Curb Mobility, LLC v. Kaptyn, Inc.

• Court: District Court, D. Nevada
• Decided: January 21, 2020
• Docket: 2:18-cv-02416
• Status: Unknown

Opinion

1 2 3 UNITED STATES DISTRICT COURT 4 DISTRICT OF NEVADA 5 * * * 6 CURB MOBILITY, LLC, Case No. 2:18-cv-02416-MMD-EJY 7 Plaintiff, ORDER v. 8 KAPTYN, INC., et al., 9 Defendants. 10 11 I. SUMMARY 12 Plaintiff Curb Mobility, LLC alleges that Defendants Kaptyn, Inc., Triad 13 Transportation Technologies, LLC, Whittlesa Blue Cab Company, and Desert Cab, Inc. 14 infringe U.S. Patent No. 6,347,739 (the “’739 Patent”) because they have systems in their 15 taxicabs that allow them to accept credit cards. (ECF No. 23 (“FAC”).) Before the Court is 16 Defendants’ motion for judgment on the pleadings under Federal Rule of Civil Procedure 17 12(c), arguing the ’739 Patent is not directed to patentable subject matter under 35 U.S.C. 18 § 101, lacks any additional inventive concept, and is thus invalid as a matter of law (the 19 “Motion”).1 (ECF No. 47.) Because the Court is persuaded by Defendants’ argument that 20 the ’739 Patent is directed to an abstract idea, and lacks any additional inventive concept 21 that would make it patent eligible—and as further explained below—the Court will grant 22 the Motion. 23 II. BACKGROUND 24 The following facts are adapted from the FAC.2 (ECF No. 23.) Plaintiff alleges that 25 Defendants, taxicab companies that operate in Nevada, infringe the ’739 Patent, titled 26 /// 27 1Plaintiff filed a response (ECF No. 49), and Defendants filed a reply (ECF No. 50). 28 1 “System for Credit Card Acceptance in Taxicabs,” by making, using, or selling a system 2 for credit card acceptance in taxicabs in their taxi fleets that “includes a taxi meter, a credit- 3 debit card reader, and a modem for wireless communications[.]” (Id. at 4.) Plaintiff attached 4 pictures to its FAC showing the system Defendants use in their taxicabs (ECF No. 23-2), 5 which “includes a taxi meter such as the Triad/Kaptyn DT5 meter, a credit-debit card 6 reader such as the Ingenico iPP320, and a generic modem as shown in the photographs[.] 7 (Id. at 4.) Plaintiff also attached pictures to its FAC (ECF No. 23-3) showing how 8 Defendants’ system allegedly infringes the ’739 Patent’s method claims. (ECF No. 23 at 9 4-5.) Plaintiff put Defendants on notice of the’739 Patent by sending them cease and desist 10 letters. (Id. at 5-6.) Plaintiff alleges Defendants infringe the ’739 Patent under direct, 11 contributory, and inducement infringement theories. (Id. at 6-9.) 12 Plaintiff also attached the ’739 Patent to its FAC. (ECF No. 23-1.) The ’739 Patent 13 includes two independent claims, though independent claim 11 is basically independent 14 claim 1—a system claim—written as a method claim. (Id. at 11.) Claim 1 claims a system 15 for accepting credit cards in taxicabs consisting of three components that work together: 16 (1) a taximeter “having application programs at least some of which mandate a sequential 17 exchange of electronic information” between the passenger and the driver about the fare; 18 (2) a credit-debit card reader; and (3) a wireless modem. (Id.) Claim 11 makes claim 1 a 19 method claim by claiming a method for charging a fare to a taxicab passenger consisting 20 of installing in the taxi: (1) a taxicab meter capable of running the application programs 21 described above; (2) a credit-debit card reader; and (3) a wireless modem. (Id.) 22 The remainder of the ’739 Patent’s claims are dependent claims adding features to 23 claim 1’s system or claim 11’s method. (Id.) Claims 2-10 depend from claim 1. (Id.) Claim 24 2 specifies that the credit-card reader can accept smart cards and private-label cards in 25 2The Court briefly recites the procedural history of this case because it is not 26 particularly relevant to the Motion. Defendants filed a motion to dismiss (ECF No. 21) Plaintiff’s original complaint (ECF No. 1), but that motion was rendered moot by Plaintiff’s 27 filing of the FAC (ECF No. 23). Defendants then moved to dismiss the FAC (ECF No. 33), in a motion that did not raise a Section 101 argument, but the Court denied that motion 28 1 addition to credit and debit cards. (Id.) Claim 3 adds a display screen. (Id.) Claim 4 adds 2 a printer. (Id.) Claim 5 adds a keyboard. (Id.) Claim 6 specifies that the modem can work 3 over the network of a wireless network carrier. (Id.) Claim 7 specifies that the modem can 4 communicate with an optional second communiations network. (Id.) Claim 8 specifies that 5 the modem can communicate with a bank’s network to verify credit-debit card information. 6 Claim 9 specifies that the modem can communicate with a taxicab network’s home base. 7 (Id.) Claim 10 specifies that the modem can communicate with the world wide web. (Id.) 8 Claims 12-18 depend from claim 11. (Id.) Claim 12 adds a keyboard and a display 9 screen. (Id.) Claim 13 further modifies claim 12 by adding an antenna and outlining a 10 process through which the system verifies the passenger’s credit-debit card information 11 with the passenger’s bank. (Id.) Claim 14 adds a printer to claim 11. (Id.) Claim 15 adds 12 to claim 11 by outlining a process through which the passenger can get a printed receipt. 13 (Id. at 11-12.) Claim 16 specifies that the method of claim 11 involves exchanging signals 14 with the internet. (Id. at 12.) Claim 17 specifies that the method of claim 11 involves 15 exchanging signals with the taxicab’s home base. (Id.) Claim 18 specififes that the method 16 of claim 11 involves exchanging signals with other taxicabs. (Id.) 17 III. LEGAL STANDARDS 18 A. Motion for Judgment on the Pleadings Under Rule 12(c) 19 “Because a Rule 12(c) motion is functionally identical to a Rule 12(b)(6) motion, the 20 same standard of review applies to motions brought under either rule.” Gregg v. Hawaii, 21 Dep’t of Pub. Safety, 870 F.3d 883, 887 (9th Cir. 2017) (citation and internal quotation 22 marks omitted). “A judgment on the pleadings is properly granted when, taking all the 23 allegations in the pleadings as true, the moving party is entitled to judgment as a matter 24 of law.” Id. (citation and internal quotation marks omitted). 25 Under Rule 12(b)(6), a court may dismiss a plaintiff’s complaint for “failure to state 26 a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). A properly pled 27 complaint must provide “a short and plain statement of the claim showing that the pleader 28 is entitled to relief.” Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 1 555 (2007). While Rule 8 does not require detailed factual allegations, it demands more 2 than “labels and conclusions” or a “formulaic recitation of the elements of a cause of 3 action.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 555.) 4 “Factual allegations must be enough to rise above the speculative level.” Twombly, 550 5 U.S. at 555. Thus, to survive a motion to dismiss, a complaint must contain sufficient 6 factual matter to “state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678 7 (internal citation omitted). 8 In Iqbal, the Supreme Court clarified the two-step approach district courts are to 9 apply when considering motions to dismiss. First, a district court must accept as true all 10 well-pled factual allegations in the complaint; however, legal conclusions are not entitled 11 to the assumption of truth. See id. at 678-79. Mere recitals of the elements of a cause of 12 action, supported only by conclusory statements, do not suffice. See id. at 678. Second, 13 a district court must consider whether the factual allegations in the complaint allege a 14 plausible claim for relief. See id. at 679. A claim is facially plausible when the plaintiff’s 15 complaint alleges facts that allow a court to draw a reasonable inference that the 16 defendant is liable for the alleged misconduct. See id. at 678. Where the complaint does 17 not permit the court to infer more than the mere possibility of misconduct, the complaint 18 has “alleged—but it has not show[n]—that the pleader is entitled to relief.” Id. at 679 19 (internal quotation marks omitted). That is insufficient. A complaint must contain either 20 direct or inferential allegations concerning “all the material elements necessary to sustain 21 recovery under some viable legal theory.” Twombly, 550 U.S. at 562 (quoting Car Carriers, 22 Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1989) (emphasis in original)). When 23 the claims in a complaint have not crossed the line from conceivable to plausible, the 24 complaint must be dismissed. See Twombly, 550 U.S. at 570. 25 B. Patentable Subject Matter and the Alice Standard 26 Under Section 101 of the Patent Act, an inventor may obtain a patent on “any new 27 and useful process, machine, manufacture, or composition of matter, or any new and 28 useful improvement thereof.” 35 U.S.C. § 101. Courts, however, “have long held that this 1 provision contains an important implicit exception: Laws of nature, natural phenomena, 2 and abstract ideas are not patentable.” Alice Corp. Pty. v. CLS Bank Int’l, 573 U.S. 208, 3 216 (2014) (quoting Ass’n for Molecular Pathology v. Myriad Genetics, Inc., 133 S. Ct. 4 2107, 2116 (2013)). The concern behind these excepted categories is “one of pre- 5 emption”—if an inventor could obtain patent protection over these “building blocks of 6 human ingenuity,” then the patent scheme would work to undermine, not promote, future 7 innovation. Id. at 216. But courts are careful to balance concerns over preemption with the 8 fact that “all inventions at some level embody, use, reflect, rest upon, or apply laws of 9 nature, natural phenomena, or abstract ideas.” Mayo Collaborative Servs. v. Prometheus 10 Labs., Inc., 132 S. Ct. 1289, 1293 (2012). Thus, where an invention moves beyond an 11 abstract idea by applying it “to a new and useful end,” the invention will meet the Section 12 101 standard. Alice, 573 U.S. at 222 (quoting Gottschalk v. Benson, 409 U.S. 63, 67 13 (1972)). 14 In light of these competing concerns, the Supreme Court has developed a two-part 15 test to assess whether a patent covers an abstract idea. First, courts must determine 16 whether a patent’s claims are directed to a “patent-ineligible concept,” such as an abstract 17 idea. Id. at 217. Abstract ideas may be “preexisting, fundamental truth[s]” such as 18 mathematical equations, and also encompass “method[s] of organizing human activity” or 19 “longstanding commercial practice[s]” like intermediated settlement or risk hedging. Id. at 20 219. 21 Second, if the court “determine[s] that the patent is drawn to an abstract idea or 22 otherwise ineligible subject matter,” then the court examines “whether the remaining 23 elements, either in isolation or combination with the non-patent-ineligible elements, are 24 sufficient to ‘transform the nature of the claim into a patent-eligible application.’” Intellectual 25 Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1366-67 (Fed. Cir. 2015) 26 (quoting Alice, 134 S. Ct. at 2358). 27 Whether a patent is eligible under Section 101 is a question of law that may be 28 determined before the summary judgment stage of litigation. See Accenture Glob. Servs., 1 GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed. Cir. 2013) (reviewing a 2 Section 101 determination de novo, but noting that the legal issue on review “may contain 3 underlying factual issues”); see also Internet Patents Corp. v. Active Network, Inc., 790 4 F.3d 1343, 1348-49 (Fed. Cir. 2015) (affirming a district court’s granting of a motion to 5 dismiss on Section 101 grounds); Smart Sys. Innovations, LLC v. Chicago Transit Auth., 6 873 F.3d 1364, 1375-76 (Fed. Cir. 2017) (affirming a district court’s grant of motion for 7 judgment on the pleadings on Section 101 grounds). 8 IV. DISCUSSION 9 The Court addresses both steps of the Alice inquiry below, and then addresses 10 Plaintiff’s contention that factual issues make resolution of this case inappropriate at this 11 stage. As further explained below, the Court finds at Alice step one that the ’739 Patent is 12 directed to an abstract idea—the longstanding commercial practice of paying for public 13 transit, here, paying for a taxicab with a credit card. At Alice step two, the Court finds that 14 nothing else in the patent—a mere assemblage of admittedly known components—brings 15 the ’739 Patent into the realm of patent-eligibility. 16 A. Alice Step One 17 At step one, Defendants argue that all claims of the ’739 Patent are directed to the 18 abstract idea of paying for a taxicab with a credit card, which is a version of the 19 longstanding commercial practice of paying for public transit. (ECF No. 47 at 10-17.) 20 Plaintiff counters that the asserted claims of the ’739 Patent are not directed to an abstract 21 idea because they are directed to a system and method, which are generally patent- 22 eligible, and because “they claim computerized components performing unordinary 23 functions above and beyond the prior art for the individual components to improve the 24 functionality of the system as a whole.” (ECF No. 49 at 14.) The Court agrees with 25 Defendants. 26 The Court finds the claims of the ’739 Patent are all directed to the abstract idea of 27 paying for a taxicab with a credit card. (ECF No. 23-1 at 11-12.) See also Smart Sys., 873 28 F.3d at 1371 (affirming the district court’s finding that the asserted claims of four patents 1 were directed to the abstract idea of “paying for a subway or bus ride with a credit card”). 2 Further, Plaintiff’s arguments at Alice step one miss the mark. Courts have invalidated 3 many patents claiming systems and methods under Alice, so the type of patent claims at 4 issue do not show that the asserted claims of the ’739 Patent are not directed to an 5 abstract idea. (ECF No. 49 at 14 (making the argument).) See also Smart Sys., 873 F.3d 6 at 1368 (describing the ultimately invalidated patent claims as covering systems and 7 methods). And Plaintiff’s argument that the asserted claims are not directed to an abstract 8 idea because they describe computerized components that go beyond the prior art to 9 improve the functionality of the claimed system (ECF No. 49 at 14) “is misplaced here 10 because we consider the application of an abstract idea under Alice step two, 11 not Alice step one.” Smart Sys., 873 F.3d at 1373. The Court therefore finds that the claims 12 of the ’739 Patent are all directed to the abstract idea of paying for a taxicab with a credit 13 card and moves on to Alice step two. 14 B. Alice Step Two 15 At step two, Defendants argue that the claims of the ’739 Patent lack an inventive 16 concept because “the claims and specification of the ’739 Patent recite computer 17 components that perform well-understood, routine and conventional functions.” (ECF No. 18 47 at 19, 19-23.) Plaintiff counters that the asserted claims of the ’739 contain an inventive 19 concept—application programs described in several claims that “mandate a sequential 20 exchange of electronic information.” (ECF No. 49 at 20.) Defendants reply that this 21 element does not save the the ’739 Patent because “Alice stands for the very principle 22 that reciting preexisting computerized components to transmit electronic information 23 between one another is not inventive.” (ECF No. 50 at 5.) The Court again agrees with 24 Defendants. 25 This is not a close call. The asserted claims of the ’739 Patent lack an inventive 26 concept that could have saved them from invalidation under Alice. At the heart of all of the 27 asserted claims is a system consisting of a taxicab meter, a credit-debit card reader, and 28 a modem. (ECF No. 23-1 at 11-12.) The specification of the the ’739 Patent makes it clear 1 that these elements are conventional or otherwise known in the art. (Id. at 8-9 (describing 2 the taxicab meter as one “known in the art” that “provides traditional taxicab functions,” 3 the modem as one that communicates with networks “known in the art” to access routers 4 and proxy servers over the world wide web in a manner “known in the art,” and the credit- 5 debit card reader as “conventional”).) And as described above, claim 11 is merely a 6 method claim version of the system claim 1. Thus, as described in the specification of the 7 ’739 Patent itself, the core system/method of the patent is simply a combination of three 8 known elements. 9 The Court does not find that the addition of known technological elements like 10 printers, displays, and the ability to connect to the internet or other taxis described in the 11 dependant claims bring the ’739 Patent within the realm of patent-eligibility. (ECF No. 23- 12 1 at 11-12.) The phrase “known in the art” is used ten times in the specification to describe 13 most if not all elements of each of the asserted claims, including the dependant claims. 14 (Id. at 8-10.) Adding known technological elements from the dependant claims to the 15 known technological elements from the indipendent claims does not make the claims 16 patent-eligible. See, e.g., Content Extraction & Transmission LLC v. Wells Fargo Bank, 17 Nat. Ass’n, 776 F.3d 1343, 1348-49 (Fed. Cir. 2014) (finding as such, noting that “all of 18 the additional limitations” “recite well-known, routine, and conventional functions of 19 scanners and computers”). 20 In addition, while the Court does not disagree with Plaintiff’s argument that 21 conventional components combined in an unconventional manner may be patent eligible 22 (ECF No. 49 at 16),3 Plaintiff fails to show how any of the conventional components 23 /// 24 3For some reason, Plaintiff makes this argument at Alice step one, citing cases discussing claims that are not abstract because they are directed to improvements in 25 computer functionality itself, such as Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253, 1259 (Fed. Cir. 2017) (“the claims here are directed to a technological improvement: an 26 enhanced computer memory system.”). (ECF No. 49 at 16-18.) But that line of cases simply does not apply here, because the ’739 Patent is not directed to a technological 27 improvement in computer functionality. The ‘739 Patent claims a system and method for accepting credit cards in taxicabs. (ECF No. 23-1.) 28 1 described in the ’739 Patent’s specification were combined in an unconventional manner. 2 Plaintiff simply states the claims cover a “process previously unknown and unapplied in 3 the context of taxi cab fare payment” in a conclusory manner, without explaining how. 4 (ECF No. 49 at 17.) And as Defendants point out in their reply (ECF No. 50 at 6-9), while 5 Defendants’ Motion contains detailed, claim-by-claim analysis of the ’739 Patent with 6 many references to the specification itself (ECF No. 47), Plaintiff’s responsive brief lacks 7 any citations to the ’739 Patent’s specification (ECF No. 49). The Court will not simply take 8 Plaintiff’s word for it. Plaintiff has failed to explain how the conventional elements 9 described in the ’739 Patent are combined in an unconventional way. 10 Moreover, the Court is unpersuaded the application programs that “mandate a 11 sequential exchange of electronic information” make the ’739 Patent patent-eligible. (ECF 12 No. 49 at 20.) The specification of the ’739 Patent describes them as consisting of generic 13 computer storage mechanisms known at the time. (ECF No. 23-1 at 9, specifically at 3:22- 14 39.) In addition, “[t]hat a computer receives and sends the information over a network— 15 with no further specification—is not even arguably inventive.” buySAFE, Inc. v. Google, 16 Inc., 765 F.3d 1350, 1355 (Fed. Cir. 2014). Indeed, the “computers in Alice were receiving 17 and sending information over networks connecting the intermediary to the other 18 institutions involved, and the Court found the claimed role of the computers insufficient.” 19 Id. This Court is therefore unpersuaded by Plaintiff’s primary argument at Alice step two.4 20 4Plaintiff also cautions the Court against hindsight bias. (ECF No. 49 at 20.) But 21 computer programs that mandate a sequential exchange of electronic information reflect the type of basic computer functionality also invalidated in Alice itself. See Alice, 573 U.S. 22 at 225 (“The same is true with respect to the use of a computer to obtain data, adjust account balances, and issue automated instructions; all of these computer functions are 23 well-understood, routine, conventional activities previously known to the industry.”) (citation, internal quotation marks, and punctuation omitted). Moreover, as part of its effort 24 to situate the Court around the time of the purported invention embodied in the the ’739 Patent—which would be more relevant to anticipation or obviousness anyway—Plaintiff 25 provided the Court with a New York Times article from July 14, 2000, which describes a system and method that appears similar to the claimed system and method, but then 26 concludes, “[s]everal cities, including San Diego and Los Angeles, have used similar credit card systems in many cabs for years[.]” (ECF No. 49-1 at 3.) Even if the content of the 27 article was relevant to the Court’s Alice inquiry, the article tends to show the patent was either obvious or not novel. Thus, the Court finds Plaintiff’s warnings against hindsight bias 28 1 In sum, the ’739 Patent is invalid under Alice and its progeny. See Smart Sys., 873 2 F.3d at 1375-76 (affirming the district court’s invalidation of a very similar set of patents 3 under Alice on a motion for judgment on the pleadings). 4 C. Factual Issues 5 The parties also dispute whether any factual issues remain precluding the entry of 6 judgment at this time. (ECF Nos. 47 at 23-24, 49 at 21-23, 50 at 12-13.) The Court finds 7 that no factual issues exist to preclude disposition of this case, nor does it find claim 8 construction necessary. “Although the determination of patent eligibility requires a full 9 understanding of the basic character of the claimed subject matter, claim construction is 10 not an inviolable prerequisite to a validity determination under § 101.” Content Extraction, 11 776 F.3d at 1349 (citation omitted). This is one of those cases. The basic character of the 12 claimed subject matter is not complicated. The Court finds it has a sufficient grasp on the 13 subject matter to rule now. See, e.g., Glob. Cash Access, Inc. v. NRT Tech. Corp., Case 14 No. 2:15-cv-00822-MMD-GWF, 2016 WL 1181669, at *4 (D. Nev. Mar. 25, 2016) (finding 15 no factual issues prevented the Court from granting a motion to dismiss based on Alice). 16 And as Defendants point out, they relied in pertinent part on Plaintiff’s proposed claim 17 construction in their Motion anyway. (ECF No. 50 at 13.) 18 As Defendants argue (ECF No. 47 at 24), all of Plaintiff’s claims, regardless of 19 infringement theory, must fail because—as explained above—Plaintiff has asserted an 20 invalid patent. The Court will therefore direct entry of judgment in Defendants’ favor and 21 close this case. 22 V. CONCLUSION 23 The Court notes that the parties made several arguments and cited to several cases 24 not discussed above. The Court has reviewed these arguments and cases and determines 25 that they do not warrant discussion as they do not affect the outcome of Defendants’ 26 Motion. 27 28 1 It is therefore ordered that Defendants’ motion for judgment on the pleadings (ECF 2 || No. 47) is granted. U.S. Patent No. 6,347,739 is invalid under Alice and its progeny. 3 The Clerk of Court is directed to enter judgment in Defendants’ favor, and in 4 || accordance with this order, and close this case. 5 DATED THIS 21* day of January 2020. 6 — 7 ASGn- MIRANDA M. DU 8 CHIEF UNITED STATES DISTRICT JUDGE 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11