eResearchTechnology, Inc. v. CRF, Inc.

• Decision Date: 10 May 2016
• Docket Number: Civil Action No. 15-918
• Citation: 186 F.Supp.3d 463
• Parties: eResearchTechnology, Inc., Plaintiff, v. CRF, Inc, d/b/a CRF Health, Defendant.
• Court: U.S. District Court — Western District of Pennsylvania

186 F.Supp.3d 463

eResearchTechnology, Inc., Plaintiff,

v.CRF, Inc, d/b/a CRF Health, Defendant.

Civil Action No. 15-918

United States District Court, W.D. Pennsylvania.

Signed May 10, 2016

Edward G. Poplawski, Grace J. Pak, Olivia M. Kim, Wilson, Sonsini, Goodrich & Rosati, Los Angeles, CA, James M. Singer, William L. Stang, Richard L. Holzworth, Fox Rothschild LLP, Pittsburgh, PA, for Plaintiff.

Andrew P. Nemiroff, Law Office of Andrew P. Nemiroff, Esq., Metuchen, NJ, Gene A. Tabachnick, John C. Thomas, Richard T. Ting, Beck & Thomas, P.C., Pittsburgh, PA, for Defendant.

MEMORANDUM OPINION

Nora Barry Fischer, United States District Judge

I. Introduction

Plaintiff eResearchTechnology, Inc. ("ERT") filed suit against Defendant CRF, Inc., d/b/a CRF Health ("CRF") on July 15, 2015, and filed an amended complaint on October 22, 2015, alleging that CRF's products infringe five of Plaintiff's patents.¹ (Docket Nos. 1, 18). Presently before the Court is Defendant's Motion to Dismiss, Pursuant to Rule 12(b)(6) and related brief, (Docket Nos. 24–25), Plaintiff's response thereto, (Docket No. 29), Defendant's Reply, (Docket No. 34), and Plaintiff's Sur-Reply, (Docket No. 35). The Court has also had the benefit of hearing and oral argument which occurred on January 29, 2016 and March 10, 2016. (Docket Nos. 36, 38). For the following reasons, Defendant's Motion to Dismiss, Pursuant to Rule 12(b)(6) [24] is GRANTED.

II. Background

Plaintiff ERT is a Delaware corporation with its principal place of business in Pittsburgh, and is a leading cloud platform solutions provider for clinical trials. (Docket No. 18 at 2). ERT advertises that its services and products improve the accuracy and reliability of patient data within the clinical drug trial process. (Docket No. 29 at 1). Defendant CRF is likewise a Delaware corporation, but with a principal place of business in Plymouth Meeting, Pennsylvania. (Docket No. 18 at 2). CRF competes with ERT, and similarly provides mobile technology and services in the clinical trial space. (Docket No. 29 at 1–2).

Participant noncompliance with clinical drug trials is expensive and problematic for pharmaceutical companies trying to navigate the drug approval process. (See Docket No. 18-1 at 1:23–48). In the past, trial participants were given paper-based diaries to record their medical information during the course of a clinical trial, but that method of collecting data proved error prone. (Id. ). Additionally, evaluating participant compliance using the paper-based diaries itself was complicated. (Id. ). In response, clinical drug trial companies like ERT and CRF started offering electronic solutions to help pharmaceutical companies better record and analyze trial participant data. (See Docket No. 29-2; also CRF Health (last visited May 6, 2016) http://www.crfhealth.com/platform/; PRO eCOA Scientific Services , ERT (last visited May 6, 2016) https://www.ert.com/ecoa/pro-ecoa-scientific-services/). The benefits of using an electronic system appear to be substantial both in terms of cost-savings and increasing the quality of the clinical drug trial process. (See Docket No. 29-2). Accordingly, both parties have a strong incentive to police their intellectual property assets; hence, Plaintiff filed the instant lawsuit.

Plaintiff is the owner of the five patents-in-suit, i.e. , the '180, '519, '605, '970, and the '447 Patents, which are collectively directed to improving clinical trials. (Docket No. 18 at ¶ 2). Plaintiff asserts that Defendant infringes its patents, and particularly accuses Defendant of infringing them, both directly and indirectly, by way of providing and inducing others to use Defendant's "'eCOA' solution."² (Docket No. 18 at ¶ 20).

In the instant motion to dismiss, Defendant contends that Plaintiff's patents are not patent-eligible, and thus, Defendant cannot be found liable for infringement. (Docket No. 24). Plaintiff counters by arguing that its patents are patent-eligible and that Defendant has infringed same. (Docket No. 29).

III. Procedural Posture

Plaintiff initiated this lawsuit against Defendant on July 15, 2015, alleging that the Defendant infringed the '180, '519, and '605 Patents. (Docket No. 1). Shortly thereafter, Plaintiff filed an amended complaint, asserting the '970 and '447 Patents as well. (Docket No. 18). Defendant filed the instant Motion to Dismiss on November 5, 2015, (Docket No. 24), and the parties briefed same. (Docket Nos. 25, 29, 34, 35). As noted, the Court conducted Motion Hearings. (Docket Nos. 36, 38). Hence, the matter is now ripe for disposition.

IV. Legal Standard³

When reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the court must "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." Eid v. Thompson, 740 F.3d 118, 122 (3d Cir.2014) (quoting Phillips v. Cnty of Allegheny, 515 F.3d 224, 233 (3d Cir.2008) ). A pleading party need not establish the elements of a prima facie case at this stage; the party must only "put forth allegations that 'raise a reasonable expectation that discovery will reveal evidence of the necessary element[s]."' Fowler v. UPMC Shadyside, 578 F.3d 203, 213 (3d Cir.2009) (quoting Graff v. Subbiah Cardiology Associates, Ltd., 2008 WL 2312671 (W.D.Pa. June 4, 2008) ); see also Connelly v. Lane Const. Corp. , 809 F.3d 780, 790 (3d Cir.2016) ("Although a reviewing court now affirmatively disregards a pleading's legal conclusions, it must still...assume all remaining factual allegations to be true, construe those truths in the light most favorable to the plaintiff, and then draw all reasonable inferences from them.") (citing Foglia v. Renal Ventures Mgmt., LLC , 754 F.3d 153, 154 n. 1 (3d Cir.2014) ).

Nonetheless, a court need not credit bald assertions, unwarranted inferences, or legal conclusions cast in the form of factual averments. Morse v. Lower Merion School District, 132 F.3d 902, 906, n. 8 (3d Cir.1997). The primary question in deciding a motion to dismiss is not whether the Plaintiff will ultimately prevail, but rather whether he or she is entitled to offer evidence to establish the facts alleged in the complaint. Maio v. Aetna, 221 F.3d 472, 482 (3d Cir.2000). The purpose of a motion to dismiss is to "streamline [ ] litigation by dispensing with needless discovery and factfinding." Neitzke v. Williams, 490 U.S. 319, 326–327, 109 S.Ct. 1827, 104 L.Ed.2d 338 (1989).

A patent case may be dismissed based on a lack of patent-eligibility,⁴ under 35 U.S.C. § 101. See e.g., Genetic Techs. Ltd. v. Merial L.L.C. , 818 F.3d 1369 (Fed.Cir.2016) (affirming motion to dismiss based on 35 U.S.C. § 101 ).

Title 35, United States Code Section 101, recites:

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. Despite the broad statutory language, "[l]aws of nature, natural phenomena, and abstract ideas are not patent-eligible." Alice Corp. Pty. Ltd. v. CLS Bank Int'l , ––– U.S. ––––, 134 S.Ct. 2347, 2354, 189 L.Ed.2d 296 (2014) (quoting Association for Molecular Pathology v. Myriad Genetics, Inc. , 569 U.S. ––––, ––––, 133 S.Ct. 2107, 2116, 186 L.Ed.2d 124 (2013) ). The aforementioned exceptions are deemed unpatentable because otherwise one could "pre-empt" an entire field by monopolizing fundamental building blocks related thereto. See Alice , 134 S.Ct. at 2347 ; Bilski v. Kappos , 561 U.S. 593, 610, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010) ("A contrary holding 'would wholly preempt the mathematical formula and in practical effect would be a patent on the algorithm itself."') (quoting Gottschalk v. Benson , 409 U.S. 63, 72, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972) ). Further, such pre-emption "might tend to impede innovation more than it would tend to promote it, thereby thwarting the primary object of the patent laws." Alice , 134 S.Ct. at 2354 (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc. , 566 U.S. 66, 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012) ); see U.S. CONST., Art. I, § 8, cl. 8 (Congress "shall have Power...To promote the Progress of Science and useful Arts") (internal quotations omitted). Courts, however, must distinguish between patents that attempt to claim the "building blocks of human ingenuity," and those that use said building blocks to create something more, thereby transforming them into patent eligible inventions. Alice , 134 S.Ct. at 2354 (citing Mayo , 132 S.Ct. at 1303 ).

With the forgoing in mind, the Supreme Court has set out a two-part test for distinguishing whether a patent claims patent-ineligible subject matter. First, a court must determine "whether the claims at issue are directed to one of those patent-ineligible concepts." Id. If the court determines that a patent is so directed, then as a second step it must ask "what else is there in the claims before [the court]." Id. To answer the question in the second step, the court must 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." Id. The second step of the analysis is "a search for an inventive concept—i.e. , an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself." Id. at 2355.

V. Discussion

A. Procedural Considerations

Plaintiff initially objects to the Court evaluating Defendant's motion to dismiss, asserting that the Court cannot rule on the motion without engaging in claim construction, and that the Court cannot use representative claims to consider the patent-eligibility of the patents-in-suit. (...