Texas Patent Litigation Monthly Wrap-Up: July 2024

Our Texas Patent Litigation Monthly Wrap-Up for July 2024 covers three decisions of interest from the Eastern District of Texas granting motions related to subject matter eligibility, stays pending inter partes review (IPR), and pleading standards for pre-suit willfulness.

Symbology Innovations, LLC v. Dexcom, Inc., No 2:23-CV-00473, 2024 WL 3543409 (E.D. Tex. Jul. 25, 2024) (Gilstrap, J.)

In a lengthy order granting defendant Dexcom’s renewed Rule 12(c) motion, the court held that the four asserted patents were ineligible under § 101. The asserted patents shared a common specification and related to systems and methods for “enabling a portable electronic device to retrieve information about an object when the object’s symbology, e.g., a barcode, is detected.” Id. at *1.

The parties disputed whether a single claim is representative of all the claims of the asserted patents. According to Dexcom, all claims contain the same essential elements:

1. capturing an image with a camera or a scanner;
2. detecting a symbology;
3. decoding the symbology to obtain a “decode string”;
4. sending the “decode string” to a “server” for processing;
5. receiving information from the “server” in response; and
6. displaying the information received.

Id. at *4. Dexcom also asserted that the dependent claims recite pre- or post-solution activity and do not negate the representativeness of a single claim. Id. Despite Symbology’s contrary arguments, the court noted that Dexcom “cite[d] and analyze[d] every single claim of all four asserted patents,” and included a detailed comparison of the representative claim to other claims of the asserted patents and found that sufficient to make a prima facie case of representativeness that Symbology did not rebut. Id. at *4-6 (citing PPS Data, LLC v. Jack Henry & Assocs., Inc., 404 F. Supp. 3d 1021, 1030–32 (E.D. Tex. 2019)). Thus, the court found it appropriate to treat a single claim as representative of the other claims.

The parties also disputed whether claim construction was necessary to decide patent eligibility. Symbology contended the court needed to construe a limitation (“one or more visual detection applications”) that was added during prosecution before it could evaluate the merits of Dexcom’s abstract concept arguments. Id. at *6. Yet the court found that Symbology did not propose a specific claim construction or explain why a proposed construction would affect the subject matter eligibility analysis. Id. at *6-7. The court therefore found it appropriate to proceed with the determination of patent eligibility at the Rule 12(c) stage.

Turning to the merits of § 101 and Alice Step 1, the court found that the claims were directed to the abstract idea of data recognition and retrieval. Id. at *8. Comparing the claims to others found ineligible by the Federal Circuit, the court found that the “purely functional nature” of the representative claim “confirms that it is directed to an abstract idea, not to a concrete embodiment of that idea.” Id. at *9. The court also considered whether any well-pleaded facts in Symbology’s complaint supported Symbology’s assertion that the asserted claims provide “a technological solution to the way a computer functions” or otherwise demonstrate the non-abstract nature of the claims, and found the complaint contained only “vague and conclusory statements.” Id. at *10. The court also reviewed the specification of the asserted patents for “indications of patent eligibility” and found it “repeatedly and unequivocally recognizes that Symbology readers and decoders existed prior to the present invention.” Id. Finding “no factual basis to support Symbology’s assertion that the Asserted Patents ‘recite a technical solution to a problem arising in the realm of computing networks’” and comparing the claims to those in Secured Mail Solutions LLC v. Universal Wilde, Inc., 873 F.3d 905, 906 (Fed. Cir. 2017), the court concluded the asserted claims are directed to an abstract idea. Id. at *11.

Turning to Alice Step 2, the court found that the limitations of the representative claim, “both individually and as an ordered combination, do not ‘involve more than performance of well-understood, routine, [and] conventional activities previously known to the industry.’” Id. at *12 (quoting Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343, 1347–48 (Fed. Cir. 2014) (internal quotation removed)). The court reasoned that the functional steps recited in the claim limitations “individually describe routine functions that have existed in computers long before these patents (and some which simply describe the act of communication itself)” and in combination, “describe a basic barcode scanner, something that the patent acknowledges was well-known at the time of the invention.” Id. The court found that Symbology did not identify a factual dispute that would preclude dismissal and noted that the “shared specification itself confirms that the Asserted Patents involve little more than the application of well-understood, routine, and conventional practices.” Id. at *13. The court again considered the complaint, finding that it contains “no more than conclusory statements related to Alice Step Two.”

Notably, the court found that despite that “the conventionality of any element or combination of elements is ordinarily a question of fact,” “the patent itself shows that claimed limitations, alone and in combination, were well-understood, routine, and conventional to one of ordinary skill in the art.” Id. at *14 (citing Univ. Of Rochester v. G.D. Searle & Co., 358 F.3d 916, 930 (Fed. Cir. 2004)).

Finding that the asserted patents “do not claim eligible subject matter under § 101,” the court dismissed the complaint with prejudice.

Foras Technologies Ltd. v. Aptiv Plc, No. 2:23-CV-00314, ECF No. 92 (E.D. Tex. July 25, 2024) (Gilstrap, J.)

The court granted defendant Valeo’s motion to stay pending IPR based on an instituted IPR involving the only asserted patent.

Plaintiff Foras Technologies filed the complaint in June 2023, but did not serve it until November 2023. Id. at *1. In March 2024, the Patent Trial and Appeal Board instituted a separate IPR filed by BMW. Id. In April 2024, Valeo filed its own IPR petition asserting the same ground as the BMW IPR and moved to join the instituted BMW IPR. Id. In November 2023, the United States Patent and Trademark Office also instituted an ex parte reexamination (EPRx) of all claims of the asserted patent, and in March 2024, it issued a non-final office action rejecting all the claims. Id. at *2.

As to the likelihood of simplification of the issues, the court found that factor weighed in favor of a stay. Id. at *2-3. The court noted that all the asserted claims were subject to the instituted IPR and that all the claims had been rejected in the EPRx, leading to a “material likelihood of simplification of the issues” in the case. Id. The court also noted that Valeo agreed to estoppel of invalidity defenses on any grounds it raised or reasonably could have raised during the BMW IPR. Id. at *3.

As to the stage of litigation, the court found that factor also weighed in favor of a stay. Id. at *3-4. Even though Foras filed the complaint back in June 2023, fact discovery had just begun, and the parties had neither taken any depositions nor served any interrogatories. Id. at *4. The Markman hearing is set for February 2025, and the final written decision in the IPR is expected to issue in March 2025, four months before the August 2025 trial date. Id. The court also considered that Valeo “acted with reasonable dispatch” in moving to file its IPR petition and moving to join the BMW IPR. Id. at 4.

As to prejudice, the court found that factor was neutral and that the Plaintiff would not be unduly prejudiced by a stay. Id. at *4-5. The court noted that although it “clearly recognizes a plaintiff’s right to the timely enforcement of its patent rights, Plaintiff has not identified any prejudice beyond the delay inherent in the IPR process.” Id. at *5.

Weighing the factors, the court found that a stay was warranted, granted Valeo’s motion, and ordered the parties to provide a joint notice of any dispositive decisions in the IPR or EPRx proceedings. Id.

Signode Industrial Group LLC v. Samuel, Son & Co., Ltd., No. 2:24-CV-00080, ECF No. 39 (E.D. Tex. July 25, 2024)

The court granted defendant Samuel’s partial motion to dismiss pursuant to Rule 12(b)(6) seeking dismissal of the pre-suit willfulness allegations in plaintiff Signode’s complaint. Id. at *1.

In its complaint, Signode accused Samuel’s “STL-500” product of willfully infringing two patents. In support of its willfulness claims, Signode pled that (1) “Samuel actively monitors Signode’s patent portfolio and product offerings,” (2) Samuel cited several Signode patents and references related to Signode’s products cited during the prosecution of one of Samuel’s patents, and (3) Samuel purchased certain Signode “battery strapping tools.” Id. at *2. Signode also alleged that only a few companies provide “high-end battery plastic strapping tools” and that it had a “significantly larger market share” and “history of being an innovator in the high-end battery plastic strapping tool market.” Based on these allegations, Signode alleged that Samuel knew about the asserted patents or at least willfully blinded itself to their existence before Signode filed its complaint. Id. Signode later amended its complaint to include another asserted patent, and alleged willful infringement based on the same facts as the other asserted patents. Id.

First, the court held that Signode failed to adequately plead actual knowledge of the asserted patents. Id. at *4. The court reasoned that although the complaint references several Signode patents and patent applications cited by Samuel in prosecution, it does not allege that Samuel cited any of the asserted patents. Id. at *6. The court declined to consider additional patent prosecution documents outside of the pleadings for patents unrelated to the asserted patents but noted they were unhelpful to Signode’s cause. Id. at *7, n.1. The court also noted that Signode did not allege that the products Samuel allegedly disclosed during patent prosecution or that the “battery plastic strapping tools” allegedly purchased by Defendants “were marked with, or otherwise relevant to, the Asserted Patents.” Id. The court also found that Signode’s allegations about the small market for such products could not “cure its pleading deficiencies.” Id. at *7-8.

Second, the court held that Signode failed to adequately plead willful blindness. Id. at *8. Although the court noted its view that willful blindness could be plausibly pled by pleading that the defendant “(1) subjectively believed that there is a high probability that a fact exists, and (2) took deliberate action to avoid learning of that fact,” (citing Global-Tech Appliances, Inc. v. SEB S.A., 563 U.S. 754, 768 (2011)), the court reasoned that Signode “faile[d] to even allege that [Samuel] took deliberate actions to avoid learning of the Asserted Patents.” Id. at *9. The court found that to be dispositive of the issue. Id.

The court dismissed the pre-suit willfulness claims without prejudice, granting Signode leave to amend its pre-suit willful infringement allegations through an amended complaint within 14 days of the court’s order.