United States District Court, N.D. California
ORDER RE MOTION TO DISMISS RE: DKT. NO. 49
DONATO, UNITED STATES DISTRICT JUDGE
patent dispute, Asus Computer International and ASUSTeK
Computer Inc. (together, “Asus”) move to dismiss
the complaint under Federal Rule of Civil Procedure 12(b)(6).
Dkt. No. 49. The motion is denied.
patent-in-suit is U.S. Reissue Patent No. RE40, 281
(“'281 patent”), entitled “Signal
Processing Utilizing a Tree-Structured Array.” Dkt. No.
1 ¶¶ 10-15. It is a reissue of U.S. Patent No. 6,
252, 909, and a reexamnination certificate was issued in
December 2015. Id. The original patent was issued on
June 26, 2001, and claimed priority to September 21, 1992.
Dkt. No. 1-2 at 1. The patent expired on September 21, 2012.
Dkt. No. 1 ¶ 16. The claimed invention “relates to
audio compression and decompression systems, ” Dkt. 1-2
at 1:22-23, and is alleged to be a component of the MP3 audio
format, Dkt. No. 1 ¶ 22; Dkt. No. 1-4 at 1.
Audio, LLC (“Hybrid Audio”) filed this patent
infringement suit against Asus in April 2016, seeking
royalties from when Asus received notice of the patent,
January 5, 2011, to the expiration date, September 21, 2012,
among other relief. Dkt. No. 1 ¶ 18. The previous owner
of the '281 patent was prevented from seeking royalties
during the pendency of a patent reexamination from June 2012
to December 2015. Id. at ¶ 16.
case was filed in the District of Massachusetts and
transferred to this district in October 2017 under 28 U.S.C.
§ 1406(a), after the Supreme Court published TC
Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct.
1514 (2017). Dkt. Nos. 25, 27, 30. Hybrid Audio asserts that
Asus infringed claims 5-6, 9-13, 15-22, 24-30, 32-35, 38-42,
45-49, 50, 51, 53, 55-61, 63 and 65-121 of the '281
patent in multiple products and services that utilize the MP3
audio file format. Dkt. No. 1 ¶¶ 24, 33.
moved to dismiss for patent ineligibility under 35 U.S.C.
§ 101 and Alice Corp. Pty. Ltd. v. CLS Bank
International, 573 U.S. 208 (2014). Dkt. No. 49. Asus
says that the '281 patent states claims that are nothing
more than an unadorned abstract idea in the form of
mathematical algorithms, with no saving inventive concept.
See Id. at 7-8. But the plain language of the patent
and other sources “properly considered on a motion to
dismiss, such as the complaint, ” Aatrix Software,
Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1128
(Fed. Cir. 2018), demonstrate that the claims are
“directed to a specific improvement to the way
computers operate, ” Enfish, LLC v. Microsoft
Corp., 822 F.3d 1327, 1336 (Fed. Cir. 2016), and
therefore constitute a non-abstract patent-eligible
8(a)(2) of the Federal Rules of Civil Procedure requires the
complaint to provide “a short and plain statement of
the claim showing that the pleader is entitled to
relief.” To meet that rule and survive a Rule 12(b)(6)
motion to dismiss, a plaintiff must allege “enough
facts to state a claim to relief that is plausible on its
face.” Bell Atl. Corp. v. Twombly, 550 U.S.
544, 570 (2007). This does not impose a probability
requirement at the pleading stage. It simply calls for enough
“factual content that allows the court to draw the
reasonable inference that the defendant is liable for the
misconduct alleged.” Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at
556). The plausibility analysis is
“context-specific” and not only invites, but
“requires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679.
Federal Circuit has “repeatedly recognized that in many
cases it is possible and proper to determine patent
eligibility under 35 U.S.C. § 101 on a Rule 12(b)(6)
motion. In many cases, too, evaluation of a patent
claim's subject matter eligibility under § 101 can
proceed even before a formal claim construction.”
Genetic Techs. Ltd. v. Merial L.L.C., 818 F.3d 1369,
1373-74 (Fed. Cir. 2016) (citations omitted); see also
Aatrix, 882 F.3d at 1125. But as the circuit has
recently emphasized, the question of eligibility may be
determined at the pleadings stage “only when there are
no factual allegations that, taken as true, prevent resolving
the eligibility question as a matter of law.”
Aatrix, 882 F.3d at 1125 (citing FairWarning IP,
LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1097
(Fed. Cir. 2016)); see also Cellspin Soft, Inc. v.
Fitbit, Inc., No. 18-2178, 2019 WL 2588278, at *10 (Fed.
Cir. June 25, 2019) (vacating Rule 12(b)(6) and Rule 12(c)
dismissals where complaint made plausible and
“well-pleaded allegations” of eligibility). This
is particularly true for the element of an inventive concept,
which raises a question of fact that can be resolved in a
motion to dismiss only if the answer may be found in the
complaint, the patent, and matters subject to judicial
notice. Aatrix, 882 F.3d at 1128.
sure, a patentee cannot avoid dismissal for ineligible claims
purely on the basis of conclusory or generalized statements,
and fanciful or exaggerated allegations that later prove to
be unsupported may lead to fee shifting or other sanctions.
See Cellspin, 2019 WL 2588278, at *8 (“While
we do not read Aatrix to say that any allegation
about inventiveness, wholly divorced from the claims or the
specification, defeats a motion to dismiss, plausible and
specific factual allegations that aspects of the claims are
inventive are sufficient.”); Berkheimer v. HP
Inc., 890 F.3d 1369, 1373 (Fed. Cir. 2018) (Moore, J.,
concurring in denial of rehearing en banc) (“[I]f the
allegations in the complaint about the invention as claimed
ultimately lack evidentiary support or if the case is
exceptional, district courts can award attorneys' fees to
the accused infringer under either Rule 11 or [35 U.S.C.]
§ 285 to compensate the accused infringer for any
additional litigation costs it incurs.”). But the
inquiry in a motion to dismiss is focused on the contents of
the complaint and the plain words of the patent that is
incorporated by reference. To the extent claim construction
issues might arise, the Court should adopt the patentee's
proposed constructions. Aatrix, 882 F.3d at 1125;
IPLearn-Focus, LLC v. Microsoft Corp., No.
14-cv-00151-JD, 2015 WL 4192092, at *3 (N.D. Cal. July 10,
2015), aff'd, 667 Fed.Appx. 773 (Fed. Cir. July
the Rule 12(b)(6) evaluation has been substantially
streamlined by the complaint and the parties' arguments.
Plaintiff does not object to resolving the Section 101
question in the context of defendants' motion and neither
side has called for claim construction as part of the
eligibility inquiry. No construction disagreements were
identified in the briefs. Consequently, the Section 101
inquiry may properly be made at this stage of the case.
merits of the Section 101 issue, the scope of patentable
subject matter includes “any new and useful process,
machine, manufacture, or composition of matter, or any new
and useful improvement thereof.” 35 U.S.C. § 101.
The “laws of nature, physical phenomena, and abstract
ideas” are “specific exceptions to §
101's broad patent-eligibility principles.”
Bilski v. Kappos, 561 U.S. 593, 601 (2010) (citation
omitted). These exclusions are intended to guard against
undue preemption of innovation and invention. Alice,
573 U.S. at 216 (citing U.S. Const. art. I, § 8, cl. 8).
The Court must “distinguish between patents that claim
the ‘buildin[g] block[s]' of human ingenuity and
those that integrate the building blocks into something more,