Versata Software, Inc. et al v. Zoho Corporation

Filing 101

ORDER DENYING 93 Motion for Summary Judgment. Signed by Judge Sam Sparks. (os)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION

VERSATA SOFTWARE, INC AND
VERSATA DEVELOPMENT GROUP,
INC.,
Plaintiffs,

2U15

OCT 25

[:

37

r

CAUSE NO.:
A-13-CA-00371-SS

-vs-

ZOHO CORPORATION,
Defendant.

ORDER
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause

and specifically Defendant Zoho Corporation (Zoho)'s Motion for Summary Judgment [#93],

Plaintiffs Versata Software, Inc. and Versata Development Group, Inc. (collectively, Versata)' s
Response [#97] thereto, Zoho's Reply [#99] thereto, and Versata's Sur-reply [#100] thereto.
Having considered the documents, the case file as a whole, and the governing law, the Court now

enters the follow opinion and order.

Background
I.

Patent-in-suit
Versata is suing Zoho for patent infringement of United States Patent Number 7,092,740

(the '740 Patent), which was issued in 2006 and is titled "High Density Information Presentation

Using Space-Constrained Display Device." The '740 Patent innovated in the then-young mobile
devices space and allows for the creation of certain "external states" a user wishes to monitor.
For example, a user might want to remotely monitor the CPU load on a critical server at any
given time and want different indications of that state which can be easily and readily

I

understood. Different colors might be used as indications of the monitored state: green if load is
less than 50%, yellow if load is between 50% and 75%, and red

if load exceeds 75%. The '740

Patent allows a user to set up the system so information related to the monitored server is sent to
one or more mobile devices and displayed compactly using the user-configured indicators in the
display. Some of the claims of the '740 Patent cover displays combining graphical and textual

representations while other claims cover displaying the data in two-dimensional arrays.
The goal of the '740 Patent's innovation is to allow a relatively large amount of data
about particular external states to be easily monitored on mobile devices and for the information
to be digested by the user at a glance. Excessive clicking and linking is reduced or eliminated,

and critical information is clearly displayed on the space-constrained mobile device. These

useful compact displays are coupled with the flexibility of allowing a non-programmer user to
configure what external states to monitor and how to monitor them. This combination creates a

useful system for monitoring data from a mobile device.

II.

Procedural History
On May 28, 2014, the Court, through Special Master Karl Bayer, held the Markman

hearing in this case. Subsequently, on July 31, 2014, the Court held a supplemental Markman

hearing on the disputed indefiniteness of two claim terms in light of the Supreme Court's
decision in Nautilus

v.

Biosig Instruments Inc., 134 S. Ct. 2120 (2014). The Special Master

issued his Report and Recommendation on claim construction on September 26, 2014. R. & R.
[#8 1]. On January 15, 2015, this Court entered its claim construction order accepting the Special

Master's recommended constructions, with two modifications relating to the '740 Patent. Order

of Jan. 15, 2015 [#88].

Zoho filed a motion for summary judgment on July 21, 2015, arguing the '740 Patent is

invalid because it claims an abstract idea in violation of Alice Corp.

v.

CLS Bank Int'l, 134 S. Ct.

2347, 2354 (2014). Versata responded on August 7, 2015, making Zoho's motion for summary

judgment ripe for consideration. Both parties filed replies.
Analysis
I.

Legal Standard
Summary judgment shall be rendered when the pleadings, the discovery and disclosure

materials on file, and any affidavits show that there is no genuine dispute as to any material fact
and that the moving party is entitled to judgment as a matter of law.
Celotex Corp.

v.

FED. R. CIV. P.

56(a);

Catrett, 477 U.S. 317, 323-25 (1986); Washburn v. Harvey, 504 F.3d 505, 508

(5th Cir. 2007). A dispute regarding a material fact is "genuine"

if the evidence

is such that a

reasonable jury could return a verdict in favor of the nonmoving party. Anderson

v.

Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986). When ruling on a motion for summary judgment, the

court is required to view all inferences drawn from the factual record in the light most favorable
to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986);

Washburn, 504 F.3d at 508. Further, a court "may not make credibility determinations or weigh
the evidence" in ruling on a motion for summary judgment. Reeves

v.

Sanderson Plumbing

Prods., Inc., 530 U.S. 133, 150 (2000);Anderson, 477 U.S. at 254-55.

II.

Application
Under Section 101 of the Patent Act, "[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 therefor, subject to the conditions and requirements of this title." 35
U.S.C.

§

101. However, Section 101 also "contains an important implicit exception: laws of

3

nature, natural phenomena, and abstract ideas are not patent-eligible." Alice, 134 S. Ct. at 2354
("[T]he concern that drives this exclusionary principle [i]s one of pre-emption."). Yet, the
Supreme Court has cautioned that at some level, "all inventions

.

. .

embody, use, reflect, rest

upon, or apply laws of nature, natural phenomena, or abstract ideas." Mayo Collaborative Servs.
v.

Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012). As a result, courts must "tread carefully

in construing this exclusionary principle, lest it swallow all of patent law." Alice, 134 S. Ct. at
2354.
In Alice, the Court articulated a two-step framework "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. A court must first "determine whether the claims at
issue are directed to one of those patent-ineligible concepts" stated above. Id. If they are, the
court then moves to the second step: determining whether the additional elements of each claim
represent an "inventive concept' sufficient to 'transform' the claimed abstract idea into a patenteligible application." Id. at 2357.
In this case, Zoho alleges the '740 Patent claims patent-ineligible subject matter, because

it is directed at "the disembodied idea of using symbols on a display to represent external

information and updating these symbols as that information changes." Mot. Summ. J. [#93] at 6.
According to Zoho, the '740 Patent fails to disclose any technological advance and instead
"recites only functional steps implemented using generic computing equipment and
functionality." Id. at 7. In response, Versata argues that at the time the '740 Patent was issued,
the growth of mobile device usage led to a corresponding increase in the demand for rich
information content; however, the "inevitable" space constraints on mobile devices "limit[ed] the

richness of information content available to a user." Resp. [#97] at 9. The '740 Patent, then, had

"the specific technical objective of allowing status updates to be displayed more efficiently
within the limited display screen of a mobile phone, pager, PDA or similar mobile device." Id.
Indulging every inference in Versata's favor, the Court concludes the '740 Patent does

not embody an impermissibly abstract idea. Therefore, the Court need not determine whether the
claims at issue contained an inventive concept sufficient to transform the allegedly abstract idea
into patent-eligible subject matter.1

Conclusion
Accordingly,
IT IS ORDERED that Defendant Zoho's Motion for Summary Judgment [#93] is

DENIED.
SIGNED this the

day of October 2015.

U
SAM SPARKS
UNITED STATES DISTRICT JUDGE

In denying Zoho's motion for summary judgment, the Court recognizes the potentially meritorious
arguments Zoho proffered under the second Alice step; indeed, it may well be that the '740 Patent implements an
idea using only conventional and well-known technologies. However, these arguments are best submitted to the
Court in conjunction with the well-established body of law addressing the novelty and non-obviousness of patents.