Two-Way Media Ltd. v. Comcast Cable Commc'ns, LLC

• Decision Date: 01 November 2017
• Docket Number: 2016-2531, 2016-2532.
• Citation: 874 F.3d 1329
• Parties: TWO-WAY MEDIA LTD., Plaintiff-Appellant v. COMCAST CABLE COMMUNICATIONS, LLC, Comcast Interactive Media LLC, Verizon Services Corp., Verizon Online LLC, Defendants-Appellees
• Court: U.S. Court of Appeals — Federal Circuit

874 F.3d 1329

TWO-WAY MEDIA LTD., Plaintiff-Appellant

v.COMCAST CABLE COMMUNICATIONS, LLC, Comcast Interactive Media LLC, Verizon Services Corp., Verizon Online LLC, Defendants-Appellees

2016-2531, 2016-2532.

United States Court of Appeals, Federal Circuit.

Decided: November 1, 2017

Michael F. Heim , Heim, Payne & Chorush, LLP, Houston, TX, argued for plaintiff-appellant. Also represented by Robert Allan Bullwinkel, Micah John Howe, Leslie Payne ; Parker C. Folse, III, Rachel S. Black, Jenna Farleigh , Susman Godfrey LLP, Seattle, WA; Shawn Daniel Blackburn, Joseph Samuel Grinstein , Houston, TX.

Brian Lee Ferrall , Keker & Van Nest, LLP, San Francisco, CA, argued for all defendants-appellees. Defendants-appellees Comcast Cable Communications, LLC, Comcast Interactive Media LLC also represented by Daniel E. Jackson, Leo L. Lam, David Justin Rosen .

Thomas M. Dunham , Winston & Strawn LLP, Washington, DC, for defendants-appellees Verizon Services Corp., Verizon Online LLC. Also represented by Sarah J. Kalemeris, Kurt a Mathas , Chicago, IL; Anup Misra , New York, NY.

Before Lourie, Reyna, and Hughes, Circuit Judges.

REYNA, Circuit Judge.

Two-Way Media Ltd. appeals from a decision of the United States District Court for the District of Delaware that found the claims of the asserted patents to be directed to patent ineligible subject matter under 35 U.S.C. § 101. Because the claims are directed to abstract ideas and contain no additional elements that transform the nature of the claims into a patent-eligible application of the abstract ideas, we affirm.

BACKGROUND

A. Technical Background

The patents-in-suit are related as a series of continuation applications, and thus share substantially the same specification. U.S. Patent No. 5,778,187 ("'187 patent") issued first, followed by U.S. Patent Nos. 5,983,005 ("'005 patent"), then 6,119,163

(not at issue here), then 6,434,622 ("'622 patent"), and then 7,266,686 ("'686 patent"). The patents are entitled "Multicasting Method and Apparatus," and generally relate to a system for streaming audio/visual data over a communications system like the internet. Claim 1 of the '187 patent is representative of all claims of the '187 patent and '005 patent, claims 1 and 29 of the '622 patent, and claims 1, 22, 26, and 30 of the '686 patent are representative of their respective patents.

The patents explain that internet systems typically operate on a point-to-point, or unicast, basis. In unicast systems, a message is converted into a series of addressed packets which are routed from a source node to a destination node. But these unicast systems lack the capability to broadcast a message from a source node to all the other recipients in a network, as this type of operation could easily overload the network.

IP Multicasting, in contrast, provides a way to transmit one packet of information to multiple recipients. In such a system, packets destined for several recipients are encapsulated in a unicast packet and forwarded from a source to a point in a network where the packets are replicated and forwarded on to all desired recipients. A multicast packet can be routed from a source node through a plurality of multicast routers to one or more devices receiving the multicast packets. The packet can then be distributed to all the host computers that are members of the multicast group. The patents explain that this technology had previously been used to provide internet-based audio/visual conferencing servicing as well as radio-like broadcasts to interested parties.

The patents describe the invention as an improved scalable architecture for delivering real-time information. Embedded in the architecture is a control mechanism that provides for the management and administration of users who are to receive real-time information. Figure 1 provides a schematic diagram depicting an overview of the system:

J.A. 80. In this system, the Primary Servers and Media Servers are interconnected by the internet. The Control Servers connect users with Media Servers using a series of message exchanges. The patents also describe monitoring network conditions and generating records about the real-time streams.

The parties agree that claim 1 of the '187 patent is representative of the claims of the '187 patent and '005 patent. It recites:

1. A method for transmitting message packets over a communications network comprising the steps of:

converting a plurality of streams of audio and/or visual information into a plurality of streams of addressed digital packets complying with the specifications of a network communication protocol,

for each stream, routing such stream to one or more users,

controlling the routing of the stream of packets in response to selection signals received from the users, andmonitoring the reception of packets by the users and accumulating records that indicate which streams of packets were received by which users, wherein at least one stream of packets comprises an audio and/or visual selection and the records that are accumulated indicate the time that a user starts receiving the audio and/or visual selection and the time that the user stops receiving the audio and/or visual selection.

J.A. 111 at col. 18 ll. 17–34; J.A. 114 (certificate of correction). Two-Way Media asserts that the claims of the '622 patent are directed to the features described in the specification, but are claimed more broadly. For example, claim 29 recites:

29. A method for forwarding real-time information to one or more users having access to a communications network comprising:

processing one or more streams of audio or visual information into one or more streams of packets for forwarding over the communications network, wherein at least one stream of packets comprises audio or video information,

forwarding the digital packets to the users in response to information selection signals received from the users,

verifying the operational status of the users' access to the communications network during delivery of the real-time information, and

updating a database with indications of: (i) which streams of packets were received by which users, (ii) the time when delivery of each stream to each user commenced, and (iii) the time when delivery of each stream to each user terminated.

J.A. 202 at col. 20 ll. 19–36. Claim 30 of the '686 patent includes certain "commercial purposes" and recites:

30. A method for metering real-time streaming media for commercial purposes, said method comprising:

selecting an intermediate server from multiple intermediate servers;

forwarding at least one copy of a real-time media stream from said intermediate server toward a user device;

detecting a termination of said forwarding;

after said termination, determining an extent of said real-time media stream forwarded toward said user device; and

logging said extent for commercial purposes.

J.A. 248 at col. 20 ll. 6–16; J.A. 251 (certificate of correction).

B. District Court Decision

The district court granted Appellees'¹ motion for judgment on the pleadings and held that the '187 patent, '005 patent, '622 patent, and '686 patent were ineligible under § 101. Two-Way Media Ltd. v. Comcast Cable Commc'ns, LLC , Nos. 14-1006-RGA, 14-1212-RGA, 2016 WL 4373698 (D. Del. Aug. 15, 2016). The district court first addressed claim construction, then addressed evidentiary arguments, and finally addressed the patents' eligibility under the two-step framework espoused in Alice Corp. v. CLS Bank Int'l , –––U.S. ––––, 134 S.Ct. 2347, 189 L.Ed.2d 296 (2014).

Two-Way Media argued before the district court that Appellees' motion was premature because claim construction was necessary to evaluate whether the representative claims were eligible under § 101. Two-Way Media provided proposed claim constructions for certain terms of the asserted patents. J.A. 599–602. Appellees agreed that the district court should adopt Two-Way Media's claim constructions, but argued that the constructions did not alter the § 101 analysis. The district court ultimately adopted Two-Way Media's proposed constructions for the purposes of the motion. Two-Way Media , 2016 WL 4373698, at *3.

Two-Way Media also argued that the district court should take judicial notice of certain materials from prior proceedings before the U.S. Patent and Trademark Office and other federal courts. Id. at *3–4. The materials, consisting of expert report excerpts, expert trial testimony, inventor trial testimony, and a press release, [BB45; RB31] purportedly related to other tribunals' evaluation of the novelty and nonobviousness of the claimed inventions. Id. The district court denied the request, reasoning that the proffered materials were irrelevant to a § 101 inquiry: "The novelty and nonobviousness of the claims under [ 35 U.S.C.] §§ 102 and 103 does not bear on whether the claims are directed to patent-eligible subject matter under § 101." Id. at *4.

The district court then addressed the eligibility of the claims of the '187 patent and '005 patent and determined that the claims were directed to an abstract idea:

The '187 and '005 patents are directed to the abstract idea of (1) sending information, (2) directing the sent information, (3) monitoring receipt of the sent information, and (4) accumulating records about receipt of the sent information. The claims are thus directed to methods of sending and monitoring the delivery of audio/visual information.

Id. at *5 (citations omitted). The district court determined that the claims did not recite a saving inventive concept under Alice step two. Although Two-Way Media had argued that the claims were directed to computer architecture that solved the technical problems of load, bottlenecking, and inadequate records, the district court disagreed, holding that "[n]one of the claims, however, recite or refer to anything that could be described as an architecture." Id. The district court expressly considered Two-Way Media's proffered claim constructions when making this determination: "The claims...