VS Techs. LLC v. Twitter, Inc.

• Decision Date: 05 October 2011
• Docket Number: Civil Action No. 2:11cv43
• Court: U.S. District Court — Eastern District of Virginia
• Parties: VS TECHNOLOGIES, LLC Plaintiff, v. TWITTER, INC., Defendant.

VS TECHNOLOGIES, LLC Plaintiff, v. TWITTER, INC., Defendant.

Civil Action No. 2:11cv43

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Norfolk Division

Dated: October 5, 2011

ORDER AND OPINION

This matter is before the Court on Defendant Twitter Inc.'s ("Twitter" or "Defendant") Motion for Summary Judgment, Doc. 55, and Plaintiff VS Technologies, Inc.'s ("VS Technologies" or "Plaintiff) motion to strike evidence presented by Twitter in its reply memorandum in support of its motion for summary judgment, Doc. 87. On September 30, 2011, the Court conducted a hearing and ruled from the bench. The Court DENIED Twitter's Motion for Summary Judgment in its entirety and GRANTED VS Technologies' Motion to Strike. This Opinion and Order sets forth the reasons for the Court's ruling.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY¹

The United States Patent and Trademark Office issued Patent No. 6,408,309 (the "'309 patent"), entitled "Method and System for Creating an Interactive Virtual Community of Famous People," on June 18, 2002. The named inventor, Dinesh Agarwal, is the prosecuting attorney, founding member, and Manager of VS Technologies, Inc.

The abstract of the '309 patent describes the invention as follows:

A method and system for creating an interactive virtual community of famous people, or those people who wish to attain the status of a famous person, in a field of endeavor, such as arts, accounting, animal rights, business, education, engineering, entertainment, financing, government affairs, human rights, legal, medical, philanthropy, politics, religion, research, science, sports, etc. The virtual community of the present invention is unique in that the members of the virtual community can update, modify or revise their individual profile, and interact with other members of the virtual community, as well as the non-members of the virtual community.

On January 18, 2011, Plaintiff filed its complaint alleging infringement of United States Patent No. 6,408,309 (the "'309 patent"). Doc. 1. Plaintiff served its patent infringement complaint on Defendant on February 8, 2011. On March 17, 2011, Defendant filed its answer and affirmative defenses. Doc. 15.

On May 2, 2011, the Court ordered that the parties submit their joint claim construction statement on August 8, 2011, and that, if the Court determines that a Markman hearing is necessary, such a hearing would be held on September 15, 2011. Doc. 31. Pursuant to the Court's order, Plaintiff and Defendant filed a joint claim construction statement on August 8, 2011. Doc. 47. Upon consideration of the joint claim construction statement, the Court determined that a Markman hearing was desirable. In accordance with the briefing schedule mandated by the court (See Doc. 49), Plaintiff and Defendant filed their respective claim construction briefs on August 24, 2011. Docs. 51-52. On September 15, 2011, the Court conducted a Markman hearing for the purpose of construing the claims in Plaintiff's patent at issue. After careful consideration of the parties' briefs and oral argument, the Court ruled from the bench and entered an order and opinion on September 23, 2011 detailing the claim constructions and reasons therewith. Doc. 86.

Defendant filed a motion for summary judgment on September 6, 2011 and memorandum in support thereof. Docs. 55-56. On September 19, 2011, Plaintiff filed a redactedmemorandum in opposition to the motion for summary judgment, Doc. 70, and a motion for leave to file its opposition to Twitter's motion for summary judgment and accompanying exhibits under seal, Doc. 71. Accordingly, Plaintiff's memorandum in opposition and accompanying exhibits were filed under seal on September 21, 2011. Docs. 74-79. After providing public notice of the motion to seal by posting an appropriate Notice on the public docket board, the Court ordered that Plaintiff's memorandum in opposition to the motion for summary judgment and accompanying exhibits be maintained under seal by the Clerk. Doc. 85. Defendant filed its reply on September 23, 2011. Doc. 83. The Court conducted a hearing on September 30, 2011.

A five-day jury trial in this case is scheduled to commence on October 24, 2011.

II. STANDARD OF REVIEW

Pursuant to Federal Rule of Civil Procedure 56(c), summary judgment is proper only where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). In determining whether summary judgment is appropriate, the court must view the facts, and inferences to be drawn from those facts, in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587-88 (1986) (quoting United States v. Diebold. Inc., 369 U.S. 654, 655 (1962)). The non-moving party "cannot create a genuine issue of material fact through mere speculation or the building of one inference upon another." Beale v. Hardy. 769 F.2d 213, 214 (4th Cir. 1985) (citing Barwick v. Celotex Corp., 736 F.2d 946, 963 (4th Cir. 1984)). Nevertheless, where the record taken as a whole "could not lead a rational trier of fact to find for the non-moving party, disposition by summary judgment is appropriate." Teamsters Joint Council No. 83 v. Centra. Inc., 947 F.2d 115, 119 (4th Cir. 1991) (citing Matsushita Elec. 475U.S. at 587, and Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248-49 (1986)).

III. MOTION FOR SUMMARY JUDGMENT OF INVALIDITY BASED ON 35 U.S.C. § 101

A. Legal Standard

Section 101 of the Patent Act delineates the scope of patentable subject matter: "[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, subject to the conditions and requirements [for patentability]." 35 U.S.C. § 101 (2008). Case law has established three categories of subject matter outside the eligibility bounds of § 101: laws of nature, physical phenomena, and abstract ideas. Ultramercial. LLC v. Hulu. LLC. No. 2010-1544, 2011 WL 4090761, at *3 (Fed. Cir. Sept. 15, 2011). As the Federal Circuit recently noted, "[a]bstractness, however, has presented a different set of interpretive problems, particularly for the § 101 'process'category." Id.

In order to deal with determining the subject matter eligibility of processes, the Federal Circuit set forth the machine-or-transformation test. In Bilski. the Federal Circuit discussed the difference between a claim drawn to a fundamental principle and a claim that seeks to foreclose others from using a particular application of that fundamental principle. In Re Bilski. 545 F.3d 943, 952-53 (Fed. Cir. 2008). The Federal Circuit stated,

[W]hether a claim is drawn only to a fundamental principle is essentially an inquiry into the scope of that exclusion; i.e., whether the effect of allowing the claim would be to allow the patentee to pre-empt substantially all uses of that fundamental principle. If so, the claim is not drawn to patent-eligible subject matter.

Id. at 953. The court further explained that a claimed process is "patent-eligible under § 101 if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing." Id. at 954. The Federal Circuit noted, "[w]e leave to future cases theelaboration of the precise contours of machine implementation, as well as the answers to particular questions, such as whether or when recitation of a computer suffices to tie a process claim to a particular machine." Id. at 962.

The Supreme Court rejected the machine-or-transformation test as the sole test for deciding patentability in Bilski. However, the Court acknowledged that the test remains "a useful and important clue, an investigative tool, for determining whether some claimed inventions are processes under § 101." Bilski, 130 S. Ct. at 3227. Furthermore, "following Bilski, courts have determined that the 'machine-or-transformation' test remains a key indicator of patentability." Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Can., 771 F. Supp. 2d 1054, 1065 (E.D. Mo. 2011).² However, the Federal Circuit recently acknowledged that "[w]hile machine-or-transformation logic served well as a tool to evaluate the subject matter of Industrial Age processes, that test has far less application to the inventions of the Information Age." Ultramercial, 2011 WL 4090761, at *3. Thus, in Ultramercial. the Federal Circuit focused its inquiry on the abstractness of the patent at issue in order to determine whether the "process" fell within a § 101 category of patent-eligible subject matter.

The Federal Circuit acknowledged that "both members of the Supreme Court and this court have recognized the difficulty [in] providing a precise formula or definition for the judge-made ineligible category of abstractness." Id. at *4. Because of this difficulty, the FederalCircuit did "not presume to define 'abstract' beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act." Id. (quoting Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 868 (Fed. Cir. 2010)). Whereas abstract principles are plainly ineligible for patent protection, abstract ideas may be eligible for patent protection if applied to a "new and useful end." Id.

B. Discussion

The '309 patent claims a method and system for creating an interactive virtual community of famous people. Twitter asserts that the '309 patent is not patentable under 35 U.S.C. § 101 because it fails the machine-or-transformation test articulated by the Federal Circuit in In Re Bilski. 545 F.3d 943 (Fed. Cir. 2008), and ultimately adopted by the Supreme Court. According to Twitter, the fundamental flaw in the instant case is that the...