NextPoint, Inc. v. Hewlett-Packard Co., 15 C 8550

• Decision Date: 08 June 2016
• Docket Number: No. 15 C 8550,15 C 8550
• Citation: 227 F.Supp.3d 963
• Parties: NEXTPOINT, INC., Plaintiff, v. HEWLETT–PACKARD CO., et al., Defendants.
• Court: U.S. District Court — Northern District of Illinois

227 F.Supp.3d 963

NEXTPOINT, INC., Plaintiff,

v.HEWLETT–PACKARD CO., et al., Defendants.

No. 15 C 8550

United States District Court, N.D. Illinois, Eastern Division.

Signed June 8, 2016

Daniel C. Cotman, Obi Ian Iloputaife, Rasheed M. McWilliams, Cotman IP Law Group, PLC, Pasadena, CA, John Montgomery Owen, Peter Michael Spingola, Chapman Spingola, LLP, Jonathan I. Loevy, Matthew Vincent Topic, Loevy & Loevy, Chicago, IL, for Plaintiff.

Barry K. Shelton, Conor Monroe Civins, David Nicholas Patariu, Pillsbury Winthrop Shaw Pittman LLP, Austin, TX, Malcolm S. Kamin, Grumley, Kamin & Rosic, LLC, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Elaine E. Bucklo, United States District Judge

In this action, plaintiff asserts that defendants infringe U.S. Pat. No. 8,447,731 (the " '731 patent"), titled Method and System for Information Management. Defendants have moved to dismiss the action on the ground that the claimed invention is ineligible for patent protection under 35 U.S.C. § 101. For the reasons that follow, I grant the motion.

I.

The following facts are drawn from plaintiff's amended complaint and from the '731 patent, which is attached to it. Plaintiff is the assignee of the '731 patent and describes itself as "a company that has pioneered the use of internet and cloud-based technologies within the legal system." Am. Cmplt. at ¶ 9. The company's founder, Rakesh Madhava, is one of the '731 patent's inventors. Id.

Sometime after plaintiff began delivering litigation support services to clients in 2001, Mr. Madhava identified certain shortcomings that led him to develop "a novel system and method to manage the electronic data produced during litigation" using traditional, "non-cloud based" computational resources. Id. at ¶ 10.¹ Mr. Madhava recognized, however, that "legacy technology solutions" were "ill-equipped to handle the unpredictable processing and storage requirements of modern litigation." Id. at ¶ 11. He thus conceived the idea of adapting his litigation management software for use in a cloud-based environment.

This idea led to the invention claimed in the '731 patent. Id.

The patent's specification states that the invention "relates generally to a method and system for managing information and more specifically, to tracking information in connection with litigation support services." '731 patent at col. 1:23–25. It goes on to identify examples of these services, such as "managing the designation of exhibits, deponents and other information for one or more cases." Id. at col. 1:27–29. The specification states that at the time of the invention, these services were "most common[ly]...provided by secretaries or paralegals via spreadsheets designed to calculate numbers and perform mathematical tasks rather than organizational tasks." Id. at col. 1:23–32.

The '731 patent contains twenty-one figures, in which "there is illustrated a system and method for managing trial information and generating respective standardized reports that can be used for efficiently tracking the status of the trial information." Id. at col. 2:44–48. The figures depict exemplary computers and computer networks on which an embodiment of the invention may be operated and a series of exemplary screen shots depicting windows that may be used in an embodiment. See '731 patent at Figs. 1–21. The detailed written description references these figures, describing the invention "in the general context of a computer network 20 , as is well know[n] in the industry, and computer executable instructions being executed by general purpose computing devices within the computer network 20 . '731 patent at col. 2:49–53.

The patent includes nine claims, eight of which depend from claim 1, which recites:

1. A method for collecting and managing trial information comprising the steps of:

receiving electronically stored information related to a trial;

storing the electronically stored information in a virtual storage location;

parsing the electronically stored information by analyzing the electronically stored information and extracting various metadata;

dividing the electronically stored information into a plurality of blocks of information, wherein each of said plurality of blocks of information comprises the smallest block of information to be processed at one time depending on type of processing required;

accessing a cloud computing network which provisions a plurality of virtual computers, each of the plurality of virtual computers using computational resources which are available remotely over a public network; and

providing processing instructions to each of the plurality of virtual computers to access the virtual storage location and to process a next available one of said plurality of blocks of information of the electronically stored information, wherein said providing processing instructions to each of the plurality of virtual computers comprises:

providing processing instructions for processing the electronically stored data from the host computer to the cloud computing network;

receiving the processing instructions by the cloud computing network and uploading the processing instructions to at least one virtual computer;

storing, by the at least one virtual computer, of the processed electronically stored data in a storage location;

indicating on a primary database by the at least one virtual computer where the processed electronically stored data is stored; and

making the processed electronically stored data available to a user.

'731 patent at col. 20: 25–60.

Defendants argue that all claims of the '731 patent are invalid because they claim an abstract idea lacking any "inventive concept" to make them eligible for patent protection. Plaintiff disagrees that the claims are drawn to an abstract idea and argues that even if they were, defendants have not established that the claims lack an inventive concept.

II.

Section 101 of the Patent Act defines the subject matter that is eligible for patent protection: "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof." 35 U.S.C. § 101. The Supreme Court has long recognized, however, that this definition "contains an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable." Alice Corp. Pty. Ltd. v. CLS Bank Intern. , ––– U.S. ––––, 134 S.Ct. 2347, 2354, 189 L.Ed.2d 296 (2014) (internal quotation marks and citation omitted). The Court explained in Alice that because the Patent Act's primary object is "[t]o promote the Progress of Science and useful Arts," patent protection must not extend to the "building blocks of human ingenuity," since "monopolization of those tools through the grant of a patent might tend to impede innovation more than it would tend to promote it." Id. (quoting U.S. Const., Art. I, § 8, cl. 8, Bilski v. Kappos , 561 U.S. 593, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010), and Mayo Collaborative Services v. Prometheus Laboratories, Inc. , 566 U.S. 66, 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012) ).

The Alice Court cautioned, however, that because "[a]t some level, all inventions...embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas," courts must "tread carefully in construing this exclusionary principle lest it swallow all of patent law." Id. (quoting Mayo , 132 S.Ct. at 1293 ) (ellipses in original, internal quotations omitted). Courts' objective in applying the § 101 exception is thus to "distinguish between patents that claim the building blocks of human ingenuity and those that integrate the building blocks into something more." Id. (citations, internal quotation marks, and alterations omitted).

In Mayo , the Court established a two-part framework for distinguishing between patents claiming "abstract ideas" (or other ineligible subject matter, but in this case the focus is on abstract ideas) and those that claim patent-eligible applications of those ideas. Alice , 134 S.Ct. at 2355 (citing Mayo , 132 S.Ct. at 1296–97 ). The first step asks whether the asserted claims are directed to an abstract idea. Id. If the answer is "yes," the analysis proceeds to the second step, which examines the elements of each claim both individually and "as an ordered combination" to ascertain whether the claim "contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application." Id. at 2357 (quoting Mayo , 132 S.Ct. at 1294, 1298 )

"Whether a claim is drawn to patent-eligible subject matter under § 101is an issue of law." In re Bilski , 545 F.3d 943, 951 (Fed. Cir. 2008) (en banc), aff'd , 561 U.S. 593, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010). The issue may, in appropriate circumstances, be decided on a motion to dismiss. See, e.g. , Ultramercial, Inc. v. Hulu, LLC , 772 F.3d 709 (Fed. Cir. 2014) (affirming dismissal based on § 101 ineligibility); Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass'n , 776 F.3d 1343, 1348 (Fed. Cir. 2014) (same); TLI Communications v. AV Automotive , 823 F.3d 607 (Fed. Cir. 2016) (Slip Op.) (same). When a challenge to subject matter eligibility is asserted on the pleadings, courts construe all claim terms in the manner most favorable to the patentee. See Content Extraction , 776 F.3d at 1349.

II.

Lower courts have struggled to apply the Alice /Mayo framework consistently in a variety of factual circumstances. As the Federal Circuit recently observed in a case addressing the patent eligibility of abstract ideas, "it is not always easy to determine the boundary between abstraction and patent-eligible subject matter." Internet Patents Corp. v. Active Network, Inc. , 790 F.33d 1343, 1347 (Fed. Cir. 2015). Illustrating the point, in just the short time since briefing on defendants' motion concluded, the Federal Circuit has issued two decisions on the subject matter eligibility of computer-related patents, reaching opposite conclusions on the specific claims asserted. Compare ...