Valjakka v. Netflix, Inc.

District Court, N.D. California·Decided August 22, 2023·No. 4:22-cv-01490·Unknown

Opinion

LAURI VALJAKKA, Case No. 22-cv-01490-JST

Plaintiff, ORDER GRANTING IN PART AND v. DENYING IN PART MOTION FOR JUDGMENT ON THE PLEADINGS Re: ECF No. 79 Defendant.

Before the Court is Netflix’s motion for judgment on the pleadings. ECF No. 79. The Court will grant the motion in part and deny it in part. Plaintiff Lauri Valjakka alleges that Defendant Netflix, Inc., infringes numerous claims of two patents: U.S. Patent No. 10,726,102 (“’102 patent”) and U.S. Patent No. (“’167 patent”). ECF No. 74. The ’102 patent “relates to an apparatus, method and/or system for providing restricted content to a user.” ’102 patent at 1:9–11. The ’167 patent “relates to improvements in data communications networks and to systems, methods and apparatus employed in such networks.” ’167 patent at 1:6–8. Valjakka initially filed suit in the Western District of Texas on September 13, 2021. ECF No. 1. After the case was transferred to the Northern District of California, ECF No. 16, the Court granted Netflix’s motion to dismiss Valjakka’s willful infringement claim on October 11, 2022. ECF No. 60. The Court held a Markman hearing and issued a claim construction order on December 13, 2022. ECF No. 73. Netflix subsequently filed the present motion on January 17, 2023, ECF No. 79, which the Court took under submission without a hearing on February 24, “After the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). “Because a Rule 12(c) motion is ‘functionally identical’ to a Rule 12(b)(6) motion, ‘the same standard of review applies to motions brought under either rule.’” Gregg v. Hawaii, 870 F.3d 883, 887 (9th Cir. 2017) (quoting Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1054 n.4 (9th Cir. 2011). That is, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A judgment on the pleadings is properly granted when, ‘taking all the allegations in the pleadings as true, the moving party is entitled to judgment as a matter of law.’” Gregg, 870 F.3d at 887 (quoting Nelson v. City of Irvine, 143 F.3d 1196, 1200 (9th Cir. 1998)). “Challenges to patentability under [35 U.S.C. § 101] may be brought based solely on the pleadings, including on a Rule 12(c) motion for judgment on the pleadings.” Broadcom Corp. v. Netflix Inc., 598 F. Supp. 3d 800, 804–05 (N.D. Cal. 2022) (quoting Open Text S.A. v. Box, Inc., 78 F. Supp. 3d 1043, 1045 (N.D. Cal. 2015)). “Section 101. . . defines the subject matter eligible for patent protection” as “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208, 216 (2014) (quoting 35 U.S.C. § 101). The Supreme Court has “long held that this provision contains an important implicit exception: . . . . abstract ideas are not patentable.” Alice, 573 U.S. at 216 (quoting Ass’n for Molecular Pathology v. Myriad Genetics, 569 U.S. 576, 589 (2013)). But “an invention is not rendered ineligible for patent simply because it involves an abstract concept.” Id. at 217. Courts must distinguish between patents that claim abstract ideas, on the one hand, and patents “that claim patent-eligible applications of those concepts,” on the other. Id. (emphasis added). To determine whether a patent claims an abstract concept, courts engage in a two-step inquiry. First, courts determine whether the claims at issue are “directed to” an abstract idea. Id. “[S]tep one presents a legal question” only, which “does not require an evaluation of the prior art 1374 (Fed. Cir. 2020). This analysis often begins “with an examination of eligible and ineligible claims of a similar nature from past cases.” Amdocs (Isr.) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1295 (Fed. Cir. 2016). “Under this inquiry, [courts] evaluate the focus of the claimed advance over the prior art to determine if the character of the claim as a whole, considered in light of the specification, is directed to excluded subject matter.” Trading Techs. Int’l, Inc. v. IBG LLC, 921 F.3d 1378, 1384 (Fed. Cir. 2019) (internal quotation marks and citation omitted). When a claim recites “a desired function or outcome, without providing any limiting detail that confines the claim to a particular solution to an identified problem,” the “functional nature of the claim confirms that it is directed to an abstract idea.” Affinity Labs of Tex., LLC v. Amazon.com Inc., 838 F.3d 1266, 1269 (Fed. Cir. 2016). The “essentially result-focused, functional character of claim language has been a frequent feature of claims held ineligible under § 101, especially in the area of using generic computer and network technology.” Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1356 (Fed. Cir. 2016). Finally, there is no need to analyze every claim where “all the claims are ‘substantially similar and linked to the same abstract idea.’” Content Extraction & Transmission LLC v. Wells Fargo Bank, 776 F.3d 1348, 1348 (Fed. Cir. 2014). If the claims are directed to an abstract idea, the inquiry proceeds to step two. At step two, courts “consider the elements of each claim both individually and as an ordered combination” to determine “whether [the claims] contains an ‘inventive concept’ sufficient to ‘transform’ the claimed abstract idea into a patent-eligible application.” Alice, 573 U.S. at 217, 221 (quoting Mayo Collaborative Servs. v. Prometheus Lab’ys, Inc., 566 U.S. 66, 73, 79 (2012)). “Stating an abstract idea ‘while adding the words apply it’ is not enough for patent eligibility. Nor is limiting the use of an abstract idea ‘to a particular technological environment.’” Id. at 223 (emphasis added) (first quoting Mayo, 566 U.S. at 72; and then quoting Bilski v. Kappos, 561 U.S. 593, 610 (2010)). Rather, this test “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) (alteration in original) (quoting Content Extraction, 776 F.3d at 1347–48). Both parts of the inquiry are informed by “the claims At the outset, the Court notes that Valjakka repeatedly emphasizes the novelty of the inventions claimed in each patent. As to the ’167 patent, Valjakka also relies on a Notice of Allowability issued by the United States Patent and Trademark Office (“USPTO”) as evidence of novelty. But “whether a claimed process is novel or non-obvious is irrelevant to the [Section] 101 analysis” because “[t]he obligation to determine what type of discovery is sought to be patented must precede the determination of whether that discovery is, in fact, new or obvious.” In re Bilski, 545 F.3d 943, 958 (Fed. Cir. 2008), aff’d sub. nom., Bilski v. Kappos, 561 U.S. 593 (2010); Parker v. Flook,

Valjakka v. Netflix, Inc., (N.D. Cal. 2023).

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