Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 1 of 26 PageID #: 868
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`ALLIANCE LAUNDRY SYSTEMS LLC,
`
`Plaintiff,
`
`v.
`
`PAYRANGE INC.,
`
`Defendant.
`
`)
`)
`)
`)
`)
`)
`)
`)
`)
`
`C. A. No.: 24-733-MN
`
`JURY TRIAL DEMANDED
`
`ALLIANCE LAUNDRY SYSTEMS, INC.’S OPENING BRIEF
`IN SUPPORT OF ITS MOTION TO DISMISS PAYRANGE’S COUNTERCLAIMS
`
`YOUNG CONAWAY STARGATT & TAYLOR, LLP
`Melanie K. Sharp (No. 2501)
`James L. Higgins (No. 5021)
`Stephanie N. Vangellow (No. 7277)
`1000 North King Street
`Wilmington, DE 19801
`(302) 571-6600
`msharp@ycst.com
`jhiggins@ycst.com
`svangellow@ycst.com
`
`HONIGMAN LLP
`Sarah E. Waidelich
`315 East Eisenhower Parkway, Suite 100
`Ann Arbor, MI 48108
`(734) 418-4200
`
`Scott Barnett
`39400 Woodward Avenue, Suite 101
`Bloomfield Hills, MI 48304
`(248) 566-8496
`
`Jenna E. Saunders
`155 North Wacker Drive, Suite 3100
`Chicago, IL 60606
`(312) 701-9322
`
`Attorneys for Plaintiff Alliance Laundry
`Systems, LLC
`
`Attorneys for Alliance Laundry Systems LLC
`
`Dated: September 13, 2024
`
`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 2 of 26 PageID #: 869
`
`
`
`I.
`
`II.
`
`III.
`
`IV.
`
`TABLE OF CONTENTS
`
`NATURE AND STAGE OF THE PROCEEDINGS ..........................................................1
`
`SUMMARY OF THE ARGUMENT ..................................................................................2
`
`STATEMENT OF FACTS ..................................................................................................3
`
`LEGAL STANDARD ..........................................................................................................6
`
`A.
`
`B.
`
`Patent Eligibility Under 35 U.S.C. § 101.................................................................6
`
`Failure to State a Claim for Patent Infringement Under Rule 12(b)(6) ...................7
`
`V.
`
`ARGUMENT .......................................................................................................................8
`
`A.
`
`Claim 11 of the ’772 Patent is Ineligible for Patenting as a Matter of Law ............8
`
`1.
`
`2.
`
`3.
`
`Claim 11 of the ’772 Patent is Directed to an Abstract Idea .......................8
`
`Claim 11 of the ’772 Patent Fails to Recite an Inventive Concept ............12
`
`PayRange Should Be Collaterally Estopped From Arguing that the
`Capability to “Show Available Payment Accepting Units” in
`Cancelled Claim 1 is an Inventive Concept ...............................................13
`
`B.
`
`Claim 1 of the ’920 and Claim 1 of the ’423 Patent are Ineligible for
`Patenting as a Matter of Law .................................................................................14
`
`1.
`
`2.
`
`3.
`
`4.
`
`Claim 1 of the ’423 Patent is Similar to, but Broader Than, Claim 1
`of the ’772 Patent .......................................................................................14
`
`Claim 1 of the ’920 Patent is Similar to, but Broader Than, Claim
`11 of the ’772 Patent ..................................................................................15
`
`Collateral Estoppel Precludes PayRange from Arguing that Claims
`1 of the ’423 and ’920 Patents Recite Patent Eligible Subject
`Matter .........................................................................................................16
`
`PayRange has Not Alleged Infringement of Any Claims of the
`’423 and ’920 Patents Other Than Claim 1 ...............................................18
`
`C.
`
`PayRange Fails to State a Claim for Infringement of Claim 1 of the ’608
`Patent......................................................................................................................19
`
`VI.
`
`
`CONCLUSION ..................................................................................................................20
`
`
`
`
`i
`
`

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`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 3 of 26 PageID #: 870
`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`CASES
`
`Alice Corp. Pty. Ltd. v. CLS Bank Intern.,
`573 U.S. 208 (2014) .......................................................................................................7, 12, 13
`
`Am. Axle & Mfg., Inc. v. Neapco Holdings LLC,
`967 F.3d 1285 (Fed. Cir. 2020), cert. denied, No. 20-891, 142 S. Ct. 2901
`(2022) .......................................................................................................................................11
`
`In re AuthWallet, LLC,
`No. 2022-1842, 2023 WL 3330298 (Fed. Cir. May 10, 2023) ..............................................8, 9
`
`Bell Atl. Corp. v. Twombly,
`550 U.S. 544 (2007) ...................................................................................................................8
`
`ChargePoint, Inc. v. SemaConnect, Inc.,
`920 F.3d 759 (Fed. Cir. 2019)..................................................................................................11
`
`cxLoyalty, Inc. v. Maritz Holdings Inc.,
`986 F.3d 1367, 1377 (Fed. Cir. 2021)..................................................................................9, 12
`
`DIFF Scale Operation Research LLC v. MaxLinear Inc.,
`No. 19-2109, 2020 WL 2220031 (D. Del. May 7, 2020) ..............................................7, 19, 20
`
`Diogenes Ltd. v. DraftKings, Inc.,
`623 F. Supp. 3d 423 (D. Del. 2022) .........................................................................................12
`
`Fowler v. UPMC Shadyside,
`578 F.3d 203 (3d Cir. 2009)...................................................................................................7, 8
`
`Genetic Techs. Ltd. v. Merial L.L.C.,
`818 F.3d 1369 (Fed. Cir. 2016)..................................................................................................6
`
`Golden v. Qualcomm Inc.,
`No. 2023-1818, 2023 WL 6561044 (Fed. Cir. 2023) ..............................................................19
`
`Google LLC v. Hammond Dev. Int’l, Inc.,
`54 F.4th 1377 (Fed. Cir. 2022) ..........................................................................................13, 17
`
`GREE, Inc. v. Supercell Oy,
`855 Fed. App’x 740 (Fed. Cir. 2021).......................................................................................11
`
`Hantz Software, LLC v. Sage Intacct, Inc.,
`No. 22-1390, 2023 WL 2569956 (Fed. Cir. Mar. 20, 2023) ....................................................18
`
`ii
`
`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 4 of 26 PageID #: 871
`
`
`
`Innovation Sciences, LLC v. Amazon.com, Inc.,
`778 F. App’x 859 (Fed. Cir. 2019) ......................................................................................9, 12
`
`Int’l Bus. Machs. Corp. v. Zillow Grp., Inc.,
`50 F.4th 1371, 1383 (Fed. Cir. 2022) ................................................................................10, 12
`
`Intellectual Ventures I LLC v. Erie Indemnity Co.,
`850 F.3d 1315 ..........................................................................................................................10
`
`Internet Patents Corp. v. Active Network, Inc.,
`790 F.3d 1343 (Fed. Cir. 2015)..................................................................................................7
`
`KioSoft Techs, LLC v. PayRange Inc.,
`PTAB-PGR2021-00093 (PTAB, June 10, 2021) ............................................................. passim
`
`KioSoft Techs, LLC v. PayRange Inc.,
`PTAB-PGR2023-00042, Paper 6 .............................................................................................14
`
`KioSoft Techs., LLC v. PayRange Inc.,
`PTAB-PGR2023-00042 (PTAB, Jul. 25, 2023) ..............................................................1, 2, 14
`
`Kroy IP Holdings, LLC v. Groupon, Inc.,
`No. 17-1405, 2022 WL 17403538 (D. Del. Dec. 2, 2022) ..........................................13, 16, 18
`
`Mayer v. Belichick,
`605 F.3d 223 (3d Cir. 2010).......................................................................................................7
`
`Mayo Collaborative Servs. v. Prometheus Labs., Inc.,
`566 U.S. 66 (2012) ...............................................................................................................7, 13
`
`N. Star Innovations, Inc. v. Micron Tech., Inc.,
`No. 17-506, 2017 WL 5501489 (D. Del. Nov. 16, 2017) ....................................................8, 19
`
`PayRange Inc. v. CSC ServiceWorks, Inc.,
`23-cv-278-MN, D.I. 1 ..........................................................................................................2, 18
`
`Sandbox Software, LLC v. 18Birdies, LLC,
`No. 18-1649, 2019 WL 2524780 (D. Del. June 19, 2019) ........................................................8
`
`SIPCO, LLC v. Streetline, Inc.,
`230 F. Supp. 3d 351 (D. Del. 2017) .........................................................................................19
`
`Smart Sys. Innovations, LLC v. Chicago Transit Auth.,
`873 F.3d 1364, 1371, 1372 (Fed. Cir. 2017).................................................................... passim
`
`Soverain Software LLC v. Victoria’s Secret Brand Mgmt., LLC,
`778 F.3d 1311 (Fed. Cir. 2015)................................................................................................13
`
`
`
`iii
`
`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 5 of 26 PageID #: 872
`
`
`
`Universal Secure Registry LLC v. Apple Inc.,
`10 F.4th 1342 (Fed. Cir. 2021) ..................................................................................................9
`
`Yu v. Apple Inc.,
`1 F.4th 1040 (Fed. Cir. 2021) ....................................................................................................7
`
`STATUTES
`
`35 U.S.C. § 101 ...................................................................................................................... passim
`
`OTHER AUTHORITIES
`
`Federal Rule of Civil Procedure 12(b)(6) ................................................................................2, 6, 7
`
`
`
`
`
`iv
`
`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 6 of 26 PageID #: 873
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`
`
`
`
`Plaintiff Alliance Laundry Systems LLC (“Alliance”) respectfully submits
`
`this
`
`memorandum in support of its motion to dismiss Defendant PayRange Inc.’s (“PayRange”)
`
`Counterclaims I-IV on the bases that: (1) the asserted claims of U.S. Patent Nos. 11,972,423 (“the
`
`’423 Patent”), 11,966,920 (“the ’920 Patent”), and 11,481,772 (“the ’772 Patent”) fail to claim
`
`eligible subject matter pursuant to 35 U.S.C. § 101; and (2) PayRange fails to state a plausible
`
`claim for relief as to infringement of U.S. Patent No. 10,891,608 (“the ’608 Patent”).
`
`I.
`
`NATURE AND STAGE OF THE PROCEEDINGS
`
`Alliance filed its Complaint on June 20, 2024, seeking declaratory judgment that Alliance
`
`does not infringe certain claims of the three PayRange patents identified in pre-suit
`
`correspondence: the ’423 Patent, the ’920 Patent, and the ’772 Patent (the “DJ Patents”). See D.I.
`
`1. On August 23, 2024, PayRange filed its Answer and Counterclaims, asserting infringement of
`
`claim 1 of the ’920 Patent, claim 1 of the ’423 Patent, claim 11 of the ’772 Patent, and claim 1 of
`
`the ’608 Patent (collectively, with the DJ patents, the “Asserted Patents”). See D.I. 11.
`
`PayRange has twice avoided a ruling on subject matter ineligibility of claim 11 of the ’772
`
`Patent by dismissing its suit before an adjudication. First, KioSoft Technologies, LLC (“KioSoft”)
`
`filed a petition for post-grant review challenging all claims of the ’772 patent as ineligible under
`
`35 U.S.C. § 101. KioSoft Techs., LLC v. PayRange Inc., PTAB-PGR2023-00042 (PTAB, Jul. 25,
`
`2023) (“the ’772 PGR”). Before the PTAB could reach an institution decision, PayRange
`
`voluntarily cancelled most of the claims of the ’772 Patent, including claim 1. See D.I. 1, Ex. 5.
`
`Notably, the ’772 PGR was filed shortly after the PTAB issued its final written decision in a PGR
`
`on U.S. Patent No. 10,891,614 (“the ’614 Patent”), a parent patent to the ’772 Patent. In the ’614
`
`Patent PGR, the PTAB found most claims, including claim 1, to be patent-ineligible. See D.I. 1,
`
`Ex. 4, KioSoft Techs, LLC v. PayRange Inc., PTAB-PGR2021-00093 (PTAB, June 10, 2021) (“the
`
`
`
`1
`
`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 7 of 26 PageID #: 874
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`’614 PGR”). Claim 1 of the ’614 Patent is materially identical to claim 1 of the ’772 Patent. See
`
`D.I. 1 at ¶ 27; see also Declaration of Sarah Waidelich (“Decl.”), Ex. C at 4-9.
`
`PayRange and the ’772 Patent family have history in this Court. While the dispute with
`
`KioSoft was ongoing in the PTAB, PayRange asserted the ’772 Patent against CSC ServiceWorks,
`
`Inc. (“CSC”) in this Court. See PayRange Inc. v. CSC ServiceWorks, Inc., C.A. No. 23-278-MN,
`
`D.I. 1. CSC also challenged the ’772 Patent under 35 U.S.C. § 101 by filing motions to dismiss
`
`under Rule 12. See id. at D.I. 8; D.I. 14; D.I. 79. Before this Court ruled, PayRange cancelled
`
`most claims of the ’772 Patent in the PGR. See D.I. 1, Ex. 5. On April 17, 2024, CSC filed its
`
`second motion to dismiss asserting that claim 11 of the ’772 Patent claims patent-ineligible subject
`
`matter. See PayRange, C.A. No. 23-278-MN, D.I. 79. One week after that motion was filed, and
`
`before this Court ruled, PayRange voluntarily dismissed the suit against CSC with prejudice. Id.
`
`at D.I. 82.
`
`II.
`
`SUMMARY OF THE ARGUMENT
`
`Alliance moves under Federal Rule of Civil Procedure 12(b)(6) to dismiss PayRange’s
`
`Counterclaims I–III because the asserted claims of the DJ Patents are invalid under 35 U.S.C. §
`
`101. As to Counterclaim III (the ’772 Patent), claim 11 of the ’772 Patent is materially identical to
`
`claim 1 of the ’614 Patent, which the PTAB has already found ineligible. Claim 11 also adds
`
`nothing material over claim 1 of the ’772 Patent, which PayRange voluntarily disclaimed prior to
`
`the PTAB’s decision on Section 101. Claim 11 should be finally determined as ineligible and
`
`invalid under Section 101.
`
`In addition, Alliance moves under Rule 12(b)(6) to dismiss PayRange’s Counterclaims I
`
`and II for infringement of claim 1 of the ’920 and ’423 Patents. These patents recently issued in
`
`April 2024, and therefore no party has yet had an opportunity to challenge them. But claim 1 of
`
`the ’920 Patent is materially identical to claim 11 of the ’772 Patent. See Decl., Ex. A. And claim
`
`2
`
`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 8 of 26 PageID #: 875
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`
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`1 of the ’423 patent is actually broader than claim 1 of the ’772 Patent, which PayRange disclaimed
`
`in the face of an eligibility challenge. See Decl., Ex. B. The asserted claims of the ’423 and ’920
`
`Patents should also be found patent-ineligible.
`
`Finally, Alliance moves to dismiss PayRange’s Counterclaim Count IV for failure to state
`
`a plausible claim for relief. PayRange pleads no facts that would plausibly demonstrate that
`
`Alliance has infringed any claim of the ’608 Patent. PayRange does not even identify an Alliance
`
`product or service as allegedly infringing, and the sum-total of its allegations amount to rote
`
`recitation of the claim limitations. It is well-established that merely parroting back the claim
`
`language, with no additional factual allegations, fails to state a plausible claim for relief. For at
`
`least this reason, Count IV should be dismissed as well.
`
`III.
`
`STATEMENT OF FACTS
`
`The Asserted Patents all share a common specification and claim priority to the same
`
`provisional patent application, filed on December 18, 2013. See D.I. 11, Exs. E, G, H, I. The
`
`common specification explains that vending, or automatic retailing machines “have been around
`
`for thousands of years.” See, e.g., id. at Ex. E, 1:45-46. The common specification further explains
`
`that vending machines are “one type of ‘payment accepting unit,’” which is described as
`
`“equipment that requires payment for the dispensing of products and/or services.” Id. at 1:54-58.
`
`The specification identifies other types of payment accepting units including “parking meters, toll
`
`booths, laundromat washers and dryers, arcade games, kiosks, photo booths, …[and] transit ticket
`
`dispensing machines[.]” Id. at 1:58-65. The specification concedes that “[m]obile payment [the
`
`subject of the asserted claims] is a logical extension” of pre-existing payment accepting units that
`
`required insertion of coins, bills, or cards. Id. at 2:10-12 (emphasis added).
`
`The DJ Patents share a common title: “Method and System for Presenting Representations
`
`of Payment Accepting Unit Events.” The claims of the DJ Patents recite using a mobile device to
`
`
`
`3
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`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 9 of 26 PageID #: 876
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`select a payment accepting unit and exchange information with the payment accepting unit to
`
`transact payment. Claim 1 of the ’772 Patent, upon which claim 11 depends, recites:
`
`Limitation
`1.a
`
`1.b
`
`1.c
`
`1.d
`
`1.e
`
`1.f
`
`1.g
`
`Text of Claim
`1. A method of presenting representations of payment accepting unit events,
`comprising:
`at a mobile device with one or more processors, memory, one or more
`output devices including a display, and one or more radio transceivers:
`identifying one or more payment accepting units in proximity to the mobile
`device that are available to accept payment from a mobile payment application
`executing on the mobile device, the identifying based at least in part on an
`identifier corresponding to the one or more payment accepting units, wherein the
`one or more payment accepting units are payment operated machines that accept
`payment for dispensing of products and/or services;
`displaying a user interface of the mobile payment application on the
`display of the mobile device, the user interface being configured to display a visual
`indication of the one or more payment accepting units and accept user input to (i)
`receive selection by a user of the mobile device of an available payment accepting
`unit of the one or more payment accepting units and (ii) trigger payment by the
`mobile payment application for a transaction initiated by the user of the mobile
`device with the available payment accepting unit of the one or more payment
`accepting units;
`transceivers a wireless
`the one or more radio
`establishing via
`communication path including the mobile device and the available payment
`accepting unit of the one or more payment accepting units;
`after establishing the wireless communication path, enabling user
`interaction with the user interface of the mobile payment application to complete
`the transaction;
`exchanging information with the available payment accepting unit via the
`one or more radio transceivers, in conjunction with the transaction; and
`after exchanging the information, displaying, on the display, an updated
`user interface of the mobile payment application to the user of the mobile device.
`
`Claim 11 depends from claim 1 and adds the following limitations:
`
`Limitation
`11.a
`
`11.b
`11.c
`11.d
`
`Text of Claim
`The method of claim 1, wherein the user interface of the mobile payment
`application, after establishing the wireless communication path, includes:
`a visual representation of the available payment accepting unit;
`an indication of a prepared balance; and
`an affordance that when slid, indicates the initiation of the transaction;
`wherein the affordance is slid in response to receiving a user input of swipe
`on the affordance displayed on the display of the mobile device.
`
`4
`
`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 10 of 26 PageID #: 877
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`
`
`The ’423 Patent and the ’920 Patent are continuations of the ’772 Patent. See D.I. 11, Exs.
`
`E, G, H. Claim 1 of the ’423 Patent is nearly identical to now-disclaimed claim 1 of the ’772
`
`Patent; in fact, claim 1 of the ’423 Patent is actually broader than claim 1 of the ’772 Patent. Claim
`
`1 of the ’920 patent is nearly identical to claim 11 of the ’772 Patent; in fact, claim 1 of the ’920
`
`Patent is broader than claim 11 of the ’772 Patent. Differences between claim 1 of the ’920 and
`
`claim 1 of the ’423 Patent, and the corresponding ’772 Patent claims, are shown in redline in the
`
`attached Exhibits A and B to the Declaration of Sarah Waidelich. See also D.I. 11, Exs. E, G, H.
`
`The ’608 Patent, despite sharing a common specification with the DJ Patents, has a
`
`different title: “Method and System for an Offline-Payment Operated Machine to Accept
`
`Electronic Payments.” See D.I. 11, Ex. I. Claim 1 of the ’608 Patent recites:
`
`Limitation
`1.a
`
`1.b
`
`1.c
`1.d
`
`1.e
`
`1.f
`
`1.g
`
`1.h
`1.i
`
`1.j
`
`Text of Claim
`1. A payment module for an offline payment-operated machine including a coin
`receiving switch, the payment module comprising:
`a short-range wireless transceiver configured to communicate with one or more
`mobile devices;
`one or more processors;
`a first interface module configured to output to a control unit of the offline
`payment-operated machine one or more electrical pulses, each of the one or more
`electrical pulses emulating an analog signal generated by the coin receiving
`switch of the offline payment-operated machine in response to insertion of a
`single coin of a predetermined type in the offline payment-operated machine;
`and
`memory with one or more programs for execution by the one or more processors,
`the one or more programs including instructions for:
`storing, in the memory of the payment module, a number of the electrical pulses
`that must be received by the control unit to initiate an operation of the offline
`payment operating machine;
`receiving a wireless request via the short-range wireless transceiver from a
`respective mobile device of the one or more mobile devices to initiate a cashless
`operation of the offline-payment operated machine; and
`in response to the wireless request:
`determining a first number of electrical pulses to output via the first interface
`module to the control unit of the offline payment-operated machine in order to
`initiate the requested cashless operation of the offline payment-operated
`machine;
`causing the offline payment-operated machine to initiate the requested cashless
`
`
`
`5
`
`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 11 of 26 PageID #: 878
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`
`
`
`
`
`1.k
`
`operation by issuing the first number of electrical pulses to the control unit via
`the first interface module; and
`sending operation information corresponding to the initiated operation of the
`offline payment-operated machine to the respective mobile device via the short-
`range wireless transceiver.
`
`Counting “electrical pulses” in a vending machine, as described in claim 1 of the ’608
`
`Patent, is not new. For decades, coin-operated washers and dryers have operated by similarly
`
`counting “electrical pulses”: each time a coin was placed into a machine, the analog system would
`
`count the coin until the requisite number of counts or “pulses” was reached to indicate sufficient
`
`payment to operate the machine. See, e.g., Decl., Ex. E, U.S. Patent No. 3,416,639 at 5:24-29
`
`(issued Dec. 17, 1968) (“[A] coin switch 42 is wired in parallel with a token switch 44,
`
`both switches positioned to energize a ratchet displacing coil 46 which, when pulsed, displaces
`
`a switch 48 through an incremental step, the number of steps for actuation of the dispensing
`
`operation being determined by the number of steps programed.”). Claim 1 of the ’608 Patent
`
`attempts to claim this longstanding and fundamental concept by requiring that it be performed by
`
`generic, conventional computing components, such as by requiring a stored “number of electrical
`
`pulses that must be received by the control unit” to operate the machine (’772 Patent claim
`
`limitation 1.f) and components for “issuing the first number of electrical pulses.” (’772 Patent
`
`claim limitation 1.j). Although not necessary for resolution of this motion, Alliance cannot
`
`possibly practice claim 1 of the ’608 Patent, either literally or under the doctrine of equivalents
`
`because, at a minimum, no Alliance product or system operates to send, receive, or count
`
`“electrical pulses” as required by this claim.
`
`IV.
`
`LEGAL STANDARD
`
`A.
`
`Patent Eligibility Under 35 U.S.C. § 101
`
`Patent eligibility under 35 U.S.C. § 101 is a question of law that may be determined on a
`
`Rule 12(b)(6) motion. See, e.g., Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369, 1373 (Fed.
`
`
`
`6
`
`

`

`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 12 of 26 PageID #: 879
`
`
`
`Cir. 2016). In ruling on a Rule 12(b)(6) motion, the Court must accept all well-pleaded factual
`
`allegations as true. See Mayer v. Belichick, 605 F.3d 223, 229 (3d Cir. 2010). However, a court
`
`need not accept as true allegations that contradict matters subject to judicial notice, “such as the
`
`claims and the patent specification.” Yu v. Apple Inc., 1 F.4th 1040, 1046 (Fed. Cir. 2021).
`
`Courts apply a two-step test for determining whether a patent claims ineligible subject
`
`matter. See Alice Corp. Pty. Ltd. v. CLS Bank Intern., 573 U.S. 208, 217 (2014). At step 1, “the
`
`claims are considered in their entirety to ascertain whether their character as a whole is directed to
`
`excluded subject matter.” Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346
`
`(Fed. Cir. 2015). For method claims, courts look to whether the claims “focus on a specific means
`
`or method that improves the relevant technology or are instead directed to a result or effect that
`
`itself is the abstract idea and merely invoke generic processes and machinery.” Smart Sys.
`
`Innovations, LLC v. Chicago Transit Auth., 873 F.3d 1364, 1371 (Fed. Cir. 2017).
`
`If the claims are directed to a patent-ineligible concept, the second step of the test requires
`
`examination of the claim to determine whether it contains an inventive concept “sufficient to
`
`‘transform’ the claimed abstract idea into a patent-eligible application.” Alice, 573 U.S. at 221.
`
`This inventive concept must do more than simply recite “well-understood, routine, conventional
`
`activity[.]” Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 82 (2012).
`
`B.
`
`Failure to State a Claim for Patent Infringement Under Rule 12(b)(6)
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`The Court applies a two-part analysis when considering motions filed under Rule 12(b)(6).
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`First, the court separates the legal and factual elements of the claim, accepting “all of the
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`complaint’s well-pleaded facts as true, but [disregarding] any legal conclusions.” Fowler v. UPMC
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`Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009); see also DIFF Scale Operation Resch. LLC v.
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`MaxLinear Inc., C.A. No. 19-2109, 2020 WL 2220031, at *1 (D. Del. May 7, 2020). Second, the
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`court determines “whether the facts alleged in the complaint are sufficient to show that the plaintiff
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`7
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`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 13 of 26 PageID #: 880
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`has a ‘plausible claim for relief.’” Fowler, 578 F.3d at 211. A “plausible” claim does more than
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`merely allege entitlement to relief; thus, a claimant’s “obligation to provide the grounds of his
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`entitle[ment] to relief requires more than labels and conclusions, and a formulaic recitation of the
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`elements of a cause of action will not do[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
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`(internal quotations and citations omitted). Pleadings that simply “parrot back the language of the[]
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`claim elements and then state[] that the accused product” meets those limitations fail to meet this
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`standard. See, e.g., N. Star Innovations, Inc. v. Micron Tech., Inc., C.A. No. 17-506, 2017 WL
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`5501489, at *2 (D. Del. Nov. 16, 2017).
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`V.
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`ARGUMENT
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`A.
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`Claim 11 of the ’772 Patent is Ineligible for Patenting as a Matter of Law
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`PayRange fails to state a claim for relief as to Counterclaim Count III because claim 11
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`of the ’772 Patent is directed to an abstract idea and lacks an inventive concept.
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`1.
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`Claim 11 of the ’772 Patent is Directed to an Abstract Idea
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`Claim 11 of the ’772 Patent is directed to the abstract idea of displaying information to
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`enable a commercial transaction from a merchant. As the ’772 Patent readily acknowledges,
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`humans have facilitated such transactions “for thousands of years.” See D.I. 11, Ex. E at 1:45-53.
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`Claim 11 is similar to claim 1 in In re AuthWallet, LLC, No. 2022-1842, 2023 WL 3330298
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`(Fed. Cir. May 10, 2023), which the Federal Circuit found was directed to an ineligible abstract
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`idea.1 Id. at *3 The claim at issue there was directed to a computer-implemented method for
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`making a purchase in which customers apply “stored value items” (such as coupons or vouchers)
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`to the purchase. Id. at *1. The claim comprised the following steps: (1) receive an authorization
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`1 Following the Court’s guidance in cases such as Sandbox Software, LLC v. 18Birdies, LLC,
`C.A. No. 18-1649, 2019 WL 2524780, at *4 (D. Del. June 19, 2019), Alliance here identifies the
`cases and claims that are most analogous to the challenged claims.
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`8
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`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 14 of 26 PageID #: 881
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`request from one of a plurality of possible points of purchase, (2) identify one or more stored items
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`to apply to the transaction, (3) transmit a transaction indication to the user’s mobile device, where
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`the indication includes information about the stored item, (4) the user indicates whether the stored
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`value item should be applied, (5) apply stored value item to the transaction amount, and (6) provide
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`updated payment amount to user. See id. at *1. AuthWallet argued that the claims provided a
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`security protocol for authorizing transactions through an intermediary service. See id. The Federal
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`Circuit rejected this argument and found that the claim was directed to a “longstanding commercial
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`practice,” which is an abstract idea. Id. at *3. It further held that, even if the claims did include
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`this security feature, they were still directed to an abstract idea where the claims merely recited
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`generic steps and results. Id. at *4.
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`Claim 11 of the ’772 Patent is similarly directed to the longstanding commercial practice
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`of displaying information to enable a commercial transaction from a merchant, which the Federal
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`Circuit has repeatedly found constitutes an abstract idea. See, e.g., cxLoyalty, Inc. v. Maritz
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`Holdings Inc., 986 F.3d 1367, 1376-77 (Fed. Cir. 2021) (facilitating commercial transaction
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`between purchaser and seller via a user interface); Smart, 873 F.3d at 1371 (method for paying a
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`transit fare with a credit card); Universal Secure Registry LLC v. Apple Inc., 10 F.4th 1342, 1349
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`(Fed. Cir. 2021) (method for enabling transaction using time-varying code); Innovation Sciences,
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`LLC v. Amazon.com, Inc., 778 F. App’x 859, 863 (Fed. Cir. 2019) (method for processing
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`transaction using a payment server).
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`Further, claim 11 is “not directed to a combined order of specific rules that improve any
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`technological process[.]” See Smart, 873 F.3d at 1372. Claim 1, from which claim 11 depends,
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`recites the following results-oriented steps: (1) identify a payment accepting unit (limitation 1.c),
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`(2) display a user interface that triggers payment in response to user selection (1.d), (4) establish
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`Case 1:24-cv-00733-MN Document 15 Filed 09/13/24 Page 15 of 26 PageID #: 882
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`wireless communication between mobile device and payment accepting unit (1.e), (5) transmit
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`information from mobile device to payment accepting unit (1.f), and (6) display an updated user
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`interface on mobile device (1.g). Dependent claim 11 recites the following additional results-
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`oriented steps: (1) the user interface displays a prepared balance (11.c), (2) the user triggers
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`payment by “sliding” an “affordance” (11.d).
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`Claims 1 and 11 do not speak to specific technical problems or solutions to perform these
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`generic steps and results. See, e.g., Smart, 873 F.3d at 1372; Intellectual Ventures I LLC v. Erie
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`Indemnity Co., 850 F.3d 1315, 1328 (Fed. Cir. 2017) (“The claims are not focused on how usage
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`of XML tags alters the database in a way that leads to an improvement in the technology”). Rather,
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`the steps are performed using generic, well-known technology. See, e.g., id. at 1329. The claimed
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`mobile device is defined generically as a “user’s personal mobile device” including “smart phones,
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`tablet[s] or laptop computers…or other technology known or yet to be discovered.” D.I. 11, Ex. E
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`at 8:59-9:26. The accompanying software application “include[s] any software program(s) capable
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`of implementing the features described[.]” See id. The payment accepting unit is “equipment that
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`requires payment for the dispensing of any product and/or service,” inclu