Richards Layton & Finger

Chief Judge Stark Denies Motion for Judgment on the Pleadings of Invalidity Under Section 101

December 19, 2017

In IBM v. Groupon, Inc., No. 16-122-LPS-CJB (D. Del. Nov. 17, 2017), Chief Judge Stark denied Groupon, Inc.’s motion for judgment on the pleadings that half of the asserted patents, covering the display of information from local storage, were invalid under Section 101. In a separate litigation, the Court had previously found under the first Alice step that the patents challenged here were directed to an abstract idea, but deferred ruling on whether they contained an inventive concept until after claim construction.

After claim construction in this litigation, and in light of the subsequent holding of Enfish LLC v. Microsoft Corp., 822 F.3d 1327 (Fed. Cir. 2016), that courts need not await the second Alice step to consider whether the claims are directed to improvements to computer functionality, the Court reversed course and found at the first Alice step that the challenged claims were directed to improvements to the storage and retrieval of data in a host system, not to an abstract idea. Nor did the Court agree with the defendant that the patents merely claimed a result, finding instead that they described how to achieve the result. Chief Judge Stark concluded that the patents did not generally claim the abstract idea of local storage, and that the specification’s discussion of how the claims represented an improvement over existing technology supported this conclusion.

Chief Judge Stark further found that, under Alice, the challenged patents would not tie-up the idea of generating a display from locally stored data, since the claims were directed to a specific improvement to data storage while still allowing for other ways to improve data storage.

Key Point: Although more guidance on how to conduct the Alice analysis is now available, Section 101 challenges remain an unsettled area of law: before ruling, the Court requested supplemental briefing on the Federal Circuit’s decision in Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253 (Fed. Cir. 2017), and soon before this decision the parties further brought the Federal Circuit’s decision in Two-Way Media Ltd. v. Comcast Cable Communications, LLC, __ F.3d __, 2017 WL 4931936 (Fed. Cir. Nov. 1, 2017), to the Court’s attention.