RecogniCorp, LLC v. Nintendo Co.

• Decision Date: 28 April 2017
• Docket Number: 2016-1499
• Citation: 855 F.3d 1322
• Parties: RECOGNICORP, LLC, Plaintiff–Appellant v. NINTENDO CO., LTD., Nintendo of America, Inc., Defendants–Appellees
• Court: U.S. Court of Appeals — Federal Circuit

855 F.3d 1322

RECOGNICORP, LLC, Plaintiff–Appellant

v.NINTENDO CO., LTD., Nintendo of America, Inc., Defendants–Appellees

2016-1499

United States Court of Appeals, Federal Circuit.

Decided: April 28, 2017

Jonathan Daniel Baker , Farney Daniels PC, San Mateo, CA, argued for plaintiff-appellant. Also represented by David P. Swenson , Minneapolis, MN.

Mark S. Parris , Orrick, Herrington & Sutcliffe LLP, Seattle, WA, argued for defendants-appellees. Also represented by Donald E. Daybell , Irvine, CA; Marc Shapiro , New York, NY; Will Melehani , San Francisco, CA.

Before Lourie, Reyna, and Stoll, Circuit Judges.

Reyna, Circuit Judge.

RecogniCorp sued Nintendo for patent infringement. The district court found that RecogniCorp's patent claims ineligible subject matter and, based on that finding, granted Nintendo's motion for judgment on the pleadings. RecogniCorp appeals. The patent's claims are directed to the abstract idea of encoding and decoding image data, and the claims do not contain an inventive concept sufficient to render the patent eligible. Therefore, we affirm.

BACKGROUND

1. The '303 Patent

U.S. Patent No. 8,005,303 ("'303 patent") patent is en-titled "Method and Apparatus for Encoding/Decoding Image Data." J.A. 17. It teaches a method and apparatus for building a composite facial image using constituent parts. See, e.g. , J.A. 27 (col. 1 ll. 30–56 and col. 2 ll. 19–28); J.A. 28 (col. 4 ll. 35–45).

Prior to the invention disclosed in the '303 patent, composite facial images typically were stored in file formats such as "bitmap," "gif," or "jpeg." But these file formats required significant memory, and compressing the images often resulted in decreased image quality. Digital transmission of these images could be difficult. The '303 patent sought to solve this problem by encoding the image at one end through a variety of image classes that required less memory and bandwidth, and at the other end decoding the images.

For purposes of this appeal, we find amended claim 1 to be representative.¹ It recites:

1. A method for creating a composite image, comprising:

displaying facial feature images on a first area of a first display via a first device associated with the first display, wherein the facial feature images are associated with facial feature element codes;

selecting a facial feature image from the first area of the first display via a user interface associated with the first device, wherein the first device incorporates the selected facial feature image into a composite image on a second area of the first display, wherein the composite image is associated with a composite facial image code having at least a facial feature element code and wherein the composite facial image code is derived by performing at least one multiplication operation on a facial code using one or more code factors as input parameters to the multiplication operation; and

reproducing the composite image on a second display based on the composite facial image code.

J.A. 35 (US 8,005,303 C1, col. 1 ll. 23–40) (Reexamination Certificate for '303 patent ).

2. District Court Litigation and Reexamination

The '303 patent issued on August 23, 2011. J.A. 17. It later was assigned to RecogniCorp, LLC ("RecogniCorp"). In 2012, RecogniCorp filed suit in the United States District Court for the District of Oregon against Nintendo Co., Ltd. and Nintendo of America, Inc. (together, "Nintendo") for infringement of several claims of the '303 patent. J.A. 49, 196. In 2012, the case was transferred to the United States District Court for the Western District of Washington.

The district court stayed the case in 2013 pending a reexamination by the United States Patent and Trademark Office ("PTO"). The reexamination focused on obviousness and resulted in several amended claims, including claim 1. See J.A. 35. The amended claims all contain similar language regarding multiplication operations. Specifically, the limitation "wherein the composite facial image code is derived by performing at least one multiplication operation on a facial code using one or more code factors as input parameters to the multiplication operation" (or a limitation substantially identical) was added to the independent claims. J.A. 4. In light of these amendments, the PTO issued a reexamination certificate for the '303 patent. Upon completion of the reexamination in 2014, the district court lifted the stay.

In March 2015, Nintendo filed a motion for judgment on the pleadings, asserting that the claims were ineligible under 35 U.S.C. § 101. Section 101 provides that "[w]hoever 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...." There is an exception to that general principle: subject matter directed to laws of nature, natural phenomena, or abstract ideas is not patent-eligible. Alice Corp. v. CLS Bank Int'l , ––– U.S. ––––, 134 S.Ct. 2347, 2354, 189 L.Ed.2d 296 (2014). The Supreme Court has established a two-step test to determine whether patent claims are directed to ineligible subject matter. In the first step, "we determine whether the claims at issue are directed to one of those patent-ineligible concepts." Id. at 2355. If the answer in step one is yes, "we then ask, ‘[w]hat else is there in the claims before us?’ " Id. (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc. , 566 U.S. 66, 132 S.Ct. 1289, 1297, 182 L.Ed.2d 321 (2012) ). In other words, step two asks whether the patent claims 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 ).

In December 2015, without issuing a claim construction ruling, the district court granted Nintendo's motion. At Alice step one, the district court concluded that the asserted claims are "directed to the abstract idea of encoding and decoding composite facial images using a mathematical formula." J.A. 8. According to the district court:

[The claims] boil down to: (1) displaying potential input variables (the facial features and their modifications), (2) selecting and manipulating the inputs, (3) deriving an output code by performing a "multiplication operation" on the inputs, and (4) outputting the original inputs on another device by performing the sequence in reverse on another device.

J.A. 8. The district court analogized the process to "paint by numbers." J.A. 8.

At Alice step two, the district court found that the '303 patent contains no inventive concept. J.A. 11. It stated that "the entirety of the '303 Patent consists of the encoding algorithm itself or purely conventional or obvious pre-solution activity and post-solution activity insufficient to transform the unpatentable abstract idea into a patent-eligible application." J.A. 14 (quotation marks, citations, and alterations omitted). Based on these findings, the district court granted Nintendo's motion for judgment on the pleadings.

RecogniCorp timely appeals. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

DISCUSSION

1. Standard of Review

We review procedural aspects of motions for judgment on the pleadings using regional circuit law, which in this case is the Ninth Circuit. McRO, Inc. v. Bandai Namco Games Am. Inc. , 837 F.3d 1299, 1311 (Fed. Cir. 2016). The Ninth Circuit reviews motions for judgment on the pleadings de novo . Enron Oil Trading & Transp. Co. v. Walbrook Ins. Co. , 132 F.3d 526, 528 (9th Cir. 1997). We review § 101 patent eligibility determinations de novo . McRO , 837 F.3d at 1311.

2. Analysis

A. Alice Step One

Under the first step of Alice , we decide whether the claims are directed to ineligible subject matter, such as an abstract idea. McRO , 837 F.3d at 1312 ; Internet Patents Corp. v. Active Network, Inc. , 790 F.3d 1343, 1346 (Fed. Cir. 2015). The inquiry often is whether the claims are directed to "a specific means or method" for improving technology or whether they are simply directed to an abstract end-result. McRO , 837 F.3d at 1314. If the claims are not directed to an abstract idea, the inquiry ends. Thales Visionix Inc. v. United States , 850 F.3d 1343, 1349 (Fed. Cir. 2017).

While "generalized steps to be performed on a computer using conventional computer activity" are abstract, Enfish, LLC v. Microsoft Corp. , 822 F.3d 1327, 1338 (Fed. Cir. 2016), not all claims in all software patents are necessarily directed to an abstract idea, Ultramercial, Inc. v. Hulu, LLC , 772 F.3d 709, 715 (Fed. Cir. 2014). For example, we have held that software patent claims satisfy Alice step one when they are "directed to a specific implementation of a solution to a problem in the software arts," such as an improvement in the functioning of a computer. Enfish , 822 F.3d at 1338–39.

We find that claim 1 is directed to the abstract idea of encoding and decoding image data. It claims a method whereby a user displays images on a first display, assigns image codes to the images through an interface using a mathematical formula, and then reproduces the image based on the codes. See J.A. 35 (col. 1 ll. 23–40). This method reflects standard encoding and decoding, an abstract concept long utilized to transmit information. Cf. Intellectual Ventures I LLC v. Capital One Fin. Corp. , 850 F.3d 1332, 1340–41 (Fed. Cir. 2017) (organizing, displaying, and manipulating data encoded for human- and machine-readability is directed to an abstract concept). Morse code, ordering food at a fast food restaurant via a numbering system, and Paul Revere's "one if by land, two if by sea" signaling system all exemplify encoding at one end and decoding at the other end. Even the '303 patent describes "a common technique for synthesizing single images of faces involv [ing] horizontally dividing the image of a face into bands for different features," such that "[p]aper strips containing exemplary features [can] then be combined to form a composite drawing of a face." J.A. 27 (...