PayRange, Inc. v. Kiosoft Technologies, LLC et al

Filing 74

Order Denying Partial Motion to Dismiss re 38 Motion to Dismiss for Failure to State a Claim. Signed by Judge Robert N. Scola, Jr on 11/18/2021. See attached document for full details. (ebz)

United States District Court
for the
Southern District of Florida
PayRange, Inc., Plaintiff,
v.
Kiosoft Technologies, LLC, and
Techtrex, Inc., Defendants.

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Civil Action No. 20-24342-Civ-Scola
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Order Denying Partial Motion to Dismiss
This cause comes before the Court upon Defendants Kiosoft
Technologies, LLC and Techtrex, Inc.’s partial motion to dismiss counts one
and three of Plaintiff PayRange, Inc.’s amended complaint. (Mot., ECF No. 38.)1
The Plaintiff responded in opposition (Resp. in Opp’n, ECF No. 43), and the
Defendants filed a reply. (Reply, ECF No. 46.) After careful consideration of the
parties’ arguments, the record, and the relevant legal authorities, the Court
finds that the motion to dismiss is premature and raises issues that should be
decided with the benefit of the parties’ claim construction briefing. Accordingly,
the motion is denied. (Mot., ECF No. 38.)
1. Background
The Plaintiff filed this action against the Defendants for the infringement
of three of its patents: Patent Nos. 10,719,833 (“833 Patent”), 10,891,608 (“608
Patent”), and 10,891,614 (“614 Patent”) (collectively the “Patents”). (Am.
Compl., ECF No. 17 at ¶ 3.)
The Plaintiff is a Tennessee corporation with its principal place of
business located in Portland, Oregon. (Id. at ¶ 5.) The Plaintiff is a technology
company in the business of offering payment solutions for various “self-help”
retail industries. (Id. at ¶ 15.) Specifically, the Plaintiff’s technology makes it
possible for users of communal or commercial laundry machines to pay for
services through an application on their cellular phones instead of paying with
coins. (Id. at ¶ 16.) Operators, or the owners of the laundry machine, only need
to install a small device manufactured by the Plaintiff on their existing
machines or kiosks. (Id. at ¶ 17.) This technology is called the “BluKey mobile
payment device.” (Id.)
Defendant TechTrex is a Canadian corporation with its principal place of
business in Ontario, Canada. (Id. at ¶ 6.) Defendant Kiosoft is a Florida limited

1

The Defendants filed a memorandum of law in support of their motion. (ECF No. 39.)

liability company with its principal place of business in Boynton Beach,
Florida. (Id. at ¶ 7.) The Defendants directly compete with the Plaintiff offering
a “single-source [payment] solution,” and “they manufacture and sell the
payment-collecting kiosks or terminals in which the mobile payment
functionalities are built-in.” (Id. at ¶ 22.) On February 12, 2019, the Plaintiff
and the Defendants met in Portland to discuss a potential business and
licensing relationship. (Id. at ¶ 23.) The parties did not enter into a licensing
agreement. After the meeting, the Defendants continued making and selling
kiosks with built-in mobile payment functionalities. (Id. at ¶ 24.)
To protect its technologies, the Plaintiff filed for three patents with the
United States Patent and Trademark Office (“USPTO”). (Id. at ¶ 18.) On July 21,
2020, the USPTO issued the 833 Patent, titled “Method and System for
Performing Mobile Device-To-Machine-Payments.” (Id. at ¶ 19.) On January 12,
2021, the USPTO issued the 608 Patent titled “Method and System for an
Offline-Payment Operated Machine to Accept Electronic Payments.” (Id. at ¶
20.) That same day, the USPTO issued the 614 Patent, titled “Method and
System for Presenting Representations of Payment Accepting Unit Events.” (Id.
at ¶ 21.) The Defendants’ continued manufacturing of payment-collecting
kiosks directly infringe on the Plaintiff’s patents.
The Plaintiff initiated this action on October 21, 2020 and has since
amended its complaint. The operative complaint alleges three counts of patent
infringement in violation of 35 U.S.C. § 271. (See generally Am. Compl., ECF
No. 17.) The Defendants jointly move to dismiss counts one and three of the
complaint which allege infringement of the 614 and 833 Patents. (See generally
Mot., ECF No. 39.) They argue that the Plaintiff has failed to state a claim of
infringement as to either patent because both patents are directed to
unpatentable subjects under 35 U.S.C. § 101. (Id. at 1.) In opposition, the
Plaintiff argues that the motion is premature and requires further development
of the record. (Resp. in Opp’n, ECF No. 43 at 3.) Alternatively, the Plaintiff
contends that both patents are directed at patentable subjects. Because the
Court agrees that the motion to dismiss is premature, it will not consider the
merits of the patent infringement claims.
2. Legal Standard
When considering a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(6), the Court must accept all of the complaint’s allegations as
true, construing them in the light most favorable to the plaintiff. Pielage v.
McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008). A pleading need only contain
“a short and plain statement of the claim showing that the pleader is entitled to
relief.” Fed. R. Civ. P. 8(a)(2). “[T]he pleading standard Rule 8 announces does

not require detailed factual allegations, but it demands more than an
unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quotation omitted). A plaintiff must articulate
“enough facts to state a claim to relief that is plausible on its face.” Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007).
3. Analysis
In a patent case, a determination of infringement (or non-infringement)
requires a two-step analysis. Spanakos v. Aronson, No. 17-80965-CV, 2018 WL
2392011, at *5 (S.D. Fla. Apr. 3, 2018) (Middlebrooks, J.) (citing Advanced
Cardiovascular Sys. v. Scimed Life Sys., 261 F.3d 1329, 1336 (Fed. Cir. 2001)).
The court must first determine the scope and meaning of the patent claims
asserted. The second step is to compare the construed claims to the allegedly
infringing device or process. See Apex Inc. v. Raritan Computer, Inc., 325 F.3d
1364, 1370 (Fed. Cir. 2003). Generally, a motion to dismiss is not the proper
vehicle to raise claim construction arguments. Spanakos, 2018 WL 2392011 at
*5; see also DOK Sol. LLC v. FKA Distrib. Co., No. 8:14-CV-1910-T-30TBM,
2015 WL 1606339, at *1 (M.D. Fla. Apr. 8, 2015) (Moody, J.) (“When, as here,
the parties dispute the meaning of a term, claim construction is necessary to
determine the term’s meaning.”). Dismissal may be appropriate when claim
construction is not necessary to the two-step analysis, in other words, when
there are no disputed terms contained within the claims relevant to the issue of
invalidity. Digitech Info. Sys., Inc. v. BMW Fin. Servs. NA, LLC, 864 F. Supp. 2d
1289, 1292 (M.D. Fla. 2012) (Antoon, J.), aff’d sub nom. Digitech Info. Sys., Inc.
v. BMW Auto Leasing, LLC, 504 F. App’x 920 (Fed. Cir. 2013).
Here, the Defendants argue that the Plaintiff’s claims of infringement of
the 614 and 833 Patents fail because “they are directed to unpatentable
subject matter under 35 U.S.C. § 101.” (Mot., ECF No. 39 at 1.) Particularly,
they argue that the patents do not contain the requisite inventive concept;
rather the claims merely involve the use of a generic electronic form of
payment. (Mot., ECF No. 39 at 7.) It would be premature to engage in this
analysis at the motion to dismiss stage. StoneEagle Servs., Inc. v. Pay-Plus
Sols., Inc., No. 8:13-CV-2240-T-33MAP, 2015 WL 518852, at *4 (M.D. Fla. Feb.
9, 2015) (denying motion for judgment on the pleadings in which the
defendants argued that the claims lacked the inventive concept because the
court had not had the benefit of claim construction briefing); see also IMX, Inc.
v. E-Loan, Inc., No. 09-20965-CIV, 2010 WL 11506065, at *1 (S.D. Fla. Mar. 3,
2010) (Martinez, J.) (denying motion to dismiss because it was premature to
consider whether the plaintiff’s infringement claims met the patentability
requirements of 35 U.S.C. § 101). Moreover, this is not a scenario where claim

construction is unnecessary to the infringement analysis. Indeed, the parties
appear to disagree on the construction of several terms relevant to the 614 and
833 Patents. With respect to the 833 Patent, the parties dispute whether the
term “detecting, by an application executing on the mobile device, a trigger
condition to perform the cashless transaction with the automatic retail
machine,” is indefinite, thereby rendering the patent invalid. (Mot., ECF No. 39
at 8.) The Defendants also contend that the terms “authorization zone
threshold criterion,” and “payment zone threshold criterion” are indefinite. (Id.)
As to the 614 Patent, the parties disagree as to the meaning of the term
“automatic retail machine.” (Resp. in Opp’n at 4.) At this juncture it is
improper for the Court to blindly accept either side’s proposed definitions
without the benefit of claim construction briefing. DOK Sol. LLC, 2015 WL
1606339, at *2. Moreover, after the filing of this motion, the parties requested
an extension of time of certain pretrial deadlines in light of the USPTO’s
anticipated determination of whether it will reexamine the three patents at
issue in this case. (Mot. for Extension of Time, ECF No. 60 at 2.) For these
reasons, the Court finds that a determination of the validity of the 614 and 833
Patents is premature. The Defendants may renew their challenges after the
Court has had the benefit of full claim construction proceedings. DOK Sol. LLC,
2015 WL 1606339, at *2; see also Fuzzysharp Techs. Inc. v. 3dLabs Inc., 447 F.
App’x 182, 186 (Fed. Cir. 2011) (remanding for § 101 analysis after claim
construction was filed); Inventor Holdings, LLC v. Bed Bath & Beyond, Inc., 876
F.3d 1372, 1376 (Fed. Cir. 2017) (affirming judgment on the pleadings where
the district waited until the parties filed their claim construction briefs before
ruling on the defendant’s judgment on the pleadings).
4. Conclusion
For the aforementioned reasons, the Court denies the Defendants’
partial motion to dismiss. (ECF No. 38.)
Done and ordered at Miami, Florida, on November 18, 2021.
________________________________
Robert N. Scola, Jr.
United States District Judge