Cal. Inst. Technology v. Hughes Commc'ns Inc.

• Citation: 59 F.Supp.3d 974,113 U.S.P.Q.2d 2062
• Decision Date: 03 November 2014
• Docket Number: Case No. 2:13–cv–07245–MRP–JEM.
• Parties: The CALIFORNIA INSTITUTE OF TECHNOLOGY, Plaintiff, v. HUGHES COMMUNICATIONS INC., Hughes Network Systems LLC, Dish Network Corporation, Dish Network L.L.C., and Dishnet Satellite Broadband L.L.C., Defendants.
• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California

59 F.Supp.3d 974
113 U.S.P.Q.2d 2062

The CALIFORNIA INSTITUTE OF TECHNOLOGY, Plaintiff
v.
HUGHES COMMUNICATIONS INC., Hughes Network Systems LLC, Dish Network Corporation, Dish Network L.L.C., and Dishnet Satellite Broadband L.L.C., Defendants.

Case No. 2:13–cv–07245–MRP–JEM.

United States District Court, C.D. California, Western Division.

Signed Nov. 3, 2014.

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James R. Asperger, Bryan Christopher Hathorn, Quinn Emanuel Urquhart and Sullivan LLP, Los Angeles, CA, Kevin P.B. Johnson, Mark Yeh–Kai Tung, Quinn Emanuel Urquhart and Sullivan LLP, Redwood Shores, CA, Edward J. DeFranco, Eric H. Huang, Quinn Emanuel Urquhart and Sullivan LLP, New York, NY, Kathy Ke Peng, Quinn Emanuel Urquhart

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and Sullivan LLP, San Francisco, CA, for Plaintiff.

George Hopkins Guy, III, Baker Botts LLP, Palo Alto, CA, Aaron Shawn Thompson, David C. Marcus, James M. Dowd, Matthew J. Hawkinson, Wilmer Cutler Pickering Hale and Dorr LLP, Los Angeles, CA, Jeffrey T. Hantson, William G. McElwain, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, DC, Richard Goldenberg, William F. Lee, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, MA, for Defendants.

ORDER DENYING DEFENDANTS' MOTION FOR SUMMARY JUDGMENT ON 35 U.S.C. § 101 INELIGIBILITY

MARIANA R. PFAELZER, District Judge.

I. Introduction

Plaintiff California Institute of Technology (“Caltech”) has asserted U.S. Patent Nos. 7,116,710 (“the '710 patent”), 7,421,032 (“the '032 patent”), 7,916,781 (“the '781 patent”), and 8,284,833 (“the '833 patent,”) against Defendants Hughes Communications, Inc., Hughes Network Systems, LLC, DISH Network Corporation, DISH Network L.L.C., and dishNET Satellite Broadband L.L.C. (collectively, “Hughes”). The Court issued a claim construction order on August 6, 2014. See Cal. Inst. of Tech. v. Hughes Commc'ns Inc., 35 F.Supp.3d 1176, No. 2:13–cv–07245, 2014 WL 3866129 (C.D.Cal. Aug. 6, 2014).

Hughes moves for summary judgment on the grounds that the asserted claims are not patentable under 35 U.S.C. § 101.¹ The asserted claims focus on a particular form of error correction code, but the concerns underlying the patentability of these claims are the same concerns underlying the patentability of software generally. Having considered the parties' briefs and the papers filed therewith, the Court concludes that all asserted claims are patentable. Therefore, the Court denies Hughes' motion for summary judgment.

II. Background

The asserted claims are method and apparatus claims relating to error correction.² In modern electronic systems, data are stored in the form of bits having the value “1” or “0.” During data transmission, a random or irregular fluctuation (known as noise) can occur in the signal and corrupt data. For example, a transmitter may send a bit with the value “1,” but noise may corrupt this bit and cause the receiver to read the value as “0.” To mitigate this problem, electronic systems use error correction. Error correction depends on redundancy, which refers to “extra” bits that may be duplicates of original information bits³ and are transmitted along with the original bits. These extra bits are not necessary, in the sense that the original information exists without them, but they serve an important purpose. Using these extra bits, the receiver can ensure that the original information

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bits were not corrupted during transmission.

Caltech's patents are directed to a form of error correction code called an irregular repeat and accumulate (“IRA”) code. An IRA code operates as follows: the code can introduce redundancy by repeating (i.e., duplicating) different original bits irregularly (i.e., a different number of times). These information bits may then be randomly permuted and combined to form intermediate bits, which are accumulated to form parity bits. Parity bits reflect the values of a selection of original information bits. These parity bits are transmitted along with the original information bits. The receiver ensures that the received original information bits were not corrupted during transmission. It can do this by modulo–2 (“mod–2”) adding the original information bits and parity bits.⁴ The receiver knows whether this sum is supposed to be odd or even. If the sum is supposed to be odd but is instead even, the receiver will know that an error occurred and can perhaps correct the error using other information it has received.

The benefit of an IRA code is that not all bits are repeated the same number of times. The repetition of certain bits provides redundancy. Although greater repetition of every bit would allow for better error correction, it would also force the transmitter to send more bits, decreasing the coding rate and increasing data transfer time.⁵ IRA codes balance competing goals: data accuracy and efficiency. The asserted claims recite generally encoding and decoding bits in accordance with an IRA code.

III. Standard for Summary Judgment

The Court shall grant summary judgment if there is no genuine dispute as to any material fact, as supported by facts on the record that would be admissible in evidence, and if the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56 ; see Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Ineligibility under § 101 is a question of law.⁶ In re

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Comiskey, 554 F.3d 967, 975 (Fed.Cir.2009). The Court may appropriately decide this issue at the summary judgment stage.

IV. Ineligibility Under 35 U.S.C. § 101

Section 101 of the Patent Act defines patentable subject matter: “Whoever 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. Section 101 defines four broad categories of patentable inventions: processes, machines, manufactures, and compositions of matter. “Congress took this permissive approach to patent eligibility to ensure that ingenuity should receive a liberal encouragement.” Bilski v. Kappos, 561 U.S. 593, 601, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010) (internal quotation marks omitted). But § 101 does not encompass all products of human effort and discovery. Laws of nature, physical phenomena, and abstract ideas are not patentable. Diamond v. Chakrabarty, 447 U.S. 303, 309, 100 S.Ct. 2204, 65 L.Ed.2d 144 (1980). These exceptions are well established. See, e.g., Chakrabarty, 447 U.S. at 309, 100 S.Ct. 2204 ; Diamond v. Diehr, 450 U.S. 175, 185, 101 S.Ct. 1048, 67 L.Ed.2d 155 (1981) ; Parker v. Flook, 437 U.S. 584, 599, 98 S.Ct. 2522, 57 L.Ed.2d 451 (1978) (Stewart, J., dissenting); Gottschalk v. Benson, 409 U.S. 63, 67, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972) ; Funk Bros. Seed Co. v. Kalo Inoculant Co., 333 U.S. 127, 130, 68 S.Ct. 440, 92 L.Ed. 588 (1948) ; Le Roy v. Tatham, 55 U.S. 156, 175, 14 How. 156, 14 L.Ed. 367 (1853).

On occasion, the Federal Circuit has described § 101 as a “coarse eligibility filter,” barring only “manifestly abstract” inventions and leaving §§ 102, 103, and 112 as the finer sieves. See Ultramercial, Inc. v. Hulu, LLC, 722 F.3d 1335, 1341, 1354 (Fed.Cir.2013), vacated sub nom., WildTangent, Inc. v. Ultramercial, LLC, ––– U.S. ––––, 134 S.Ct. 2870, 189 L.Ed.2d 828 (2014). But in its last few terms, the Supreme Court has indicated that patentability is a higher bar. See Alice Corp. Pty. Ltd. v. CLS Bank Int'l, ––– U.S. ––––, 134 S.Ct. 2347, 2354–55, 189 L.Ed.2d 296 (2014) ; Ass'n for Molecular Pathology v. Myriad Genetics, Inc., ––– U.S. ––––, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013) ; Mayo Collaborative Servs. v. Prometheus Labs., Inc., ––– U.S. ––––, 132 S.Ct. 1289, 1293–94, 182 L.Ed.2d 321 (2012) ; Bilski, 561 U.S. at 609–13, 130 S.Ct. 3218. As noted by Judge Mayer of the Federal Circuit,

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a “robust application” of § 101 ensures “that patent protection promotes, rather than impedes, scientific progress and technological innovation.” I/P Engine, Inc. v. AOL Inc., 576 Fed.Appx. 982, 996 (Fed.Cir.2014) (nonprecedential) (Mayer, J., concurring).

Courts must evaluate patent eligibility using a two-part test. First, a court must ask if the claim is “directed to one of those patent-ineligible concepts”—a law of nature, physical phenomenon, or abstract idea. Alice, 134 S.Ct. at 2355. Second, if the claim is directed to one of these concepts, the court must ask “[w]hat else is there in the claims before us?” Mayo, 132 S.Ct. at 1297. This second step determines whether there is an “inventive concept” that “ensure[s] that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.” Alice, 134 S.Ct. at 2355.

These steps are broadly stated and, without more, would be difficult to apply. Fortunately, although the two-part test was created in Ma...