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Encoditech LLC v. Citizen Watch Co. of America, Inc.

United States District Court, W.D. Texas, San Antonio Division

June 25, 2019

ENCODITECH, LLC, Plaintiff,
v.
CITIZEN WATCH COMPANY OF AMERICA, INC., Defendant.

          ORDER ON MOTION TO DISMISS

          XAVIER RODRIGUEZ UNITED STATES DISTRICT JUDGE

         On this date, the Court considered Defendant's Motion to Dismiss (docket no. 13), Plaintiff's response (docket no. 25), and Defendant's reply (docket no. 26). After careful consideration, Defendant's Motion to Dismiss is DENIED.

         BACKGROUND

         Plaintiff Encoditech, LLC brings this patent infringement suit, alleging the Proximity watch made by Defendant Citizen Watch Company of America, LLC infringes Plaintiff's patent. Encoditech was issued Patent No. 6, 321, 095 (“the Patent”) on November 20, 2001. The Patent is titled “Wireless Communication Approach.” Encoditech alleges it “relates to a mobile station that provides direct, wireless communications with another mobile station on a portion of a radio frequency (RF) band.” Docket no. 1 at 3. Encoditech alleges the Patent addresses the problem of providing wireless communications methods that allow users to communicate and have private conversations, and it does so by “using a frequency division multiple access/time division multiple access communication protocol.” Id. The Proximity watch allegedly infringes on Claim 7 of the Patent by providing notifications for social media, email, and events. Id. at 4. After Encoditech its complaint on December 28, 2018, Citizen filed the Motion to Dismiss (docket no. 13) now before the Court on February 21, 2019.

         DISCUSSION

         I. Legal Standard

         To survive a 12(b)(6) motion to dismiss, “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 claim for relief must contain: (1) “a short and plain statement of the grounds for the court's jurisdiction”; (2) “a short and plain statement of the claim showing that the pleader is entitled to the relief”; and (3) “a demand for the relief sought.” Fed.R.Civ.P. 8(a). In considering a motion to dismiss under Rule 12(b)(6), all factual allegations from the complaint should be taken as true, and the facts are to be construed favorably to the plaintiff. Fernandez-Montez v. Allied Pilots Assoc., 987 F.2d 278, 284 (5th Cir. 1993). To survive a 12(b)(6) motion, a complaint must contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.

         II. Application

         Citizen argues that the Patent covers subject matter that is not patentable and that, even if it does cover patentable subject matter, not all elements of Claim 7 are met, so Encoditech does not state a direct infringement claim.

         a. Patentable Under Section 101

         Citizen argues the Patent is invalid under 35 U.S.C. 101. Section 101 of the Patent Act provides that one who “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. 35 U.S.C. § 101. Three categories-“laws of nature, physical phenomena, and abstract ideas”-are exceptions to the subject matter patentable under the Patent Act. Alice Corp. Pty. Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347 (2014). “[W]hether a claim recites patent eligible subject matter is a question of law which may contain underlying facts.” Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018).

         This requires a two-part test derived from the Supreme Court's decision in Alice. First, the court determines “whether the claims at issue are directed to a patent-ineligible concept.” Citizen argues the Patent covers an abstract idea. If the claims are not directed to a patent-ineligible concept, “the claims satisfy § 101 and [the court] need not proceed to the second step.” Core Wireless Licensing S.A.R.L. v. LG Elecs., Inc., 880 F.3d 1356, 1361 (Fed. Cir. 2018). Second, if the claim contains an abstract idea, the court evaluates whether there is “an ‘inventive concept'- i.e., an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.” Alice, 134 S.Ct. at 2355.

         i. Alice Step One

         At step one, “the claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter.” Internet Patents Corp. v. Active Network, Inc.,790 F.3d 1343, 1346 (Fed. Cir. 2015). “In performing step one of Alice, the Court should be careful not to oversimplify the claims or the claimed invention because, at some level, all inventions are based upon or touch on abstract ideas, natural phenomena, or laws of nature.” Encoditech, LLC v. Qardio, Inc., C.A. No. 1:18-864, 2019 WL 2526725, at *2 (D. Del. June 19, 2019). “At step one, therefore, it is not enough to merely identify a patent-ineligible concept underlying the claim; [courts] ...


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