Case 1:17-cv-00585-CFC-SRF Document 137 Filed 09/19/18 Page 1 of 27 PageID #: 4694
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`Plaintiff,
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`V.
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`Civil Action No. 17-585-CFC-SRF
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`UNIVERSAL SECURE REGISTRY, LLC, )
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`)
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`APPLE INC., VISA INC., and VISA
`U.S.A., INC.,
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`Defendants.
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`REPORT AND RECOMMENDATION
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`I.
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`INTRODUCTION
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`Presently before the court in this patent infringement action are the following motions:
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`(1) a motion to dismiss for failure to state a claim upon which relief can be granted pursuant to
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`Federal Rule of Civil Procedure 12(b)(6), filed by defendants Apple Inc., Visa Inc., and Visa
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`U.S.A., Inc. (collectively "defendants") (D.I. 16); and (2) defendants' motion to transfer venue to
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`the Northern District of California pursuant to 28 U.S.C. § 1404 (D.I. 21). For the following
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`reasons, I recommend that the court deny defendants' motions to dismiss and transfer.
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`II.
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`BACKGROUND
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`A. Parties
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`Plaintiff Universal Secure Registry, LLC ("USR") is a limited liability company
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`organized and existing under the laws of Massachusetts with its principal place of business in
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`Newton, Massachusetts. (D.I. 1 at ,-i 4) USR develops technological solutions for identity
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`authentication, computer security, and digital and mobile payment security which allow users to
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`securely authenticate their identity using technology built into a personal electronic device
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`combined with the users' biometric information. (Id. at ,-r 21) USR is the owner by assignment
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`

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`Case 1:17-cv-00585-CFC-SRF Document 137 Filed 09/19/18 Page 2 of 27 PageID #: 4695
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`of United States Patent Nos. 8,577,813 ("the '813 patent"); 8,856,539 ("the '539 patent");
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`9,100,826 ("the '826 patent"); and 9,530,137 ("the' 137 patent") (collectively, the "patents-in(cid:173)
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`suit"). (Id at ,r,r 2-3) The patents-in-suit allow a user to employ an electronic device as an
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`"electronic wallet" capable of interacting with point-of-sale devices to authorize payments. (Id
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`at ,r 22)
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`Apple Inc. ("Apple") is incorporated in California and maintains its headquarters in
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`Cupertino in the Northern District of California. (Id. at ,r 5) Apple maintains a retail store in
`Delaware. (Id. at ,r 13) Visa Inc. and Visa U.S.A., Inc. ("Visa") are Delaware corporations
`maintaining a principal place of business in Foster City, California. (Id. at ,r,r 6-7) USR accuses
`defendants of infringing the patents-in-suit by providing the Apple Pay service. (Id. at ,r,r 8-9)
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`Specifically, USR identifies the following allegedly infringing devices which support Apple Pay:
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`Apple iPhone 7, iPhone 7 Plus, iPhone 6s, iPhone 6s Plus, iPhone 6, iPhone 6
`Plus, iPhone SE, iPhone 5, 5s, and Sc (paired with Apple Watch), iPad (5 th
`generation), iPad Pro (12.9 inch), iPad Pro (9.7 inch), iPad Air 2, iPad mini 4,
`iPad mini 3, Apple Watch Series 2, Apple Watch Series 1, Apple Watch (1 st
`generation), MacBook Pro with Touch ID, and all Mac models introduced in 2012
`or later (with an Apple Pay-enabled iPhone or Apple Watch) (collectively, the
`"Accused Products") ....
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`(Id. at ,r 39)
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`B. Patents-In-Suit
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`USR filed this patent infringement action on May 21, 2017, asserting claims for
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`infringement regarding the patents-in-suit. (D.1. 1 at ,r 2) The '813 and '539 patents are both
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`entitled "Universal Secure Registry" and list Dr. Kenneth P. Weiss as the sole inventor. (Id. at
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`,r,r 25-26) The '813 patent issued on November 5, 2013, and the '539 patent was granted on
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`October 7, 2014. (Id.) The '826 and '137 patents are both entitled "Method and Apparatus for
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`Secure Access Payment and Identification," and list Dr. Weiss as the sole inventor. (Id. at ,r,r 27-
`2
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`Case 1:17-cv-00585-CFC-SRF Document 137 Filed 09/19/18 Page 3 of 27 PageID #: 4696
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`28) The '826 patent issued on August 14, 2015, and the' 137 patent issued on December 27,
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`2016. (Id.)
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`C. Procedural History
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`In 2010, USR sent Apple multiple letters describing its patented technology and seeking
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`to partner with Apple to jointly develop a payment method involving a software-modified
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`payment phone and the use of biometric identity authentication. (D.I. 1 at 133) USR also
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`pursued a partnership with Visa during this time, engaging in a series of confidential discussions
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`with senior Visa representatives which included detailed presentations of the patented
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`technology under the protection of a non-disclosure agreement. (Id. at 134) Instead of
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`partnering with USR, Apple and Visa ultimately partnered with each other and other payment
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`networks and banks as early as January 2013 to allegedly incorporate the patented technology
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`into the Apple Pay service. (Id. at 135) Apple publicly launched Apple Pay on September 9,
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`2014. (Id. at 136)
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`III. DISCUSSION
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`A. Venue
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`1. Legal standard
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`Section 1404(a) of Title 28 of the United States Code grants district courts the authority
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`to transfer venue "[f]or the convenience of parties and witnesses, in the interests of justice ... to
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`any other district or division where it might have been brought." 28 U.S.C. § 1404(a). Much has
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`been written about the legal standard for motions to transfer under 28 U.S.C. § 1404(a). See,
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`e.g., In re Link_A_Media Devices Corp., 662 F.3d 1221 (Fed. Cir. 2011); Jumara v. State Farm
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`Ins. Co., 55 F.3d 873 (3d Cir. 1995); Helicos Biosciences Corp. v. Illumina, Inc., 858 F. Supp. 2d
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`367 (D. Del. 2012).
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`3
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`Referring specifically to the analytical framework described in Helicos, the court starts
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`with the premise that a defendant's state of incorporation has always been "a predictable,
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`legitimate venue for bringing suit" and that "a plaintiff, as the injured party, generally ha[s] been
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`'accorded [the] privilege of bringing an action where he chooses."' 858 F. Supp. 2d at 371
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`(quoting Norwood v. Kirkpatrick, 349 U.S. 29, 31 (1955)). Indeed, the Third Circuit in Jumara
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`reminds the reader that "[t]he burden of establishing the need for transfer ... rests with the
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`movant" and that, "in ruling on defendants' motion, the plaintiffs choice of venue should not be
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`lightly disturbed." 55 F.3d at 879 (citation omitted).
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`The Third Circuit goes on to recognize that,
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`[i]n ruling on§ 1404(a) motions, courts have not limited their consideration to the
`three enumerated factors in§ 1404(a) (convenience of parties, convenience of
`witnesses, or interests of justice), and, indeed, commentators have called on the
`courts to "consider all relevant factors to determine whether on balance the
`litigation would more conveniently proceed and the interests of justice be better
`served by transfer to a different forum."
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`Id. ( citation omitted). The Court then describes some of the "many variants of the private and
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`public interests protected by the language of§ 1404(a)." Id.
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`The private interests have included: plaintiffs forum of preference as manifested
`in the original choice; the defendant's preference; whether the claim arose
`elsewhere; the convenience of the parties as indicated by their relative physical
`and financial condition; the convenience of the witnesses - but only to the extent
`that the witnesses may actually be unavailable for trial in one of the fora; and the
`location of books and records (similarly limited to the extent that the files could
`not be produced in the alternative forum).
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`The public interests have included: the enforceability of the judgment; practical
`considerations that could make the trial easy, expeditious, or inexpensive; the
`relative administrative difficulty in the two fora resulting from court congestion;
`the local interest in deciding local controversies at home; the public policies of
`the fora; and the familiarity of the trial judge with the applicable state law in
`diversity cases.
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`Id. ( citations omitted).
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`4
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`Considering these "jurisdictional guideposts," the court turns to the "difficult issue of
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`federal comity" presented by transfer motions. E.E.O.C. v. Univ. of Pa., 850 F.2d 969,976 (3d
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`Cir. 1988). USR has not challenged defendants' assertion that venue would also be proper in the
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`Northern District of California. (D.I. 31 at 3) As such, the court does not further address the
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`appropriateness of the proposed transferee forum. 1 See 28 U.S.C. § 1404(a).
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`2. Private Interests
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`(a) Plaintiff's forum preference
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`Plaintiffs have historically been accorded the privilege of choosing their preferred venue
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`for pursuing their claims. See C.R. Bard, Inc. v. AngioDynamics, Inc., 156 F. Supp. 3d 540, 545
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`(D. Del. 2016). "It is black letter law that a plaintiffs choice of a proper forum is a paramount
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`consideration in any determination of a transfer request, and that choice 'should not be lightly
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`disturbed."' Shuttle v. Armco Steel Corp., 431 F .2d 22, 25 (3d Cir. 1970) (internal citation
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`omitted). However, the Federal Circuit has recognized that "[w]hen a plaintiff brings its charges
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`in a venue that is not its home forum ... that choice of forum is entitled to less deference, In re
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`Link_A_Media Devices Corp., 662 F.3d 1221, 1223 (Fed. Cir. 2011), andjudges within this
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`district have defined a party's "home forum" as its principal place of business, see Mite!
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`Networks Corp. v. Facebook, Inc., 943 F. Supp. 2d 463, 469-70 (D. Del. 2013).
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`In the present action, USR does not allege that it has facilities, employees, or operations
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`in Delaware. USR's choice of Delaware as a forum weighs in USR's favor, but not as strongly
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`1 The first step in the transfer analysis is to determine whether the movant has demonstrated that
`the action could have been brought in the proposed transferee venue in the first instance. See
`Mallinckrodt, Inc. v. E-Z-Em, Inc., 670 F. Supp. 2d 329, 356 (D. Del. 2009). This issue is not
`disputed. (D.I. 31 at 3)
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`5
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`as it would ifUSR had a place of business in Delaware. See Ip Venture, Inc. v. Acer, Inc., 879 F.
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`Supp. 2d 426,431 (D. Del. 2012); see also Symantec Corp. v. Zscaler, Inc., C.A. No. 17-806-
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`MAK, D.I. 25 at 3-4 (D. Del. July 31, 2017) (citing Memory Integrity, LLC v. Intel Corp., C.A.
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`No. 13-1804-GMS, 2015 WL 632026, at *3 (D. Del. Feb. 13, 2015) (concluding that a non-
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`practicing entity's choice of forum should receive limited deference because it had no physical
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`presence in Delaware)). Consequently, USR's forum preference weighs slightly against transfer.
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`(b) Defendant's forum preference
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`Defendants' preference to litigate in the Northern District of California, where defendants
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`maintain their principal places of business, weighs in favor of transferring venue. However,
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`defendants' preference is accorded less weight than USR's preference. See Stephenson v. Game
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`Show Network, LLC, 933 F. Supp. 2d 674,678 (D. Del. 2013) (citing Cradle IP, LLC v. Texas
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`Instruments, Inc., 923 F. Supp. 2d 696, 699-700 (D. Del. 2013)).
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`( c) Where the claim arose
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`A claim for patent infringement arises wherever someone has committed acts of
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`infringement. See generally 35 U.S.C. § 271(a); Red Wing Shoe Co., Inc. v. Hockerson(cid:173)
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`Halberstadt, Inc., 148 F.3d 1355, 1360 (Fed. Cir. 1998) (an infringement claim "arises out of
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`instances of making, using, or selling the patented invention"). Because defendants' allegedly
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`infringing products are sold and used nationwide, the asserted patent claims may be said to
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`arise in Delaware. See C.R. Bard, Inc. v. AngioDynamics, Inc., 156 F. Supp. 3d 540, 547 (D.
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`Del. 2016) (finding that a patent claim arose in Delaware when the defendant sold products
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`there); Scientific Telecomm., LLC v. Adtran, Inc., C.A. No. 15-647-SLR, 2016 WL 1650760, at
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`*1 (D. Del. Apr. 25, 2016) (holding that, despite ties to Alabama, the defendant operated on a
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`global basis, and its incorporation in Delaware precluded arguments that the forum was
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`inconvenient absent a showing of a unique or unexpected burden). This factor is neutral.
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`( d) Convenience of the parties
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`In evaluating the convenience of the parties, a district court should focus on the parties'
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`relative physical and financial condition. See C.R. Bard, 2016 WL 153033, at *3 (citing Jumara
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`v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995)). When a party "accept[s] the benefits of
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`incorporation under the laws of the State of Delaware, 'a company should not be successful in
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`arguing that litigation' in Delaware is 'inconvenient,' 'absent some showing of a unique or
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`unexpected burden."' Scientific Telecomm., LLC v. Adtran, Inc., C.A. No. 15-647-SLR, 2016
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`WL 1650760, at *1 (D. Del. Apr. 25, 2016) (quoting ADE Corp. v. KLA-Tencor Corp., 138 F.
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`Supp. 2d 565, 573 (D. Del. 2001)). "Unless the defendant 'is truly regional in character' - that
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`is, it operates essentially exclusively in a region that does not include Delaware - transfer is
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`almost always inappropriate." Checkpoint, 797 F. Supp. 2d at 477 (quoting Praxair, Inc. v.
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`ATM!, Inc., 2004 WL 883395, at *1 (D. Del. Apr. 20, 2004)).
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`The record before the court reveals that USR is a small company with negative cash flow
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`and no income, funded out of the savings of its founder, Dr. Weiss. (D.I. 36 at ,r 11) The USR
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`entities collectively have six full-time employees, two part-time employees, and three
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`consultants located in Massachusetts. (Id. at ,r 9) USR's records are kept in six storage boxes in
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`Massachusetts. (Id. at ,r 10) In contrast, there is no dispute that Apple and Visa are large,
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`wealthy corporations who engage in business throughout the United States. (D.1. 38 at 6)
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`Defendants have not shown a unique or unexpected burden as required to support transfer under
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`the relevant standard. See Cornerstone Therapeutics Inc. v. Exela Pharma Scis., LLC, C.A. No.
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`13-1275-GMS, 2014 WL 12597625, at *1 (D. Del. June 16, 2014) ("[T]he decision of two out of
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`three defendants to incorporate in Delaware casts doubt on their arguments that litigating in this
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`state is inconvenient.").
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`Defendants point out that USR has no connections to Delaware, yet has accepted the
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`costs of travel to Delaware by choosing to litigate here. (D.I. 22 at 15) (quoting Blackbird Tech
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`LLC v. TujjStuff Fitness, International, Inc., C.A. No. 16-733-GMS, 2017 WL 1536394, at *5
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`(D. Del. Apr. 27, 2017) ("The court believes that Blackbird, given its location, structure of its
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`company, and lack of substantial connections in Delaware, would suffer little added
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`inconvenience were this case transferred away from its preferred forum.")). However, the
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`distance between Massachusetts and the Northern District of California is substantially greater
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`than the distance between Massachusetts and Delaware. Focusing on the significant difference
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`in the parties' relative financial positions, as well as USR's proximity to Delaware in comparison
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`to the Northern District of California, the court concludes that the present record does not
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`support transfer of venue.2 This factor weighs slightly against transfer.
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`(e) Location of books and records
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`The Third Circuit in Jumara advised that the location of books and records is only
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`determinative if "the files c[an] not be produced in the alternative forum." 55 F.3d at 879.
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`However, the Federal Circuit has explained that "[i]n patent infringement cases, the bulk of the
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`relevant evidence usually comes from the accused infringer. Consequently, the place where the
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`defendant's documents are kept weighs in favor of transfer to that location." In re Genentech,
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`Inc., 566 F.3d 1338, 1345 (Fed. Cir. 2009). Nevertheless, courts within the District of Delaware
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`2 The court recognizes that the analysis of this factor typically focuses on the size and financial
`position of the defendant, as opposed to the plaintiff, given that the defendant does not choose to
`commence the litigation. Nonetheless, the disparity between the parties' size and financial
`condition is evident in the instant case, and litigating in the Northern District of California is
`likely to be more expensive and burdensome for USR.
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`have repeatedly recognized that technological advances have reduced the weight of this factor.
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`See, e.g., Intellectual Ventures I LLC, v. Checkpoint Software Techs. Ltd., 797 F. Supp. 2d 472,
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`485 (D. Del. 2011); Affymetrix, Inc. v. Synteni, Inc., 28 F. Supp. 2d 192,208 (D. Del. 1998);
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`Nihon Tsushin Kabushiki Kaisha v. Davidson, 595 F. Supp. 2d 363, 372 (D. Del. 2009). Today,
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`"virtually all businesses maintain their books and records in electronic format readily available
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`for review and use at any location." C.R. Bard, 2016 WL 153033, at *3; see also Quest Integrity
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`USA, LLC v. Clean Harbors Indus. Servs., Inc., 114 F. Supp. 3d 187, 191 (D. Del. 2015).
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`Defendants designed and developed the allegedly infringing technology in the Northern
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`District of California, and much of the documentary evidence is located there. (D .I. 23 at ,i,i 7-9)
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`Defendants have not shown that relevant documents cannot be transported to Delaware. See
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`Cruise Control Techs. LLC v. Chrysler Group LLC, C.A. No. 12-1755-GMS, 2014 WL 1304820,
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`at *4 (D. Del. Mar. 31, 2014) (concluding that location of books and records is only relevant
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`"where the Defendants show that there are books and records that cannot be transported or
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`transmitted to Delaware."). This factor weighs slightly in favor of transfer.
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`(t) Convenience of the witnesses
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`The relevant inquiry with respect to convenience of the witnesses is not whether
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`witnesses are inconvenienced by litigation, but rather, whether witnesses "actually may be
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`unavailable for trial in one of the fora." Jumara, 55 F.3d at 879. The inconvenience of travel
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`does not demonstrate that witnesses would "actually be unavailable for trial," as required by
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`Jumara. 55 F.3d 873, 879 (3d Cir. 1995). The court has previously found that
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`travel expenses and inconveniences incurred for that purpose, by a Delaware
`defendant, [are] not overly burdensome. From a practical standpoint, much of the
`testimony presented at trial these days is presented via recorded depositions, as
`opposed to witnesses traveling and appearing live. There certainly is no obstacle
`to [ a party] embracing this routine trial practice.
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`Oracle Corp. v. epicRealm Licensing, LP, No. Civ. 06-414-SLR, 2007 WL 901543, at *4 (D.
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`Del. Mar. 26, 2007).
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`Defendants identify six prior art witnesses who reside in or near the Northern District of
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`California and are named inventors on patent applications. (D.I. 24 at 113) Defendants do not
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`identify former employees or other third party witnesses. Other third party witnesses involved in
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`the prosecution of the patents-in-suit are located in Massachusetts and have affirmatively
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`expressed their willingness to testify at trial in Delaware, despite residing beyond the subpoena
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`power of both this court and the proposed transferee district. (D.I. 32 at 113-6; D.I. 34 at 113-6)
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`An independent technology consultant to USR residing in Massachusetts also indicated that he
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`will voluntarily travel to Delaware to testify at trial in this matter. (D.I. 33 at 112-5) Because
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`defendants have not identified any specific witnesses who cannot appear in Delaware for trial,
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`this factor is neutral.
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`3. Public interests3
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`(a) Practical considerations
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`Defendants reiterate their arguments regarding private interest factors such as the
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`convenience of the parties and witnesses, and the location of evidence, in support of their
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`position on practical considerations. (D.I. 22 at 18) Courts in this district have declined to
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`"double-count" a defendant's arguments in such cases. Contour IP Holding, LLC v. GoPro, Inc.,
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`C.A. No. 15-1108-LPS-CJB, 2017 WL 3189005, at *13 (D. Del. July 6, 2017). This factor is
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`neutral.
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`3 Turning to the Jumara factors, the court notes that the parties do not dispute several of the
`public interest factors: (1) the enforceability ofthejudgment; (2) the public policies of the fora;
`and (3) the familiarity of the trial judge with the applicable state law in diversity cases. (D.I. 22
`at 17-20; D.I. 31 at 15-19) These factors are therefore neutral.
`10
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`(b) Court congestion
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`Defendants allege that this factor weighs in favor of transfer due to the judicial vacancies
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`on this court, citing statistics4 regarding the number of open patent cases and the rates at which
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`new patent cases are filed in each jurisdiction. (D.I. 22 at 18-19; D.I. 38 at 10) However, "the
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`case management orders [in this district] always start with the schedules proposed by the litigants
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`.... [I]f there is a need to expedite proceedings, that need is generally accommodated by the
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`court." Godo Kaisha IP Bridge Iv. Omni Vision Techs., Inc., 246 F. Supp. 3d 1001, 1003-04 (D.
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`Del. 2017). Defendants' reliance on MEC Resources, LLC v. Apple, Inc. is inapposite because
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`the court's finding that considerations of court congestion weighed in favor of transfer was based
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`largely on the prospect of avoiding an allocation of Delaware's judicial resources to resolve a
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`dispute between citizens of California and North Dakota. C.A. No. 17-223-MAK, 2017 WL
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`4102450, at *5 (D. Del. Sept. 15, 2017). In contrast, Visa is a Delaware corporation. This factor
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`is neutral.
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`( c) Local interest
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`The local interest factor is generally neutral in patent litigation because patent cases
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`"implicate[] constitutionally protected property rights, [are] governed by federal law reviewed by
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`a court of appeals of national (as opposed to regional) stature, and affect[] national (if not global)
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`markets." C.R. Bard, Inc. v. Angiodynamics, Inc., 156 F. Supp. 3d 540,547 (D. Del. 2016)
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`(citing Cradle IP v. Texas Instruments, Inc., 923 F. Supp. 2d 696, 700-01 (D. Del. 2013)); see
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`4 USR counters with statistics of its own, stating that the Northern District of California has 622
`pending actions per judge to 515 per judge in this district, and noting that the average time to
`trial in civil cases is faster in Delaware than it is in the Northern District of California. (D.1. 35,
`Ex.B)
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`11
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`also Tessera, 2017 WL 1065865, at *11. Because USR brings only federal patent law claims,
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`the local interest factor is neutral.
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`4. Transfer analysis summary
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`As a whole, the Jumara factors weigh against transfer. Although USR's forum
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`preference is given slightly less deference because USR does not maintain a place of business in
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`Delaware, it is accorded more weight than defendants' choice of forum. Defendants have shown
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`that most of the relevant evidence and witnesses are located in the Northern District of
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`California, but have not shown that the evidence and witnesses would be unavailable if the case
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`is not transferred. USR has established that it is a small company with limited financial
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`resources in comparison to Apple and Visa, and Delaware is a more convenient forum for it as a
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`party to the action. The remaining factors are neutral. For these reasons, I recommend that the
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`court deny defendants' motion to transfer venue.
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`B. Patentability Under§ 101
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`1. Legal standard
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`Defendants move to dismiss the pending action pursuant to Rule 12(b)(6), which permits
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`a party to seek dismissal of a complaint for failure to state a claim upon which relief can be
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`granted. Fed. R. Civ. P. 12(b)(6). When considering a Rule 12(b)(6) motion to dismiss, the
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`court must accept as true all factual allegations in the complaint and view them in the light most
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`favorable to the plaintiff. Umlandv. Planco Fin. Servs., 542 F.3d 59, 64 (3d Cir. 2008).
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`According to defendants, USR's complaint fails to state a claim because the patents-in-suit are
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`ineligible for patent protection under 35 U.S.C. § 101.
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`Section 101 provides that patentable subject matter extends to four broad categories,
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`including "new and useful process[es], machine[s], manufacture, or composition[s] of matter."
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`35 U.S.C. § 101; see also Bilski v. Kappas, 561 U.S. 593,601 (2010) ("Bilski IF'); Diamond v.
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`Chakrabarty, 447 U.S. 303,308 (1980). The Supreme Court recognizes three exceptions to the
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`statutory subject matter eligibility requirements: "laws of nature, physical phenomena, and
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`abstract ideas." Bilski II, 561 U.S. at 601. In this regard, the Supreme Court has held that "[t]he
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`concepts covered by these exceptions are 'part of the storehouse of knowledge of all men ...
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`free to all men and reserved exclusively to none."' Id at 602 (quoting Funk Bros. Seed Co. v.
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`Kala lnoculant Co., 333 U.S. 127, 130 (1948)). At issue in the present case is the third category
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`pertaining to abstract ideas, which "embodies the longstanding rule that an idea of itself is not
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`patentable." Alice Corp. Pty. Ltd v. CLS Bank Int'!, 134 S. Ct. 2347, 2355 (2014) (internal
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`quotations omitted).
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`In Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012),
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`the Supreme Court articulated a two-step "framework for distinguishing patents that claim laws
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`of nature, natural phenomena, and abstract ideas from those that claim patent-eligible
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`applications of those concepts." Alice, 134 S. Ct. at 2355. In accordance with the first step of
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`the Alice test, the court must determine whether the claims at issue are directed to a patent(cid:173)
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`ineligible concept. See id If so, the court must tum to the second step, under which the court
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`must identify an '"inventive concept'-i. e., an element or combination of elements that is
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`sufficient to ensure that the patent in practice amounts to significantly more than a patent upon
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`the [ineligible concept] itself." Id (certain quotation marks omitted). The two steps are "plainly
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`related" and "involve overlapping scrutiny of the content of the claims." Elec. Power Grp., LLC
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`v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016).
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`At step 1, "the claims are considered in their entirety to ascertain whether their character
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`as a whole is directed to excluded subject matter." Internet Patents Corp. v. Active Network,
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`Case 1:17-cv-00585-CFC-SRF Document 137 Filed 09/19/18 Page 14 of 27 PageID #: 4707
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`Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015); see also Affinity Labs of Texas, LLC v. DIRECTV,
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`LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016) ("The 'abstract idea' step of the inquiry calls upon us
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`to look at the 'focus of the claimed advance over the prior art' to determine if the claim's
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`'character as a whole' is directed to excluded subject matter."). However, "courts must be
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`careful to avoid oversimplifying the claims by looking at them generally and failing to account
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`for the specific requirements of the claims." McRO, Inc. v. Bandai Namco Games Am. Inc., 837
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`F.3d 1299, 1313 (Fed. Cir. 2016) (internal quotation marks omitted). "Whether at step one or
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`step two of the Alice test, in determining the patentability of a method, a court must look to the
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`claims as an ordered combination, without ignoring the requirements of the individual steps."
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`Enfish, 822 F.3d at 1338.
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`At step 2, the Federal Circuit instructs courts to "look to both the claim as a whole and
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`the individual claim elements to determine whether the claims contain an element or
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`combination of elements that is sufficient to ensure that the patent in practice amounts to
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`significantly more than a patent upon the ineligible concept itself." McRO, 83 7 F .3d at 1312
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`(internal brackets and quotation marks omitted). Under the step 2 inquiry, the court must
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`consider whether claim elements "simply recite 'well-understood, routine, conventional
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`activit[ies]."' Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1350
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`(Fed. Cir. 2016) (quoting Alice, 134 S. Ct. at 2359). "Simply appending conventional steps,
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`specified at a high level of generality, [is] not enough to supply an inventive concept." Alice,
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`134 S. Ct. at 2357 (internal quotation marks omitted).
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`The Federal Circuit looks to the claims as well as the specification in performing the
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`"inventive concept" inquiry. See Affinity Labs ofTexas v. Amazon.com Inc., 838 F.3d 1266,
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`1271 (Fed. Cir. 2016) ("[N]either the claim nor the specification reveals any concrete way of
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`Case 1:17-cv-00585-CFC-SRF Document 137 Filed 09/19/18 Page 15 of 27 PageID #: 4708
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`employing a customized user interface."). "The inventive concept inquiry requires more than
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`recognizing that each claim element, by itself, was known in the art." Bascom, 827 F.3d at 1350.
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`In Bascom, the Federal Circuit held that "the limitations of the claims, taken individually, recite
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`generic computer, network and Internet components, none of which is inventive by itself," but
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`nonetheless determined that the patent adequately alleged an ordered combination of these
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`limitations to be patent-eligible under step 2 at the pleading stage. Id. at 1349.
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`The "mere recitation of a generic computer cannot transform a patent-ineligible abstract
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`idea into a patent-eligible invention" under step 2. Alice, 134 S. Ct. at 2358. "Given the
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`ubiquity of computers ... wholly generic computer implementation is not generally the sort of
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`additional feature that provides any practical assurance that the process is more than a drafting
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`effort designed to monopolize the abstract idea itself." Id. (internal citation and quotation marks
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`omitted). For the second step of the Alice framework, the machine-or-transformation test may
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`provide a "useful clue," although it is not determinative. Ultramercial, Inc. v. Hulu, LLC, 772
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`F.3d 709, 716 (Fed. Cir. 2014) (citing Bilski II, 561 U.S. at 604 and Bancorp Servs., L.L.C. v.
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`Sun Life Assurance Co. of Canada, 687 F.3d 1266, 1278 (Fed. Cir. 2012)). A claimed process
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`can be patent-eligible under § 101 consistent with the machine-or-transformation test if it "uses a
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`particular machine or apparatus" and does not "pre-empt5 uses of the principle that do not also
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`5 At both steps 1 and 2 of the Alice inquiry, the Federal Circuit considers the issue of preemption
`to determine whether a patent is not directed to a specific invention and instead would
`monopolize "the basic tools of scientific and technological work," thereby "imped[ing]
`innovation more than it would tend to promote it" and "thwarting the primary object of the patent
`laws." Alice, 134 S. Ct. at 2354; see also McRO, 837 F.3d at 1315 (applying the doctrine of
`preemption and concluding that a claim was patent-eligible at step 1); Bascom, 827 F.3d at 1350
`(applying the doctrine of preemption and concluding that a claim was patent-eligible at step 2).
`"[T]he focus of preemption goes hand-in-hand with the inventive concept requirement." Jedi
`Techs., Inc. v. Spark Networks, Inc., C.A. No. 16-1055-GMS, 2017 WL 3315279, at *8 n.2 (D.
`Del. Aug. 3, 2017) (quoting Tenon & Groove, LLC v. Plusgrade S.E.C., C.A. No. 12-1118-GMS,
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`Case 1:17-cv-00585-CFC-SRF Document 137 Filed 09/19/18 Page 16 of 27 PageID #: 4709
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`use the specified machine or apparatus in the manner claimed." In re Bilski, 545 F.3d 943, 954
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`(Fed. Cir. 2010), aff'd sub nom., Bilski v. Kappas, 561 U.S. 593 (2010).
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`Patent eligibility under § 101 is a question of law suitable for resolution on a motion to
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`dismiss for failure to state a claim under Rule 12(b)(6). See In re TLI Commc 'ns LLC Patent
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`Litig., 823 F.3d 607,610 (Fed. Cir. 2016) (applying regional circuit law to the de novo review of
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`a district court's patent eligibility determination under§ 101 on a Rule 12(b)(6) motion to
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`dismiss). However, the Federal Circuit recently emphasized that, "like many legal questions,
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`there can be subsidiary fact questions which must be resolved en route to the ultimate legal
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`determination." Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1128 (Fed.
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`Ci