Mantissa Coporation v. Ondot Systems, Inc. et al

Filing 58

MEMORANDUM AND ORDER denying 45 MOTION to Dismiss 38 Amended Complaint/Counterclaim/Crossclaim etc., ; denying as moot 46 MOTION to Take Judicial Notice.(Signed by Judge Keith P Ellison) Parties notified.(arrivera, 4)

United States District Court
Southern District of Texas

ENTERED
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
MANTISSA CORPORATION,
Plaintiff,
VS.
ONDOT SYSTEMS, INC., et al,
Defendants.

§
§
§
§
§
§
§
§

August 12, 2016
David J. Bradley, Clerk

CIVIL ACTION NO. 4:15-CV-1133

MEMORANDUM AND ORDER
Before the Court are Defendants’ Motion to Dismiss Plaintiff’s First Amended Complaint
for Failure to State a Claim (Doc. No. 45), and Defendants’ Motion to Take Judicial Notice of
the American Bar Association Guide to Wills & Estates (Doc. No. 46).
In April 2016, the Court held a hearing on Defendants’ Motion to Dismiss for Failure to
State a Claim. The Court granted the motion to dismiss on the grounds that the patents are
invalid because they are drawn to an abstract idea. However, the Court gave Plaintiff fifteen days
to re-plead or file additional briefing. Plaintiff filed a supplemental brief on April 29 and an
amended complaint on May 3. Defendants filed their motion to dismiss the amended complaint,
along with their motion to take judicial notice, on May 20. Plaintiff’s responses were filed on
June 10, and Defendants’ replies were filed on June 20. In addition, Plaintiff filed two notices of
relevant precedential decisions of the Federal Circuit.
The Court is persuaded by the additional briefing that it should not make a final decision
about patent eligibility until after claim construction has occurred. Defendants contend that “it is
the claims—not the specification or figures—that matter.” (Doc. No. 45 at 10). However, the
Federal Circuit recently clarified the two-step process of determining whether a patent’s subject
matter is eligible for patent protection. It described “a stage-one filter to claims, considered in
1

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) (quoting
Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015) (emphasis
added)). More specifically, the Federal Circuit found that its conclusion that “the claims are
directed to an improvement of an existing technology is bolstered by the specification’s
teachings that the claimed invention achieves other benefits over conventional databases, such as
increased flexibility, faster search times, and smaller memory requirements.” Id. at 1337
(emphasis added).
In its decision, the Federal Circuit reversed the district court. This reversal was largely
based on the Federal Circuit’s finding that “the district court oversimplified . . . the claims and
downplayed the invention’s benefits.” Id. at 1338. By first allowing claim construction, the Court
hopes to avoid that situation in this case.
Regarding the second step in deciding the validity of a patent, Plaintiff argues that “[a]
person of ordinary skill in the art would recognize that claims of the Patents describe inventive
concepts that improve the conventional technology for consummating transactions over
computer networks.” (Doc. No. 49 at 24.) Claim construction is necessary for this contention to
be tested. In addition, the Federal Circuit recently emphasized the importance of analyzing the
“ordered combination of limitations” of the claims. Bascom Glob. Internet Servs., Inc. v. AT&T
Mobility LLC, No. 2015-1763, 2016 WL 3514158, at *6 (Fed. Cir. June 27, 2016). Although the
district court had properly found that “the limitations of the claims, taken individually, recite
generic computer, network and Internet components,” the court held that the district court erred
in its analysis of the ordered combination. Even though each claim element alone was known in
the prior art, “an inventive concept can be found in the non-conventional and non-generic

2

arrangement of known, conventional pieces,” such as when a “‘software-based invention . . .
improves the performance of the computer system itself.’” Id. (quoting Brief for United States as
Amicus Curiae in Support of Respondents at 30–31, Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 134
S. Ct. 2347 (2014) (No. 13-298), 2014 WL 828034.
Accordingly, the motion to dismiss is DENIED. Because Defendants’ motion to take
judicial notice requests that the Court consider the American Bar Association Guide “strictly for
purposes . . . of resolving the pending Motion to Dismiss,” (Doc. No. 52 at 2), that motion is
DENIED AS MOOT.
IT IS SO ORDERED.
SIGNED at Houston, Texas, this the 11th day of August, 2016.

THE HONORABLE KEITH P. ELLISON
UNITED STATES DISTRICT JUDGE

3