court will issue Orders consistent with this Memorandum Opinion.

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