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Tranxition, Inc. v. Lenovo (United States) Inc.

United States District Court, D. Oregon

July 9, 2015

TRANXITION, INC., a Delaware corporation, Plaintiff,
v.
LENOVO (UNITED STATES) INC., a Delaware corporation, Defendant.

Arthur S. Beeman, Joel T. Muchmore, Arent Fox LLP, San Francisco, CA, Dayna J. Christian, Nicholas M.M. Drum Immix Law Group, Portland, OR, Attorneys for Plaintiff.

Eric J. Klein, Todd E. Landis, Akin Gump Strauss Hauer & Feld LLP, Dallas, TX, Fred I. Williams, Akin Gump Strauss Hauer & Feld LLP, Austin, TX, Kenneth L. Walhood, Blunck & Walhood LLC, West Linn, OR, Attorneys for Defendant.

OPINION & ORDER

MARCO A. HERNNDEZ, District Judge.

Plaintiff Tranxition, Inc. owns U.S. Patent Nos. 6, 728, 877 (the "877 patent") and 7, 346, 766 (the "766 patent"). The claims generally recite a software method for transferring customized user settings from an old computer to a new computer. Tranxition filed the present infringement action against Defendant Lenovo (United States) Inc. and a separate action against Novell, Inc. that is also before this Court (Case No. 3:12-cv-01404-HZ). The parties in the Novell case have agreed to allow the merits of this case to proceed first.

Currently before the Court are two motions from Lenovo seeking summary judgment of invalidity under Section 101 of the Patent Act. Lenovo's motion for partial summary judgment [229] attacks one specific claim in the 877 patent, while Lenovo's motion for summary judgment [234] is broader in scope, as it attacks all of the remaining independent claims in both of Tranxition's patents-in-suit.

For reasons explained below, the Court finds that Tranxition's patents are aimed at a patent-ineligible abstract idea. Neither of the patent's claims, whether read singly or in combination, state an inventive concept sufficient to satisfy the Supreme Court's test for patentability of an abstract idea under Section 101 of the Patent Act. Therefore, Lenovo's motions for summary judgment are granted, and Tranxition's 877 and 766 patents are invalid.

BACKGROUND

The patents at issue recite the same concept: "a method and system for automatic transitioning of configuration settings among computer systems." 877 patent, col. 1, ll. 18-21.[1] Tranxition calls this "the migration process." 877 patent, col. 1, ll. 6-7. "In today's world, " the patents explain, "technology changes very quickly, [and] it is very common to replace an old computer system every few years with a new computing system." 877 patent, col. 1, ll. 24-26. A major problem with this change-over is that computer users often spend significant time customizing the settings on their old computers, and would like to transfer many of those settings to their new computers. The transferred settings could be simple, such as a custom desktop wallpaper, or sophisticated, such as network settings. 877 patent, col. 1, ll. 36-47. As the complexity of computers grows, the number of possible configuration settings and the places they might be located increases. It can take significant time and effort to find the old settings, identify where on the new system those settings are located, and then change the new system to match the old one. 877 patent, col. 1, ll. 48-62. The patents claim that "[m]any users often decide to stick with an obsolete old computer system rather than wrestle migration and manual reconfiguration required for a new computer system." 877 patent, col. 2, ll. 9-13. And, like any human process, this "transitioning" of settings from one system to the other is "prone to errors that lead to user frustration." 877 patent, col. 2, ll. 19-21.

The patents aim to address this problem by "automatically determin[ing] configuration settings customized by a user or network administrator on a[n] old computer system, " and providing "an automatic migration of configuration settings from an old computer system to a new computing system without using a time consuming manual migration process." 877 patent, col. 2, ll. 38-44.

The method and system claims that make up the patents describe how the invention achieves automatic migration. First, it identifies the various configuration settings, which include Internet browser settings, a desktop "look and feel, " user preferences, e-mail address books, folder names and locations, passwords, registry settings, and more. 877 patent, col. 17, ll. 65-67; col. 18, ll. 1-23. It then identifies the locations of these various settings, and allows the user to select the settings he or she would like to transfer to the new computer. 766 patent, col. 17, ll. 56-62. Next, the invention retrieves the chosen settings, and completes the personality transfer by "manipulating" and "transitioning" the configuration settings to the new computer system. 877 patent, col. 17, ll. 55-62; 766 patent, col. 17, ll. 63-67; col. 18, ll. 1-3.

Between the 877 patent and the 766 patent, there are five independent claims that describe the invention's technological concepts-Claims 1, 16, and 30 of the 877 patent, and Claims 1 and 42 of the 766 patent. The remaining claims that are the subject of Lenovo's motions and this Opinion & Order are dependent, either directly or indirectly, of those claims. Plaintiff's Response to Defendant's Motion for Summary Judgment II ("Pl. Resp. II"), ECF No. 250, at 4-5.

In total, Lenovo asks for summary judgment of invalidity on claims 1-12, 15-26, 29, and 30 of the 877 patent, and claims 1-3, 5-11, 15, and 42-44 of the 766 patent. Lenovo moved separately for summary judgment of invalidity against Claim 30 of the 877 patent, see Defendant's Motion for Summary Judgment ("Def. Mot. I"), ECF No. 229, and against the other claims (hereinafter the "Primary Claims"). See Defendant's Motion for Summary Judgment ("Def. Mot. II"), ECF No. 234. Lenovo's asserted grounds for invalidity are the same, however, against both the Primary Claims and Claim 30. Lenovo argues that the claims are unpatentable under Section 101 of the Patent Act because they are directed at an abstract idea and they do not contain an "inventive concept sufficient to transform the claimed abstract idea into a patenteligible subject matter." Def. Mot. II at 1 (quoting Alice Corp. Pty. Ltd. v. CLS Bank, Int'l, 134 S.Ct. 2347, 2357 (2014)). Tranxition contends that the patents disclose a "computer-based solution to a uniquely computer problem, " which is either not abstract, or is sufficiently inventive to be worthy of patent protection. Pl. Resp. II at 1-2.

Since the law governing the two motions is the same, this Opinion & Order resolves both of Lenovo's motions.

STANDARDS

Summary judgment is appropriate if there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving party bears the initial responsibility of informing the court of the basis of its motion, and identifying those portions of "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, ' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986) (quoting Fed.R.Civ.P. 56(c)).

Once the moving party meets its initial burden of demonstrating the absence of a genuine issue of material fact, the burden shifts to the nonmoving party to present "specific facts" showing a "genuine issue for trial." Fed. Trade Comm'n v. Stefanchik, 559 F.3d 924, 927-28 (9th Cir. 2009) (internal quotation marks omitted). The nonmoving party must go beyond the pleadings and designate facts showing an issue for trial. Bias v. Moynihan, 508 F.3d 1212, 1218 (9th Cir. 2007) (citing Celotex, 477 U.S. at 324).

The substantive law governing a claim determines whether a fact is material. Suever v. Connell, 579 F.3d 1047, 1056 (9th Cir. 2009). The court draws inferences from the facts in the light most favorable to the nonmoving party. Earl v. Nielsen Media Research, Inc., 658 F.3d 1108, 1112 (9th Cir. 2011).

DISCUSSION

1. Applicable Law

Section 101 of the Patent Act is the starting point for patentability, and provides that "[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title." 35 U.S.C. § 101. From this sweeping statute, the Supreme Court has carved out as not patentable three broad subjects: "laws of nature, natural phenomena, and abstract ideas." Bilski v. Kappos, 561 U.S. 593, 601 (2010) (quoting Diamond v. Chakrabarty, 447 U.S. 303, 308 (1980)). Allowing patents over these "basic tools of scientific and technological work" would impede, not promote innovation. Alice, 134 S.Ct. at 2354 (quotation marks omitted); see also U.S. CONST. ART. I, § 8, cl. 8 (granting Congress the power to "promote the Progress of Science and useful Arts"). The High Court has "repeatedly emphasized this... concern that patent law not inhibit further discovery by improperly tying up the future use of these building blocks of human ingenuity." Alice, 134 S.Ct. at 2354 (quotation marks omitted).

But courts must "tread carefully in construing this exclusionary principle lest it swallow all of patent law" because, "[a]t some level, all inventions embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas." Id . (citing Mayo, 132 S.Ct. at 1293) (quotation marks omitted). An invention that involves or invokes an abstract concept can be patentable, so long as it applies such a concept "to a new and useful end" or integrates these "building blocks into something more." Id . (quotation marks omitted).

The Supreme Court in Mayo and Alice set out a two-step analytical framework for "distinguishing patents that claim laws of nature, natural phenomena, and abstract ideas from those that claim patent-eligible applications of those concepts." Alice, 134 S.Ct. at 2355 (citing Mayo, 132 S.Ct. at 1293-94). First, the court must "determine whether the claims at issue are directed to one of the patent-ineligible" categories. DDR Holding, LLC v. Hotels.com L.P., 773 F.3d 1245, 1255 (Fed. Cir. 2014) (citing Alice, 134 S.Ct. at 2355). If so, the court then examines "the elements of each claim-both individually and as an ordered combination-to determine whether the additional elements transform the nature of the claim into a patent-eligible application of that abstract idea." Id . (citing Alice, 134 S.Ct. at 2355). This second step is the search for an "inventive concept, " or some "element or combination of elements sufficient to ensure that the claim in practice amounts to significantly more' that a patent on an ineligible concept." Id . (quoting Alice, 134 S.Ct. 2355). A claim that recites an abstract idea must include "additional features" to ensure "that the [claim] is more than a drafting effort designed to monopolize" the abstract idea. Alice, 134 S.Ct. at 2357 (quoting Mayo, 132 S.Ct. at 1297).

Distinguishing between a patent-eligible claim and an ineligible one can be difficult, especially in the realm of computer technology and software patents. Id .; see also Intellectual Ventures II LLC v. JP Morgan Chase & Co., No. 13-cv-3777 (AKH), 2015 WL 1941331 at *5 (S.D.N.Y. Apr. 28, 2015) (explaining that in analyzing software patents, courts must "be careful not to mistake a difficulty in conceptualizing an esoteric-but potentially patent-eligible invention with a patent-ineligible abstraction.").

2. Presumption of Validity & Evidentiary Standard

Before analyzing the merits of the claims, the Court first addresses Tranxition's contention that "a party seeking to invalidate a patent must overcome the strong presumption of validity with clear and convincing evidence." Pl. Resp. II at 5 (citing United States Gypsum Co. v. Nat'l Gypsum Co., 74 F.3d 1209, 1212 (Fed. Cir. 1996)) (additional citations omitted). Tranxition criticizes Lenovo for only offering "conclusory attorney argument" in support of its motion, and argues that Lenovo "falls far short of its burden to establish by clear and convincing evidence that Patents-in-Suit are invalid as abstract." Pl. Resp. II at 1-2, 34.

Tranxition's argument fails for two reasons. First, the Federal Circuit has explained that the presumption of validity is now "unwarranted" when "assessing whether claims meet the demands of Section 101." Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 720 (Fed. Cir. 2014). The presumption of patent validity is based on deference to the United States Patent and Trademark Office's expertise in approving the claim as patentable. Id . However, in light of recent Supreme Court decisions in Mayo and Alice that have "unequivocally repudiated the overly expansive approach to patent eligibility" under Section 101, the Federal Circuit has explicitly stated that "while the presumption of validity attaches in many contexts, no equivalent presumption of eligibility applies in the Section 101 calculus." Id. at 720-21 (citing Microsoft Corp. v. i4i Ltd. P'ship, 131 S.Ct. 2238, 2243-47 (2011)); see also Modern Telecom Sys. LLC v. Earthlink, Inc., No. SA CV 14-0347-DOC, 2015 WL 1239992, at *7 (C.D. Cal. Mar. 17, 2015) (declining to apply presumption of validity under Section 101); Wireless Media Innovations, LLC v. Maher Terminals, LLC, No. CIV.A. 14-7004, 2015 WL 1810378, at *5-6 (D.N.J. Apr. 20, 2015) (same).

Second, the Court fails to see how the "clear and convincing" standard applies to the validity analysis under Section 101 in this case. The Federal Circuit has held that "any attack on an issued patent based on a challenge to the eligibility of the subject matter must be proven by clear and convincing evidence." CLS Bank Int'l v. Alice Corp. Pty., 717 F.3d 1269, 1304 (Fed. Cir. 2013) cert. granted, 134 S.Ct. 734 (2013) and aff'd, 134 S.Ct. 2347 (2014). However, the application of that standard was based on the presumption of validity that previously attached to patents challenged under Section 101 which, as explained above, is now "unwarranted" in light of more recent Supreme Court decisions. See id. ("Because we believe the presumption of validity applies to all challenges to patentability, including those under Section 101... we find that any attack on an issued patent based on a challenge to the eligibility of the subject matter must be proven by clear and convincing evidence.").

Furthermore, recent decisions from the Supreme Court and the Federal Circuit invalidating patents under Section 101 have not mentioned or applied the "clear and convincing standard" in analysis. See Alice, 134 S.Ct. at 2359-60; Internet Patents Corp. v. Active Network, Inc., No. 2014-1048, 2015 WL 3852975, at *2-*6 (Fed. Cir. June 23, 2015); DDR Holdings, 773 F.3d at 1255-57. Lower courts are split whether the "clear and convincing" standard applies to eligibility challenges under Section 101. Affinity Labs ...


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