O2 Media, LLC v. Narrative Sci. Inc., 15 C 05129

• Decision Date: 25 February 2016
• Docket Number: No. 15 C 05129,15 C 05129
• Citation: 149 F.Supp.3d 984
• Parties: O2 Media, LLC, Plaintiff, v. Narrative Science Inc., Defendant.
• Court: U.S. District Court — Northern District of Illinois

149 F.Supp.3d 984

O2 Media, LLC, Plaintiff,

v.Narrative Science Inc., Defendant.

No. 15 C 05129

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

Signed February 25, 2016

Michael James Waters, Angelo J. Bufalino, Alain Villeneuve, Vedder Price P.C., Chicago, IL, for Plaintiff.

Michael Anthony Parks, Nathan P. Sportel, Thompson Coburn LLP, Chicago, IL, Anthony F. Blum, Jonathan G. Musch, Thompson Coburn LLP, St. Louis, MO, for Defendant.

MEMORANDUM OPINION AND ORDER

John J. Tharp, Jr.

, United States District Judge

This is a case in which the plaintiff seeks to enforce three related business method patents for a computer-assisted process of generating financial reports and news stories relating to selected data. The plaintiff, O2 Media, LLC (“O2 Media”), brings suit against the defendant, Narrative Science Inc. (“Narrative Science”), alleging patent infringement in violation of the Patent Act, 35 U.S.C. § 271 et seq .,

and breach of the Illinois Uniform Deceptive Trade Practices Act (“UDTPA”), 815 ILCS 510/2. The asserted patents were all issued before the Supreme Court “threw cold water”¹ on business method patents that claim the automation of otherwise generic processes in Alice Corp. Pty. Ltd. v. CLS Bank Int'l , ––– U.S. ––––, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014). Because the patents are directed to an abstract and generic concept—the process of identifying, organizing, and reporting relevant data—and fail to imbue that process with any significant innovative concept, they are invalid under the framework set forth in Alice. Accordingly, Narrative Science's motion to dismiss is granted.

BACKGROUND²

O2 Media is a holding company that publishes websites for investors and licenses content to institutional clients in the investment industry, such as Standard & Poors, Fidelity, TDAmeritrade, NASDAQ.com, and CBOE. Am. Compl. ¶ 1, ECF No. 8. O2 Media is the sole owner and assignee of U.S. Patent Nos. 7,856,390 (“'390 patent”)

, 8,494,944 (“'944 patent”), and 8,676,691 (“'691 patent”). Id . ¶ 6. The United States Patent and Trademark Office (“USPTO”) issued the '390 patent, entitled “System, Report, and Method for Generating Natural Language News-based Stories,” on December 21, 2010 (with a priority date of June 6, 2007). Id . ¶ 7. The '944 patent is a continuation-in-part of the '390 patent and was issued on July 23, 2013 (with a priority date for at least one of its claims of June 6, 2007). Id . ¶ 8. The '691 patent is the third in the family, issued on March 18, 2014 (also with a priority date for at least one of its claims of June 6, 2007). Id . ¶ 9. The patents “generally relate[ ] to a system, report, and method for automatically generating a series of natural language news-based stories to be presented via a digital interface or printed publication to a portfolio user.” '390 Patent 2:58-61; '944 Patent 3:24-27; '691 Patent 3:24-27, ECF No. 1-1 Exs. A-C.

Narrative Science created data-driven communications software—Quill—that uses a computer interface to allow users to select and analyze data, to generate natural language narratives based on that data, and to disseminate those narratives on a large scale. Am. Compl. Ex. D. As such, it can be used to identify data relevant to a portfolio of financial instruments and to generate strategy reports and natural language news stories based on the selected data. Am. Compl. ¶ 17. Quill is available for use in a number of industries, including financial services, government, staffing services, marketing services, and sports. Id . ¶ 14. O2 Media claims that Narrative Science's software, “when used in some or all of its possible ways,” infringes on O2's three patents at issue, that Narrative Science offers Quill to potential O2 Media clients, and that Narrative Science allows third parties to infringe the methods covered in the patents at issue. Id . ¶¶ 17-18.

O2 Media gave Narrative Science notice of its ownership of the patents at issue on March 25, 2015. Id . ¶ 19. Narrative Science did not thereafter obtain a license to use O2's patents nor did it cease offering Quill. Id . O2 Media filed suit in June 2015 alleging patent infringement and violation of the Illinois UDTPA. Narrative Science now moves to dismiss the Complaint.

DISCUSSION

I. Patent Validity Under 35 U.S.C. § 101

Narrative Science's motion to dismiss is premised on the basis that each of the patents at issue are directed to “abstract ideas” and are therefore invalid under 35 U.S.C. § 101

. Section 101 of the Patent Act identifies 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.” The Supreme Court has recognized, however, that § 101 “contains an important implicit exception [for l]aws of nature, physical phenomena, and abstract ideas....” Alice, 134 S.Ct. at 2354. For over 150 years the Court has recognized this exception as necessary to prevent monopolization of the “'basic tools of scientific and technological work”' that “'might tend to impede innovation more than it would tend to promote it,' thereby thwarting the primary object of the patent laws.” Id. (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc. , ––– U.S. ––––, 132 S.Ct. 1289, 1293, 182 L.Ed.2d 321 (2012) ). Narrative Science maintains that the patents at issue are invalid because they claim the abstract idea of “using templates to write stories about selected topics.” Mem. in Supp. 1, ECF No. 15.

A. Ripeness of Narrative Science's Motion to Dismiss

A threshold question that O2 Media raises is whether this Court should determine the patents' validity under § 101

before claim construction. Resp. 8, ECF No. 21. Although it “will ordinarily be desirable—and often necessary—to resolve claim construction disputes prior to a § 101 analysis,” Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.) , 687 F.3d 1266, 1273–74 (Fed.Cir.2012), claim construction is not necessary if the asserted claims, read most favorably to the patent holder, still describe an abstract idea. See

Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n , 776 F.3d 1343, 1349 (Fed.Cir.2014) (endorsing the district court's construction of all claim terms “in the manner most favorable to [the patent holder]” in deciding § 101 eligibility on a motion to dismiss); Ultramercial, Inc. v. Hulu, LLC , 772 F.3d 709, 719 (Fed.Cir.2014) (no formal claim construction required when “there was no reasonable construction that would bring [the claims] within patentable subject matter” (internal quotation marks omitted)). To overcome the presumption of validity of a patent claim under 35 U.S.C. § 282, a § 101 challenge must satisfy a “clear and convincing” standard. Microsoft Corp. v. i4i Ltd. P'ship , 564 U.S. 91, 131 S.Ct. 2238, 2242, 180 L.Ed.2d 131 (2011) (“We consider whether § 282 requires an invalidity defense to be proved by clear and convincing evidence. We hold that it does.”).

Narrative Science's motion to dismiss is ripe for adjudication, then, so long as all terms in the patent claims are construed in the manner most favorable to O2 Media. Market Track, LLC v. Efficient Collaborative Retail Mktg., LLC , No. 14 C 4957, 2015 WL 3637740, at *2 (N.D.Ill. June 11, 2015)

, appeal dismissed (Sept. 8, 2015) (deciding 12(c) motion prior to claim construction, construing all terms in the light most favorable to the patent holder). The only two disputed terms identified by O2 Media are “template” and “news generating algorithm.” O2 Media submits that “ template” means “something that takes incoming data and creates new output data based on the incoming data,” Resp. 9, and that “ news generating algorithm” means “a six-step process that somebody must go through to program a computer.” Oral Arg. Trans. 5:20-21, ECF No. 27. Accordingly, the Court will employ those constructions in evaluating Narrative Science's invalidity challenge.

B. The Supreme Court's Two-Step Mayo Test Although § 101

excludes “laws of nature, natural phenomena, and abstract ideas” from patent protection, inventions that “integrate” such laws, phenomena, or ideas “into something more” are patentable. Alice , 134 S.Ct. at 2354–55. In Mayo Collaborative Services v. Prometheus Laboratories., Inc. , ––– U.S. ––––, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012), the Supreme Court set forth a two-step test for determining whether a claimed invention is sufficiently transformative to be a patentable application of such laws, phenomena, or abstract ideas. Id . at 1296–97. First, the court must determine whether the claims at issue are directed to the excluded content—i.e. , a law of nature, natural phenomena, or abstract idea. Id . ; see also

Alice , 134 S.Ct. at 2355. If so, the court then determines whether there is an inventive concept: considering “the elements of each claim both individually and 'as an ordered combination' [the court must] determine whether the additional elements ‘'transform the nature of the claim’ into a patent-eligible application.” Alice , 134 S.Ct. at 2355 (quoting Mayo , 132 S.Ct. at 1297–98 ).

Shortly after crafting the two-step test in Mayo

, the Supreme Court applied the test to computer-implemented methods in Alice, invalidating “a method of exchanging financial obligations between two parties using a third-party intermediary to mitigate settlement risk.” Alice , 134 S.Ct. at 2356. Applying step one of the Mayo test, the Supreme Court concluded that the patented method was an abstract concept and noted that “the concept of intermediated settlement is a fundamental economic practice long prevalent in our system of commerce.”

Id. (quoting Bilski v. Kappos , 561 U.S. 593, 611, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010) ). Turning to the second step, the Court held that the claimed invention lacked any inventive concept and was little more than implementation of “the abstract idea of intermediated settlement on a generic computer.” Alice , 134 S.Ct. at...