Automated Tracking Solutions, LLC v. ValidFill, LLC et al

Filing 83

OPINION AND ORDER granting Defendant The Coca-Cola Companys Motion for Judgment on the Pleadings 70 and denying Defendant The Coca-Cola Companys Motion for Oral Argument 71 . Signed by Judge William S. Duffey, Jr on 12/21/16. (ddm)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
AUTOMATED TRACKING
SOLUTIONS, LLC,
Plaintiff,
v.

1:15-cv-04348-WSD

THE COCA-COLA COMPANY,
Defendant.

OPINION AND ORDER
This matter is before the Court on Defendant The Coca-Cola Company’s
Motion for Judgment on the Pleadings [70] (“Motion”). Also before this Court is
Defendant’s Motion for Oral Argument [71].
I.

BACKGROUND
A.

Facts

Plaintiff Automated Tracking Solutions, LLC (“ATS”) is a Delaware limited
liability company, founded and owned by Dr. Fred H. Sawyer. (Am. Compl. [33]
¶¶ 2, 12-13). Dr. Sawyer “is the sole named inventor” in the four patents asserted
in this patent infringement action (“the Patents-in-Suit”):

1.

United States Patent No. 7,551,089 (“the ’089 Patent”), titled
“Method and Apparatus for Tracking Objects and People,” which duly
and legally issued on June 23, 2009;

2.

United States Patent No. 7,834,766 (“the ’766 Patent”), titled
“Method and Apparatus for Tracking Objects and People,” which duly
and legally issued on November 16, 2010;

3.

United States Patent No. 842,013 (“the ’013 Patent”), titled “Method
and Apparatus for Tracking Objects and People,” which duly and
legally issued on September 23, 2014; and

4.

United States Patent No. 8,896,449 (“the ’449 Patent”), titled
“Method and Apparatus for Tracking Objects and People,” which duly
and legally issued on November 25, 2014.

(Id. at ¶¶ 16 & 18-21). The Patents-in-Suit are directed to “processes and systems
that permit identification, tracking, location, and/or surveillance of tagged objects
anywhere in a facility or area.” (Id. at ¶ 14). These processes and systems seek to
“integrate new RFID [(Radio-Frequency Identification)] technology into the[]
manual processes [of inventory control].” (Id. at ¶¶ 11-12). ATS is “the assignee
and owner of the right, title and interest in and to” the Patents-in-Suit, “including

2

the right to assert all causes of action arising under said patents and the right to any
remedies for infringement of them.” (Id. at ¶ 22).
ATS alleges that Defendant The Coca-Cola Company (“Coca-Cola”) has an
exclusive licensing relationship with “ValidFill LLC related to ValidFill LLC’s
RFID beverage dispensing technology” for use in “Coca-Cola Freestyle beverage
service machines.” (Id. at ¶ 8). Coca-Cola allegedly, in violation of 35 U.S.C.
§ 271(a), “directly infringe[s], both literally and under the doctrine of equivalents,”
the Patents-in-Suit by “using RFID to monitor and track cartridges installed within
the Freestyle beverage dispenser[s].” (Id. at ¶¶ 25, 29, 33 & 37).
B.

Procedural History

On March 9, 2015, ATS filed this patent infringement action against
Coca-Cola in the Eastern District of Virginia. (See Original Compl. [1]). On
June 22, 2015, ATS filed its Amended Complaint.1 In the Amended Complaint,
ATS seeks relief against Coca-Cola, including: (i) adjudication that Coca-Cola has
infringed the Patents-in-Suit, (ii) damages for past and present infringement of the

1

ATS’s complaint included three defendants: ValidFill, LLC, Royal
Caribbean Cruises LTD, and Cola-Cola. ATS and Defendants ValidFill, LLC and
Royal Caribbean Cruises LTD filed a joint motion to dismiss with prejudice under
Fed. R. Civ. P. 41(a)(2). (See [52]). The claims and counterclaims between these
parties were dismissed with prejudice before this case transferred to this district.
(See Order [53]). Only Coca-Cola remains in this pending action.
3

Patents-in-Suit, both literally and under the doctrine of equivalents, and (iii) a
royalty for any continued infringement of the Patents-in-Suit. (See Am. Compl.
[33] ¶¶ a-c, at 9). On July 6, 2015, Coca-Cola filed its Answer [38], asserting at
least ten different affirmative defenses.
On October 9, 2015, Coca-Cola filed a Motion to Transfer Venue [55]. On
December 15, 2015, the Honorable Henry E. Hudson, United States District Judge
for the Eastern District of Virginia, granted Coca-Cola’s Motion and transferred
the case to the Northern District Of Georgia. (See Mem. Op. [63] and Order [64]).
On April 29, 2016, Coca-Cola filed its Motion. Coca-Cola contends that
“the Patent Act prohibits issuance of a patent directed merely to the automation of
a manual and abstract process . . . through the use of well-known, existing
computerized technology.” (See [70.1] at 2). Coca-Cola asserts that, because the
Patents-in-Suit are “directed to nothing more than an abstract idea,” (id. at 1),
“implemented with generic components, using existing and conventional RFID
technology,” (id. at 2-3), the Patents-in-Suit are “invalid under 35 U.S.C. § 101,”
(id. at 1). Coca-Cola asks the Court to find the claimed processes and systems as

4

patent-ineligible under Section 101 of the Patent Act and grant it judgment on the
pleadings.2
On May 20, 2016, ATS filed its Opposition to Defendant’s Motion for
Judgment on the Pleadings [74] (“Opposition”), contending that Coca-Cola
“misapplies” the test for determining patent eligibility set forth by the Supreme
Court. (See Opp’n [74] at 1). ATS argues, among other things, that (i) the claims
of the Patents-in-Suit do not recite an abstract idea, (ii) the other elements of the
claims of the Patents-in-Suit present an inventive concept, (iii) the claims of the
Patents-in-Suit do not preempt any purported abstract idea, and (iv) the “machine
or transformation” test confirms patent-eligibility. (See generally, id.).
On June 17, 2016, Coca-Cola filed its Reply Brief in Support of Its Motion
for Judgment on the Pleadings [77] (“Reply”). Coca-Cola argues that ATS’s
arguments “mischaracterize[] the scope of the claimed invention and the
controlling precedent concerning patent eligibility.” (See Reply [77] at 1).
The parties filed a series of notices of supplemental authority to inform the
Court of recent Federal Circuit decisions interpreting Section 101. On
August 5, 2016, Coca-Cola filed its notice of supplemental authority [78],
2

On April 29, 2016, Coca-Cola also filed a Motion for Oral Argument [71].
The Court determines that oral argument is unnecessary so the motion is denied.
5

informing the Court of the Federal Circuit’s decision in Electric Power Group,
LLC v. Alstom S.A., 830 F.3d 1350 (Fed. Cir. Aug. 1, 2016). Coca-Cola explains
that the Federal Circuit “affirmed that claims directed to methods for ‘detecting
events on an interconnected electric power grid in real time’ were invalid for
claiming patent ineligible subject matter.” (See Def.’s Notice [78] at 1). On
August 12, 2016, ATS filed its notice of supplemental authority [79]. In ATS’s
notice, ATS first argues that Coca-Cola “mischaracterizes” the Electric Power
decision. (See Pl.’s Notice [79] at 1). ATS next contends that the Federal
Circuit’s recent decision in Bascom Global Internet Services, Inc. v. AT&T
Mobility LLC, 827 F.3d 1341 (Fed. Cir. June 27, 2016), “is far more relevant to
this case.” (Id. at 2).
C.

Patents-In-Suit

The Patents-in-Suit are all titled “Method and Apparatus for Tracking
Objects and People” and share a common specification.3 The claimed invention as
disclosed in the Patents-in-Suit “relates generally to object or asset locating,
tracking, and surveillance, and, more particularly to a method and apparatus for
locating, identifying, tracking, and surveillance of physical objects and evidence in

3

For ease of reference, the Court will refer to the specification of the
’089 Patent.
6

environments such as police departments, law offices, and the Courts.”
(’089 Patent [70.4] at 1:17-22).
As way of background, the specification of the Patents-in-Suit explains that
“[t]he systems in use [at the time of the invention] for handling physical evidence
range[d] from honor systems and hand-written entries in logs to the more
sophisticated bar code systems.”4 (Id. at 1:33-35). These prior art “systems for
tracking objects” had “significant” problems and were “inadequate.” (Id. at
1:39-40 & 2:11). Accordingly, the specification explains that there was a need “to
reduce human responsibility in locating, tracking, and surveillance of physical
evidence”; a need “for an automatic locating and tracking system for managing
evidence”; and a need of “better ways of locating, tracking and retrieving evidence
years later.” (Id. at 1:48-49, 1:63-64 & 2:9-10).
“The invention [claimed in the Patents-in-Suit] solves the problems and
overcomes the drawbacks and deficiencies of prior art systems” by employing
certain computerized technologies. (Id. at 2:46-54). For example, the invention
may “employ[] radio frequency identification (RFID) technology, computer
programming and database applications, networking technologies, and hardware
4

ATS asserts that “[i]nventory control was conventionally performed
primarily by hand or not at all.” (Am. Compl. [33] ¶ 11).
7

elements for locating, identifying, tracking, and surveillance of objects.” (Id. at
2:46-50). “Alternatively, the present invention may employ laser and/or infrared
technology, computer programming and database applications, networking
technologies, and hardware elements for locating, identifying, tracking, and
surveillance of objects.” (Id. at 2:50-54). The invention may be “used to locate
and track” objects “in near-real time,” and “may be configured as part of a local
area network, a wide area network, or the Internet.” (Id. at 2:58 & 61-62).
The specification explains that a “simple RFID system may be composed of
three components: a scanner, a transponder, and a computer.” (Id. at 3:10-12).
The system “may further include a plurality of transponders, scanners and
antennas,” “at least one application server for processing the data and being
logically connectable to the scanner, at least one user terminal and workstation for
inputting the data into the system, and at least one database server for managing
and storing the data in an enterprise database.” (Id. at 4:16-22).
II.

DISCUSSION
A.

Legal Standard for Judgment on the Pleadings

“Judgment on the pleadings is appropriate where there are no material facts
in dispute and the moving party is entitled to judgment as a matter of law.”
Cannon v. City of West Palm Beach, 250 F.3d 1299, 1301 (11th Cir. 2001).
8

Motions for judgment on the pleadings based on allegations of a failure to state a
claim are evaluated using the same standard as a Rule 12(b)(6) motion to dismiss.
See Sampson v. Washington Mut. Bank, 453 F. App’x 863, 865 n.2 (11th Cir.
2011); Strategic Income Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 305 F.3d
1293, 1295 n.8 (11th Cir. 2002); Provident Mut. Life Ins. Co. of Phila. v. City of
Atlanta, 864 F. Supp. 1274, 1278 (N.D. Ga. 1994) (“A motion for judgment on the
pleadings is subject to the same standard as is a Rule 12(b)(6) motion to dismiss.”).
Dismissal of a complaint, pursuant to Rule 12(b)(6), is appropriate “when,
on the basis of a dispositive issue of law, no construction of the factual allegations
will support the cause of action.” Marshall Cnty. Bd. of Educ. v. Marshall Cnty.
Gas Dist., 992 F.2d 1171, 1174 (11th Cir. 1993). In considering a motion to
dismiss, the Court accepts the plaintiff’s allegations as true and considers the
allegations in the complaint in the light most favorable to the plaintiff. See
Hishon v. King & Spalding, 467 U.S. 69, 73 (1984); Watts v. Fla. Int’l Univ.,
495 F.3d 1289, 1295 (11th Cir. 2007); see also Bryant v. Avado Brands, Inc.,
187 F.3d 1271, 1273 n.1 (11th Cir. 1999). The Court is not required to accept a
plaintiff’s legal conclusions as true. See Sinaltrainal v. Coca-Cola Co., 578 F.3d
1252, 1260 (11th Cir. 2009) (citing Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)),
abrogated on other grounds by Mohamad v. Palestinian Auth., — U.S. —, 132
9

S. Ct. 1702 (2012). The Court also will not “accept as true a legal conclusion
couched as a factual allegation.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007). The complaint, ultimately, is required to contain “enough facts to state
a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570.
To state a plausible claim for relief, the plaintiff must plead factual content
that “allows the Court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S. at 678. “Plausibility” requires more
than a “sheer possibility that a defendant has acted unlawfully,” and a complaint
that alleges facts that are “merely consistent with” liability “stops short of the line
between possibility and plausibility of ‘entitlement to relief.’” Id. (citing
Twombly, 550 U.S. at 557); see also Arthur v. JP Morgan Chase Bank, NA, 569
F. App’x 669, 680 (11th Cir. 2014) (noting that Conley’s “no set of facts” standard
has been overruled by Twombly, and a complaint must contain “sufficient factual
matter, accepted as true, to state a claim for relief that is plausible on its face.”).
“A complaint is insufficient if it ‘tenders naked assertions devoid of further factual
enhancement.’” Tropic Ocean Airways, Inc. v. Floyd, 598 F. App’x 608, 609
(11th Cir. 2014) (quoting Iqbal, 556 U.S. at 678).
“To survive a motion to dismiss, plaintiffs must do more than merely state
legal conclusions; they are required to allege some specific factual bases for those
10

conclusions or face dismissal of their claims.” Jackson v. BellSouth Telecomms.,
372 F.3d 1250, 1263 (11th Cir. 2004); see also White v. Bank of America, NA,
597 F. App’x 1015, 1017 (11th Cir. 2014) (“[C]onclusory allegations, unwarranted
deductions of facts or legal conclusions masquerading as facts will not prevent
dismissal.”) (quoting Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188
(11th Cir. 2002)).5
B.

Framework for Determining Patent-Eligible Subject Matter

Section 101 of the Patent Act defines patentable subject matter:
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 “long held that this provision contains an
important implicit exception: Laws of nature, natural phenomena, and abstract
ideas are not patentable.” Ass’n for Molecular Pathology v. Myriad Genetics, Inc.,
— U.S. —, 133 S. Ct. 2107, 2116 (2013) (quoting Mayo Collaborative Servs.
v. Prometheus Labs., Inc., — U.S. —, 132 S. Ct. 1289, 1293 (2012) (internal
5

Federal Rule of Civil Procedure 8(a)(2) requires the plaintiff to state “a short
and plain statement of the claim showing that the pleader is entitled to relief.”
Fed. R. Civ. P. 8(a)(2). In Twombly, the Supreme Court recognized the liberal
minimal standards imposed by Federal Rule 8(a)(2) but also acknowledged that
“[f]actual allegations must be enough to raise a right to relief above the speculative
level . . . .” Twombly, 550 U.S. at 555.
11

brackets omitted)). “Patent eligibility under 35 U.S.C. § 101 is an issue of
law . . . .” OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362 (Fed. Cir.
2015). The Section 101 inquiry provides “a basis for a patentability/validity
determination that is independent of—and on an equal footing with—any other
statutory patentability provision.”6 Bascom, 827 F.3d at 1347 (citation omitted).
“Courts may therefore dispose of patent-infringement claims under § 101
whenever procedurally appropriate.” Id. at 1347 (citation omitted); see also OIP
Tech., 788 F.3d at 1364 (Mayer, J., concurring) (encouraging district courts to
resolve patent eligibility “at the first opportunity” because “[a]ddressing 35 U.S.C.
§ 101 at the outset” of litigation “conserves scarce judicial resources.”).
In Mayo, the Supreme Court faced the question whether specific processes
that helped doctors to determine the proper dosage level of a particular drug were
patentable. Mayo at 132 S. Ct. at 1294. The Supreme Court considered the
patents-in-question and determined that the patents set forth laws of nature or
natural relations. Id. at 1296-97. After concluding that the patents were directed to
6

The Supreme Court characterizes the § 101 patent-eligibility inquiry as “a
threshold test.” Bilski v. Kappos, 561 U.S. 593, 602 (2010). Even if an invention
qualifies as patent eligible under § 101, “the claimed invention must also satisfy
‘the conditions and requirements of this title,’” including “that the invention be
novel, see § 102, nonobvious, see § 103, and fully and particularly described, see
§ 112.” Id.
12

patent-ineligible subject matter, the Court next considered whether the patent
claims were “sufficient to transform unpatentable natural correlations into
patentable applications of those regularities.” Id. at 1298. Mayo “set[s] forth a
framework for distinguishing patents that claim laws of nature, natural phenomena,
and abstract ideas from those that claim patent-eligible applications of those
concepts.” Alice Corp. Pty. v. CLS Bank Int’l, — U.S. —, 134 S. Ct. 2347, 2355
(2014) (citing Mayo, 132 S. Ct. 1289 (2012)). Alice extended Mayo’s two-step
analytical framework to abstract ideas.
Under the Mayo/Alice framework, the first step is to “determine whether the
claims at issue are directed to one of those patent-ineligible concepts.”
DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1255 (Fed. Cir. 2014)
(citing Alice, 134 S. Ct. at 2355). The “directed to” inquiry “applies a stage-one
filter to claims, considered in light of the specification, based on whether ‘their
character as a whole is directed to excluded subject matter.’” Enfish, LLC
v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016) (citation omitted).
If the claims are directed to a patent-ineligible concept, the analysis proceeds
to the second step of the Mayo/Alice framework. During this second step, courts
must “consider the elements of each claim—both individually and as an ordered
combination—to determine whether the additional elements transform the nature
13

of the claim into a patent-eligible application of that abstract idea.” DDR
Holdings, 773 F.3d at 1255 (citing Alice, 134 S. Ct. at 2355). “This second step is
the search for an ‘inventive concept,’ or some element or combination of elements
sufficient to ensure that the claim in practice amounts to ‘significantly more’ than a
patent on an ineligible concept.” Id.
Although the Supreme Court did not “delimit the precise contours of the
‘abstract ideas’ category” in Alice, the Supreme Court and the Federal Circuit have
provided some important guiding principles. See Alice, 134 S. Ct. at 2357; DDR
Holdings, 773 F.3d at 1256. First, mathematical algorithms or formulas, if
executed on a generic computer, are abstract ideas. DDR Holdings, 773 F.3d at
1256; Enfish, 822 F. 3d at 1338. Second, some fundamental economic and
conventional business practices, if performed on a generic computer, are also
abstract ideas. DDR Holdings, 773 F.3d at 1256. Third, longstanding, well-known
methods of organizing human behavior are also abstract ideas. Bascom, 827 F.3d
at 1348. Fourth, manipulating information—collecting information, analyzing
information, or presenting information—without more, is also an abstract idea.
Elec. Power Grp., 830 F.3d at 1354.
Since Alice, the Federal Circuit has identified two instances where the
challenged claims are not directed to patent-ineligible concepts under step one.
14

The Federal Circuit, in Enfish, found that “the plain focus of the claims is on an
improvement to computer functionality itself, not on economic or other tasks for
which a computer is used in its ordinary capacity.”7 Enfish, 822 F.3d at 1337. The
Federal Circuit determined that the district court oversimplified the claims by
concluding that “the claims were directed to the abstract idea of ‘storing,
organizing, and retrieving memory in a logical table’ or, more simply, the concept
of organizing information using tabular formats.” Id. In rejecting the district
court’s conclusion, the Federal Circuit cautioned against oversimplifying the
claims by “describing the claims at such a high level of abstraction and untethered
from the language of the claims.” Id.
In McRo, Inc. v. Bandai Namco Games America Inc., the Federal Circuit,
like in Enfish, found that the claims in that case were not directed to ineligible
subject matter under step one. McRo, Inc. v. Bandai Namco Games Am. Inc., 837
F.3d 1299 (Fed. Cir. Sept. 13, 2016). In McRo, the court also looked at the
elements of the claim as “an ordered combination” and found that the claim
7

According to the Federal Circuit, the claimed invention had three key
distinctions: (i) the claims were “not simply directed to any form of storing tabular
data, but instead are specifically directed to a self-referential table for a computer
database”; (ii) the specification taught that “the self-referential table functions
differently than conventional database structures”; and (iii) the claimed invention
achieved “benefits over conventional databases, such as increased flexibility, faster
search times, and smaller memory requirements.” Id.
15

“focused on a specific asserted improvement in computer animation, i.e., the
automatic use of rules of a particular type.”8 Id. at 1314. The Federal Circuit
determined that the incorporation of specific claimed rules improved the existing
technological process. Id.
In Enfish and McRo, the Federal Circuit found claim language reciting
“specific improvements” that helped it determine in step one that the claims are not
directed to abstract ideas. “[S]ome inventions’ basic thrust might more easily be
understood as directed to an abstract idea,” so the search for specific improvements
in the recited computer technology could also take place under step two.
DDR Holdings, 773 F.3d at 1348. The Federal Circuit took this step-two analysis
in DDR Holdings and Bascom. In DDR Holdings, the Federal Circuit found that
the claims “do not broadly and generically claim ‘use of the Internet’ to perform an
abstract business practice (with insignificant added activity).”9 Id. at 1258. The
Federal Circuit observed that the claims do not merely perform on the Internet
“some business practice known from the pre-Internet world.” Id. at 1257. The
8

The Federal Circuit noted that the task previously performed by humans,
“even if automated by rules, would not be within the scope of the claims.”
9
The Federal Circuit found several distinctions: (i) the claims specified “how
interactions with the Internet are manipulated to yield [an unconventional] result”;
(ii) the claimed invention caused the computer network to operate in a way that is
not “its normal, expected manner”; and (iii) “the claims at issue do not attempt to
preempt every application of the idea.” Id. at 1258-1259.
16

DDR Holdings court instead 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 Bascom, the Federal Circuit found that “the limitations of the claims,
taken individually, recite generic computer, network and Internet components,
none of which is inventive by itself.” See Bascom, 827 F.3d at 1349. The Federal
Circuit found, however, that “an inventive concept can be found in the nonconventional and non-generic arrangement of known, conventional pieces.”10 Id.
at 1350. Even if filtering content is an abstract idea, the Court held that the claims
recite a specific non-conventional implementation of the network technology. The
Court now applies this analytical framework and authorities to the Patents-in-Suit
in this litigation.
C.

Analysis
1.

Representative Claims

In a § 101 analysis, courts may evaluate representative claims to determine
whether the claims are “substantially similar and linked to the same abstract idea.”

10

The Court determined that the specific method of filtering Internet content
“by associating individual accounts with their own filter scheme” and “locating the
filtering system on an ISP server” “cannot be said, as a matter of law, to have been
conventional or generic.” Id.
17

See Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass’n, 776
F.3d 1343, 1348 (Fed. Cir. 2014). Coca-Cola contends that “[e]very asserted claim
recites generic RFID components and/or generic computer hardware.” ([70.2] at
5). Coca-Cola identifies claim 49 of the ’089 Patent as the representative claim for
both ’089 and ’013 Patents, (id. at 6), and claim 1 of the ’766 Patent as the
representative claim for both ’766 and ’499 Patents, (id. at 9). ATS identifies a
representative claim for each of the Patents-in-Suit. ATS argues that claim 49 of
the ’089 Patent, claim 1 of the ’766 Patent, claim 1 of the ’013 Patent, and claim 1
of the ’449 Patent are all representative.11 (See [74] at 15-18). Having reviewed
the asserted claims, the Court finds that claim 49 of the ’089 Patent is
representative for both ’089 and ’013 Patents, and claim 1 of the ’766 Patent is
representative for both ’766 and ’499 Patents.
The asserted claims of the ’089 and ’013 Patents are substantially similar.
Representative claim 49 of the ’089 Patent recites:
A system for locating, identifying, and/or tracking of at least one
object, said system comprising:
a transponder affixable to the object, the transponder associated
with a transponder identification (ID);
11

Coca-Cola does not actively dispute that these claims are representative for
each respective patent, (see [70.2] at 6, 8-9 & 11), but proposes to eliminate
representative claim redundancy.
18

a reader for detecting a transponder ID;
an antenna for communicating radio frequency (RF) signals
between said reader and said transponder, the RF signals including the
transponder ID;
a storage device for storing known transponder IDs and
detection information associated with the stored known transponder
IDs, wherein the detection information indicates whether the stored
known transponder ID has been previously detected by the system;
and
a processor for comparing the known transponder IDs stored in
said storage device with the detected transponder ID, and determining
whether the detected transponder ID is a detected known transponder
ID based on the comparison of the known transponder IDs with the
detected transponder ID.
(’089 Patent [70.4] at 30:15-33). The first half of the claim recites RFID
components: a transponder, a reader, and an antenna; the second half of the claim
recites a computer: a storage device and a processor. (See id. at Abstract (“[The
system] may employ exemplary components such as RFID transponders or tags,
scanners, antennas and computers to facilitate tacking of objects and people as
needed.”)). Claim 1 of the ’013 Patent is substantially similar. (’013 Patent [70.5]
at 20:59-21:6). It is directed to a system for locating, identifying, and/or tracking a
“transponder,” and it comprises similar computer hardware performing the same
“storing,” “comparing,” and “determining” functions. (Id.). Claim 1 of the ’013
Patent, however, omits the “reader” and “antenna” elements. (Id.).
19

The asserted claims of the ’766 and ’449 Patents are likewise substantially
similar. Representative claim 1 of the ’766 Patent recites:
A system for locating, identifying and/or tracking of an object,
the system comprising:
a first transponder associated with the object;
a reader that is configured to receive first transponder data via a
radio frequency (RF) signal from the first transponder;
an antenna in communication with the reader and having a first
coverage area;
a processor coupled to the reader, wherein the processor is
configured to receive the first transponder data from the reader, to
generate detection information based on the received first transponder
data, the detection information comprising first sighting and last
sighting of the first transponder in the first coverage area, and to use
the last sighting of the first transponder to determine whether the first
transponder is dwelling in the first coverage area; and
a storage device that is configured to store the detection
information.
(’766 Patent Reexam. Cert. [70.6] at 1:18-2:11). Claim 1 of the ’449 Patent is
substantially similar, except that it is directed to an RFID system comprising a
processor that performs similar function to “receive” data and “generate” detection
information. (’449 Patent [70.7] at 20:58-63). For the purposes of its Section 101
analysis, the Court focuses on the two representative claims.

20

2.

Step One

The first step of the Mayo/Alice analysis asks whether the claims at issue are
directed to one of those patent-ineligible concepts, such as an abstract idea.
Coca-Cola contends that the claims are directed to the abstract idea of “locating,
identifying, and/or tracking objects.” ([70.2] at 14). According to Coca-Cola, this
abstract idea of “locating, identifying, and/or tracking objects” is “without question
a ‘method of organizing human activity’ that has long been prevalent in our system
of commerce.” (Id. at 15).
ATS argues that the Patents-in-Suit are not directed to any abstract ideas
because, as ATS explains, “the claims are defined by reference to physical
components.” (Pl.’s Opp’n at 12). According to ATS, because all of the asserted
claims “require specialized physical hardware components as well as software,”
the hardware elements necessarily make the claims “in better standing than those
found eligible in Enfish.” (Id.). ATS further questions “how a human could
achieve the claimed system,” asserting that this question of fact precludes
judgment on the pleadings. (Id. at 14).
Courts are instructed to consider the claims “in light of the specification,
based on whether ‘their character as a whole is directed to excluded subject
matter.’” Enfish, 822 F.3d at 1335. In determining whether the claims are directed
21

to an abstract idea, courts 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.’” Alice, 134 S. Ct. at
2354 (citing Mayo, 132 S. Ct. at 1293)).
On its face, representative claim 49 of the ’089 Patent and representative
claim 1 of the ’766 Patent are directed to systems “for locating, identifying and/or
tracking of” an object.12 (’089 Patent at 30:15; ’766 Patent Reexam. Cert. at 1:23).
Both claims recite a set of RFID-related components, such as “a transponder,” “a
reader,” and “an antenna,” and a computer having software. In representative
claim 49 of the ’089 Patent, the computer performs the functions of “storing
known transponder IDs and detection information,” “comparing the known
transponder IDs with the detected transponder ID,” and “determining whether the
detected transponder ID is a detected known transponder ID.” In representative
claim 1 of the ’766 Patent, the computer is configured to “receive the first
transponder data,” “generate detection information,” and “determine whether the
first transponder” has “not mov[ed] for a period of time,” and “store the detection
information.”
12

The Court has not construed the terms of the Patents-in-Suit. For the
purposes of this Order, the Court construes the terms in favor of the nonmovant
ATS and uses ATS’s proposed constructions. (See [70.8]).
22

The specification describes the background of the invention as related to
“locating and tracking” objects. (’089 Patent at 1:15-2:22). Stated another way—
as defined in ATS’s own complaint—the invention is directed to “inventory
control.” (Am. Compl. at ¶ 11). The specification states that the prior art systems
at that time had significant drawbacks13 and that the claimed invention “reduces
human responsibility” and provides “an automatic locating and tracking system”
for inventory control. (See ’089 Patent at 1:48 & 63).
Viewing the claims in light of the specification, the Court finds that the
representative claims are directed to abstract ideas. The focus of the claims, as
illustrated by the two representative claims above, is on collecting data, analyzing
it, and determining the results based on the analysis of data. The Court finds that
the claims are similar to those asserted claims in Electric Power. See generally
Elec. Power Grp., 830 F.3d 1350.
ATS’s argument that the claims require “specialized physical hardware
components as well as software” does not change the abstract idea in the claims.
Not every claim reciting “concrete, tangible components escapes the reach of the
abstract-idea inquiry.” In re TLI Commc’ns LLC Patent Litig., 823 F.3d 607, 611
13

The Amended Complaint also states that because of the prior art system,
“business often faced significant shrinkage of inventory and increased labor costs
as employees searched for missing items.” ([33] at ¶ 11).
23

(Fed. Cir. 2016) (claims reciting “a telephone unit” and a “server” are nonetheless
directed to an abstract idea); see also Content Extraction, 776 F. 3d at 1347 (claims
reciting a “scanner” are directed to an abstract idea); Mortg. Grader, Inc. v. First
Choice Loan Serv. Inc., 811 F.3d 1314, 1324–25 (Fed. Cir. 2016) (claims reciting
an “interface,” “network,” and a “database” are also directed to an abstract idea).
While both representative claims require physical components—the RFID
“transponder,” “reader,” and “antenna”—the specification makes clear that the
recited physical components merely provide “an environment in which to carry out
the abstract idea.” See In re TLI, 823 F.3d at 611; see also ’089 Patent at 2:45-54
(“The present invention . . . employ[s] radio frequency identification (RFID)
technology” or alternatively, “laser and/or infrared technology.”). These RFID
components recited in the claims are tools used to collect data.14 “[C]ollecting
information, including when limited to particular content (which does not change
its character as information),” is within the realm of abstract ideas. Elec. Power
Grp., 830 F.3d at 1353.
The Court’s conclusion is further supported by Enfish. In Enfish, the
Federal Circuit considered “whether the focus of the claims is on the specific
14

According to the specification, when the “transponder” is “detected by the
system,” “[d]ata may be transmitted to the main computer and the system’s
back-end processing may then initiate.” (’089 Patent at 3:54-55).
24

asserted improvement in computer capabilities . . . or, instead, on a process that
qualifies as an ‘abstract idea’ for which computers are invoked merely as a tool.”
Enfish, 822 F.3d at 1335. The Court does not find any specific purported
improvement in computer capabilities in ATS’s Amended Complaint or in the
specification of the Patents-in-Suit.15 Contrary to ATS’s argument that “the focus
of the claims is on a specific improvement to the way an RFID system operates,”16
([74] at 14-15), the claims are not directed to a specific improvement to computer
functionality, or even to RFID systems. According to the specification, the
problem facing the inventor was not, as ATS now asserts, related to RFID
drawbacks and deficiencies.17 Instead, the inventor sought to “reduce human
responsibility” by providing an “automatic” process of inventory management.
(See ’089 Patent at 1:34-35, 48 & 63; Am. Compl. ¶ 12). RFID technology was
15

ATS’s post hoc attempt to create support in the specification is disingenuous
and not supportable. ATS asserts that the specification of the ’089 Patent supports
the notion that “[t]raditional system of the time” included “hand-written logs, bar
code systems, and traditional RFID systems.” ([74] at 5 (emphasis added)). The
language of the specification, however, shows that the “systems in use [at that
time] . . . ranged from honor systems and hand-written entries in logs to the more
sophisticated bar code systems.” (’089 Patent at 1:33-35).
16
ATS contends, without any support, that the invention was “an improvement
on previous RFID systems that was not well-known, routine, or conventional.”
(See [74] at 15-18).
17
For example, the inventor was not faced with the problem of improving the
RFID reader to increase its ability to detect a transponder, or improving the
antenna to enhance communication of radio frequency.
25

merely “employed” as one possible option; other options such as employing laser
or infrared technologies were also possible. (See ’089 Patent at 2:45-47 & 50-51).
The specification does not address how the RFID technology itself is improved: it
does not describe a new or improved RFID transponder, a new or improved RFID
reader, or a new or improved RFID antenna. Nor does the specification describe
any “specific improvement to the way computers operate.” Enfish, 822 F.3d at
1336. In Enfish, “the plain focus of the claims is on an improvement to computer
functionality itself.” Id. at 1336. Here, the focus of the claims is on certain
abstract process for which computers are invoked merely as a means to achieve the
ends. While the RFID technology employed by the invention was a rapidly
developing technology at the time of the invention, the use of a conventional or
generic computer in a nascent environment does not make the claims any less
abstract.
3.

Step Two

Having found that the representative claims are directed to an abstract idea,
the Court turns to step two of the Mayo/Alice inquiry to consider the elements of
each claim. Step two is a search for an “inventive concept” or for “any additional
elements that transform the nature of the claim into a patent-eligible application of
that abstract idea.” DDR Holdings, 773 F.3d at 1255 (citing Alice, 134 S. Ct. at
26

2355). Here, the Court must look at the elements of each claim—both individually
and as an ordered combination. Id.
Looking at the elements individually, the Court finds that elements of the
claims recite generic computer and RFID components. As discussed above, the
“processor” and “storage device” elements recite a generic computer, and the
“transponder,” “reader,” and “antenna” elements recite generic RFID technology.
Taking these elements individually, the Court does not find any “inventive
concept” significantly more than the abstract idea itself or any additional elements
that transform the abstract idea into a patent-eligible invention.
The question then is whether an inventive concept can be found when
viewing the elements as an ordered combination. An inventive concept “can be
found in the non-conventional and non-generic arrangement of known,
conventional pieces.” Bascom, 827 F.3d at 1350. The Court looks at the claims
as an ordered combination and considers whether each representative claim
contains a combination of elements sufficient to ensure that the claim amounts to
“significantly more” than a patent on the abstract idea. The Court finds they do
not.
The representative claims are directed to a specific inventory management
process. This process begins with the RFID devices collecting certain data. In
27

representative claim 49 of the ’089 Patent, the system collects “transponder ID”;
and in representative claim 1 of the ’766 Patent, the system collects “transponder
data.” The data is then “transmitted to the main computer” to initiate “back-end
processing.” (’089 Patent at 3:54-55). On the backend, the main computer (that is,
the “storage device” and “processor”) has stored certain known information such
as “known transponder IDs” and “detection information.”
In representative claim 49 of the ’089 Patent, the system next compares the
data collected from the transponder with the known information. Through this
comparison, the system determines if the detected data matches the known
information. (See ’089 Patent at 30:60-63 (claim 55)).
In representative claim 1 of the ’766 Patent, the system first receives the data
collected from the transponder. Based on the data received, the system generates
specific detection information, which is stored in the computer, including the first
detection of the transponder and the most recent detection of the transponder.
Using the most recent detection of the transponder, the system then determines
whether the transponder has “not mov[ed] for a period of time.” (See [70.8]).
“The concept of data collection, recognition, and storage is undisputedly
well-known. Indeed, humans have always performed these functions.” Content
Extraction, 776 F.3d at 1347; see also Elec. Power Grp., 830 F.3d at 1354 (treating
28

“analyzing information by steps people go through in their minds, or by
mathematical algorithms, without more, as essentially mental processes within the
abstract-idea category”). The steps of comparing data with known information,
generating information related to first and most recent detection, and determining
information based on the first and most recent detection, fall into the category of
“manipulation of information,” which “by itself does not transform the otherwiseabstract processes of information collection and analysis.” Elec. Power Grp.,
830 F.3d at 1355.
The claims at issue here are different from the claims at issue in DDR
Holding and in Bascom.18 The claims here do not require modification of the
routine and conventional use of the RFID devices and computer. They also do not
use these generic components in a non-conventional combination or arrangement.
They merely disclose collecting data from a particular source, RFID transponders,
and analyzing the data. Viewed individually or as an ordered combination, the
claims do not contain an inventive concept.

18

In DDR Holding, the Federal Circuit found an inventive concept in
modifying the routine and conventional computer network in a manner that
produced a hybrid web page. In Bascom, the Federal Circuit found sufficient
inventive concept in the non-conventional distribution of functionality within a
network to perform the known concept of filtering content.
29

III.

CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that Defendant The Coca-Cola Company’s

Motion for Judgment on the Pleadings [70] is GRANTED.
IT IS FURTHER ORDERED that Defendant The Coca-Cola Company’s
Motion for Oral Argument [71] is DENIED.

SO ORDERED this 21st day of December, 2016.

30