British Telecommunications PLC v. Iac/Interactive Corp

• Decision Date: 04 February 2019
• Docket Number: Civil Action No. 18-366-WCB
• Citation: 381 F.Supp.3d 293
• Parties: BRITISH TELECOMMUNICATIONS PLC, Plaintiff, v. IAC/INTERACTIVECORP, Match Group, Inc., Match Group, LLC, and Vimeo, Inc., Defendants.
• Court: U.S. District Court — District of Delaware

381 F.Supp.3d 293

BRITISH TELECOMMUNICATIONS PLC, Plaintiff,

v.IAC/INTERACTIVECORP, Match Group, Inc., Match Group, LLC, and Vimeo, Inc., Defendants.

Civil Action No. 18-366-WCB

United States District Court, D. Delaware.

Signed February 4, 2019

Philip A. Rovner, Jonathan A. Choa, Potter Anderson & Corroon, LLP, Wilmington, DE, Daniel A. Boehnen, Pro Hac Vice, George T. Lyons, III, Pro Hac Vice, Grantland G. Drutchas, Pro Hac Vice, Jeffrey P. Armstrong, Pro Hac Vice, for Plaintiff.

Jack B. Blumenfeld, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, DE, T. Cy Walker, Pro Hac Vice, for Defendants.

MEMORANDUM OPINION & ORDER

WILLIAM C. BRYSON, UNITED STATES CIRCUIT JUDGE

BACKGROUND

Plaintiff British Telecommunications plc ("British Telecom") filed its first amended complaint in this action on June 8, 2018, against IAC/InterActiveCorp ("IAC"), Match Group, Inc. ("MGI"), Match Group, LLC ("MGL"), and Vimeo, Inc. ("Vimeo"). The first amended complaint alleged that the named defendants infringed six patents owned by British Telecom: U.S. Patent Nos. 6,240,450 ("the '450 patent"), 6,397,040 ("the '040 patent"), 6,578,079 ("the '079 patent"), 7,243,105 ("the '105 patent"), 7,974,200 ("the '200 patent"), and 9,177,297 ("the '297 patent"). Dkt. No. 17, at 24–25. British Telecom accused IAC and Vimeo of infringing the '450 patent, the '079 patent, and the '200 patent. Id. at 29, 38, 48. It accused IAC, MGI, and MGL of infringing the '040 patent, the '105 patent, and the '297 patent. Id. at 33, 42, 52.¹

Vimeo filed a motion under Fed. R. Civ. P. 12(b)(6) to dismiss British Telecom's first amended complaint. Dkt. No. 22. In that motion, Vimeo argues that British Telecom "has not pleaded facts demonstrating that Vimeo has infringed [the '200 patent ], as [British Telecom] has failed to allege that Vimeo's video service reads on a critical claim element." Dkt. 23, at 1. Vimeo also seeks dismissal of the claims predicated on the '450 patent and the '079 patent on the ground that those patents are directed to patent-ineligible subject matter. Id.

MGL also filed a motion under Rule 12(b)(6) to dismiss British Telecom's first amended complaint. Dkt. No. 24. MGL argues that British Telecom "has not pleaded facts that make infringement plausible" under the '105 patent. Dkt. No. 25, at 1. MGL also argues that the '040 patent and the '297 patent are directed to patent-ineligible subject matter. Id.

DISCUSSION

I. The '105 patent and the '200 patent

Vimeo and MGL have filed motions to dismiss the claims of the amended complaint directed to the '105 and '200 patents, respectively. They argue that the complaint fails to allege facts sufficient to satisfy the pleading requirements set forth by the Supreme Court in Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), and Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009), and the line of cases following Twombly and Iqbal .

In considering whether a complaint should be dismissed for failure to state a claim upon which relief can be granted, courts "accept all factual allegations as true, construe the complaint in the light most favorable to the plaintiff, and determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief." Pinker v. Roche Holdings Ltd. , 292 F.3d 361, 374 n.7 (3d Cir. 2002). Nonetheless, as the Supreme Court has made clear, the complaint must contain "enough facts to state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. "Determining whether a complaint states a plausible claim for relief will ... be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal , 556 U.S. at 679, 129 S.Ct. 1937.

Importantly, it is not necessary for the plaintiff to plead "specific facts." Erickson v. Pardus , 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) ; see Disc Disease Sols. Inc. v. VGH Sols., Inc. , 888 F.3d 1256, 1260 (Fed. Cir. 2018). As this court has explained:

So long as plaintiffs do not use "boilerplate and conclusory allegations" and "accompany their legal theory with factual allegations that make their theoretically viable claim plausible," the Third Circuit has held "pleading upon information and belief [to be] permissible [w]here it can be shown that the requisite factual information is peculiarly within the defendant's knowledge or control."

DermaFocus LLC v. Ulthera, Inc. , 201 F.Supp.3d 465, 468 (D. Del. 2016) (quoting McDermott v. Clondalkin Grp., Inc. , 649 Fed. Appx. 263, 267–68 (3d Cir. 2016). And in the context of patent litigation, "it is logical to presume that a defendant has greater access to, and therefore, more information [than the plaintiff] about its accused method." DermaFocus , 201 F.Supp.3d at 469.

A. The '105 Patent

The '105 patent is entitled "Method and Apparatus for Automatic Updating of User Profiles." The patent is directed to "a method and apparatus for updating user profiles based upon personalized reasoning about user activity." '105 patent, col. 1, ll. 9-11. The invention employs an inference engine that infers and outputs updates to a user profile according to a first set of rules and event statistics. Id. at col. 4, ll. 35-60. The first set of rules is weighted according to a set of personalized rule weightings, which are generated according to a second set of rules and user preference data. Id. at col. 5, ll. 8-34. According to the inventor, this two-rule method for updating user profiles was an improvement over prior art systems, which updated user profiles, but "offer[ed] little in the way of user control and personalization of the profile update process itself." Id. at col. 2, ll. 23-24. Illustrative claim 10 is a method claim, which provides as follows:

A method of updating a user profile, the user profile being suitable for use in providing customized services to a respective user, the method comprising:

(i) storing a first set of rules;

(ii) generating a set of personalized rule weightings according to a second set of rules and with reference to a set of user preference data;

(iii) receiving event statistics relating to a user's activity; and

(iv) applying an inference engine to infer and output at least one update to a profile for the user according to said first set of rules weighted according to said generated set of personalized rule weightings, using said received event statistics.

The first amended complaint states that MGL, together with IAC and MGI, "directly infringed, actively induced the infringement of, and/or contributorily infringed the ... '105 patent by providing infringing products/services under the name of ‘Daily Matches’ for Match.com," an on-line dating service. Dkt. No. 17, at 43; see Dkt. No. 32, at 8. Accompanying the first amended complaint is an infringement chart that includes factual allegations discussing how "Daily Matches" practices each element of claim 10 of the '105 patent. Dkt. No. 17, Ex. J; see DermaFocus , 201 F.Supp.3d at 469.

The first amended complaint and accompanying infringement chart present a plausible theory of infringement. British Telecom specifically describes how MGL's product meets each limitation in claim 10, using photographs of the product and quoting language from Match.com's website. See Disc Disease , 888 F.3d at 1260 (finding Plaintiff's complaint sufficient because it "specifically identified the three accused products—by name and by attaching photos of the product packaging as exhibits—and alleged that the accused products meet ‘each and every element of at least one claim.’ "). For example, the infringement charts allege that: "[a] first set of rules is based on information in the user's profile"; "Match.com generates personalized weightings for the users according to a second set of rules and with reference to a set of user preference data"; "Match.com receives event statistics relating to the user's activity when the user rates other users"; and "Match.com updates the criteria it uses for matching a particular user (in the user's profile) with other users based on the [user's preference and activity]." Dkt. No. 17, Ex. J. These allegations are sufficient to satisfy the pleading requirements set forth in the Twombly / Iqbal line of cases.

MGL argues that the first amended complaint "contains nothing showing that two sets of rules are present in the accused Match.com service ... [and] merely shows that the Match.com service utilizes an algorithm that learns user preferences from user ratings of proposed matches." Dkt. No. 25, at 7. However, MGL's argument is based on a more rigorous pleading standard than the law imposes. That is especially clear in light of the fact that, as appears to be the case here, MGL's "Daily Match" algorithm is not in the public domain. MGL fails to demonstrate how British Telecom could have determined whether, for example, MGL's product contains "IF/THEN" rule statements that "are the hallmarks of the '105 Patent." Id. at 8; see Dkt. No. 34, at 3 (British Telecom's claim charts "provide no basis to infer that the Match.com service employs any of the '105 Patent's hallmark claim elements: multiple rule sets ....").

MGL also argues that "British Telecom equates the claims' rules with Match.com's preference data." Dkt. No. 25, at 9. According to MGL, that is inappropriate, because "as a matter of plain English and common sense, user ‘preferences’ are not ‘rules.’ " That argument misconstrues British Telecom's infringement contentions. The infringement contentions clearly differentiate between rules and preferences. See Dkt. No. 17, Ex. J, at 17 ("first set of rules is based on ... user preferences" (emphasis added) ); id. at 18 ("Match.com generates personalized weightings for the users according to a second set of rules and with reference to a set of user preference data " (emphasis added) ).

Implicit in MGL's argument regarding rules and preferences is a...