Buysafe, Inc. v. Google Inc.

• Decision Date: 29 July 2013
• Docket Number: C.A. No. 11–1282–LPS
• Citation: 964 F.Supp.2d 331
• Parties: buySAFE, Inc., Plaintiff, v. Google Inc., Defendant.
• Court: U.S. District Court — District of Delaware

964 F.Supp.2d 331

buySAFE, Inc., Plaintiff,

v.Google Inc., Defendant.

C.A. No. 11–1282–LPS

United States District Court, D. Delaware.

July 29, 2013

Joseph J. Faman, Jr., Esq., Brian E. Farnan, Esq., Farnan LLP, Wilmington, DE. Attorneys for Plaintiff buySAFE, Inc.

Jack B. Blumenfeld, Esq., Paul Saindon, Esq., Morris, Nichols, Arsht & Tunnel LLP, Wilmington, DE. Attorneys for Defendant Google Inc.

MEMORANDUM OPINION

LEONARD P. STARK, U.S. District Judge:

Pending before the Court is Defendant Google Inc.'s (“Defendant”) motion for judgment on the pleadings under Fed.R.Civ.P. 12(c). (D.I. 31) Defendant argues that Plaintiff buySAFE, Inc.'s (“Plaintiff”) U.S. Pat. No. 7,644,019 (“the '019 patent”) is invalid under 35 U.S.C. § 101 because it is directed to non-patent-eligible subject matter.

The parties completed briefing for this motion on August 31, 2012. (D.I. 32, 40, 42) The Court heard oral argument on October 26, 2012.¹ (D.I. 49) (hereinafter “Tr.”) On May 17, 2013, the Court ordered the parties to submit supplemental briefs “for the purpose of addressing the effect, if any, of the en banc decision of the United States Court of Appeals for the Federal Circuit” in CLS Bank International v. Alice Corp. Pty.Ltd., 717 F.3d 1269 (Fed.Cir.2013), which was issued on May 10, 2013. (D.I. 58) The parties submitted their supplemental briefs on May 28, 2013. (D.I. 59, 60)

For the reasons set forth below, the Court will grant Defendant's Rule 12(c) motion.

I. BACKGROUND

Plaintiff filed this patent infringement action against Defendant on December 22, 2011, alleging that Google's “Trusted Stores” program infringes the '019 patent. (D.I. 1) The '019 patent is entitled “Safe Transaction Guaranty” and generally relates to providing a guaranty service for online transactions.

The '019 patent contains two independent claims, claim 1 and claim 39. Claim 1 is a process claim. Claim 39 requires a “machine readable medium” capable of performing the process of claim 1. The parties agree that, for purposes of Defendant's Rule 12(c) motion, there are no material differences between claims 1 and 39. (D.I. 32 at 3, D.I. 40 at 2)

Claim 1 is reproduced below:

A method, comprising:

receiving, by at least one computer application program running on a computer of a safe transaction service provider, a request from a first party for obtaining a transaction performance guaranty service with respect to an online commercial transaction following closing of the online commercial transaction;

processing, by at least one computer application program running on the safe transaction service provider computer, the request by underwriting the first party in order to provide the transaction performance guaranty service to the first party,

wherein the computer of the safe transaction service provider offers, via a computer network, the transaction performanceguaranty service that binds a transaction performance guaranty to the online commercial transaction involving the first party to guarantee the performance of the first party following closing of the online commercial transaction.

Claims 1, 14, 39, and 44 are the only asserted claims in this action, and the only claims Defendant contends are invalid. (Tr. at 26–27) Dependent claims 14 and 44 are identical, except that claim 14 depends from claim 1 while claim 44 depends from claim 39.

II. LEGAL STANDARDS

Pursuant to Federal Rule of Civil Procedure 12(c), a party may move for judgment on the pleadings “[a]fter pleadings are closed—but early enough not to delay trial.” When evaluating a motion for judgment on the pleadings, the Court must accept all factual allegations in a complaint as true and view them in the light most favorable to the non-moving party. SeeRosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir.2008); see alsoMaio v. Aetna, Inc., 221 F.3d 472, 482 (3d Cir.2000). A Rule 12(c) motion will not be granted “unless the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law.” Rosenau, 539 F.3d at 221. This is the same standard as a Rule 12(b)(6) motion to dismiss. SeeTurbe v. Gov't of Virgin Islands, 938 F.2d 427, 428 (3d Cir.1991). “The purpose of judgment on the pleadings is to dispose of claims where the material facts are undisputed and judgment can be entered on the competing pleadings and exhibits thereto, and documents incorporated by reference.” Venetec Int'l, Inc. v. Nexus Med., LLC, 541 F.Supp.2d 612, 617 (D.Del.2008); see alsoIn re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.1997) (explaining that any documents integral to pleadings may be considered in connection with Rule 12(c) motion).

III. DISCUSSION

Defendant seeks judgment on the pleadings that the '019 patent is invalid because it fails to meet the subject matter eligibility requirements of 35 U.S.C. § 101.² (D.I. 32 at 1) Section 101 provides that “[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, subject to the conditions and requirements of this title.” 35 U.S.C. § 101. There are three recognized exceptions to Section 101—“laws of nature, physical phenomena, and abstract ideas”—and if a claim is directed on one of these exceptions, it is not eligible for patent protection. Bilski v. Kappos, ––– U.S. ––––, 130 S.Ct. 3218, 3225, 177 L.Ed.2d 792 (2010). Defendant's Rule 12(c) motion concerns only the “abstract ideas” exception. (D.I. 32 at 1)

To determine whether a patent claims an abstract idea, courts frequently apply the “machine-or-transformation” test. SeeBilski, 130 S.Ct. at 3227. The Supreme Court has cautioned, however, that the machine-or-transformation test is not the sole test for patent-eligibility. See id.Accordingly, courts also should more generally examine the abstract nature of the claims. SeeCyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1371 (Fed.Cir.2011).

Defendant contends that the asserted claims are not patent-eligible because they: (1) fail the machine-or-transformation test; and (2) are directed to an abstract idea. (D.I. 32 at 8)

A. Machine–or–Transformation

Under the machine-or-transformation test, a process claim is patent-eligible if: “(1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing.” Bilski, 130 S.Ct. at 3224 (internal citations omitted). Because Plaintiff has not argued that any article is transformed (Tr. at 51–52), the Court's analysis is limited to the “machine” prong of the test.

“[T]o impart patent-eligibility to an otherwise unpatentable process under the theory that the process is linked to a machine, the use of the machine must impose meaningful limits on the claim's scope.” CyberSource, 654 F.3d at 1375 (internal quotation marks omitted). The Federal Circuit has stated that a machine will only “impose a meaningful limit on the scope of a claim [when it plays] a significant part in permitting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations.” SiRF Tech., Inc. v. ITC, 601 F.3d 1319, 1333 (Fed.Cir.2010). A computer is not a significant part the process if that process can be performed without a computer. SeeCyberSource, 654 F.3d at 1375 (“[M]erely claiming a software implementation of a purely mental process that could otherwise be performed without the use of a computer does not satisfy the machine prong of the machine-or-transformation test.”).

The '019 patent, on its face, explains that the entire inventive process can be performed by a human. For instance, with respect to the key “underwriting” step, the '019 patent states that: “[t]he underwriter may be a person, a corporation that carries out the underwriting process either manually or automatically through a computer application program or semi-automatically.” ('019 patent at col. 6, ll. 57–60) (emphasis added) ³ At oral argument, Plaintiff's counsel acknowledged that “if the transaction was not online,” each of the steps “could be conducted without a computer.” (Tr. at 61) A method that can be performed entirely in the human mind is an abstract idea and is not eligible for patent protection. SeeCyberSource, 654 F.3d at 1375.

Nonetheless, Plaintiff contends that the claimed process is patent-eligible because it takes place online, and online transactions by definition require a computer. (Tr. at 45–48, 51) The Court disagrees. In CyberSource, 654 F.3d at 1370, the patent was also limited to online transactions—“a method for verifying the validity of a credit card transaction over the Internet”—yet the Federal Circuit found the patent invalid under Section 101.

Plaintiff further contends that “there is simply no practical way to do [the process of the '019 patent] mentally or with a pen and paper,” because it involves “millions” of online transactions. (Tr. at 54) That argument is not persuasive. The '019 patent describes a well-known, and widely-understood concept—a third party guarantee for a sales transaction—and then applies that concept using conventional computer technology and the Internet. Merely using a computer to perform more efficiently what could otherwise be accomplished manually does not confer patent-eligibility. SeeBancorp Servs., L.L.C. v. Sun Life Assur. Co. of Can., 687 F.3d 1266, 1279 (Fed.Cir.2012) (“Using a computer to accelerate an ineligible mental process does not make that process patent-eligible.”); MySpace, Inc. v. GraphOn Corp., 672 F.3d 1250, 1267 (Fed.Cir.2012) (“While running a particular process on a computer undeniably improves efficiency and accuracy, cloaking an otherwise abstract idea in the guise of a computer-implemented claim is insufficient to bring it within section 101.”).

The '019 patent...