JDS Technologies, Inc. v. Exacq Technologies, Inc.
Filing
49
MEMORANDUM AND ORDER denying 16 Motion to Dismiss. Signed by District Judge Avern Cohn. (MVer)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
JDS TECHNOLOGIES, INC.,
a Michigan corporation,
Plaintiff,
vs.
Case No. 15-10387
EXACQ TECHNOLOGIES,
HON. AVERN COHN
Defendant.
__________________________________/
MEMORANDUM AND ORDER DENYING DEFENDANT’S MOTION TO DISMISS
(Doc. 16)
TABLE OF CONTENTS
I.
Introduction
1
II.
Background
3
A.
The JDS Patents in General
3
B.
The Paradigm Claim
5
C.
JDS’s Description of the Patents and Invention
6
III.
Motion to Dismiss
9
IV.
Analysis
9
A.
Abstract Idea
10
1.
Parties’ Arguments
10
2.
Discussion
11
Inventive Concept
16
B.
V.
Conclusion
17
i
I. Introduction
This is a patent case. Plaintiff JDS Technologies, Inc. (JDS) is suing defendant
Exacq Technologies, Inc. (Exacq) claiming infringement of two patents: U.S. Patent
Nos. 6,891,566 (“the ’566 patent”) and 8,185,964 (“the ’964 patent”) (collectively, “the
JDS patents”). The JDS patents issued in 2005 and 2012. Both patents are identically
titled, “Digital Video System Using Networked Cameras” and relate to software used for
video surveillance systems. Each shares a common specification and claim priority
directly or indirectly to a U.S. provisional patent application filed in 2000.
According to JDS, the patents are directed at protecting against the unauthorized
use of the video surveillance software, i.e. piracy, though the use of a Media Access
Control (MAC) address, which is a unique address assigned to each computer. The
patented technology uses MAC addresses to control which computers have access to
the video surveillance software.
Exacq disputes this characterization of the patented technology, contending that
the patents never mention “unauthorized use” or piracy. Exacq instead says that they
are “directed to software that provides for the accessing and displaying of camera
images.” (Doc. 1, Complaint at ¶ 1). Exacq further says that the use of the MAC
addresses, which is the “validation” step in the patents, is a generic and conventional
way for computers to identify and communicate with other devices and therefore not
patent eligible.
Before the Court is JDS’s motion to dismiss under Fed. R. Civ. P. 12(b)(6) on the
grounds that the asserted claims in each patent are invalid under 35 U.S.C. § 101 in
light of the Supreme Court’s decision in Alice Corp. Pty. Ltd. v. CLS Bank International,
1
134 S. Ct. 2347 (2014). Essentially, Exacq says that the patents claim nothing more
than an abstract idea—monitoring images from multiple video cameras from a single
location—and the use of the MAC addresses as part of the licensing process is not an
inventive concept but simply a conventional step in computing.
This motion is part of a growing trend in federal district courts and the Court of
Appeals for the Federal Circuit addressing a section 101 challenge to a software patent
based on the Supreme Court’s decision in Alice.
The motion is fully briefed. The motion papers are voluminous and comprise the
following:
Doc. 16 - Exacq’s Motion and Brief
Doc. 20 - JDS’s Response and Brief
Doc. 22 - Exacq’s Reply
Doc. 28 - JDS’s Surreply
Doc. 29 - Exacq’s Notice of Supplemental Authority
Doc. 31 - Exacq’s Notice of Pertinent Authorities
Doc. 32 - JDS’s Supplemental Submission1
Doc. 34 - Exacq’s Response to JDS’s Supplemental Submission
Doc. 37 - JDS’s Notice of Filing Declaration of C. Douglas Locke, Ph.D.
Doc. 42 - JDS’s Supplemental Submission on Patent Eligibility2
Doc. 43 - Exacq’s Response to JDS’s Second Supplemental Brief
Doc. 44 - Exacq’s Notice of Supplemental Authority
Doc. 45 - Exacq’s Notice of Supplemental Authority
Doc. 46 - Exacq’s Notice of Inter Partes Review3
Doc. 47 - JDS’s Notice of Supplemental Authority
Doc. 48 - Exacq’s Response to JDS’s Notice of Supplemental Authority
1
Docs. 32, 34, and 37 were filed following a tutorial. Docs. 36 and 39 contain
JDS’s tutorial materials. Doc. 40 contains Exacq’s tutorial materials.
2
Docs. 42-45 were filed following oral argument.
3
Exacq filed petitions for inter partes review (IPR) challenging the validity of
certain claims in the ‘566 and ‘964 patents. Because IPR petitions do not raise section
101 patent eligibility issues, the Court is going forward with the motion to dismiss.
Additionally, the USPTO has not, to date, agreed to hear the IPR petitions.
2
II. Background
A. The JDS Patents in General
As noted above, the complaint describes the JDS patents as directed to a
relatively basic concept: “the accessing and displaying of camera images.” (Doc. 1,
Complaint at ¶ 12). In looking at the text of the JDS patents, the first sentence of the
specification states that the
invention relates to systems for accessing, recording, and displaying
camera images from any number of remotely located cameras and, more
particularly, to such systems that provide access to images from one or
more remote cameras over a public or private computer network.
(Col. 1 ll. 11-15 (emphasis added)).
The “Background of the Invention” section of the specification acknowledges that
analog and digital video surveillance systems already exist that allowed users to access
and display images from multiple cameras in a single viewing location. (Col. 1 ll. 22-41
(discussing analog-only system using video cables, a monitor/TV, and a multiplexer to
allow “multiple cameras to be hooked to a single recording/view device”); Col. 1 ll. 42-62
(discussing digital systems using similar technologies for viewing multiple cameras from
one location)) According to the specification, these pre-existing analog and digital
systems were problematic because they were expensive, did not necessarily allow for
remote viewing, and required special configurations and skilled technicians to
implement and maintain. (Col. 1 ll. 35-40 (analog-only systems); Col. 1 ll. 55-62 (digital
systems)).
In addition to these systems, the specification also says that “[t]here now exists
commercially available networkable cameras that can be accessed over networks
3
running TCP/IP,4 including both LAN5s and global networks such as the Internet.” (Col.
1 ll. 63-66) “Ethernet-based digital video servers are now common that are small,
autonomous, and usually contain a web-based configuration utility, as well as
administration software.” (Col. 1 l. 66 – col. 2 l. 2) “[T]he video servers (whether
integrated in as part of a camera server or as a standalone unit [which uses a traditional
analog camera]) can be connected to the Ethernet-based networks commonly used in
businesses and other computer enabled sites.” (Col. 2 ll. 17-21) The specification
identifies two existing, commercially-available types of “video servers.” “One is a
camera server that is a complete product containing both a camera and a web server
with an Ethernet port.” (Col. 2 ll. 10-12) “The other is a component based video server
with inputs for one or more analog video feeds, which the user can connect to
conventional camera PAL or NTSC video feeds.” (Col. 2 ll. 12-15)
According to the specification, “[t]hese video servers can be connected to these
network segments and are fully compatible with existing data on these networks.” (Col.
2 ll. 21-23) “The video data can be received by standard PC computers which require
no special hardware other than an Ethernet connection. The cameras can be easily
configured by a novice user who has very basic experience with the Internet.” (Col. 2 ll.
23-27)
Having identified these pre-existing systems and equipment, the JDS patents
4
TCP/IP is an acronym for Transmission Control Protocol/Internet Protocol,
“TCP/IP is the suite of communications protocols used to connect hosts on the Internet.
See http://www.webopedia.com/TERM/T/TCP_IP.html (last visited May 9, 2016).
5
A LAN is commonly known as Local Access Network.
4
describe the invention as follows:
[T]here is provided a digital video system which includes a client
computer, one or more video servers accessible by the client computer
over a network, and a plurality of cameras connected to the video
servers. The one or more video servers provide an interface between the
cameras and client computer, with images from the cameras being
accessed by the video servers and then sent to the client computer upon
request by the client computer. The client computer provides a user
interface display on the computer that includes a display window for
each of the cameras accessed over the network and that displays in each
of the display windows an image received from the camera associated
with that display window.
(Col. 3, ll. 20-33).
The devices that perform these functions are computers, cameras, and
networking equipment. For example, “[t]he cameras . . . that are connected to the video
servers . . . can be industry PAL or NTSC video cameras.” (Col. 5 ll. 19-21) And the
“[c]lient computer . . . can be a conventional personal computer having an Intel™ or
compatible CPU running a Windows™ operating system and including a network
interface card . . . for connecting to the 10/100 Mb Ethernet network . . . that uses the
TCP/IP network protocol.” (Col. 5, 22-26)
Finally, the JDS patents identify six different potential video and camera servers
by way of example only, noting that “other” servers may also be used. (Col. 5 ll. 14-20,
fig. 1) In other words, the “invention” in the JDS patents takes cameras, connects them
to servers on a network, and then accesses those cameras on a computer. Images
from the generic cameras are then output to an unspecified, generic display.
B. The Paradigm Claim
JDS claims that Exacq infringes Claims 1 and 49 of the ‘566 patent and Claim 1
of the ’964 patent. (Doc. 1 at ¶¶ 33, 55, 82, 93, 101, 134, 142, 144, 153) No other
5
patent claims are claimed to be infringed.
Claim 1 of the ’566 patent is the designated representative/paradigm claim. It
reads:
A computer readable medium for use by a computer in providing an
interface to multiple cameras via one or more video servers accessible to
the computer via a network, comprising
a digital storage device;
a user interface program stored on said digital storage device in
computer readable form, said program being operable upon execution
by the computer to access server data uniquely identifying each video
server and to attempt access to the video servers over the network, said
program also being operable to obtain from each of the accessible video
servers a hardware address stored in the video server;
wherein said program is further operable to validate the hardware
addresses received from the video servers using the server data and, for
those video servers having a valid hardware address, said program is
operable to generate a user interface display on the computer that
includes a display window for each of the cameras accessed via the
validated servers over the network and to display in each of the display
windows an image received from the camera associated with that display
window.
(Col. 21 ll. 6-24).
C. JDS’s Description of the Patents and the Invention
In its papers, JDS describes the background leading to the patents as well as
what it says make the patents cover unique subject matter, i.e. patentable. The
background begins with Joseph Marchese, the founder of JDS and inventor of the
patents-in-suit. JDS says that Marchese, as software engineer, knows that piracy of the
software itself is an important issue. JDS goes on to say that Marchese has personal
experience with software piracy when he was a trade show where he learned that his
software was being sold by someone else who previously had access to the software
6
and simply copied it. JDS says that Marchese sought a better solution to software
piracy than those available at the time. JDS describes Marchese’s development of the
process leading to the JDS patents as follows:
In 1999, Marchese developed software for use in the surveillance industry.
Before the software was completed, Marchese implemented a unique anti-piracy
solution. Instead of the software being unprotected from copying, or using “dongles”6 as
taught by the prior art, Marchese, says JDS, went in a completely different direction.
Unlike most persons that developed solutions for software piracy, Marchese
appreciated the benefits that could come from software that could be freely shared with
clients or potential clients. Such persons could install the software on various devices
without restriction and enjoy access to their surveillance system from anywhere. But,
such a benefit could not be achieved with the existing software piracy solutions. To
solve this problem and to provide an improved anti-piracy solution, Marchese developed
de-centralized MAC address licensing to prevent piracy and abuse of his video
surveillance software.
As explained in the patents-in-suit, embodiments of the invention rely on the
software extracting unique numbers, MAC addresses, “from protected areas” of camera
devices and servers that are remotely located from the software. These numbers,
which are only ascertained through “parsing and formatting,” are then tested against
6
A dongle is a small piece of hardware that attaches to a computer, TV, or other
electronic device in order to enable additional functions such as copy protection, audio,
video, games, data, or other services. These services are available only when the
dongle is attached. See https://en.wikipedia.org/wiki/Dongle (Last visited Mar. 29,
2016).
7
known values to validate or approve only certain devices for use with the particular
software. The result is an anti-piracy or licensing technology that is de-centralized and
permits software to be freely distributed, but not abused. This aspect, says JDS, was
revolutionary and is the subject of many of the claims of the patents in suit.
In short, JDS says that the patents cover a method for licensing software which
uses the MAC addresses. Claim 1, with the critical language identified by JDS as
describing this process is highlighted below:
1. A computer readable medium for use by a computer in providing an interface
to multiple cameras via one or more video servers accessible to the computer via
a network, comprising:
a digital storage device;
a user interface program stored on said digital storage device in computer
readable form, said program being operable upon execution by the computer to
access server data uniquely identifying each video server and to attempt
access to the video servers over the network, said program also being
operable to obtain from each of the accessible video servers a hardware
address stored in the video server;
wherein said program is further operable to validate the hardware
addresses received from the video servers using the server data and, for
those video servers having valid hardware address, said program is operable
to generate a user interface display on the computer that includes a display
window for each of the cameras accessed via the validated servers over the
network and to display in each of the display windows an image received from
the camera associated with that display window.
According to JDS, the advancements in the highlighted claim language above are
hardware-focused and had not been performed before. JDS says that its de-centralized
licensing or anti-piracy solution, through the use of a MAC address, was not known, was
not considered, and was not used by any of the multi-national companies in the
surveillance software industry. As such, JDS maintains that the patents cover
8
patentable subject matter under section 101.
III. Motion to Dismiss
To survive a Rule 12(b)(6) motion to dismiss, the complaint's "factual allegations
must be enough to raise a right to relief above the speculative level on the assumption
that all of the allegations in the complaint are true." Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 545 (2007). See also Ass'n of Cleveland Fire Fighters v. City of Cleveland,
Ohio, 502 F.3d 545, 548 (6th Cir. 2007). The court is "not bound to accept as true a
legal conclusion couched as a factual allegation." Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (internal quotation marks and citation omitted). In sum, "[t]o survive a motion to
dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a
claim for relief that is plausible on its face." Id. at 678 (internal quotation marks and
citation omitted).
IV. Analysis
Exacq says that the complaint should be dismissed because the JDS patents do
not cover patentable subject matter. As such, the complaint fails to state a plausible
claim for infringement.
Under 35 U.S.C. § 101, “[w]hoever 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 therefore....” Section 101 is limited, however,
and does not cover “laws of nature, natural phenomena, and abstract ideas.” Alice, 134
S.Ct. at 2354. In “applying the § 101 exception, we must distinguish between patents
that claim the ‘building block[s]’ of human ingenuity and those that integrate the building
blocks into something more.” Id. (citing Mayo Collaborative Services, v. Prometheus
9
Laboratories, Inc., 132 S.Ct. 1289, 1303 (2012)).
In Alice, the Supreme Court employed a two-part test “for distinguishing patents
that claim laws of nature, natural phenomena, and abstract ideas from those that claim
patent-eligible applications of those concepts.” Id. at 2355. First, a court must
determine “whether the claims at issue are directed at a patent-ineligible concept.” If
the claims are so construed, the court must proceed to step two, which involves a
determination as to whether the patent contains an “inventive concept,” which is
described as “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. (Internal citations and quotations omitted).
A. Abstract Idea
Generally, this prong addresses whether the patent is directed to an “abstract”
idea because there is a longstanding rule that “an idea itself is not patentable.” Id.
(Citations and quotations omitted).
1. Parties’ Arguments
Exacq says that the patents are drawn to an abstract idea—“the principle of
combining images from multiples cameras in a single location.” Exacq also cites to
multiple cases involving software patents where courts have held what it says are
similar concepts to be abstract and therefore unpatenable.
Exacq says that the patents-in-suit attempt to cover “the abstract principle of
monitoring images from multiple video cameras from a single location – a concept as
old as video surveillance itself.”
JDS disputes this characterization and says that the claims of the patents-in-suit
10
are directed to a technological solution to a technological problem – software piracy.
The claimed solution is necessarily rooted in computer technology, and its purpose is to
overcome a problem that specifically arises with computer software.
According to JDS, “monitoring images from multiple video cameras from a single
location” is not an abstract business practice; it can only be accomplished by specific
technology. Moreover, JDS says that the claims are not directed to “monitoring images
from multiple video cameras from a single location” as argued by Exacq. The claimed
inventions described in JDS’s patents take a concrete, tangible form – a video
management system that queries external devices (computers) for protected
information stored in memory (the MAC address) which is used for anti-piracy purposes,
i.e. to protect unlawful or unapproved dissemination of software that is located remotely.
2. Discussion
The case law says that “[f]irst, the court must identify whether a claim is directed
to an abstract idea. To do this, the court must identify the purpose of the claim—in
other words, what the claimed invention is trying to achieve—and ask whether that
purpose is abstract.” California Inst. of Tech. v. Hughes Commc'ns Inc., 2014 WL
5661290, at *13 (C.D. Cal. Nov. 3, 2014). Identifying an abstract idea is no easy matter.
“At some level, ‘all inventions ... embody, use, reflect, rest upon, or apply laws of
nature, natural phenomena, or abstract ideas.’ Thus, an invention is not rendered
ineligible for patent simply because it involves an abstract concept.” Alice Corp. Pty. v.
CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014). Any invention can be over-generalized in
an effort to characterize it as “abstract.” “Abstract” ideas have included: (1)
11
intermediated settlement, Alice, 134 S. Ct. at 2359; (2) creating a transaction
performance guaranty, buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed. Cir.
2014); (3) generating insurance-policy-related tasks, Accenture Global Servs., BmgH v.
Guidewire Software, Inc., 728 F.3d 1336, 1344-45 (Fed. Cir. 2013); (4) managing a
stable-value protected life insurance policy, Bancorp Servs., LLC v. Sun Life Assur. Co.
of Canada, 687 F.3d 1266, 1278 (Fed. Cir. 2012); and (5) using advertising as a
currency, Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715-16 (Fed. Cir. 2014). The
Federal Circuit has characterized these “abstract” ideas as simple performance of a
business practice, one that can and was performed by “human thought alone.”
CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1373 (Fed. Cir. 2011);
DDR Holdings, LLC v. Hotels.com, 773 F.3d 1245, 1256 (Fed. Cir. 2014).
In Intellectual Ventures I LLC v. Mfrs. & Traders Trust Co., 2014 WL 7215193 (D.
Del. Dec. 18, 2014), a case cited by Exacq, the patent covered digital images like the
JDS Patents. The court held that none of the method claims at issue were necessarily
tied to any particular structure. The claims recited “scanning” hard copy images, but
only for the purpose of grouping the images by “categories.” Id. at *10. The court
therefore concluded that such a grouping by category is certainly something that can be
performed in the human mind and therefore the patent was abstract.
The JDS patents are different from the patent in Intellectual Ventures. JDS is
correct in saying that querying external camera devices to extract an embedded unique
identifier (the MAC address) and then validating the unique identifier for software
licensing purposes is not something a human mind is capable of doing. These steps
are necessarily tied to the video devices being validated and system created by their
12
addition. Here, up to the time of the invention, no one queried digital cameras and
video servers for an embedded code (the MAC address) for the purpose of restricting
access and protecting the software on a different device. The technological solution
presented is inexorably tied to computer technology and prevents abuse by controlling
when and how external devices are allowed to operate within a video surveillance
system that includes software, creating an effective and desired anti-piracy solution for
the software. Thus, the JDS patents are not abstract.
Exacq also cites in support In re TLI Commc’ns LLC Patent Litig., 2015 WL
627858 at *8 (E.D. Va. Feb. 6, 2015) which analyzed another patent that involved
“taking, organizing, classifying, and storing photographs.” The court held that the patent
claims were directed to an abstract idea since they “describe[ ] a scheme or concept not
tied to a particular concrete application.” Id. at *8.
Here, however, the JDS patents are directed to a particular concrete application.
As described above, the JDS patents use device-based access control to prevent
unauthorized use of the surveillance software, while allowing unlimited copying and
installing of that same software. Moreover, the claims at issue do not cover a
“fundamental practice” previously practiced in video surveillance or otherwise. The
court in TLI additionally held that the claims at issue were abstract because they
covered “common practice that long-predates computers, as persons have taken,
organized, classified, and stored photographs for more than a century without the aid of
computers.” Id. at *8. Thus, TLI does not support a finding that the JDS patents are
abstract.
While Exacq argues that the “principle” of the patents-in-suit is “as old as video
13
surveillance itself,” it does not address the claim language whatsoever. It also does not
address access control features, i.e. the use of the MAC address, that are rooted in
computer technology in order to overcome a problem that specifically arose with the
growth of IP camera technology. As explained in DDR Holdings, LLC v. Hotels.com,
773 F.3d 1245, 1257 (Fed. Cir. 2014), the “claimed solution is necessarily rooted in
computer technology in order to overcome a problem specifically arising in the realm of
computer networks,” and therefore, is not abstract.
The claims of the ’566 Patent are directed to a video surveillance system,
complete with computers, a network, and a plurality of video servers and cameras.
These are particular machines, not generic computers. The claims do not embody a
mental process or an abstract idea. And, an abstract idea cannot be found simply
because Exacq points to prior art Hollywood movies that show technological systems.
Exacq’s reliance on movies is an attempt to oversimplify the patented technology.
There is no mental process (or other ineligible concept) that permits viewing video
images at a central location. The claimed invention, as described by JDS, is not
abstract.
Recent authority supports this conclusion. In Enfish, LLC v. Microsoft Corp., No.
2015-1244, 2016 WL 2756255 (Fed. Cir. May 12, 2016), the Federal Circuit
applied—and clarified—the first step of the Alice analysis. There the the Federal Circuit
made clear that not all claims directed to software are per se abstract ideas under step
one of the Alice analysis and explained that a claim is patentable under 35 U.S.C. §
101—in accordance with step one of Alice—when it is “directed to a specific
implementation of a solution to a problem in the software arts.” The Federal Circuit
14
explained:
We do not read Alice to broadly hold that all improvements in
computer-related technology are inherently abstract and, therefore, must be
considered at step two. Indeed, some improvements in computer-related
technology when appropriately claimed are undoubtedly not abstract, such as a
chip architecture, an LED display, and the like. Nor do we think that claims
directed to software, as opposed to hardware, are inherently abstract and
therefore only properly analyzed at the second step of the Alice analysis.
Software can make non-abstract improvements to computer technology just as
hardware improvements can, and sometimes the improvements can be
accomplished through either route. We thus see no reason to conclude that all
claims directed to improvements in computer-related technology, including those
directed to software, are abstract and necessarily analyzed at the second step of
Alice, nor do we believe that Alice so directs. Therefore, we find it relevant to
ask whether the claims are directed to an improvement to computer
functionality versus being directed to an abstract idea, even at the first step
of the Alice analysis.
For that reason, the first step in the Alice inquiry in this case asks whether
the focus of the claims is on the specific asserted improvement in computer
capabilities (i.e., the self-referential table for a computer database) or, instead, on
a process that qualifies as an “abstract idea” for which computers are invoked
merely as a tool. As noted infra, in Bilski and Alice and virtually all of the
computer-related § 101 cases we have issued in light of those Supreme Court
decisions, it was clear that the claims were of the latter type requiring that the
analysis proceed to the second step of the Alice inquiry, which asks if
nevertheless there is some inventive concept in the application of the abstract
idea. See Alice, 134 S.Ct. at 2355, 2357–59. In this case, however, 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.
Enfish, LLC v. Microsoft Corp., No. 2015-1244, 2016 WL 2756255, at *4-5 (Fed. Cir.
May 12, 2016) (emphasis added).
As explained throughout the writings in this case, the paradigm claim (claim 1 of
the ‘566 Patent) is directed to a specific process in which a user interface program
obtains the MAC addresses of peripheral devices and uses them to enable or disable
the display of video. This specific process “enables the software [on another device] to
15
be licensed on a per-camera or per-server basis and can be used to prevent access to
any cameras or servers for which the user is not licensed.” (Doc. 1-6, ’566 Patent at
6:54-56.). Paradigm claim 1 of the ’566 patent identifies and claims a process that uses
a “hardware address obtained from an accessible video server” to validate whether to
permit particular software on a computer to display an image from that server. This
specific process was not done before. This claimed process also provides an efficient
solution to software licensing – to avoid the problem associated with piracy – within
particular computer network environments unique to video surveillance systems. The
claims describe an improvement in computer technology. As such, the JDS patents are
not directed to an abstract idea.
Application of step one of the Alice analysis to claim 1 of the ’566 Patent results
in a finding that the claimed subject matter is not abstract. Therefore, the JDS patents
are not invalid § 101.
B. Inventive Concept
In step two in the Alice analysis, the Supreme Court made clear that a claim
directed to an abstract idea does not move into section 101 eligibility territory by “merely
requir[ing] generic computer implementation.” Alice, 134 S.Ct. at 2357. The Court
relied on Mayo for the proposition that “ ‘[s]imply appending conventional steps,
specified at a high level of generality,’ was not ‘enough’ to supply an ‘ “inventive
concept.” ’ ” Id. (quoting Mayo, 132 S.Ct. at 1300, 1297, 1294). Neither “attempting to
limit the use of [the idea] to a particular technological environment” nor a “wholly generic
computer implementation” is sufficient. Id. at 2358 (internal quotation marks omitted).
Because the Court has found that the JDS patents are not abstract, it is not
16
necessary to consider step two, i.e. an abstract idea being nevertheless patenable if it
contains an inventive concept. The Court will only briefly comment that Exacq’s
arguments as to an inventive concept appear more appropriately directed to an
obviousness challenge.
V. Conclusion
Overall, the JDS patents are not abstract under step one of the Alice analysis.
As such, they cover patentable subject matter under § 101. Exacq’s motion is DENIED.
The Clerk shall schedule a status conference with the parties to chart the future course
of the case.
SO ORDERED.
CODA
There is little doubt that Alice has changed the patent landscape and courts will
continue to grapple with the decision and its impact, particularly on software and
business method patents. See http://www.abajournal.com/magazine/article/
business_method_and_software_patents_may_go_through_the_looking_glass_after.
(Last visited May 25, 2016). Recent Federal Circuit decisions illustrate the difficulties in
applying Alice. Compare Becton Dickinson and Co. v. Baxter Int’l, Inc., 15-1918, 2016
WL 2620564 (Fed. Cir. May 9, 2016) (summary affirmance of district court’s decision
17
invalidating a remote pharmacy-monitoring patent as ) with Enfish LLC v. Microsoft
Corp., 15-1244, 2016 WL 2756255, *5 (Fed. Cir. May 12, 2016) (discussed above).
S/Avern Cohn
AVERN COHN
UNITED STATES DISTRICT JUDGE
Dated: June 7, 2016
Detroit, Michigan
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