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Visible Connections, LLC v. Zoho Corp.

United States District Court, W.D. Texas, Austin Division

May 30, 2019

VISIBLE CONNECTIONS, LLC, Plaintiff,
v.
ZOHO CORPORATION, Defendant.

          ORDER

          ROBERT PITMAN UNITED STATES DISTRICT JUDGE.

         Before the Court is Defendant Zoho Corporation's (“Zoho”) motion to dismiss, (Dkt. 15), along with responsive briefing, (Dkts. 16, 18). At the parties' request, the Court heard argument on the motion on April 25, 2019, (see Dkt. 33), after which the parties filed supplemental briefing, (Dkts. 34, 35). Having considered the parties' briefs and arguments, the record, and the relevant law, the Court finds that the motion should be denied.

         I. BACKGROUND

         This is a patent infringement suit concerning teleconferencing and application sharing. (Am. Compl., Dkt. 14, at 4-16). Plaintiff Visible Connections, LLC (“Visible”) alleges that Zoho has infringed two patents: U.S. Patent No. 6, 665, 392 (the “‘392 Patent”) and 7, 284, 203 (the “‘203 Patent”). (Id.). The ‘392 Patent describes a method for operationally associating a conference call participant's telephone connection to a conference call system with a data connection via the internet. (Id. at 5-6). According to Visible, the ‘392 Patent improves upon prior art by allowing participants to establish this connection without pre-registering and without requiring the host to send each participant a unique access code. (Id. at 7-9).

         The ‘203 Patent, meanwhile, describes a method for real-time application sharing. (Id. at 13). According to Visible, the ‘203 Patent improves on prior art by allowing sharing without preexisting knowledge of associated conferencing programs and by providing data about participants to the host. (Id. at 13-14).

         Zoho is a company that provides conferencing software to businesses. (Id. at 17). Visible alleges that Zoho's software infringes both patents, both directly and indirectly. (Id. at 25-45). Zoho now asks the Court to dismiss all of Visible's claims pursuant to Federal Rule of Civil Procedure 12(b)(6) on the ground that the ‘392 and ‘203 Patents are invalid under 35 U.S.C. § 101 for failing to claim patentable subject matter. (Mot. Dismiss, Dkt. 15, at 2).

         II. LEGAL STANDARD

         Pursuant to Rule 12(b)(6), a court may dismiss a complaint for “failure to state a claim upon which relief can be granted.” Fed.R.Civ.P. 12(b)(6). In deciding a 12(b)(6) motion, a “court accepts ‘all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff.'” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (quoting Martin K. Eby Constr. Co. v. Dallas Area Rapid Transit, 369 F.3d 464, 467 (5th Cir. 2004)). “To survive a Rule 12(b)(6) motion to dismiss, a complaint ‘does not need detailed factual allegations,' but must provide the plaintiff's grounds for entitlement to relief-including factual allegations that when assumed to be true ‘raise a right to relief above the speculative level.'” Cuvillier v. Taylor, 503 F.3d 397, 401 (5th Cir. 2007) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). 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 Twombly, 550 U.S. at 570).

         A claim has facial plausibility “when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. “The tenet that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. A court ruling on a 12(b)(6) motion may rely on the complaint, its proper attachments, “documents incorporated into the complaint by reference, and matters of which a court may take judicial notice.” Dorsey v. Portfolio Equities, Inc., 540 F.3d 333, 338 (5th Cir. 2008) (citations and internal quotation marks omitted). A court may also consider documents that a defendant attaches to a motion to dismiss “if they are referred to in the plaintiff's complaint and are central to her claim.” Causey v. Sewell Cadillac-Chevrolet, Inc., 394 F.3d 285, 288 (5th Cir. 2004). But because the court reviews only the well-pleaded facts in the complaint, it may not consider new factual allegations made outside the complaint. Dorsey, 540 F.3d at 338. “[A] motion to dismiss under 12(b)(6) ‘is viewed with disfavor and is rarely granted.'” Turner v. Pleasant, 663 F.3d 770, 775 (5th Cir. 2011) (quoting Harrington v. State Farm Fire & Cas. Co., 563 F.3d 141, 147 (5th Cir. 2009)).

         III. DISCUSSION

         Whether a claim is drawn to patent-eligible subject matter under Section 101 is a “threshold inquiry.” In re Bilski, 545 F.3d 943, 950-51 (Fed. Cir. 2008), aff'd sub nom. Bilski v. Kappos, 561 U.S. 593 (2010). If a claim is not drawn to patent-eligible subject matter, it “must be rejected even if it meets all the other legal requirements of patentability.” Id. Section 101 allows inventors to obtain patents on “any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 35 U.S.C. § 101. However, “this provision contains an important implicit exception:” an inventor may not patent laws of nature, natural phenomena, or abstract ideas. Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 573 U.S. 208, 216 (2014). Zoho argues that Visible's patents are patent-ineligible because they are directed to abstract ideas. (See, e.g., Mot. Dismiss, Dkt. 15, at 2-3).

         To determine whether a patent claim violates this exception to the terms of § 101, the Supreme Court has set forth a two-step framework in which a court determines: (1) whether the claim is “directed to a patent-ineligible concept”-a law of nature, natural phenomenon, or abstract idea-and, if so, (2) whether the elements of the claim, considered “both individually and ‘as an ordered combination, '” add enough to “‘transform the nature of the claim' into a patent-eligible application.” Alice Corp., 573 U.S. at 217 (quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 78 (2012)). In the context of an abstract-idea challenge to a patent claim, as here, those two steps are typically understood as the “abstract idea” step and the “inventive concept” step. Interval Licensing LLC v. AOL, Inc., 896 F.3d 1335, 1342 (Fed. Cir. 2018) (citing Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253, 1257-58 (Fed. Cir. 2016)).

         Although patent eligibility under Section 101 is “ultimately a question of law, ” it “may contain underlying issues of fact.” Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018). Accordingly, patent eligibility can be determined at the Rule 12(b)(6) stage, but only when “there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law.” Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1125 (Fed. Cir. 2018). Because a “patent is presumed valid, . . . the burden of establishing invalidity of a claim rests on the party asserting invalidity by clear and convincing evidence.” Core Wireless Licensing S.A.R.L. v. LG Elecs., Inc., 880 F.3d 1356, 1364 (Fed. Cir. 2018) (citing 35 U.S.C. § 282; Microsoft Corp. v. i4i Ltd. P'ship, 564 U.S. 91, 95 (2011)).

         The parties disagree vigorously about whether Visible's patents fail step one of the Alice inquiry, based both on the nature of the claims themselves and on the synthesis and application of Federal Circuit precedent. (Mot. Dismiss, Dkt. 15, at 10-13, 17-18; Resp. Mot. Dismiss, Dkt. 16, at 9-11, 17). The Court need not resolve this dispute now, because even if each patent is directed to an abstract concept, ...


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