Stoneeagle Services, Inc. v. Pay-Plus Solutions, Inc. et al
Filing
206
ORDER: Defendants Pay-Plus Solutions, Inc. and Premier Healthcare Exchange, Inc.'s Dispositive Motion for Summary Judgment 123 is DENIED. Signed by Judge Virginia M. Hernandez Covington on 7/1/2015. (KNC)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
STONEEAGLE SERVICES, INC.,
Plaintiff,
v.
Case No.: 8:13-cv-2240-T-33MAP
PAY-PLUS SOLUTIONS, INC., and
PREMIER HEALTHCARE EXCHANGE, INC.,
Defendants.
_______________________________/
ORDER
This
Defendants
matter
comes
Pay-Plus
before
Solutions,
the
Inc.
Court
pursuant
(“PPS”)
and
to
Premier
Healthcare Exchange, Inc.’s (“PHX”) Dispositive Motion for
Summary Judgment (Doc. # 123), filed on March 20, 2015.
Plaintiff
StoneEagle
Services,
Inc.
filed
a
response
in
opposition to the Motion on April 20, 2015. (Doc. # 156).
Thereafter, Defendants filed a reply in support of their
Motion on May 4, 2015. (Doc. # 168). For the reasons set forth
below, the Motion is denied.1
Although Defendants’ Motion was filed under seal (Doc. #
143), the Court declines to file the present Order under seal.
“The operations of the courts and the judicial conduct of
judges are matters of utmost public concern and the commonlaw right of access to judicial proceedings, an essential
component of our system of justice, is instrumental in
securing the integrity of the process.” Romero v. Drummond
1
I.
Factual Background
Plaintiff initiated this patent infringement action on
August 29, 2013, filed an Amended Complaint on February 7,
2014, and thereafter filed a Second Amended Complaint on
November 20, 2014. (Doc. ## 1, 28, 66). Plaintiff alleges
that Defendants willfully infringed Plaintiff’s rights under
two patents: Reissue Patent No. US RE43,904 E (“the 904
Patent”), which has twenty-six claims and was issued on
January 1, 2013, and Reissue Patent No. US RE44,748 E (“the
748 Patent”), which has thirty claims and was issued on
February 4, 2014. (Doc. # 66 at ¶¶ 1, 8-10 & Ex. A, B). These
patents are reissue patents of U.S. Patent No. 7,792,686 (“the
686 Patent”), which was issued on September 7, 2010. (Doc. #
143 at 5; Doc. # 156 at 5).
Traditionally, “health insurers paid medical service
providers by mailing checks with an explanation of benefits
(‘EOB’).” (Doc. # 156 at 5). In doing so, insurers incurred
“significant expenses” printing and mailing these checks and
EOBs to health care providers. (Id.). However, “[a] small
percentage of payments were made by insurers via an automatic
clearing house (‘ACH’) direct deposit.” (Id.). According to
Co., 480 F.3d 1234, 1245 (11th Cir. 2007)(internal citations
omitted).
2
Plaintiff, “[a]t the time of the patent application giving
rise
to
[Plaintiff’s]
disassociated
from
the
Patents,
EOBs,
ACH
making
ACH
payments
were
payments
less
desirable to providers due to reconciliation issues.” (Id.).
The
relevant
Patents
cover
a
health
care
provider
reimbursement system, by which a payor, such as an insurance
company, makes “a virtual payment to a medical provider by
transmitting
a
stored-value
card
account
payment
of
the
authorized benefit amount, together with an [EOB].” (Doc. #
66 at ¶¶ 14-16 & Ex. A, B). According to the Patents’
abstracts, the disclosed method is an improvement over the
prior art. (Id.).
In discussing this prior art, “the [P]atents explain
that, in handling a health care provider’s claim for services
rendered to a patient, a payer ‘generates an [EOB] and a check
for the benefit payment,’” which “are then sent concurrently
to the health care provider[].” (Doc. # 143 at 6)(citing Doc.
# 66 at Ex. A, B). The cited “drawbacks” of the prior art are
“the cost and time associated with generating hardcopy checks
and sending them by mail to [a] health care provider[].”(Id.).
The Patents seek to “‘reduce this transactional cost and speed
up
payment
of
benefits
to
health
3
care
providers’
by
electronically transmitting a file containing the payment and
[EOBs].” (Id.).
Plaintiff alleges that Defendants’ health care benefits
payment
processing
system,
“Pay-Plus™
Select”
directly
competes with Plaintiff’s patented system. (Doc. # 66 at ¶¶
17-18). Namely, Plaintiff has asserted infringement of claims
2, 7, 12, 17, and 22 of the 904 Patent and claims 7, 13, 19,
and 25 of the 748 Patent. (Id.).
The accused Pay-Plus™ Select system is a “health care
payment service used to deliver EOBs and payment information
to health care providers.” (Doc. # 143 at 7). Defendants
explain that several companies in addition to PPS are involved
in performing aspects of Pay-Plus™ Select: “(1) UMB Bank is
the issuing bank for Pay-Plus™ Select card payments; (2)
StoreFinancial
is
the
card
processor
for
UMB
Bank;
(3)
MasterCard provides the credit card[;] and (4) InterFAX is a
faxing service that transmits EOB faxes and payment faxes to
health care providers.” (Id.).
Since Pay-Plus™ Select’s introduction into the market in
February of 2012, three versions of the product have been
used. (Id.)(citing Doc. # 143-3 at ¶¶ 5-8). Initially, the
EOB and payment information were transmitted to providers in
one
multi-page
fax
transmission
4
(the
“one-fax
system”).
(Id.). Then, on October 10, 2013, “StoreFinancial implemented
a modification to its software to generate two separate files
for transmission to health care providers in two separate fax
transmissions: one file contains an EOB and a second file
contains
the
card
payment
information
(the
‘two-fax
system’).” (Id.). In particular:
PPS provides EOB and payee information to
StoreFinancial
in
two
separate
files.
StoreFinancial
generates
the
card
payment
information (e.g., card number, etc.) and creates
two separate PDF files, one containing the EOB and
another containing the card payment information.
StoreFinancial then transmits the separate PDF
files to InterFAX, which in turn faxes the separate
files to the provider as two separate fax
transmissions.
(Id. at 8). In 2014, PPS also began transmitting EOB and card
payment information by mail to some providers (the “hardcopy
mailing system”). (Id. at 7-8).
According to Defendants, in all three versions, “PPS has
always provided, and continues to provide, StoreFinancial two
separate files: one file containing payment information, and
a
second
file
containing
the
information
necessary
to
generate the EOB.” (Id. at 7). Further, Defendants assert
that in each version, “PPS has always received information
about
claim
payments
to
be
5
paid
directly
from
the
administrator or payer, instead of obtaining such information
from
a
transmittal
made
by
a
payer/administrator
to
a
provider.” (Id. at 8).
According to the expert report of the Patent’s creator
– Mr. Robert Allen - (1) the “one-fax system” allegedly
infringes all of the asserted claims and (2) the “two fax
system”
and
“hardcopy
mailing
system”
each
allegedly
infringes claims 7, 13, 19, and 25 of the 748 Patent. (Id.).
II.
Procedural Background
On December 2, 2014, Defendants filed Answers to the
operative complaint, including, as an affirmative defense, a
challenge to the validity of the Patents pursuant to 35 U.S.C.
§ 101. (Doc. # 67 at 7; Doc. # 68 at 7). Thereafter, on
December 9, 2014, Defendants filed a Motion for Judgment on
the Pleadings arguing that the claims at issue are directed
to patent-ineligible subject matter under 35 U.S.C. § 101,
which warranted judgment in Defendants’ favor. (Doc. # 69).
This
Court
denied
Defendants’
Motion
without
prejudice,
partially as claim construction had not occurred in this
action. (See Doc. # 91).
On March 4, 2015, the Patent Trial and Appeal Board
(“PTAB”)
denied
PPS’
Petition
to
institute
inter
partes
review of the 904 Patent. (See Doc. # 112). PPS’ Petition to
6
institute inter partes review of the 748 Patent – filed on
January 14, 2015 – is still pending with the PTAB, and
according to the parties’ Joint Status Report, the PTAB’s
decision as it relates to the 748 Patent will likely be issued
no later than August 7, 2015. (See Id.).
This Court held a Markman hearing on May 11, 2015 (Doc.
# 183), and entered an Order on claim construction on June 4,
2015. (Doc. # 197). Thereafter, on June 17, 2015, the Court
held a hearing on the parties’ Daubert Motions and various
Motions in Limine. (Doc. ## 128, 138, 144, 178). The Court
entered an Order on the Motions on June 19, 2015, wherein the
Court
denied
both
Daubert
Motions.
(Doc.
##
201-202).
Defendants filed the present Motion for Summary Judgment on
March 20, 2015 (Doc. # 123), which is ripe for this Court’s
review.
III. Legal Standard
Summary judgment is appropriate “if the movant shows
that there is no genuine dispute as to any material fact and
the movant is entitled to judgment as a matter of law.”
Fed.
R. Civ. P. 56(a). A factual dispute alone is not enough to
defeat a properly pled motion for summary judgment; only the
existence of a genuine issue of material fact will preclude
a grant of summary judgment. Anderson v. Liberty Lobby, Inc.,
7
477 U.S. 242, 247-48 (1986).
An issue is genuine if the evidence is such that a
reasonable jury could return a verdict for the nonmoving
party. Mize v. Jefferson City Bd. of Educ., 93 F.3d 739, 742
(11th Cir. 1996) (citing Hairston v. Gainesville Sun Publ’g
Co., 9 F.3d 913, 918 (11th Cir. 1993)). A fact is material if
it may affect the outcome of the suit under the governing
law. Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.
1997). The moving party bears the initial burden of showing
the court, by reference to materials on file, that there are
no genuine issues of material fact that should be decided at
trial. Hickson Corp. v. N. Crossarm Co., Inc., 357 F.3d 1256,
1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett, 477
U.S. 317, 323 (1986)). “When a moving party has discharged
its burden, the non-moving party must then ‘go beyond the
pleadings,’ and by its own affidavits, or by ‘depositions,
answers
to
interrogatories,
and
admissions
on
file,’
designate specific facts showing that there is a genuine issue
for trial.” Jeffery v. Sarasota White Sox, Inc., 64 F.3d 590,
593-94 (11th Cir. 1995) (citing Celotex, 477 U.S. at 324).
If there is a conflict between the parties’ allegations
or evidence, the non-moving party’s evidence is presumed to
be true and all reasonable inferences must be drawn in the
8
non-moving party’s favor. Shotz v. City of Plantation, Fla.,
344 F.3d 1161, 1164 (11th Cir. 2003). If a reasonable fact
finder evaluating the evidence could draw more than one
inference from the facts, and if that inference introduces a
genuine issue of material fact, the court should not grant
summary judgment. Samples ex rel. Samples v. City of Atlanta,
846 F.2d 1328, 1330 (11th Cir. 1988) (citing Augusta Iron &
Steel Works, Inc. v. Emp’rs Ins. of Wausau, 835 F.2d 855, 856
(11th Cir. 1988)). However, if the non-movant’s response
consists
of
conclusional
nothing
“more
allegations,”
than
summary
a
repetition
judgment
is
of
not
his
only
proper, but required. Morris v. Ross, 663 F.2d 1032, 1034
(11th Cir. 1981), cert. denied, 456 U.S. 1010 (1982).
IV. Analysis
a. Exhibit 2 of Defendants’ Motion
To begin, the Court addresses Plaintiff’s request that
Exhibit 2 of Defendants’ Motion be stricken. (Doc. # 156 at
9). Exhibit 2 is a “survey” of district court decisions
“wherein challenges to one or more patent claims were raised
in
view
of
[Alice
Corporation
Pty.
Ltd.
v.
CLS
Bank
International, 134 S. Ct. 2347 (2014)] and decided on the
merits.” (Doc. # 143-2).
9
Plaintiff suggests that such material should have been
included within the Motion, and if it was, Defendants’ Motion
would “have greatly exceeded the Court’s page limitation.”
(Doc. # 156 at 9); see Local Rule 3.01(a), M.D. Fla. However,
Defendants counter that Exhibit 2 “does not amount to argument
that should be included in the body of Defendants’ Motion.”
(Doc. # 168 at 3). Rather, Exhibit 2 merely “catalogues
relevant district court decisions wherein challenges to one
or more patent claims were raised in view of Alice and decided
on the merits.” (Id.). The Court agrees with Defendants.
Upon review, Exhibit 2 is simply a compilation of patent
case law decided under Alice, which was set forth to aid this
Court in its determination as to patentability of the relevant
claims. Such “catalogue” does not need to be contained within
Defendants’ Motion, as many of the cases cited were expounded
upon in the Motion and others support Plaintiff’s position.
Therefore, the Court denies Plaintiff’s request.
b. Invalidity of Patent Claims
Defendants move for summary judgment of invalidity of
claims 2, 7, 12, 17, and 22 of the 904 Patent and claims 7,
13, 19, and 25 of the 748 Patent “because they are directed
to patent ineligible subject matter under 35 U.S.C. § 101.”
(Doc. # 143 at 5).
10
The issue of patent-eligibility under 35 U.S.C. § 101
presents a question of law. Accenture Global Servs., GmbH v.
Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed. Cir.
2013). Because each claim of a patent is presumed valid,
Defendants bear the burden of establishing invalidity by
“clear and convincing evidence.” 35 U.S.C. § 282(a); CLS Bank
Int’l v. Alice Corp. Pty. Ltd., 717 F.3d 1269, 1284 (Fed.
Cir. 2013) (finding that “any attack on an issued patent based
on a challenge to eligibility of the subject matter must be
proven by clear and convincing evidence.”).
Pursuant to 35 U.S.C. § 101:
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.
35 U.S.C. § 101 sets forth four categories of inventions
or
discoveries
“processes,
that
machines,
are
eligible
for
manufactures,
patent
and
protection:
compositions
of
matter.” Bilski v. Kappos, 561 U.S. 593, 601 (2010). Supreme
Court precedent provides three exceptions to § 101's broad
coverage: “laws of nature, natural phenomena, and abstract
11
ideas” are not patent-eligible. Id. (internal quotation marks
omitted).
In order to determine whether subject matter is patent
eligible under § 101, the first question is whether the claims
at issue are directed to “patent-ineligible concepts.” Alice
Corp. Pty. Ltd., 134 S. Ct. at 2355. If so, the next question
is
whether
individually
the
and
elements
in
of
each
combination,
claim,
contain
considered
an
both
“inventive
concept,” sufficient to transform the claims into a patent
eligible application. Id.
A claimed process contains the requisite “inventive
concept” if the process comprises more than “well-understood,
routine, conventional activity” previously engaged in by the
scientific community. Mayo Collaborative Servs. v. Prometheus
Labs. Inc., 132 S. Ct. 1289, 1298 (2012). Limiting the use of
an abstract idea to a “particular technological environment,”
or using “a generic computer to perform generic computer
functions” is not sufficient to transform an abstract idea
into a patent eligible process. Id. at 1297, 1301 (internal
quotation marks omitted). On the other hand, improving an
existing technological process may transform a process into
an inventive application. Alice Corp. Pty. Ltd., 134 S. Ct.
at 2358. For instance, an abstract idea may be integrated
12
into
a
new
combination
of
steps,
in
a
way
that
is
unconventional in the field. Mayo, 132 S. Ct. at 1298-00.
The present case involves Patents that are claimed to be
“processes” under 35 U.S.C. § 101. Section 100(b) defines
“process” as: “process, art or method, and includes a new use
of a known process, machine, manufacture, composition of
matter, or material.” 35 U.S.C. § 100(b).
Defendants
have
set
forth
numerous
arguments
to
demonstrate how the claims at issue embody an unpatentable
abstract idea. (See Doc. # 143)(citing Alice, 134 S. Ct. at
2347 (abstract idea of intermediated settlement in financial
transactions); Bilski, 561 U.S. at 593 (abstract idea of
hedging
against
the
risk
of
price
fluctuations);
Ultramerical, Inc., 772 F.3d at 709 (abstract idea of using
advertising as an exchange or currency); Accenture Global
Servs. GmbH, 728 F.3d at 1336 (abstract idea of generating
insurance policy-related tasks); Every Penny Counts, Inc. v.
Wells Fargo Bank, N.A., No. 8:11-cv-2826-T-23TBM, 2014 WL
4540319, at *4 (M.D. Fla. Sept. 11, 2014)(abstract idea of
incremental savings from financial transactions)).
The Court will address each of Defendants’ arguments in
turn. However, upon consideration of the parties’ contentions
and the legal authority on this matter, the Court determines
13
that the asserted claims of the 904 and 748 Patents clear the
§ 101 hurdle.
i. Whether Claims Address Long Standing, Routine
Practice in Commerce
To begin, Defendants argue that both Patents describe an
unpatentable
abstract
idea,
and
all
the
asserted
claims
embody the “same basic concept;” specifically: “(i) obtaining
or
generating
an
[EOB]
and
corresponding
payment,
(ii)
combining (or merging) the [EOB and payment information] into
a single file, and (iii) transmitting the combined file to a
health care provider.” (Doc. # 143 at 10-14).
According to Defendants, “the abstract idea of paying a
service
provider
using
a
financial
instrument
and
accompanying that payment with an explanation of what parts
of the bill the payer did or did not pay, and why, has long
been a fundamental economic practice present in our system of
commerce.” (Id. at 15). To that end, Defendants describe that
traditionally, insurers in the health care industry printed
checks and EOB forms that were then together sent to the
health care provider by physical mail. (Id. at 11). The
Patents seek to eliminate “the cost and time associated with
generating hardcopy checks and sending them by mail to [the]
health care provider[].” (Id.).
14
To “reduce this transactional cost and speed up payment
of benefits,” Defendants explain that the Patents provide for
sending the information contained on a stored value card as
the payment means and EOB in a single file by facsimile or
other electronic means, as opposed to physical mail. (Id.).
As such, Defendants proffer that the Patents “teach nothing
more
than
computerizing
the
combined
transmission
of
a
payment means and an explanation of the payment, given the
advent of modern technology.” (Id.). According to Defendants,
“[s]uch computerization of a fundamental business method is
the precise subject matter held not eligible for patent
protection.” (Id.).
To support this position, Defendants point to the expert
report of Mr. Thomas Turi. (See Doc. # 128-1). Mr. Turi
analyzes and provides an overview of prior art in an attempt
to demonstrate how the claims are focused on patent ineligible
materials. (Id.). Specifically, Mr. Turi argues that the
claims are “obvious” when read in light of these prior arts.2
(Id.).
Mr. Turi analyzes the following: U.S. Patent Application
Publication No. 2007/0005403 (Kennedy); U.S. Patent No.
5,991,750 (Watson); press release entitled Viewpoint &
Performance Collaborate to Provide Image Statement Products
(Image
Statement
Products);
Purchasing
Credit
Cards
Introduction by LeRoy H. Graw (vPayment Interview); U.S.
2
15
Furthermore,
Defendants
submit
that
Plaintiff
often
refers to the “stored-value card account payment” form as a
“Virtual Card.” (Doc. # 143 at 11). But, not only does the
patentee - Mr. Robert Allen - admit that he did not invent
this “virtual card” (Doc. # 168 at 7), Defendants provide
that this “Virtual Card” is “nothing more than a computer
file containing information found on a physical credit or
debit card.” (Doc. # 143 at 11). Likewise, Mr. Turi opines
that the stored-value card is just another alternative format
to facilitate the movement of funds from one entity to
another. (Doc. # 128-1).
Regardless, Defendants contend that “the act of placing
information that is otherwise found on the face of a physical
credit card into a computer file to permit the electronic
transmission of that same information does not alter the
fundamental, abstract nature of the claims.” (Id. at 1112)(citing Alice, 134 S. Ct. at 2356 (finding that the
abstract
concept
of
“intermediated
settlement”
to
be
a
fundamental economic practice long prevalent in our system of
commerce); Bilski, 561 U.S. at 611-12 (noting that “[h]edging
Patent Application Publication No. US 2005/0209964 (Allen);
US Patent No. 6,901,387 (Wells); and U.S. Patent Application
Publication No. 2006/106650 (Bush). (See Doc. # 128-1).
16
is a fundamental economic practice long prevalent in our
system of commerce and taught in any introductory finance
class.”); Every Penny Counts, Inc., 2014 WL 4540319, at *4
(invalidating patent claims directed to abstract ideas that
are implemented by “well-understood, routine, conventional
activities previously known to the industry.”)). Therefore,
Defendants submit that “the highly generalized claims of the
Patents merely articulate a fundamental economic concept in
steps specific to processes used in the health insurance field
in light of modern technology.” (Doc. # 143 at 12).
In its response, Plaintiff proffers that Defendants have
failed to provide evidence supporting their assertion that
Plaintiff’s
Patents
claim
“an
abstract,
long-standing,
‘fundamental economic practice.’” (Doc. # 156 at 11-12). To
that end, Plaintiff submits that before the 686 Patent issued,
health insurers incurred time and expense generating and
delivering physical checks along with EOBs to pay health care
claims. (Id. at 12). The Patents “integrate and send a
uniquely-generated
stored-value
card
payment
with
a
corresponding EOB in a new process superior to the traditional
method of paying health care claims.” (Id.). By doing so,
Plaintiff argues that the Patents “produce advantages over
the
prior
art
for
reconciliation,
17
security,
and
administration[,] and do so at a dramatically lower cost.”
(Id.).
Plaintiff recognizes that, in order to support their
position, Defendants reference the 904 Patent’s discussion of
a prior art’s use of physical checks sent with EOBs. (Id.).
However, Plaintiff points out that the Patents do not concern
payments made via a physical check. (Id.). In contrast,
Plaintiff’s asserted claims cover payments: “(a) for only
medical benefits, (b) on behalf of only a third party payer
(not patients), (c) using only a stored-value card account,
(d) funded only with an amount equal to the approved benefit
amount, [(e)] made via sending four specified types of payment
information combined with an EOB.” (Id. at 13). Therefore, it
is Plaintiff’s position that the asserted claims are in no
way a mere “abstract idea” and do not “merely computerize”
anything done before. (Id.).
Upon
review
of
the
parties’
arguments
and
legal
authority on this matter, the Court finds that the claims do
not embody an abstract idea, but, rather involve patentable
subject matter. The Court finds that this action is analogous
to DDR Holdings, LLC v. Hotels.com, 773 F.3d 1245 (Fed. Cir.
2014). The court there upheld a patent in which the “claims
address[] the problem of retaining website visitors that, if
18
adhering to the routine, conventional functioning of Internet
hyperlink protocol, would be instantly transported away from
a host’s website after ‘clicking’ on an advertisement and
activating a hyperlink.” 773 F.3d at 1257. Finding that the
patent satisfied 35 U.S.C. § 101, the Federal Circuit stated
that the patent “do[es] not merely recite the performance of
some business practice known from the pre-Internet world
along with the requirement to perform it on the Internet.”
Id. at 1258. Rather, the Federal Circuit found that “the
claimed solution is necessarily rooted in computer technology
in order to overcome a problem specifically arising in the
realm of computer networks.” Id. In other words, no “preInternet
analog
of
the
patent’s
asserted
claims”
exists
because the problem addressed by the claims is unique to “the
realm of computer networks.” Id. at 1257-58.
Here, the Patents’ background sections state:
Third party administrators, insurance companies,
and
large
self-funded
corporations
(herein
“Payers”) adjudicate claims, compare them to the
benefit plan and make the decision to write checks
in payment for the claims. Currently, Payers are
required to print checks and explanation of benefit
(EOB) forms for delivery to the health care
providers. The EOB lists the amount the health care
provider billed the Payer’s company and the amount
the Payer’s company paid on the claim. It may also
list the contractual discount amount and the
19
patient responsibility. If the claim is denied, the
EOB will explain the reason for denial. It has been
estimated that the check and EOB forms cost Payers
approximately $4.50 each.
[The] This creates inefficiencies [to] for all
Payers that must coordinate payment for medical
services[. This includes], including, but [is] not
limited
to,
insurance
carriers,
government
entities, and non-profit organizations.
A long-felt but unfulfilled need in the art is a
system to reduce the transactional cost incurred by
the payers and speed up the delivery and funding of
payments by weeks.
(Doc. # 66 at Ex. A, B)(emphasis added). The claims at issue
seek to address a problem uniquely within the health care
industry:
“to
reduce
the
cost
and
time
associated
with
generating hard copy checks and sending them by mail to [a]
health care provider[].”
(Id.).
Here, it is true that the claims are similar to the prior
art discussed in detail by Defendants and Mr. Turi. (See Doc.
# 128-1). But, the relevant claims stand apart because (1)
the claims are different enough in substance from the prior
art and (2) the claims do not merely recite the performance
of some prior art business practice. Instead, the claimed
solution is necessarily rooted in computer technology in
order to overcome a problem specifically arising in the realm
20
of the health care industry. (See Doc. # 156 at 5). Likewise,
the
claims
implement
do
[an]
not
“simply
abstract
instruct
idea
with
the
practitioner
routine,
to
conventional
activity.” See Ultramercial, Inc., 772 F.3d at 715.
In his report, Mr. Turi admits that there is nothing in
the various prior art (i.e., vPayment Interview) that would
have precluded the prior art from being used in the health
care
industry;
however,
these
prior
art
systems
were
admittedly not implemented. (Doc. # 128-1). Therefore, while
the
concept
may
have
been
“obvious,”
as
suggested
by
Defendants and Mr. Turi, the precise practice at issue did
not exist prior to the Patents being issued.
Like the claims in DDR Holdings, LLC, the asserted claims
“do not recite an invention as technologically complex as an
improved, particularized method” of payment systems. See DDR
Holdings, LLC, 773 F.3d at 1259. However, the relevant claims
do not simply recite “a commonplace business method aimed at
processing business information, applying a known business
process to the particular technological environment of the
Internet, or creating or altering contractual relations using
generic
computer
functions
and
conventional
network
operations.” Id. Therefore, even with Mr. Turi’s thorough
analysis of the prior art, the Court finds that Defendants
21
have not provided clear and convincing evidence to establish
that the prior arts engaged in the practice implemented by
the Patents or that the claims at issue involve a fundamental
economic practice, thus making them unpatentable subject
matter. See Biosig Instruments, Inc. v. Nautilus, Inc., 783
F.3d 1374, 1377 (Fed. Cir. 2015)(“A patent is presumed valid
under 35 U.S.C. § 282 and, consistent with that principle, a
[fact finder is] instructed to evaluate . . . whether an
invalidity defense has been proved by clear and convincing
evidence.”)(internal quotations omitted).
ii.
Whether Patents are Directed at Solving a
Problem or Shortcoming
In addition, Defendants provide that the Patents are
“not directed at solving any particular computer, network, or
Internet technology problems or shortcomings.” (Doc. # 168 at
9).
Instead,
Defendants
argue
that
Plaintiff’s
Patents
essentially “recite the performance of some business practice
known
from
the
[pre-computer]
world
along
with
the
requirement to perform it on [a computer],” which is subject
matter
that
would
not
survive
under
an
Alice
analysis.
(Id.)(citing Alice, 134 S. Ct. 2347 (“recitation of a generic
computer cannot transform a patent-ineligible abstract idea
into a patent-eligible invention.”).
22
However, this Court finds that the relevant claims do
not broadly and generically claim the use of stored-value
cards to perform an abstract business practice. Rather, the
claims at issue specify how interactions with these storedvalue cards are manipulated to yield a desired result –
“reduce this transactional cost and speed up payment of
benefits
to
health
care
providers
by
electronically
transmitting a file containing the payment and explanation of
benefits.” (Doc. # 66 at Ex. A, B).
iii.
Finally,
Whether Claims are Rendered Patentable by
Limiting
Abstract
Idea
to
Health
Care
Industry, and Whether Preemption is Applicable
Test
Defendants
argue
that
the
claims
are
not
rendered patentable simply by limiting the use of the abstract
idea to the health care industry, as Plaintiff has allegedly
done. (Doc. # 143 at 17); see Bilski, 561 U.S. 593 (finding
that “limiting the abstract idea to one field of use” does
not necessarily guard against preempting all uses of the
abstract idea). Similarly, Defendants argue that preemption
is not the test for subject matter eligibility under Alice.
(Doc. # 168 at 7). According to Defendants, the Federal
Circuit has similarly rejected Plaintiff’s argument that its
Patents are patent-eligible because they cover only “a single
23
mode of payment (stored-value card accounts)” as opposed to
other payment means. (Id. at 8)(citing In re BRCA1- & BRCA2Based Hereditary Cancer Test Patent Litig., 774 F.3d 755, 764
(Fed. Cir. 2014)(“The preemptive nature of the claims is not
ameliorated even if we accept [the] argument that other
methods of comparison exist.”)).
In response, Plaintiff argues that “[t]he fact that some
of the limitations of [Plaintiff’s] asserted claims may have
been present separately in different industries does not
render them unpatentable.” (Doc. # 156 at 16). In fact,
Plaintiff
provides
that
a
sound
method
for
determining
whether patent claims are unpatentable under 35 U.S.C. § 101
is inquiring whether such claims would entirely preempt the
“approach in all fields” and “effectively grant a monopoly
over an abstract idea.” (Id.)(citing Alice, 134 S. Ct. at
2354).
Plaintiff also argues that its Patents do not preempt
the payment to service providers by third party payers “in
all fields.” (Id.). To that end, Plaintiff submits that the
Patents “do not even claim all modes of payment of health
insurance benefits to providers by third party payers and do
not claim the following payment modes: ACH payments, physical
24
checks, or physical credit, debit, or other stored-value
cards.” (Id.).
To further support its position, Plaintiff acknowledges
that in rejecting the attack on the validity of the 904 Patent
in a covered business method review, the PTAB agreed “. . .
there is a myriad of methods of transmitting a payment . . .”
that do not require the steps of Plaintiff’s asserted claims.
(Id.)(citing
provides
Doc.
that
no
#
156-5
at
preemption
19).
exists
Therefore,
because
Plaintiff
Plaintiff’s
asserted claims are narrow, specific, concrete, and cover a
single mode of payment (stored value card accounts), in one
particular industry (health care), by one specific class
(third party payers). (Id.).
In DDR Holdings, LLC, the Federal Circuit found that the
claims at issue did not create a risk of preemption:
It is also clear that the claims at issue do not
attempt to preempt every application of the idea of
increasing sales by making two web pages look the
same, or of any other variant suggested by NLG.
Rather, they recite a specific way to automate the
creation of a composite web page by an “outsource
provider” that incorporates elements from multiple
sources in order to solve a problem faced by
websites on the Internet. As a result, the ′399
patent's claims include “additional features” that
ensure the claims are “more than a drafting effort
designed to monopolize the [abstract idea].” Alice,
134 S.Ct. at 2357. In short, the claimed solution
amounts to an inventive concept for resolving this
25
particular Internet-centric problem, rendering the
claims patent-eligible.
773 F.3d at 1259 (emphasis added). Similarly, as articulated
by Plaintiff, the claims at issue “recite a ‘specific way’
medical benefits are paid by a particular class (third party
payers) by incorporating elements from multiple sources (EOB
information from the health care claims administrator and
stored-value card account information from a stored-value
card processor) to solve a problem faced by the health care
industry.” (See Doc. # 156 at 17). Therefore, the Court finds
that the asserted claims do not attempt to preempt “the
payment to service providers by third party payers in all
fields,” and do not seek to grant Plaintiff a monopoly over
the relevant practice in the health care industry.
For the reasons set forth above, the Court finds that
Defendants have not met their burden and have not demonstrated
by clear and convincing evidence that each asserted claim of
Plaintiff’s Patents are patent-ineligible under 35 U.S.C. §
101.
Accordingly,
Defendants’
Motion
is
denied
on
this
ground.
c. Non-Infringement of 748 Patent
Defendants move for summary judgment of non-infringement
of claims 7, 13, 19 and 25 of the 748 Patent by the current
26
“two-fax” and “hardcopy mailing” versions of the accused PayPlus™
Select
system.
(Doc.
#
143
at
22).
According
to
Defendants, all of these asserted claims “require[] combining
stored-value card information and an [EOB] into a single
electronic file or document.” (Id.). However, Defendants
submit that neither the “two-fax system” nor the “hard-copy
system” combines credit card information and an EOB in a
single file or document. (Id.).
Instead, it is undisputed that the “two-fax system”
always maintains the credit card information and
the EOB in separate files, from the beginning of
the process when the files are created to the end
of the process when the files are separately faxed
to the health care provider. Likewise, the “hardcopy mailing systems” always maintains the credit
card information and the EOB in two separate and
distinct files, from the beginning of the process
when the files are created to the end of the process
when the two files are printed and mailed.
(Id.).
Therefore,
according
to
Defendants,
the
“two-fax
system” and “hardcopy mailing” system cannot infringe any of
the asserted claims of the 748 Patent. (Id.).
Defendants’
construction
However,
of
this
argument
various
Court
did
relies
terms
not
of
upon
the
adopt
their
challenged
Defendants’
proposed
claims.
proposed
construction; specifically, the Court declined Defendants’
position that the plain language of the Patents requires
27
“merging” into a single electronic file or document both the
(1)
stored-value
card
payment
information
and
(2)
an
explanation of benefits. (Doc. # 197 at 17-18).
Rather, the Court found that the written description of
the Patents’ abstract could be read as a singular or plural
interpretation. (Id. at 22); see Baldwin Graphic Sys., Inc.
v. Siebert, Inc., 512 F.3d 1338, 1342-43 (Fed. Cir. 2008).
Here, like in Baldwin Graphic, upon review of the prosecution
history, specification, and the context of the Patents, the
Court
concluded
application
of
that
the
the
rule
term
of
“merge”
does
singularity.
not
(Id.
require
at
23).
Furthermore, the Court found that the Patent materials are
devoid of any indication that the plain language of the claims
“clearly indicates” that the relevant information should be
merged into a “single” or “one” file or document. (Id. at
24). Therefore, as this Court declined to accept Defendants’
construction
of
the
term
“merging,”
the
Court
denies
Defendants’ Motion for Summary Judgment as to the 748 Patent.
d. Non-Infringement of the 904 Patent
Finally, Defendants move for summary judgment on noninfringement of claim 2 of the 904 Patent, which requires
“intercepting the [EOB] and payment information transmitted
from the administrator to the health care provider,” because
28
“no
version
of
Pay-Plus™
Select
intercepts
or
otherwise
obtains any information transmitted from an administrator to
a health care provider.” (Doc. # 143 at 28).
The Court notes that Defendants’ argument again relies
upon Defendants’ proposed construction of various terms of
the challenged claims. However, this Court did not adopt
Defendants’ proposed construction of the term “intercepting”
contained within claim 2: “receiving, retrieving or otherwise
acquiring an explanation of benefits and payment information
from a transmission of that information that is sent directly
from an administrator to a health care provider.” (Doc. # 197
at 10).
As this Court previously found, a review of the 904
Patent as a whole fails to demonstrate that the addition of
the term “directly” is required, as suggested by Defendants.
(Id. at 11). To that end, Defendants failed to establish that
the claims, specification, and prosecution history of the 904
Patent
defined
demonstrate
the
that
claims
–
the
patentee,
with
Mr.
reasonable
Robert
Allen,
clarity
and
deliberateness – to mandate a narrower interpretation (i.e.,
use of term “directly”) of claim 2. (Id.). For support, the
Court pointed to the “Detailed Description of the Preferred
Embodiment” as an example (Doc. # 66-1 at 8), and found that
29
there is no requirement – explicit or otherwise – that such
transmission shall go directly from administrator to health
care provider, as suggested by Defendants. (Id. at 11-12).
For that reason, the Court denies Defendants’ Motion for
Summary Judgment as the 904 Patent.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
Defendants
Pay-Plus
Solutions,
Inc.
and
Premier
Healthcare Exchange, Inc.’s Dispositive Motion for Summary
Judgment (Doc. # 123) is DENIED.
DONE and ORDERED in Chambers in Tampa, Florida, this 1st
day of July, 2015.
Copies: All counsel of record
30
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