823 F.3d 607 (Fed. Cir. 2016), 2015-1372, TLI Communications LLC v. AV Automotive, L.L.C.

Docket Nº:2015-1372, 2015-1376, 2015-1377, 2015-1378, 2015-1379, 2015-1382, 2015-1383, 2015-1384, 2015-1385, 2015-1417, 2015-1419, 2015-1421
Citation:823 F.3d 607, 118 U.S.P.Q.2d 1744
Opinion Judge:Hughes, Circuit Judge.
Party Name:IN RE: TLI COMMUNICATIONS LLC PATENT LITIGATION; v. AV AUTOMOTIVE, L.L.C., HALL AUTOMOTIVE, LLC, YAHOO! INC., TUMBLR, INC., TWITTER, INC., PINTEREST, INC., IMGUR LLC, SHUTTERFLY, INC., TRIPADVISOR INC., TRIPADVISORY LLC, SNAPCHAT INC., CAPITAL ONE FINANCIAL CORPORATION, CAPITAL ONE, N.A., CAPITAL ONE SERVICES, LLC, VINE LABS, INC., Defendants-...
Attorney:ROBERT ALAN WHITMAN, Mishcon de Reya New York LLP, New York, NY, argued for plaintiff-appellant. Also represented by MICHAEL DEVINCENZO, MARK STEWART RASKIN, CHARLES WIZENFELD. MARK A. LEMLEY, Durie Tangri LLP, San Francisco, CA, argued for defendants-appellees CityGrid Media LLC, IAC/InterActive...
Judge Panel:Before DYK, SCHALL, and HUGHES, Circuit Judges.
Case Date:May 17, 2016
Court:United States Courts of Appeals, Court of Appeals for the Federal Circuit
 
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823 F.3d 607 (Fed. Cir. 2016)

118 U.S.P.Q.2d 1744

IN RE: TLI COMMUNICATIONS LLC PATENT LITIGATION;

TLI COMMUNICATIONS LLC, Plaintiff-Appellant

v.

AV AUTOMOTIVE, L.L.C., HALL AUTOMOTIVE, LLC, YAHOO! INC., TUMBLR, INC., TWITTER, INC., PINTEREST, INC., IMGUR LLC, SHUTTERFLY, INC., TRIPADVISOR INC., TRIPADVISORY LLC, SNAPCHAT INC., CAPITAL ONE FINANCIAL CORPORATION, CAPITAL ONE, N.A., CAPITAL ONE SERVICES, LLC, VINE LABS, INC., Defendants-Appellees

APPLE INC., WHI INC., GOOGLE, INC., FACEBOOK, INC., INSTAGRAM, LLC, YELP, INC., DROPBOX INC., IAC/INTERACTIVECORP, CITYGRID MEDIA LLC, VIMEO LLC, Defendants

Nos. 2015-1372, 2015-1376, 2015-1377, 2015-1378, 2015-1379, 2015-1382, 2015-1383, 2015-1384, 2015-1385, 2015-1417, 2015-1419, 2015-1421

United States Court of Appeals, Federal Circuit

May 17, 2016

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Appeals from the United States District Court for the Eastern District of Virginia in Nos. 1:14-md-02534-TSEJFA, 1:14-cv-00136-TSE-JFA, 1:14-cv-00137-TSE-JFA, 1:14-cv-00138-TSE-JFA, 1:14-cv-00139-TSE-JFA, 1:14-cv-00140-TSE-JFA, 1:14-cv-00142-TSE-JFA, 1:14-cv-00785-TSE-JFA, 1:14-cv-00788-TSE-JFA, 1:14-cv-00790-TSEJFA, 1:14-cv-00791-TSE-JFA, 1:14-cv-00842-TSE-JFA, Judge T. S. Ellis III.

ROBERT ALAN WHITMAN, Mishcon de Reya New York LLP, New York, NY, argued for plaintiff-appellant. Also represented by MICHAEL DEVINCENZO, MARK STEWART RASKIN, CHARLES WIZENFELD.

MARK A. LEMLEY, Durie Tangri LLP, San Francisco, CA, argued for defendants-appellees CityGrid Media LLC, IAC/InterActiveCorp, Imgur LLC, Pinterest, Inc., Shutterfly, Inc., Snapchat Inc., TripAdvisor Inc., TripAdvisory LLC, Tumblr, Inc., Twitter, Inc., Vimeo LLC, Vine Labs, Inc., Yahoo! Inc. Also represented by ZAC COX, ALEXANDRA HELEN MOSS.

JOSHUA BRYSON BRADY, Williams Mullen, PC, McLean, VA, for defendants-appellees AV Automotive, LLC, Hall Automotive, LLC.

ROBERT A. ANGLE, Troutman Sanders LLP, Richmond, VA, for defendants-appellees Capital One Financial Corporation, Capital One, N.A., Capital One Services, LLC.

Before DYK, SCHALL, and HUGHES, Circuit Judges.

OPINION

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[118 U.S.P.Q.2d 1745] Hughes, Circuit Judge.

TLI Communications LLC alleges that the defendants infringe a patent relating to a method and system for taking, transmitting, and organizing digital images. The district court dismissed the complaint after concluding that the patent-in-suit fails to claim patent-eligible subject matter under 35 U.S.C. § 101, and that, in the alternative, claims 1, 25, and their dependent claims are invalid for failing to recite sufficient structure as required by 35 U.S.C. § 112 ¶ 6. Because we agree with the district court that the patent-in-suit claims no more than the abstract idea of classifying and storing digital images in an organized manner, we affirm the district court's judgment and do not reach the § 112 ¶ 6 issue.

I

In 2014, TLI Communications LLC (TLI) filed a series of actions in the District of Delaware and the Eastern District of Virginia, alleging that the defendants infringed U.S. Patent No. 6,038,295 (the '295 patent) by making, selling, and/or using products and services that allow uploading of digital photos from a mobile device, such as a cell phone. The Judicial Panel on Multidistrict Litigation consolidated the cases for pre-trial purposes in the Eastern District of Virginia.

The '295 patent " relates generally to an apparatus for recording of a digital image, communicating the digital image from the recording device to a storage device, and to administering the digital image in the storage device." '295 patent, col. 1 ll. 7-10. The specification notes that a " wide variety of data types" can be transmitted, including audio and image stills. Id. at col. 1 ll. 15-26. Moreover, " [s]o called cellular telephones may be utilized for image transmissions," id. at col 1 ll. 31-34, and, at the time of the invention, it was known how to " digitize, compress and transmit individual still pictures, such as photo-graphs," id. at col 1 ll. 35-42. Further, the specification recognizes that the prior art taught " [a]n image and audio communication system having a graphical annotation capability . . . in which voice, data and image communications are used in telephone systems." Id. at col 1 ll. 52-59. But, " [w]hen a large number of digital images are recorded and are to be archived in a central computer unit, then the organization of the data base becomes a

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problem." Id. at col 1 ll. 43-45. " In particular, the problems of locating the data of an image data file increase as the number of images to be archived increases." Id. at col. 1 ll. 46-48. The invention seeks to solve this problem " by providing for recording, administration and archiving of digital images simply, fast and in such way that the information therefore may be easily tracked." Id. at col. 1 ll. 64-66.

More specifically, the invention teaches manually or automatically assigning " classification data," such as a date or timestamp, to digital images and sending those images to a server. The server then extracts the classification data and stores the digital images, " taking into consideration the classification information." Id. at col. 2 ll. 35-45. Claim 17 is representative: 17. A method for recording and administering digital images, comprising the steps of:

recording images using a digital pick up unit in a telephone unit,

storing the images recorded by the digital pick up unit in a digital form as digital images,

transmitting data including at least the digital images and classification information [118 U.S.P.Q.2d 1746] to a server, wherein said classification information is prescribable by a user of the telephone unit for allocation to the digital images,

receiving the data by the server,

extracting classification information which characterizes the digital images from the received data, and

storing the digital images in the server, said step of storing taking into consideration the classification information.

Id. at col. 10 ll. 1-17. Independent claims 1 and 25 recite substantially the same concept but do so in the context of an apparatus or system. Claim 1 includes a " means for allocating classification information prescribed by a user of said at least one telephone unit to characterize digital images obtained by said digital pick up unit." Likewise, claim 25 recites a " means . . . to allocate information in the corresponding digital still image data." Claims 10 and 11 add an " image analysis unit" and a " control unit" to the features of claim 1.

The defendants filed a motion to dismiss for failure to state a claim, arguing that the '295 patent is drawn to patent-ineligible subject matter. The district court agreed, concluding that the claims are directed to " the abstract idea of taking, organizing, classifying, and storing photographs." J.A. 16. The district court declined to give patentable weight to the claims' recitation of a telephone unit or a server, or to the " means for allocating" limitation in claims 1 and 25. As a result, the district court granted the defendants' motion to dismiss.

TLI appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

II

We apply regional circuit law to the review of motions to dismiss for failure to state a claim under Rule 12(b)(6). Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343, 1346 (Fed. Cir. 2014). The Fourth Circuit reviews challenges to a dismissal for failure to state a claim de novo. Burbach Broad. Co. of Del. V. Elkins Radio Corp., 278 F.3d 401, 406 (4th Cir. 2002).. We review the district court's patent eligibility determination under § 101 de novo. OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362 (Fed. Cir. 2015).

A patent may be obtained for " any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof."

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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., 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013) (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012)). Under the now familiar two-part test described by the Supreme Court in Alice, " [w]e must first determine whether the claims at issue are directed to a patent-ineligible concept," such as an abstract idea. Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347, 2355, 189 L.Ed.2d 296 (2014). If so, we must then " consider the elements of each claim both individually and 'as an ordered combination' to determine whether the additional elements 'transform the nature of the claim' into a patent-eligible application."...

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