3Shape A/S v. Medit Corp. ( 2023 )

IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS WACO DIVISION 3SHAPE A/S, § Plaintiff, § § W-22-CV-00443-ADA-DTG v. § § MEDIT CORP., § Defendant. § § REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE TO: THE HONORABLE ALAN D ALBRIGHT, UNITED STATES DISTRICT JUDGE This Report and Recommendation is submitted to the Court pursuant to 28 U.S.C. § 636(b)(1)(C), Fed. R. Civ. P. 72(b), and Rules 1(f) and 4(b) of Appendix C of the Local Rules of the United States District Court for the Western District of Texas, Local Rules for the Assignment of Duties to United States Magistrate Judges. Before the Court is Defendant Medit Corporation’s Motion to Dismiss (ECF No. 42). After careful consideration of the briefs, arguments of counsel, and the applicable law, the Court RECOMMENDS that the Motion to Dismiss be DENIED. I. FACTUAL BACKGROUND Plaintiff 3Shape A/S filed this lawsuit accusing Defendant Medit Corporation of infringing U.S. Patent Nos. 11,076,146 (the “’146 patent”), 9,626,551 (the “’551 patent”), 10,064,553 (the “’553 patent”), 10,695,151 (the “’151 patent”), and 11,368,667 (the “’667 patent”). ECF No. 39 at 3–4. Defendant Medit moved to dismiss Plaintiff’s claims of infringement for the ’551 patent, the ’553 patent, and the ’151 patent, alleging that the asserted claims of these patents are invalid under 35 U.S.C. § 101. See ECF No. 42. II. LEGAL STANDARD Section 101 of the Patent Act defines the subject matter eligible for patent protection: “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. However, courts have long recognized that laws of nature, natural phenomena, and abstract ideas are not patentable under § 101 because they are “the basic tools of scientific and technological work.” Alice Corp. Pty. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014) (citations omitted). In Alice, the Supreme Court articulated a two-step framework for distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent- eligible applications of those concepts. Id. at 217. In Alice step one, the court must “determine whether the claims at issue are directed to one of those patent-ineligible concepts.” Id. In doing so, the court must be careful not to over generalize the invention because “all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id. (quoting Mayo Collaborative Servs. v. Prometheus Lab'ys, Inc., 566 U.S. 66, 71 (2012)). Instead, “the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter.” McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1312 (Fed. Cir. 2016) (citation omitted). If the claims are not directed to one of those patent- ineligible concepts, the inquiry ends. If the claims are directed to one of those patent-ineligible concepts, then the inquiry proceeds to step two of the Alice framework. In Alice step two, the court considers whether the claims contain an “inventive concept” sufficient to “transform the nature of the claim into a patent-eligible application.” Alice, 573 U.S. at 217–18 (quotation omitted). In doing so, the court considers “the elements of each claim both individually and ‘as an ordered combination’” to determine whether they are “‘sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the [ineligible concept] itself.’” Id. (quoting Mayo, 566 U.S. at 72–73). Alice step two is satisfied when the claim limitations “involve more than performance of ‘well-understood, routine, [and] conventional activities previously known to the industry.’” Berkheimer v. HP Inc., 881 F.3d 1360, 1367 (Fed. Cir. 2018) (quoting Alice, 573 U.S. at 225 and Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat’l Ass’n, 776 F.3d 1343, 1347–48 (Fed. Cir. 2014)). However, to recite an inventive concept, a patent must do more than recite an abstract idea “while adding the words ‘apply it.’” Alice, 573 U.S. at 221 (quoting Mayo, 566 U.S. at 72). “[S]imply appending conventional steps, specified at a high level of generality, to laws of nature, natural phenomena, and abstract ideas cannot make those laws, phenomena, and ideas patentable.” Mayo, 566 U.S. at 82. Likewise, “the mere recitation of a generic computer cannot transform a patent-ineligible abstract idea into a patent-eligible invention.” Alice, 573 U.S. at 223. III. DISCUSSION Defendant asserts that the asserted claims of the ’551, ’553, and ’151 patent are invalid under 35 U.S.C. § 101. ECF No. 42 at 1. Plaintiff responds that there are factual and claim construction disputes that prevent a finding of invalidity at this stage. ECF No. 43 at 1. The Court has not yet construed claim terms in this case. The Court prefers to conduct a § 101 invalidity analysis on a full record. While not a requirement, it is “ordinarily [] desirable—and often necessary—to resolve claim construction disputes prior to a § 101 analysis, for the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter.” Bancorp Servs., L.L.C. v. Sun Life Assurance Co. of Can. (U.S.), 687 F.3d 1266, 1273– 74 (Fed. Cir. 2012) (en banc). Given the potential impact of this Court’s construction on the § 101 analysis, the undersigned recommends denying Defendant’s Motion to Dismiss without prejudice to refiling after claim construction. IV. RECOMMENDATION For the above reasons, it is the RECOMMENDATION of the United States Magistrate Judge to the United States District Judge Defendant’s Motion to Dismiss (ECF No. 42) should be DENIED without prejudice to refiling after claim construction. Vv. OBJECTIONS The parties may wish to file objections to this Report and Recommendation. Parties filing objections must specifically identify those findings or recommendations to which they object. The District Court need not consider frivolous, conclusive, or general objections. See Battle v. U.S. Parole Comm’n, 834 F.2d 419, 421 (Sth Cir. 1987). A party’s failure to file written objections to the proposed findings and recommendations contained in this Report within fourteen (14) days after the party is served with a copy of the Report shall bar that party from de novo review by the District Court of the proposed findings and recommendations in the Report. See 28 U.S.C. § 636(b)(1)(C); Thomas v Arn, 474 U.S. 140, 150- 53 (1985); Douglass v. United Servs. Auto. Ass’n, 79 F.3d 1415 (Sth Cir. 1996) (en banc). Except upon grounds of plain error, failing to object shall further bar the party from appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the District Court. See 28 US.C. § 636(b)(1)(C); Thomas, 474 U.S. at 150-53; Douglass, 79 F.3d at 1415. SIGNED this Ist day of May, 2023. A) nab Ibs DEREK T. LY UNITED STATES MAGISTRATE JUDGE