Case 6:21-cv-00309-ADA Document 42 Filed 08/15/22 Page 1 of 18
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`
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`WILLIAM GRECIA,
` Plaintiff
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`-vs-
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`PAYPAL, INC.,
` Defendant
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`§
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`§
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`W-21-CV-00309-ADA
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`MEMORANDUM OPINION AND ORDER
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`Before the Court is Defendant PayPal, Inc.’s (“PayPal”) Motion to Dismiss arguing that
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`Plaintiff Grecia Estate Holdings, LLC (“Grecia”) fails to state a plausible infringement claim
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`under Rule 12(b)(6) or is collaterally estopped from asserting such a claim. ECF No. 10.
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`Grecia’s Opposition to Defendant’s Motion was timely filed in response. ECF No. 16. PayPal
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`timely filed a reply. ECF No. 17. Having considered the motion, parties’ briefs, and applicable
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`law, the Court GRANTS PayPal’s Motion.
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`I.
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`BACKGROUND
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`Grecia filed this action against PayPal on March 30, 2021, asserting infringement of the
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`sole patent in this case: U.S. Patent No. 8,402,555 (the “’555 Patent”). ECF No. 1 at 1. This
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`patent relates to “digital rights management” (“DRM”) schemes used “to protect commercial
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`intellectual property copyrights privy to illegal copying using computerized devices.” ’555
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`Patent at 1:19-32. As the patent explains, traditional DRM schemes “rel[ied] on content
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`providers to maintain computer servers to receive and send authorization keys.” Id. at 2:54-59.
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`These schemes suffered drawbacks limiting a user's access to content, including “a requirement
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`to reconnect with the server ... for reauthorization.” Id. at 2:57-59. Consequently, users could no
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`Case 6:21-cv-00309-ADA Document 42 Filed 08/15/22 Page 2 of 18
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`longer access purchased media when “content providers discontinue[d] servers or even [went]
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`out of business some years after DRM encrypted content was sold to consumers[.]” Id. at 2:59-
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`62. In such cases, traditional DRM systems yielded a counterintuitive outcome: “hardware
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`failure or property theft ... could lead to a paying customer losing the right to recover purchased
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`products.” Id. at 2:63-67. The ’555 Patent allegedly solved this problem by providing “unlimited
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`interoperability of digital media between unlimited machines with management of end-user
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`access to the digital media.” Id. at 3:11-13. Figure 6 illustrates the invention's general steps:
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`Id. at Fig. 6. Grecia claims this invention represents an advancement over the prior art in that it
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`“employs electronic IC, as part of a web service membership, to manage access rights across a
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`plurality of devices” rather than restrict digital media interoperability to a limited number of
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`machines. Id. at 1:23-26.
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`The Complaint accuses PayPal’s app (the “Accused Product”) as the instrumentality
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`infringing the ’555 Patent. ECF No. 16 at 6. Specifically, Grecia alleges that the Accused
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`Product meets each limitation in claim 16 of the ’555 Patent by “associating a QR code with the
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`user’s account” and monitoring “access to the digital media of the PayPal user’s account.” Id. at
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`6–7. PayPal petitions the Court to dismiss that Complaint under Rule 12(b)(6) for failure to state
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`a plausible infringement claim, or under collateral estoppel because the ’555 Patent issues in this
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`case are allegedly identical to those litigated in other proceedings. ECF No. 10 at 5. This Court
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`has also granted a motion to dismiss in another similar case with nearly identical analysis and
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`reasoning.1
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`II.
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`LEGAL STANDARD
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`A.
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`Rule 12(b)(6): Failure to State a Claim
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`A party may move to dismiss a claim if the complaint has “fail[ed] to state a claim upon
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`which relief can be granted.” FED. R. CIV. P. 12(b)(6). When considering a Rule 12(b)(6) motion,
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`a court must assume that all well-pleaded facts are true and view them in the light most favorable
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`to the non-moving party. Bowlby v. City of Aberdeen, 681 F.3d 215, 218 (5th Cir. 2012).
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`However, courts “are not bound to accept as true a legal conclusion couched as a factual
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`allegation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). To survive a Rule 12(b)(6) motion to
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`dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to
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`1 Grecia Estate holdings LLC v. Meta Platforms, Inc., No. 6:21-cv-00677-ADA, 2022 WL 2019296 (W.D. Tex.
`June 6, 2022).
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`relief that is plausible on its face.’” Id. (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
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`(2007)). “A claim has facial plausibility when the pleaded factual content allows the court to
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`draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 663.
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`A complaint is insufficient if it offers only “labels and conclusions” or “a formulaic recitation of
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`the elements of a cause of action.” Id.
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`A literal infringement claim “require[s] a showing that each and every limitation set forth
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`in a claim appears in the accused product.” Iron Oak Techs., LLC v. Acer Am. Corp., No. 6:17-
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`CV-00143-RP-JCM, 2017 WL 9477677, at *3 (W.D. Tex. Nov. 28, 2017) (internal quotation
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`marks omitted). “[W]hen deciding a motion to dismiss, a court may ‘consider documents
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`attached to or incorporated into the complaint and matters of which judicial notice may be
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`taken.’” Id. at *2. “[A] plaintiff cannot assert a plausible claim for infringement under the
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`Iqbal/Twombly standard by reciting the claim elements and merely concluding that the accused
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`product has those elements.” Bot M8 LLC v. Sony Corp. of Am., 4 F.4th 1342, 1353 (Fed. Cir.
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`2021). “[A] patentee may subject its claims to early dismissal by pleading facts that are
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`inconsistent with the requirements of its claims.” Id. at 1346.
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`B.
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`Collateral Estoppel
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`“Collateral estoppel protects a party from having to litigate issues that have been fully
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`and fairly tried in a previous action and adversely resolved against a party-opponent.” Ohio
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`Willow Wood Co. v. Alps South, LLC, 735 F.3d 1333, 1342 (Fed. Cir. 2013). “The issue of
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`whether to apply collateral estoppel is a question of law.” Bradberry v. Jefferson Cty., Tex., 732
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`F.3d 540, 549 (5th Cir. 2013). Thus, the issue of whether to apply collateral estoppel may be
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`properly addressed in a motion to dismiss. See, e.g., NetSoc, LLC v. Oath Inc., No. 18-CV-12267
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`(RA), 2020 WL 419469, at *1 (S.D.N.Y. Jan. 24, 2020); Arunachalam v. Exxon Mobil Corp.,
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`No. 6:19-CV-00171-ADA, 2019 WL 10303695, at *1 (W.D. Tex. June 26, 2019).
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`Regional circuit law governs the general procedural question of whether collateral
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`estoppel (i.e., issue preclusion) applies, but Federal Circuit law governs questions involving
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`substantive issues of patent law. Soverain Software LLC v. Victoria's Secret Direct Brand Mgmt.,
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`LLC, 778 F.3d 1311, 1314 (Fed. Cir. 2015). The Fifth Circuit has held that collateral estoppel
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`applies if: “(1) the identical issue was previously adjudicated; (2) the issue was actually litigated;
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`and (3) the previous determination was necessary to the decision.” Bradberry, 732 F.3d at 548.
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`Determining an “identity of issues” test implicates substantive patent law, meaning Federal
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`Circuit law controls. Ohio Willow, 735 F.3d at 1342; Soverain, 778 F.3d at 1314. Collateral
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`estoppel applies where there is “identity of the issues” and does not require patent claims to be
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`“identical.” Ohio Willow, 735 F.3d at 1342 (emphasis in original); see also Soverain, 778 F.3d at
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`1319 (“Complete identity of claims is not required to satisfy the identity-of-issues requirement
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`for claim preclusion.”). “If the differences between the unadjudicated patent claims and
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`adjudicated patent claims do not materially alter the question of invalidity, collateral estoppel
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`applies.” Ohio Willow, 735 F.3d at 1342.
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`III. DISCUSSION
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`PayPal moves for dismissal of Grecia's Complaint on two grounds. First, it asserts Grecia
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`is collaterally estopped from asserting claim 16. Second, it asserts Grecia’s complaint fails to
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`state a claim for infringement. The Court considers these arguments below.
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`A. Grecia is not collaterally estopped from asserting claim 16
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`PayPal argues that collateral estoppel bars Grecia from alleging infringement of the ’555
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`Patent because claim 16 is substantively identical to claims previously invalidated in other
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`proceedings under 35 U.S.C. § 101 and 35 U.S.C. § 112 ¶ 6. PayPal acknowledges that the
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`claims contain different language, strictly speaking, but believes that such differences are minor.
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`Ultimately, PayPal contends that Grecia cannot allege infringement because claim 16 discloses
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`substantially the same invention as the invalidated claims and is therefore invalid. This Court
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`disagrees, however, and will DENY PayPal's Motion on this ground.
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`1. Neither the § 101 validity issue nor the § 112, ¶ 6 definiteness issue is
`substantively identical to those previously adjudicated
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`In a separate district court proceeding, Judge Sullivan invalidated claim 21 of a related
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`patent, U.S. Patent No. 8,533,860 (the “’860 patent”), as indefinite. ECF No. 10 at 2 (citing
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`Grecia v. Mastercard Int’l Inc., No. 15-cv-09059, slip op. (S.D.N.Y. Sept. 8, 2018). Because
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`claim 21 of the ’860 patent bears some similarity to independent claim 15 of the ’555 Patent,
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`from which the asserted claim 16 depends, PayPal argues that Judge Sullivan’s holding that
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`claim 21 was indefinite collaterally estops Grecia from asserting claim 16. ECF No. 8 at 4–6.
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`PayPal emphasizes the two patents’ have identical specifications without any “specialized
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`hardware, software, or algorithms” that correspond to the claimed functions. Thus, Judge
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`Sullivan’s analysis and decision, which was affirmed on appeal, collaterally estops Grecia from
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`asserting claim 16 in the instant action.
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`Grecia concedes that collateral estoppel applies to a claim term that the federal courts
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`finally adjudged indefinite under § 112. ECF No. 16 at 14. But that term is “customization
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`module,” not “computer product,” and there is no “customization module” in claim 16. Again,
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`Grecia argues—as it did concerning pleading sufficiency—that PayPal attempts to broaden an
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`indefiniteness ruling of the “customization module” in claim 21 beyond its reasonable limit by
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`claiming that it applies to the “computer product” in claim 16. Id. The Federal Circuit, however,
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`expressly declined to discuss whether collateral estoppel extended to the “computer product”
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`term. Id. (citing Grecia v. Samsung Elec. Am. Inc., 780 Fed. Appx. 912, 916–17 (Fed. Cir.
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`2019)). In fact, Grecia claims that case law teaches against evaluating the merits of the district
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`court’s “computer product” construction because the relevant construction “had to be the reason
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`for the loss” for collateral estoppel to apply. ECF No. 16 at 15 (quoting TecSec, Inc. v. Int’l
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`Business Machines Corp., 731 F.3d 1336 (Fed. Cir. 2013)). But in Samsung, the court’s
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`construction of “customization module” led to the loss, not any construction of “computer
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`program product.” ECF No. 16 at 15. Therefore, Grecia asserts that extending collateral
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`estoppel’s preclusive effect to “computer program product” by way of Samsung is not only
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`misguided; it is expressly rejected by the Federal Circuit. Id.
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`Additionally, PayPal alleges that collateral estoppel bars Grecia from asserting claim 16
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`of the ’555 Patent because it is substantively identical to claim 1 of U.S. Pat. No. 8,887,308 (the
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`“’308 Patent”), which Judge Caproni of the Southern District of New York invalidated under §
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`101. ECF No. 10 at 6 (citing Grecia v. Bank of New York Mellon Corp., 456 F. Supp. 3d 525
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`(S.D.N.Y 2020)). First, Judge Caproni found that claim 1 of the ’308 patent failed the first Alice
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`step because it was “directed to the abstract idea of storing information about permission and
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`identity for processing access requests.” Id. at 7. And, “[l]ike claim 1, claim 16 similarly does
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`not ‘teach a specific way to improve the functionality of a computer.’” Id. (quoting Bank of New
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`York, 456 F. Supp. 3d at 533) (internal quotation marks omitted). Second, Judge Caproni’s
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`analysis applies equally to claim 16 regardless of estoppel. Like claim 1 of the ’308 Patent, claim
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`16 is directed to receiving and processing access requests, language the Federal Circuit has
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`deemed patent ineligible. Third, PayPal argues that claim 16 fails to recite improvements to
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`computer technology and uses abstractions in lieu of specific computer components, objects, or
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`processes. Id. at 8. Third, “the abstract steps of claim 16 can be performed entirely in the human
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`mind.” Id. Just as Judge Caproni found claim 1 of the ’308 Patent could be implemented without
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`any reference to or reliance upon computers, the information analyzed in claim 16 can be readily
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`understood by a human and contains nothing computer-specific. Id. at 9. PayPal further argues
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`that claim 16 fails Alice step two because no factual issues exist and no inventive concept is
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`contained in the asserted claim. Accordingly, PayPal argues Grecia is collaterally estopped from
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`asserting claim 16, or at the very least, this Court should adopt Judge Caproni’s analysis and
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`render claim 16 invalid under Alice.
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`Grecia rebuts by offering three reasons that claim 16 of the ’555 Patent is unique and
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`materially different than claim 1 of the ’308 Patent. ECF No. 10 at 16. First, independent claim
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`15 of the ’555 Patent is narrower because it “is directed to the problem of interoperability and
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`teaches the solution with the six limitations listed above, most of which the examiner added to
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`claim 15 before claim 15 was allowed.” ECF No. 16 at 19 (citing ’555 Patent at 16:50-51).
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`Second, 35 U.S.C. § 282 accords a presumption of validity to each patent claim. PayPal fails to
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`produce the requisite clear and convincing evidence to overcome that presumption, especially in
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`light of the examiner’s amendments tailoring the claims to the solution of granting interoperable
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`access. ECF No. 16 at 17. Third, the doctrine of claim differentiation supports a finding that
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`claim 16, as a dependent claim, is unique in that it creates a presumption that the limitation is not
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`included in the independent claim. Id. at 18. The presence of a dependent claim that adds a
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`particular limitation gives rise to a presumption that the limitation in question is not present in
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`the independent claim. Id. Not only does this emphasize the individuality of claim 16, but it also
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`teaches against PayPal’s attempt to equate the ’555 Patent and the ’308 Patent by lumping their
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`claims together wholesale. Id. at 19.
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`This Court agrees with Grecia that neither the § 112 ¶ 6 nor § 101 issue is substantively
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`identical to those previously litigated in other proceedings.
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`As for § 112 ¶ 6 definiteness, Grecia makes a compelling observation that the court’s
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`ruling in Mastercard applies to “customization module”—a term conspicuously absent from
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`claim 16—rather than “computer product.” To the extent PayPal suggests that these terms are
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`interchangeable and therefore subject to the Mastercard holding, it petitions this Court to
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`conduct a premature validity determination. This Court will not evaluate the merits of validity
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`arguments on claim 16 before claim construction because, as previously noted, it is generally
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`unwise to do so. See Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d
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`1266, 1273–74 (Fed. Cir. 2012) (“[I]t will ordinarily be desirable—and often necessary—to
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`resolve claim construction disputes prior to a § 101 analysis, for the determination of patent
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`eligibility requires a full understanding of the basic character of the claimed subject matter.”).
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`This Court is equally unconvinced concerning § 101 eligibility. Grecia identifies an
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`additional limitation in claim 16—“the method facilitating interoperability between a plurality of
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`data processing services”—that creates a plausible distinction between Bank of New York and the
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`case at hand. On its face, the plain language between the two claims is objectively different.
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`Even if these differences do not prove the validity of claim 16 of the ’555 Patent, they may be
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`significant enough to raise substantially different validity issues. Still, this Court cannot make a
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`bona fide eligibility determination until it develops a “full understanding” of the claimed subject
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`matter. Developing the requisite proficiency is a far-fetched (if not unattainable) goal when a
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`court has not construed the patent’s claims or opened discovery, as is the case here. See id.
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`(“Therefore, because claim construction can affect—and perhaps, in most cases, will affect—a
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`court’s § 101 eligibility analysis, the Court believes that it is generally wiser—and more
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`Case 6:21-cv-00309-ADA Document 42 Filed 08/15/22 Page 10 of 18
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`efficient—to wait to determine a patent’s § 101 eligibility until after issuing its claim
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`construction order.” (emphasis in original)). The plain meaning presumption, validity
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`presumption under § 282, and doctrine of claim differentiation may not be determinative in
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`isolation, but they collectively signal to this Court that it must scrutinize claim 16 of the ’555
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`Patent holistically before broaching the subject of invalidity.
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`By alleging detailed validity arguments at this stage, PayPal seeks to prevail—as it did
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`above—on a ground not yet ripe for dispute. To rule in PayPal’s favor at this stage of litigation,
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`this Court would have to (1) presume that the ’555 Patent is invalid under § 101 based on
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`Mastercard and Bank of New York, (2) presume that differences between the claim 16 of the
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`’555 patent and claim 21 of the ’860 patent do not “materially alter the question of validity”
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`before claim construction, and (3) apply collateral estoppel to invalidate the ’555 patent under §
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`101. In effect, PayPal petitions this Court to indulge a series of “unsound presumptions”
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`concerning the validity of the ’555 patent. Just as this Court rejected those presumptions in the
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`past, so will it reject them today. See SmileDirectClub, LLC v. CandidCare Co., No. 6:20-CV-
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`01115-ADA, 2021 WL 3598287, at *3 (W.D. Tex. July 1, 2021). Despite language similarities
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`between claim 16 of the ’555 patent and the claims in Mastercard and Bank of New York, this
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`Court cannot appreciate the full context of these patents at this stage of litigation. Accordingly,
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`this Court refuses to accept that claim 16 is estopped from assertion on either ground grounds
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`until claim construction occurs.
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`2. Both the § 101 validity and the § 112, ¶ 6 definiteness issues were “actually
`litigated.”
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`Under Fifth Circuit precedent, an issue is “actually litigated” for collateral estoppel
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`purposes when “the issue is raised, contested by the parties, submitted for determination by the
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`court, and determined.” In re Keaty, 397 F.3d 264, 273 (5th Cir. 2005) (quotation omitted).
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`In Mastercard, Judge Sullivan issued a ruling after Grecia argued its definiteness position
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`in multiple claim construction briefs and at the claim construction hearing. Grecia appealed the
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`decision to the Federal Circuit, which affirmed Sullivan’s holding. Additionally, in Bank of New
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`York, Judge Caproni found claim 1 of the ’308 Patent invalid under § 101 after considering
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`Grecia’s arguments. Grecia subsequently filed two additional memoranda, which the court
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`considered and denied. Grecia then appealed the decision to the Federal Circuit, which affirmed
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`Judge Caproni’s holding. Therefore, this element is satisfied for both issues.
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`3. Both the § 101 validity and the § 112, ¶ 6 definiteness determinations were
`necessary to the courts’ decisions.
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`The parties do not dispute that Judge Sullivan’s indefiniteness finding under § 112 ¶ 6 in
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`Mastercard was necessary to support the invalidity judgment. They also do not dispute that
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`Judge Caproni’s patent ineligibility finding under § 101 in Bank of New York was necessary to
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`support the invalidity judgment. Therefore, this element is satisfied for both issues.
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`Invalidity under § 101 represents a particularly complicated and volatile area of patent
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`law. See Sound View Innovations, LLC v. Walmart Inc., No. CV 19-660-CFC-CJB, 2019 WL
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`7067056, at *4 (D. Del. Jan. 13, 2020). Based on apparent similarities between the disclosures of
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`the ’555 Patent and various related patents, however, PayPal requests that this Court extend other
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`courts’ invalidity findings to the ’555 Patent. But PayPal overlooks those as different
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`proceedings in different courts regarding different patents. As a result, this Court finds that
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`collateral estoppel does not bar Grecia’s infringement claim. See id. (finding that a previous
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`decision by a different court finding a patent invalid under § 101 is not “‘sufficiently firm’ such
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`that it should be accorded preclusive effect” under the doctrine of collateral estoppel).
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`B. Grecia fails to plead infringement of the ’555 Patent in sufficient detail
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`PayPal argues if Grecia is not collaterally estopped from asserting claim 16, then the
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`Court should dismiss the complaint for failing to plead a cognizable theory of direct
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`infringement. PayPal provides three reasons: (1) Grecia’s “theory requires combining PayPal’s
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`consumer-facing mobile application with one of PayPal’s merchant’s software applications to
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`satisfy the claim limitation ‘computer program product for use with a computer’”; (2) “Grecia
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`alleges the merchant software requests and receives the ‘electronic verification reference’ from
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`PayPal’s servers, not the ‘communications console’ Grecia accuses”; and (3) “Grecia
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`inconsistently accuses two different QR cods as the ‘electronic verification reference’—one
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`associated with a user account and one associated with an invoice—and fails to allege that either
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`is written into any PayPal metadata.” ECF No. 10 at 10 (emphases omitted).
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`1. Grecia
`improperly combines PayPal’s server-side software with an
`unspecified third-party merchant software in its pleadings.
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`The asserted claim of the ’555 patent recites a “computer program product for use with a
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`computer” that performs all six steps of the claimed method. ECF No. 10 at 10. Grecia alleges
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`that a “PayPal computer program product for use with a computer” performs all six steps. ECF
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`No. 1 at 3. PayPal points out that it uses a two-sided network to interface with consumers on one
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`end, and with merchants on the other. ECF No. 10 at 10. Thus, PayPal argues that the “computer
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`program product” is actually two separate software applications, which run on two separate
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`computers. Id. at 11. One side is the server software that interfaces with the consumer
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`application. Id. The other application is third-party merchant software that communicates with
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`PayPal via a merchant Invoicing Application Programming Interface (“API”). Id.
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`The first two limitations of claim 15 are as follows: “[A] receiving an encrypted digital
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`media access branding request…” and “[B] authenticating the membership verification token . .
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`.” ECF No. 1-1 at ¶ 16. Grecia accuses PayPal’s server-side authentication software for
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`authenticating login requests from its consumer application. ECF No. 10 at 11. However, with
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`regard to the third, fourth, and fifth limitations, Grecia points to operations that are performed by
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`third-party software on third-party computers. Id. Specifically, Grecia alleges that PayPal’s
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`computer program is capable of establishing an “API communication related to the PayPa [sic]
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`QR RESTful API.” ECF No. 1-2 at 5. In support, Grecia cites a developer document for PayPal’s
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`invoicing API, which is used by PayPal merchants to manage invoices. ECF No. 10 at 11. PayPal
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`argues that the invoicing API is used by the merchants who use PayPal’s developer platform. Id.
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`at 12. The invoicing API is integrated by the third-party merchants into the merchants’ own
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`products. Id. The code Grecia cites regarding the QR RESTful API is for third-party merchants
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`who use PayPal’s developer platform to integrate into their own software applications in order to
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`request and receive QR codes from PayPal’s merchant facing servers. Id. Thus, Grecia’s theory
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`requires combining the PayPal server-side software for consumer logins and unidentified third-
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`party software, which operates on separate computers, for integrating with PayPal’s merchant-
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`facing applications. Id.
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`Grecia responds that PayPal mischaracterizes Grecia’s evidence. ECF No. 16 at 9. The
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`complaint alleges that the PayPal computer program associates any account with a QR code.
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`ECF No. 1 at ¶ 14. Grecia argues that this allegation should be taken as true. ECF No. 16 at 9.
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`Grecia supports this allegation with evidence that shows the PayPal product generating a QR
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`code for a merchant on a consumer’s screen. ECF No. 1-2 at 5. Grecia further argues that
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`PayPal’s contention that this function requires combining PayPal’s consumer-facing mobile
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`application and one of PayPal’s merchant’s software applications should be set aside. ECF No.
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`16 at 9. Grecia reasons that PayPal is arguing the evidence, rather than the allegations as required
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`by the Rule 12 standard. Id. at 10.
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`PayPal argues that this Court granted a motion to dismiss on similar facts in another case.
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`ECF No. 10 at 12. In that case, the Court made clear that the pleading standard for joint
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`infringement requires “facts sufficient to allow a reasonable inference that all steps of the
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`claimed method are performed and either (1) one party exercises the requisite ‘direction and
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`control’ over the other’s performance or (2) the actors form a joint enterprise that such
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`performance of every step is attributable to the controlling party.” Gabriel De La Vega v.
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`Microsoft Corp., W-19-cv-00612-ADA, ECF No. 36 at 6 (W.D. Tex. Feb. 7, 2020). In this case,
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`while the limitations are performed by two separate parties, Grecia has not even plead joint
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`infringement. ECF No. 10 at 12.
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`Grecia responds that PayPal’s reliance on De La Vega is inappropriate for two reasons.
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`ECF No. 16 at 10. First, De La Vega involved the assertion of a method claim, whereas Grecia
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`asserts a product claim. Id. With respect to that method, Grecia alleges that the PayPal computer
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`program product is capable of associating a QR code with the user’s account. Id. Grecia further
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`alleges that said capability extends to either a merchant or a customer. Id. Thus, Grecia was not
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`alleging joint infringement. Id. Rather, Grecia was simply giving notice of different aspects of
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`PayPal’s potential liability. Id. Second, Grecia directs all allegations to PayPal, not to third-party
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`merchants. ECF No. 16 at 11. Whereas in De La Vega, the complaint recognized that the method
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`claim required multiple actors. Id.
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`The Court agrees with PayPal for at least the following reasons. First, PayPal identifies
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`limitations of claim 15 of the ’555 patent that are performed by third-party software. Thus, in
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`order for the accused product to infringe, the third-party software must meet said claim
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`14
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`Case 6:21-cv-00309-ADA Document 42 Filed 08/15/22 Page 15 of 18
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`limitations. Further, Grecia is required to allege joint infringement by PayPal and the third-party.
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`Although the Court agrees that the allegation should be taken as true, Grecia does not provide a
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`convincing argument why Grecia’s allegations do not constitute joint infringement. Additionally,
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`the Court finds that De La Vega is relevant and applicable to this case. Thus, the Court looks to
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`see if Grecia meets the standard under De La Vega. Under this test, Grecia fails to allege that
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`PayPal exercises the “requisite direction and control” over the other party’s performance.
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`Further, Grecia fails to allege actions which would constitute a joint enterprise by the actors such
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`that the actions of one actor could be attributed to the controlling party. Therefore, Grecia failed
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`to plead that the accused products met the limitations found in independent claim 15.
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`2. Grecia fails to allege that the “computer” infringes even if there is a
`connection with the PayPal mobile application
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`PayPal argues that Grecia’s allegations are insufficient even if the actions of the third-
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`party merchant software were attributable to PayPal. ECF No. 10 at 13. The third limitation of
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`claim 15 requires: “[C] establishing a connection with the at least one communications console.”
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`ECF No. 1-1 at ¶ 16. PayPal agrees that Grecia’s pleadings unambiguously accuse the PayPal
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`mobile application as satisfying the “communications console” limitation. ECF No. 10 at 13.
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`However, PayPal argues that the code Grecia cites for the limitations of claim 15 relate to a
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`request for a QR code that is sent from a third-party software application. Id. Thus, PayPal
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`argues that Grecia failed to allege that any connection is established between the accused PayPal
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`computer program product and the mobile application. Id.
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`Grecia responds that PayPal relies on an incorrect claim construction in its argument.
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`ECF No. 16 at 11. Grecia alleges that the PayPal computer program product includes a
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`combination of the Graphic User Interface (“GUI”) and API. ECF No. 1 at ¶ 15. The two
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`interfaces make up the claimed “communications console.” ECF No. 16 at 11. However, by
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`15
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`Case 6:21-cv-00309-ADA Document 42 Filed 08/15/22 Page 16 of 18
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`arguing that the sample code relates to a request by third-party software to the PayPal servers,
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`PayPal asks the Court to construe the “communications console” to be a fixed, tangible piece of
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`hardware. Id. Grecia argues instead, that the “communications console” is an intangible
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`interface. Id. at 12. Specifically, the PayPal app is the twin intangible interface which constitutes
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`the communications console. Id.
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`PayPal argues that it does not engage in premature claim construction. ECF No. 17 at 10.
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`Specifically, PayPal points out that its argument does not hinge on what the term
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`“communications console” means. Id. Both parties agree that Grecia’s complaint accuses the
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`“PayPal mobile application” as the “communications console.” Id. In fact, PayPal assumed as
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`much in its non-infringement argument. Id.
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`Grecia’s argument does not address how the accused product meets the third limitation of
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`claim 15. PayPal’s argument does not require that the “communications console” be construed to
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`be a tangible piece of hardware. In fact, PayPal agrees that at least the accused “communications
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`console” is intangible in the form of a mobile application. ECF No. 10 at 13. Further still, the
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`parties appear to agree that the PayPal mobile application qualifies as the “communications
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`console.” Thus, the argument comes down to whether said “communications console”
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`establishes a connection with the accused product as required by claim 15. ECF No. 1 at ¶ 16.
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`Limitations D and E of claim 15 require “requesting at least one electronic identification
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`reference” and “receiving the at least one electronic identification reference” respectively from
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`“the at least one communications console.” ECF No. 1-1 at ¶ 16. PayPal argues that Grecia fails
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`to allege that any software requests or receives an electronic identification reference from the
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`PayPal mobile app. ECF No. 17 at 9. Instead, “Grecia alleges that the PayPal app requests and
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`receives a QR code identifier from the PayPal QR API web service.” ECF No. 17 at 10 (citing
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`16
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`Case 6:21-cv-00309-ADA Document 42 Filed 08/15/22 Page 17 of 18
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`ECF No. 16 at 6). PayPal points out that the “PayPal QR API web service” is identified by
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`Grecia as t