Case 2:19-cv-00395-JRG Document 303 Filed 02/16/21 Page 1 of 12 PageID #: 20489
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`LUMINATI NETWORKS LTD.,
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`Plaintiff,
`
`v.
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`TESO LT, UAB, METACLUSTER LT,
`UAB, OXYSALES, UAB,
`
`Defendants.
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`§
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`CIVIL ACTION NO. 2:19-CV-00395-JRG
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`MEMORANDUM OPINION AND ORDER
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`Before the Court is Defendants Teso LT, UAB, Metacluster LT, UAB, and Oxysales,
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`UAB’s (collectively, “Teso”) Motion for Judgment on the Pleadings Under Fed. R. Civ. P. 12(c)
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`and 35 U.S.C. § 101 (the “Motion”). (Dkt. No. 210). On February 4, 2021, the Court held a hearing
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`on the Motion. Having considered the Motion, the parties’ arguments, related briefing, and relevant
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`authority, the Court finds that the Motion should be DENIED.
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`I.
`
`BACKGROUND
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`Plaintiff Luminati Networks Ltd. (“Luminati”) alleges infringement of U.S. Patent Nos.
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`10,257,319 (the “’319 Patent”), 10,484,510 (the “’510 Patent”), and 10,469,614 (the “’614
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`Patent”) (collectively, the “Patents-in-Suit”). (Dkt. No. 1). Luminati accuses Teso of infringing:
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`Claims 1, 2, 14, 15, 17, 18, 21, 22, 24-27 of the ’319 Patent; Claims 1, 2, 8-11, 13, 15, 16, 18-20,
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`22, and 23 of the ’510 Patent; and Claims 1, 2, 4-6, 9-12, 15-20, 22, 23, 25, 26, and 29 of the ’614
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`Patent (collectively, the “Asserted Claims”). (Dkt. No. 224 at 2).
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`Previously, Teso filed a Rule 12(b)(6) Motion to Dismiss (the “Motion to Dismiss”)
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`contending that the Asserted Claims were unpatentable under 35 U.S.C. § 101. (Dkt. No. 20 at 2–
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`Metacluster LT, UAB
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`21). Noting that “claim construction could be of benefit in addressing this issue as it is presented
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`in this case,” the Court denied Teso’s Motion to Dismiss. (Dkt. No. 85 at 5). On December 7, 2020,
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`Magistrate Judge Payne entered a Claim Construction Opinion and Order in this case. (Dkt. No.
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`191). On December 30, 2020, Teso filed the instant Motion, re-raising the issue of patent-eligibility
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`of the Patents-in-Suit under 35 U.S.C. § 101. (Dkt. No. 210).
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`II.
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`LEGAL STANDARD
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`A. Rule 12(c)
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`After the pleadings are closed, but early enough not to delay trial, a party may move for
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`judgment on the pleadings. Fed. R. Civ. P. 12(c). “The standard for deciding a Rule 12(c) motion
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`is the same as a Rule 12(b)(6) motion to dismiss . . . [t]he plaintiff must plead ‘enough facts to
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`state a claim for relief that is plausible on its face.’” Guidry v. American Public Life Ins. Co., 512
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`F.3d 177, 180 (5th Cir. 2007) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007)). In a
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`patent case, the Federal Circuit reviews procedural aspects of motions for judgment on the
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`pleadings using regional circuit law. RecogniCorp, LLC v. Nintendo Co., Ltd., 855 F.3d 1322,
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`1325–26 (Fed. Cir. 2017).
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`B. Patent Eligibility
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`Anyone who “invents or discovers any new and useful process, machine, manufacture, or
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`composition of matter, or any new and useful improvement thereof” may obtain a patent.
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`35 U.S.C. § 101. Since patent protection does not extend to claims that monopolize the “building
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`blocks of human ingenuity,” claims directed to laws of nature, natural phenomena, and abstract
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`ideas are not patent eligible. Alice Corp. Pty. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354 (2014).
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`The Supreme Court instructs courts to distinguish between claims that set forth patent-ineligible
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`subject matter and those that “integrate the building blocks into something more.” Id.
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`First, the court “determine[s] whether the claims at issue are directed to a patent-ineligible
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`concept.” Id. at 2355. In doing so, the court must be wary not to over generalize the invention, as
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`“all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or
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`abstract ideas.” Alice, 134 S. Ct. at 2354 (omission in original). In other words, the court must
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`distinguish between “ineligible ‘abstract-idea-based solution[s] implemented with generic
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`technical components in a conventional way’ from the eligible ‘technology-based solution’ and
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`‘software-based invention[] that improve[s] the performance of the computer system itself.’”
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`Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1299 (Fed. Cir. 2016) (quoting
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`Bascom Glob. Internet Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1351 (Fed. Cir. 2016))
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`(alteration in original).
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`If the challenged claims recite a patent-ineligible concept, the court then “consider[s] the
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`elements of each claim both individually and ‘as an ordered combination’ to determine whether
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`the additional elements ‘transform the nature of the claim’ into a patent eligible application.”
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`Alice, 134 S. Ct. at 2355 (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S.
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`66, 78–79 (2012)). This step is satisfied when the claim limitations “involve more than
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`performance of ‘well-understood, routine, [and] conventional activities previously known to the
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`industry.’” Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d
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`1343, 1347–48 (Fed. Cir. 2014) (quoting Alice, 134 S. Ct. at 2359). The Federal Circuit has
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`explained that “[w]hile the ultimate determination of eligibility under § 101 is a question of law,
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`like many legal questions, there can be subsidiary fact questions which must be resolved en route
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`to the ultimate legal determination.” Aatrix Software, Inc. v. Green Shades Software, Inc., 882
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`F.3d 1121, 1128 (Fed. Cir. 2018). As such, “[t]he question of whether a claim element or
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`combination of elements is well-understood, routine and conventional to a skilled artisan in the
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`relevant field is a question of fact” that must be “proven by clear and convincing evidence.”
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`Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018).
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`Something is not necessarily well-understood, routine, and conventional simply because it
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`is disclosed in a prior art reference. Exergen Corp. v. KAZ USA, Inc., 725 Fed. App’x. 959, 965
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`(Fed. Cir. 2018). There are many obscure references that may qualify as prior art but are
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`insufficient to establish something is a “well-understood, routine, and conventional activity
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`previously engaged in by scientists who work in the field.” Mayo, 566 U.S. at 79. Additionally,
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`specific improvements described in a patent specification, “to the extent they are captured in the
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`claims, create a factual dispute regarding whether the invention describes well-understood, routine,
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`and conventional activities.” Berkheimer, 881 F.3d at 1369. However, “[w]hen there is no genuine
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`issue of material fact regarding whether the claim element or claimed combination is well-
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`understood, routine, conventional to a skilled artisan in the relevant field, [patent eligibility] can
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`be decided on summary judgment as a matter of law.” Berkheimer, 881 F.3d at 1368.
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`III. DISCUSSION
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`A. Representativeness
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`The Court first notes that Teso bears the burden of either addressing the eligibility of each
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`Asserted Claim or making a showing of the representativeness of any claims asserted to be
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`representative. See PPS Data, LLC v. Jack Henry & Assocs., Inc., 404 F. Supp. 3d 1021 (E.D. Tex.
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`2019). Teso addresses each Asserted Claim in its Motion. (See Dkt. No. 210). The parties focused
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`their argument at the hearing on the independent claims asserted from the Patents-in-Suit. (See
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`Dkt. No. 293 at 6:6–23). Accordingly, the Court’s analysis is likewise focused on Claim 1 of each
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`Patent-in-Suit.
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`B. The Patents-in-Suit
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`Claim 1 of the ’319 Patent, the only independent claim asserted from the ’319 Patent,
`recites:
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`
`A method for use with a first client device, for use with a first server that
`comprises a web server that is a Hypertext Transfer Protocol (HTTP) server that
`responds to HTTP requests, the first server stores a first content identified by a first
`content identifier, and for use with a second server, the method by the first client
`device comprising:
`receiving, from the second server, the first content identifier;
`sending, to the first server over the Internet, a Hypertext Transfer Protocol
`(HTTP) request that comprises the first content identifier;
`receiving, the first content from the first server over the Internet in response
`to the sending of the first content identifier; and
`sending, the first content by the first client device to the second server, in
`response to the receiving of the first content identifier.
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`(Dkt. No. 1-2 at 19:16–32). Claim 1 of the ’510 Patent, the only independent claim asserted from
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`the ’510 Patent, recites:
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`A method for use with a web server that responds to Hypertext Transfer
`Protocol (HTTP) requests and stores a first content identified by a first content
`identifier, the method by a first client device comprising:
`establishing a Transmission Control Protocol (TCP) connection with a
`second server;
`sending, to the web server over an Internet, the first content identifier;
`receiving, the first content from the web server over the Internet in response
`to the sending of the first content identifier; and
`sending the received first content, to the second server over the established
`TCP connection, in response to the receiving of the first content
`identifier.
`
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`(Dkt. No. 1-3 at 19:18–31). In the Claim Construction Order, the term “client device” in the ’319
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`and ’510 Patents is construed as “communication device that is operating in the role of a client.”
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`(Dkt. No. 191 at 10–12). The term “second server” is construed as “server that is not the client
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`device.” (Id. at 13–14). Claim 1 of the ’614 Patent, the only independent claim asserted from the
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`’614 Patent, recites:
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`A method for use with a resource associated with a criterion in a client
`device that communicates with a first server over the Internet, the client device is
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`identified in the Internet using a first identifier and is associated with first and
`second state according to a utilization of the resource, the method comprising:
`initiating, by the client device, communication with the first server over the
`Internet in response to connecting to the Internet, the communication
`comprises sending, by the client device, the first identifier to the first
`server over the Internet;
`when connected to the Internet, periodically or continuously determining
`whether the resource utilization satisfies the criterion;
`responsive to the determining that the utilization of the resource satisfies the
`criterion, shifting to the first state or staying in the first state;
`responsive to the determining that the utilization of the resource does not
`satisfy the criterion, shifting to the second state or staying in the second
`state;
`responsive to being in the first state, receiving, by the client device, a
`request from the first server; and
`performing a task, by the client device, in response to the receiving of the
`request from the first server,
`wherein the method is further configured for fetching over the Internet a
`first content identified by a first content identifier from a web server that
`is distinct from the first server, and the task comprising:
`receiving, by the client device, the first content identifier from the
`first server;
`sending, by the client device, the first content identifier to the web
`server;
`receiving, by the client device, the first content from the web server
`in response to the sending of the first content identifier; and
`sending, by the client device, the received first content to the first
`server.
`
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`(Dkt. No. 1-1 at 173:44–174:13). In the ’614 Patent, “client device” is construed as “device
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`operating in the role of a client by requesting services, functionalities, or resources from the
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`server.” (Dkt. No. 191 at 14–15). The term “first server” is construed as “server that is not the
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`client device.” (Id. at 16).
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`C. The Parties’ Contentions
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`Teso argues that the Court’s claim construction and Luminati’s arguments at the claim
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`construction hearing support Teso’s argument that the client and server terms merely refer to
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`general purpose computers running software. (Dkt. No. 210 at 3–5). Since the Patents-in-Suit refer
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`to software roles running on general purpose computers, Teso argues that they claim no more than
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`general purpose computers sending or receiving information over the Internet using an
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`intermediary device. (Id. at 5).
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` Teso argues that Claim 1 of the ’319 Patent and Claim 1 of the ’510 Patent merely claim
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`the sending and receiving of information over the Internet between client devices and servers, and
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`are therefore abstract. (Id. at 15). The addition of the status determination step in Claim 1 of the
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`’614 Patent adds “nothing beyond the routine and conventional step of indicating a device’s
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`availability based upon standard criteria such as its connectivity, battery power, or CPU usage.”
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`(Id. at 16). Further, Teso argues, the dependent claims asserted in this case do not add anything
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`more than conventional steps recited at a high level, and thus fail for the same reasons. (Id. at 15,
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`16) (citing Mayo, 566 U.S. at 82). In essence, Teso’s argument is that the Asserted Claims are
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`abstract because they describe the typical human interaction of communicating through an
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`intermediary being performed by general purpose computers. (Id. at 17–18). Teso also argues that
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`nothing in the Asserted Claims converts the abstract idea into an inventive concept under Step
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`Two of Alice. (Id. at 19).
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`Luminati argues that the claimed invention goes beyond mere communications between
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`devices over the Internet, but that the Patents-in-Suit are directed to a new and improved network
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`architecture that operates over the Internet. (Dkt. No. 224 at 12). The invention solves a technical
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`problem with fetching Internet content, Luminati argues, and is therefore not abstract. (Id.) The
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`traditional client-server architecture limited client devices to making requests and receiving
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`content, but not acting as peer-proxies. (Id. at 13). Luminati argues that the situation is different
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`from human interactions, in part because the Patents-in-Suit recite modifications to client devices,
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`such as software installation, to allow client devices to perform in the recited roles. (Id. at 14).
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`Should the Court reach Alice Step Two, Luminati argues that Step Two is satisfied because the
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`claims recite inventive concepts. (Id. at 20). Further, Luminati argues that judgment on the
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`pleadings is an inappropriate disposition of the factual inquiry involved in Alice Step Two. (Id. at
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`23).
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`D. Alice Step One
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`Teso cites Specialized Monitoring Solutions, LLC v. ADT LLC, in which the asserted
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`patents claimed a database which stored coded messages and provided access to such messages
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`over the Internet. 367 F. Supp. 3d 575, 585 (E.D. Tex. Feb. 7, 2019) (Bryson, Circuit Judge). In
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`that case, “[t]he claims [did] not recite improvements in technology that help[ed] perform those
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`steps or describe[d] any means of accomplishing those steps other than through the use of a generic
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`computer and commonplace communication networks . . .” Id. In contrast, the methods claimed in
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`this case, while including generic computers and common Internet communication protocols,
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`recite a broader network that is itself the claimed improvement. Rather than a mere categorization
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`of data, the pairing of servers and peer-proxies describes a network structure that improves the
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`ability of those actors to communicate.
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`Teso analogizes this case to Reese v. Sprint Nextel Corp., in which the Federal Circuit held
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`that claims reciting methods for the sending and receiving of information were abstract. (Id. at 13)
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`(citing 774 Fed. App’x. 656 (Fed. Cir. 2019)). In Reese, the patent claims were directed to
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`receiving information—a calling phone number—and sending information—a tone. 774 Fed.
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`App’x. at 660. However, unlike in this case, the patents in Reese were “akin to concepts of
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`receiving and displaying (indicating) information . . . that fall into a familiar class of claims
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`directed to abstract ideas.” Id. If the claimed methods in this case were simply the receipt and
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`forwarding of information over the Internet, Teso might have a compelling argument. However, it
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`is the use of non-traditional client devices that transforms the Asserted Claims into non-abstract
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`subject matter.
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`Teso also compares this case to Elec. Pwr. Grp., LLC v. Alstom S.A., another case in which
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`the Federal Circuit held that the act of collecting and receiving information, without more, is
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`abstract. (Id. at 14) (citing 830 F.3d 1350, 1353 (Fed. Cir. 2016)). In Electric Power, the Federal
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`Circuit categorized the collection of information, the mere analysis of information akin to mental
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`steps or by algorithms, and the resulting presentation of that collection and analysis, as abstract.
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`830 F.3d at 1353–54. As noted above, it is not the individual steps of the method that render the
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`Asserted Claims non-abstract, it is the network architecture as a whole.
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`Teso argues that Ericsson Inc. v. TCL Commc’n Tech. Holdings Ltd., 955 F.3d 1317 (Fed.
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`Cir. 2020) is “right on point.” (Dkt. No. 293 at 29:19). In Ericsson, the claimed process of
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`controlling access to resources was “exactly the sort of process that ‘can be performed in the human
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`mind, or by a human using a pen and paper . . . .’” 955 F.3d at 1327 (quoting CyberSource Corp.
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`v. Retail Decisions, Inc., 654 F.3d 1366, 1372 (Fed. Cir. 2011). However, this case differs from
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`Ericsson in that an improvement in network design that addresses the problem of congested
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`networks goes beyond the mere control of access to resources. This is not something a human
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`being can perform using a pen and pad.
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`The Court finds the instant situation more comparable to SRI Int’l, Inc. v. Cisco Sys., Inc.,
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`in which the Federal Circuit concluded that the claimed invention was “directed to an improvement
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`in computer network technology.” 930 F.3d 1295, 1303 (Fed. Cir. 2019). Although the purpose of
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`the invention in SRI was to improve security by monitoring network traffic, and the Asserted
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`Claims in this case are not designed to improve network security, the Court concludes that the
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`Asserted Claims here are similarly “directed to a technological solution to a technological
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`problem.” Id. The specifications of the Patents-in-Suit state that the inventions were designed to
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`solve a technological problem: the increased use of bandwidth on the Internet, which slows down
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`networks and increases costs for content providers and Internet Service Providers. (See, e.g., Dkt.
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`No. 1-1 at 1:42–57; Dkt. No. 1-3 at 1:32–60). The use of a non-traditional network structure with
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`a client device acting as a proxy is designed to produce “faster and more efficient data
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`communication within a communication network.” (Dkt. No. 1-2 at 4:41–43).
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`Even more analogous to this case is Packet Intelligence LLC v. NetScout Sys., Inc., 965
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`F.3d 1299 (Fed. Cir. 2020). In Packet Intelligence, the Federal Circuit held that a method for
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`monitoring a stream of packets (a “connection flow”) exchanged over a computer network was not
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`abstract. Id. at 1309–10. Affirming this Court’s findings in that case, the Federal Circuit described
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`the representative claim as “meet[ing] a challenge unique to computer networks, identifying
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`disjointed connection flows in a network environment.” Id. at 1309. Here, as in Packet Intelligence,
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`the Asserted Claims address a technological problem unique to computer networks. The Federal
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`Circuit also found that the patent in Packet Intelligence “solves a technological problem by
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`identifying and refining a conversational flow such that different connection flows can be
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`associated with each other and ultimately with an underlying application or protocol.” Id.
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`Likewise, the Asserted Claims here provide a technological solution by routing server requests
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`and receipts through non-traditional client devices, and adding in the ’614 Patent the additional
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`step of determining whether the client device is available to perform that function.
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`The Court is not persuaded that the use of general purpose computers transforms the idea
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`into something abstract. “Software can make non-abstract improvements to computer technology
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`just as hardware improvements can, and sometimes the improvements can be accomplished
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`through either route.” Enfish, 822 F.3d at 1335. The Court here notes that in their claim
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`construction briefing, Teso specifically represented that they would not take the position that they
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`would later assert that client devices and servers are interchangeable general use computers. (See
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`Dkt. No. 138 at 11). However, they appear to have taken that position anyway.1 (See id.). The
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`Court finds that the Patents-in-Suit are not abstract because they make use of general-purpose
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`computers, given that the specifications2 of the Patents-in-Suit describe the functionality as being
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`“provided by software stored within each communication device.” (Dkt. No. 1-1 at 83:6–15; Dkt.
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`No. 1-2 at 5:46–48; Dkt. No. 1-3 at 4:48–50). Teso’s counsel acknowledged in the hearing that if
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`the claims “concerned a non-abstract software . . . that actually caused a technological
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`improvement . . . putting it on a general purpose computer or using that does not . . . somehow
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`cause it to become abstract.” (Dkt. No. 293 at 16:14–18). Teso’s counsel also acknowledged that
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`a technological solution could be brought about through the sending and receiving of information
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`through general purpose computers—in other words, that the use of a general purpose computer
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`sending and receiving information was not per se abstract. (Id. at 32:2–33:6). This reality aside,
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`the Step One analysis leads the Court to conclude that these claims are not abstract but, in fact,
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`bring a new technological solution to an existing technological problem.
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`E. Alice Step Two
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`Having concluded that the Asserted Claims are not abstract, the Court does not reach Alice
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`Step Two. However, even if the Court reached the opposite conclusion regarding Step One, the
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`question as to whether the Asserted Claims are well-understood, routine, and conventional would
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`contain questions of fact. See Berkheimer, 881 F.3d at 1369. On the face of the pleadings, there
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`are factual disputes between the parties on this issue. Accordingly, a judgment on the pleadings
`
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`1 Notably, Magistrate Judge Payne took specific note of Teso’s position in the Claim Construction Order.
`(Dkt. No. 191 at 15).
`2 When determining patent-eligibility, the Court considers the claims as a whole and reads the claims in
`light of the specification. Data Engine Techs. LLC. v. Google LLC, 906 F.3d 999, 1011 (Fed. Cir. 2018).
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`would be inappropriate, even if the Court had reached the opposite conclusion as to Step One and
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`found that the Asserted Claims are directed to an abstract concept.
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`IV. CONCLUSION
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`For the foregoing reasons, the Court finds that Teso’s Motion should be and hereby is
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`DENIED.
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`12
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`.
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`____________________________________
`RODNEY GILSTRAP
`UNITED STATES DISTRICT JUDGE
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`So ORDERED and SIGNED this 12th day of February, 2021.
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`Page 12 of 12
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