USADATA Incorporated v. DataWidget LLC ( 2021 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 USADATA Incorporated, No. CV-21-00526-PHX-DLR 10 Plaintiff, ORDER 11 v. 12 DataWidget LLC, et al., 13 Defendants. 14 15 16 This order concerns the validity of the ’557 patent (“Patent”), owned by Defendant 17 DataWidget LLC and licensed to Defendant E-Printwerx International. (Doc. 20 ¶¶ 12- 18 13.) Because the Patent’s claims constitute an unpatentable abstract idea, the Court finds 19 the Patent invalid. 20 I. Background 21 A. The Patent 22 The Patent, issued in 2018, is titled “System and Method for Selling Customer- 23 Specific Data Subsets on a Third-Party Website Using a Web Widget.” (Doc. 1 at 4; Doc 24 1-6 at 2.) Its first and only independent claim sets out “[a] system for searching and 25 purchasing data subsets from a data seller” and comprises three main components: (1) an 26 ecommerce vendor, (2) a data seller, and (3) a data extraction widget. (Doc. 1-6 at 13.) 27 The Patent defines the individual components. The “ecommerce vendor” is a 28 printing services vendor with a website and an “ecommerce server configured to operate 1 the ecommerce website, the ecommerce servicer comprising a first processor and a first 2 memory.” (Id.) The “data seller” maintains a database with geographic and demographic 3 data and hosts a “database server” with a “second processor and a second memory.” (Id.) 4 The “lynchpin” of this system is the data extraction widget, which is a “portable chunk of 5 code” that can be “written in any computer readable language” and is “installed and 6 executed within any separate HTML-based web page without requiring additional 7 compilation.” (Id.) It facilitates direct connections with the (1) the ecommerce server, (2) 8 database server, and (3) “between the database server and the ecommerce server.” (Id. at 9 13.) 10 The Patent offers a “Sandwich Shop/Web-to-print” example of how the components 11 function together. A sandwich shop owner wants to run a targeted mail campaign by 12 designing and sending postcards to all residents within five miles of the sandwich shop. 13 (Id. at 10.) The owner finds an ecommerce vendor selling printing services, but the vendor 14 lacks its own database of residents within five miles of the sandwich shop. (Id. at 10.) 15 However, a third-party data seller has a database that can be searched to obtain that specific 16 data subset. (Id.) 17 Using the data seller widget, the customer [sandwich shop] accesses the data seller’s database via server, obtains a list of 18 residents within a five mile radius of the customer’s shop and then uses that mailing list to send out custom postcards through 19 the web-to-print site. Preferably, the customer pays for the data subset (in this case the names and addresses) during checkout 20 at the web-to-print site and the data seller and web-to-print vendor can settle their accounts at the same or subsequent time. 21 Throughout the process, the customer need not know that a third-party data seller is involved. (Id.) 22 23 B. Factual and Procedural History 24 Plaintiff USADATA Inc. produces software plugins. (Doc. 1 ¶¶ 53-55.) Starting 25 in September 2019, DataWidget sent letters to three USADATA customers, accusing them 26 of infringing the Patent by using USADATA plugins. (Id.) DataWidget sued another 27 USADATA customer using USADATA plugins, alleging it had infringed the Patent as 28 well. (Id. ¶ 60.) 1 Plaintiff filed a complaint against Defendants, asking the Court to declare the Patent 2 invalid, among other things. (Doc. 1.) Plaintiff has now moved for judgment on the 3 pleadings on its invalidity claim. (Doc. 29.) Defendants responded (Doc. 33) and Plaintiff 4 replied (Doc. 37). The motion is now ripe. 5 II. Standard 6 A motion for judgment on the pleadings under Federal Rule of Civil Procedure 12(c) 7 “is properly granted when, taking all the allegations in the non-moving party’s pleadings 8 as true, the moving party is entitled to judgment as a matter of law.” Fajardo v. Cty. of 9 L.A., 179 F.3d 698, 699 (9th Cir. 1999). And patent eligibility ultimately presents questions 10 of law, although it may contain underlying questions of fact. Synchronoss Techs., Inc. v. 11 Dropbox, Inc., 987 F.3d 1358, 1365 (Fed. Cir. 2021). “Rule 12(c) is ‘functionally 12 identical’ to Rule 12(b)(6) and . . . ‘the same standard of review’ applies to motions brought 13 under either rule.” Cafasso v. Gen. Dynamics C4 Sys., 637 F.3d 1047, 1054 n.4 (9th Cir. 14 2011) (quoting Dworkin v. Hustler Magazine Inc., 867 F.2d 1188, 1192 (9th Cir. 1989)). 15 Thus, a motion for judgment on the pleadings will be granted if the complaint lacks 16 “sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its 17 face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotation marks and citation 18 omitted). 19 III. Analysis 20 Patent eligibility extends to “any new and useful process, machine, manufacture, or 21 composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. A 22 patent is presumed valid, and the burden of establishing invalidity lies with the challenging 23 party, 35 U.S.C. § 282(a), who may show invalidity by an analysis of a single representative 24 claim, Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat. Ass’n, 776 F.3d 25 1343, 1348 (Fed. Cir. 2014). Plaintiff challenges the Patent as a patent-ineligible abstract 26 idea. A two-step inquiry governs whether a patent claim is “abstract idea.”1 Alice Corp. 27 1 Because the Alice analysis resolves patent eligibility, the Court does not reach 28 Plaintiff’s argument that the Patent encompasses human beings or entities/organizations. (Doc. 29 at 14-15.) 1 Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 216, 217, 219 (2014). 2 A. Alice Step One 3 Step one asks whether the “character” of the claims “in their entirety” are “directed 4 to” a patent-ineligible concept,” like an “abstract idea.” Smart Sys. Innovations, LLC v. 5 Chicago Transit Auth., 873 F.3d 1364, 1371 (Fed. Cir. 2017). In that inquiry, courts look 6 to whether the claims “focus on a specific means or method that improves the relevant 7 technology or are instead directed to a result or effect that itself is the abstract idea and 8 merely invoke generic processes and machinery. Id. (cleaned up). If the Court determines 9 that the Patent is not directed toward an abstract idea, the analysis ends; otherwise, the 10 analysis proceeds to step two. Alice Corp., 573 U.S. at 221 11 The Patent is directed to an abstract idea. Functionally, as Plaintiff argues, the data 12 extraction widget exchanges information with and between a vendor of geographic and 13 demographic data and a printing service. (Doc. 1-6 at 10.) This exchange is not new. As 14 far back as the pre-Civil War era, humans have acquired geographic and demographic data 15 and used a printing service to reach a targeted audience. See Nancy Pope, “America’s First 16 Direct Mail Campaign,” Smithsonian National Postal Museum (July 29, 2010), 17 https://postalmuseum.si.edu/node/1912. And the Patent’s own example of a sandwich 18 shop owner comports with this historical practice of targeted, direct mailers. (Doc. 1-6 at 19 10.) Defendants admit as much in their answer, characterizing the Patent as “a system for 20 selling individually-tailored customer-specific data subsets (for example mailing lists used 21 in direct-mail campaigns).” (Doc. 2 ¶ 14.) The Patent essentially computerizes a 22 longstanding economic practice. Mortg. Grader, Inc. v. First Choice Loan Servs. Inc., 811 23 F.3d 1314, 1324 (Fed. Cir. 2016) (holding that processes that have been performed by 24 humans without the use of computers are abstract ideas). 25 Defendants argue that the Patent is not directed toward an abstract idea because it 26 uses the word “system” several times and the Patent Office determined that the 27 arrangement of the components “is neither anticipated nor rendered obvious over the 28 totality of the available art.” (Doc. 33 at 9, 11.) But Defendants have cited no legal 1 authority to buttress these arguments, and existing caselaw offers them no quarter. For 2 starters, the word “system” is no incantation, magically protecting patents from Alice 3 challenges. The substance of claims outweighs the mere “form of the asserted claims.” 4 DDR Holdings, LLC v. Hotels.com, L.P., 773 F.3d 1245, 1257 n.4 (Fed. Cir. 2014). 5 The examiner’s statements do not help the Defendants. As a threshold matter, “[a]n 6 examiner’s statements about a patent are not themselves evidence of a patent’s validity.” 7 Fitbit Inc. v. AliphCom, No. 16-CV-00118-BLF, 2017 WL 3129989, at *2 (N.D. Cal. July 8 24, 2017). And these statements are irrelevant because they refer to a materially different 9 version of the claims that did not issue and is not at bar. (Compare, with Doc. 1-6.) The 10 statements specifically address the data seller widget’s use of an Application Programming 11 Interface (“API”), a commonplace protocol for exchanging information. (Doc. 33-2 at 12 159-62.) And mere information exchange is an abstract idea, even when performed by 13 computers or otherwise technologically restricted. Content Extraction, 776 F.3d at 1348. 14 The Patent is thus directed to an abstract idea, and the analysis must proceed to step two. 15 B. Alice Step Two 16 Step two asks whether the claims, despite being directed to an abstract idea, 17 nevertheless contain an inventive concept that transforms the nature of the claim into a 18 patent-eligible application of the abstract idea. Alice Corp., 573 U.S. at 221. The inventive 19 concept must “ensure that the claim is more than a drafting effort designed to monopolize 20 the abstract idea,” id. (cleaned up), and it must be a “specific technical solution beyond 21 simply using generic computer concepts in a conventional way,” Bascom Glob. Internet 22 Servs., Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1352 (Fed. Cir. 2016). 23 Plaintiff argues that none of the components are inventive concepts because they 24 implement conventional protocols. (Doc. 29 at 12.) The Court agrees. The Patent claims 25 a system that employs a database, servers, processors, and memory, all of which the Patent 26 describes as “well-known in the art.” The components perform generic functions: 27 exchanging information, permitting printing services, and charging the customer for the 28 transaction. (Doc. 1-6 at 13.) Even the “lynchpin” data extraction widget does not amount 1 to an inventive concept because it is merely a “portable chunk of code” that can be “written 2 in any computer readable language” and is “installed and executed within any separate 3 HTML-based web page without requiring additional compilation.” (Id. at 10.) Such 4 generic language does not reveal an inventive concept. Internet Pats. Corp. v. Active 5 Network, Inc., 790 F.3d 1343, 1348 (Fed. Cir. 2015) (explaining that routine and 6 conventional activities are not inventive concepts). 7 Defendants point to the examiner’s statements to argue that that the arrangement of 8 the components constitutes the inventive concept. (Doc. 33 at 13-14.) But this Court is 9 not required to grant this statement much weight—nor does it deserve weight. See 10 Interactive Wearables, LLC v. Polar Electro Oy, 501 F. Supp. 3d 162, 183 (E.D.N.Y. 11 2020). The arrangement’s purported inventive concept is that the data extraction widget 12 directly connects with the claims components “to charge the customer for data extracted 13 from the database and for printing services provided by the ecommerce vendor in a single 14 transaction.” (Doc. 33-2 at 21.) This arrangement, the examiner asserts, “is neither 15 anticipated nor rendered obvious over the totality of the available prior art.” (Id.) Not so. 16 Two-way electric communication is common, and, as noted above, the widget 17 accomplishes these connections by standard means. See Elec. Power Grp., LLC v. Alstom 18 S.A., 830 F.3d 1350, 1355 (Fed. Cir. 2016) (explaining that “off-the-shelf, conventional 19 computer, network, and display technology for gathering, sending, and presenting the 20 desired information” was patent ineligible). The Court detects no inventive concept in 21 Defendants’ claims. 22 IV. Conclusion 23 The Court finds that the claims set out in the Patent are impermissibly directed 24 toward an abstract idea, and thus the Patent is invalid under Alice. Moreover, because this 25 judgment hinges entirely on the patent claims themselves, amendment would be futile, and 26 the Court denies leave to amend. See Novak v. United States, 795 F.3d 1012, 1020 (9th 27 Cir. 2015). 28 1 IT IS ORDERED that Plaintiff's motion for judgment on the pleadings (Doc. 29) 2|| is GRANTED as to the invalidity claim only. 3 Dated this 29th day of October, 2021. 4 5 Ls Ue 8 States Dictric Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -7-