Miller Mendel, Inc. v. City of Anna

• Decision Date: 14 April 2022
• Docket Number: CIVIL ACTION NO. 2:21-CV-00445-JRG
• Parties: MILLER MENDEL, INC., Plaintiff, v. CITY OF ANNA, TEXAS, Defendant.
• Court: U.S. District Court — Eastern District of Texas

598 F.Supp.3d 486

MILLER MENDEL, INC., Plaintiff,

v.CITY OF ANNA, TEXAS, Defendant.

CIVIL ACTION NO. 2:21-CV-00445-JRG

United States District Court, E.D. Texas, Marshall Division.

Signed April 14, 2022

Kurt M. Rylander, Rylander & Associates PC, Vancouver, WA, Elizabeth L. DeRieux, Sidney Calvin Capshaw, III, Capshaw DeRieux LLP, Gladewater, TX, for Plaintiff.

Kevin Michael Curley, Messer, Fort, McDonald, PLLC, Frisco, TX, Douglas J. Sorocco, Evan W. Talley, Dunlap Codding, P.C., Oklahoma City, OK, for Defendant.

ORDER

RODNEY GILSTRAP, UNITED STATES DISTRICT JUDGE

Before the Court is the Motion for Judgment on the Pleadings Pursuant to Federal Rule of Civil Procedure 12(c) and 35 U.S.C. § 101 (the "Motion") filed by Defendant City of Anna, Texas (the "City") on February 15, 2022. (Dkt. No. 16.) In the Motion, the City seeks judgment on the pleadings that the subject matter of U.S. Patent No. 10,043,188 (the "’188 Patent") is ineligible for patent protection under 35 U.S.C. § 101. (Id. at 1–2.)

I. BACKGROUND

a. Procedural History

Plaintiff Miller Mendel, Inc. ("Miller Mendel") filed a Complaint on December 2, 2021 alleging infringement of "at least Claims 1, 5, and 15" of the ’188 Patent by the City and the Anna Police Department. (Dkt. No. 1.)¹ Miller Mendel alleges that the City, "by and through its authorized agency the Anna Police Department," uses the "Guardian Alliance Technologies investigation software platform" (the "Guardian Platform") and infringes the ’188 Patent through use of the Guardian Platform "on a computing device with a processor and system memory[ to assist] an investigator in conducting a background investigation of an application within an organization." (Dkt. No. 21, ¶ 12.)

Miller Mendel has filed several lawsuits throughout the country alleging that customers of Guardian Alliance Technologies ("GAT") infringe the same claims of the ’188 Patent. (Dkt. No. 16 at 1–2.) In October 2018, Miller Mendel sued the City of Oklahoma City in the Western District of Oklahoma (the "Oklahoma Action"). (Id. ; see also Case. No. CIV-18-990-JD (W.D. Okla.).) In the Oklahoma Action, the defendant filed a § 101 motion that was denied based on factual disputes pending claim construction. (Dkt. No. 16 at 1; see also Case. No. CIV-18-990-JD, Dkt. No. 32 (W.D. Okla.).) Claim construction in the Oklahoma Action was fully briefed as of May 10, 2021, a Markman hearing has not been scheduled, and a claim construction order has not yet issued. (See, e.g. , Dkt. No. 16 at 1; see also Dkt. No. 24 at 3; Case. No. CIV-18-990-JD, Dkt. No. 122 (W.D. Okla.).) In February 2021, Miller Mendel filed an infringement suit against Washington County, Oregon (the "Oregon Action") (Case No. 3:21-cv-00168-SB (D. Ore.)) and in May 2021, Miller Mendel sued the State of Alaska (the "Alaska Action") (Case No. 3:21-cv-00129-HRN (D. Alaska)). (Dkt. No. 16 at 1.) Both the Oregon Action and the Alaska Action have been stayed pending the outcome of the Oklahoma Action. (Id. at 1–2.) In all pending actions filed by Miller Mendel against GAT customers, "GAT is contractually obligated to defend and indemnify Miller Mendel's claims for patent infringement." (Id. at 7.)

b. The ’188 Patent

The ’188 Patent is entitled "Background Investigation Management Service" and was issued on August 7, 2018. The ’188 Patent is directed to a "software system for managing the process of performing pre-employment background investigations." ( ’188 Patent at 3:66–4:2.) The ’188 Patent describes a "software system 100 [that] allows an organization 102 the ability to create and customize electronic documents 104 to be sent to applicants to complete via the software system 100, and returned to the software system 100 in similar fashion." (Id. at 4:5–9.)

The specification notes that the "system 100 automates the majority of the tasks of a common pre-employment background investigation so that fewer hardcopy documents are necessary, thus creating more efficient management of individual background investigations." (Id. at 4:12–16.) The system also "automatically processes information entered in the documents to save organizations time and allow quicker turnaround of the background investigation." (Id. at 4:33–36.) The "technical functions and features" of the system are "initiated when a remote terminal communicates with a central computer (server) via the Internet or other network." (Id. at 4:41–44.) Claim 1 of the ’188 Patent reads as follows:²

A method for a computing device with a processor and a system memory to assist an investigator in conducting a background investigation of an applicant for a position within a first organization, comprising the steps of:

receiving a first set of program data comprising information identifying the applicant, the position, the first organization, and the investigator;

storing a new applicant entry in the system memory, the new applicant entry associated with the first set of program data;

transmitting an applicant hyperlink to an applicant email address associated with the applicant, the applicant hyperlink for viewing an applicant set of electronic documents;

receiving an applicant electronic response with a reference set of program data, wherein the reference set of program data comprises information regarding a reference source, wherein the reference source is a person, the program data including a reference email address associated with the reference source;

determining a reference class of the reference source based on the reference set of program data;

selecting a reference set of electronic documents based on the reference class of the reference source;

transmitting a reference hyperlink to the reference email address, the reference hyperlink for viewing the reference set of electronic documents;

receiving a reference electronic response to the reference set of electronic documents from the reference source;

storing the reference electronic response in the system memory, associating the reference electronic response with the new applicant entry; and

generating a suggested reference list of one or more law enforcement agencies based on an applicant residential address.

( ’188 Patent at Claim 1.)

The parties agree that during prosecution of the ’188 Patent, "the examiner rejected all pending claims under Section 101 as patent ineligible[.]" (Dkt. No. 24 at 3; see also Dkt. No. 16 at 10–11 (noting that the "patent examiner found that the proposed claims fall under the abstract concept of ‘Fundamental Economic Practices.’ ").) Miller Mendel contends that to counter that rejection, the applicant pointed to the step of Claim 1 that recites "generating a suggested reference list of one or more law enforcement agencies based on an applicant residential address." (Id. at 3–4.) The specification of the ’188 Patent refers to this feature as the "Address Locator," which "will retrieve law enforcement and court names, addresses and phone numbers for a pre-defined radius around the applicant's past and current addresses, and those addresses of the applicant's employer's [sic ] and relatives." ( ’188 Patent at 9:48–53.) Specifically:

The system does this by taking the address information the applicant provided on questionnaires he or she submitted to the organization via the software system. The system then conducts a search using an Internet search engine for agencies and courts around the selected address. A list of agencies and courts is presented to the user at which time the organization user selects which agencies and courts the organization will send reference letters and requests for records checks to. The user can also edit the address in case of any system mistake.

(Id. at 9:54–62.)

The City also points out that, in response to the § 101 rejection, the applicant argued that the examiner's rejection was incorrect because the examiner "failed to expressly support the necessary underlying fact determinations to reach such a conclusion, as required by Patent Office guidelines then in effect for a § 101 rejection, namely: (1) a citation to an express statement by applicant; (2) a court decision finding similar claim language ineligible; (3) a publication that demonstrates the well-understood, routine, conventional nature of the additional element(s); or (4) a statement that the examiner is taking official notice of the well-understood, routine, conventional nature of the additional element(s)." (Id. at 11) (quotations omitted). The claims were subsequently allowed. (Id. )³

II. LEGAL STANDARD

a. Rule 12(c)

After the pleadings are closed, but early enough not to delay trial, a party may move for judgment on the pleadings. Fed. R. Civ. P. 12(c). "The standard for deciding a Rule 12(c) motion is the same as a Rule 12(b)(6) motion to dismiss ... [t]he plaintiff must plead ‘enough facts to state a claim for relief that is plausible on its face.’ " Guidry v. American Public Life Ins. Co. , 512 F.3d 177, 180 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). In a patent case, the Federal Circuit reviews procedural aspects of motions for judgment on the pleadings using regional circuit law. RecogniCorp, LLC v. Nintendo Co., Ltd. , 855 F.3d 1322, 1325–26 (Fed. Cir. 2017).

b. Patent Eligibility

Anyone who "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. 35 U.S.C. § 101. Since patent protection does not extend to claims that monopolize the "building blocks of human ingenuity," claims directed to laws of nature, natural phenomena, and abstract ideas are not patent eligible. Alice Corp. Pty. v. CLS Bank Int'l , 573 U.S. 208, 134 S. Ct. 2347, 2354, 189 L.Ed.2d 296 (2014). The Supreme Court instructs courts to distinguish between claims that set forth patent-ineligible subject matter and those that "integrate the building blocks into something more." ( Id. )

First, the court "determine[s] whether...