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Broadband iTV, Inc. v. Hawaiian Telcom, Inc.

United States District Court, D. Hawaii

September 29, 2015

Broadband iTV, Inc., Plaintiff,
Hawaiian Telcom, Inc., Defendant

          For Broadband iTV, Inc., Plaintiff: Frederick A. Tecce, John D. Simmons, LEAD ATTORNEYS, PRO HAC VICE, Panitch Schwarze Belisario & Nadel, Philadelphia, PA; John S. Rhee, Paul Alston, LEAD ATTORNEYS, Alston Hunt Floyd & Ing, Honolulu, HI.

         For Hawaiian Telcom, Inc., Defendant: Brandon H. Stroy, LEAD ATTORNEY, PRO HAC VICE, Bingham McCutchen LLP, Palo Alto, CA; Brian Y. Hiyane, Randall Y. Yamamoto, LEAD ATTORNEYS, Yamamoto Kim LLP, Honolulu, HI; Charlene S. Shimada, LEAD ATTORNEY, Bingham McCutchen LLP, San Francisco, CA; Sasha G. Rao, LEAD ATTORNEY, PRO HAC VICE, Maynard Cooper & Gale, San Francisco, CA.

         For Oceanic Time Warner Cable, LLC, Defendant: Aaron Stiefel, David S. Benyacar, LEAD ATTORNEYS, PRO HAC VICE, Kaye Scholer LLP, New York, NY; Brett R. Tobin, Lisa W. Munger, LEAD ATTORNEYS, Goodsill Anderson Quinn & Stifel LLLP, Honolulu, HI; Daniel L. Reisner, LEAD ATTORNEY, Kaye Scholer LLP, New York, NY.

         For Time Warner Cable, Inc., Time Warner Entertainment Company, LP, Defendants: Aaron Stiefel, David S. Benyacar, Nathan Brown, LEAD ATTORNEYS, PRO HAC VICE, Kaye Scholer LLP, New York, NY; Brett R. Tobin, Lisa W. Munger, LEAD ATTORNEYS, Goodsill Anderson Quinn & Stifel LLLP, Honolulu, HI; Daniel L. Reisner, LEAD ATTORNEY, Kaye Scholer LLP, New York, NY.

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         Alan C. Kay, Senior United States District Judge.

         For the reasons set forth below, the Court GRANTS Defendant Hawaiian Telcom, Inc.'s Motion for Summary Judgment of Invalidity under 35 U.S.C. § 101, ECF No. 463.


         On December 8, 2009, the United States Patent and Trademark Office (" USPTO" ) issued Patent No. 7,631,336 (the " '336 Patent" ), entitled " Method for Converting, Navigating and Displaying Video Content Uploaded from the Internet to a Digital TV Video-on-Demand Platform." Am.

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Compl. ¶ 19, Ex. A, ECF Nos. 100, 100-1. The patent was issued in the name of Milton Diaz Perez (" Diaz Perez" )[1] and based on United States Patent Application No. 11/685,188 (the " '188 Application" ), which was assigned to Broadband iTV, Inc. (" Plaintiff" ). Am. Compl. ¶ 18, ECF No. 100.

         The '336 Patent discloses and claims various features related to the delivery of video-on-demand (" VOD" )[2] content to a VOD server. Id. ¶ 21. According to the patent itself, the invention is intended to facilitate " the provision of video content to viewers through digital TV infrastructure." '336 Patent at Col. 1, ln. 17-18.[3] Specifically, it relates to a method for " converting, navigating and displaying video content uploaded from the Internet on a digital TV video-on-demand platform." Id. at Col. 1, ln. 19-21. The patent includes eleven claims, out of which Claim 1 is independent and Claims 2-10 are dependent. See id. at Col. 21-22.

         On April 9, 2014, Plaintiff filed a Complaint against Defendants Oceanic Time Warner Cable, LLC, Time Warner Cable, Inc., Time Warner Entertainment Company, LP[4] (collectively, " TWC" ), and Hawaiian Telcom, Inc. (" HTI" ) (collectively, " Defendants" ). Compl., ECF No. 1. The Complaint was amended on December 5, 2014. Am. Compl., ECF No. 100. The Amended Complaint accuses Defendants of infringing the '336 Patent by " making, using, offering for sale and selling the '336 patent's claimed method for converting, navigating and displaying video content in connection with their providing, selling and offering for sale digital television services." Id. ¶ 22. Defendants deny that they infringe the '336 Patent. Def. HTI's Answer and Affirmative Defenses to Plf. BBiTV's Am. Compl. ¶ 22, ECF No. 104; Def. TWC's Answer to Am. Compl. ¶ 22, ECF No. 106.

         Pursuant to the parties' stipulation, the Court ordered the severance of the cases against TWC and HTI on April 16, 2015. The severed cases were consolidated " for all pre-trial purposes, including claim construction." Stipulation and Order at 2, ECF No. 164. Following an off-the-record technology tutorial, held on June 3, 2015, and a Markman hearing, held on June 4, 2015, the Court issued its Claim Construction Order on June 24, 2015. ECF No. 290.

         Following correspondence from the parties, the Court issued a Minute Order on August 4, 2015 outlining the number of permissible summary judgment motions. ECF No. 432. In the interests of judicial economy and pursuant to Federal Rules of Civil Procedure 1 and 16, the Court permitted each party to file one summary judgment motion regarding patent validity. In addition, each Defendant was permitted to file one summary judgment motion regarding patent infringement, and Plaintiff was permitted to file one summary judgment motion regarding patent infringement with respect to each Defendant. Id. at 2.

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          The instant motion relates to the validity of the '336 Patent. On August 10, 2015, HTI filed its Motion for Summary Judgment of Invalidity under 35 U.S.C. § 101, ECF No. 463 (" HTI's MSJ" ), and a Concise Statement of Facts attached thereto, ECF No. 465 (" HTI's CSF" ). HTI's motion challenges that the '336 Patent is invalid as related to ineligible subject matter under 35 U.S.C. § 101.[5]

         On August 27, 2015, Plaintiff filed its Memorandum in Opposition to HTI's MSJ, ECF No. 559 (" Plf.'s Opp. to HTI's MSJ" ), and a Concise Statement of Facts attached thereto, ECF No. 560 (" Plf.'s CSF -- HTI's MSJ" ).

         On September 3, 2015, HTI filed its Reply in Support of Its MSJ, ECF No. 606 (" HTI's Reply" ). Hearings were held on TWC's MSJ and HTI's MSJ on September 17, 2015.[6]


         I. Summary Judgment Standard

          A party is entitled to summary judgment on any claim or defense if it can be shown " that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.'" Maxwell v. Cnty. of San Diego, 697 F.3d 941, 947 (9th Cir. 2012) (quoting Fed.R.Civ.P. 56(a)). A party asserting that a fact cannot be or is genuinely disputed must support the assertion by either " citing to particular parts of materials in the record" or " showing that the materials cited do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1).

          A genuine issue of material fact exists if " a reasonable jury could return a verdict for the nonmoving party." United States v. Arango, 670 F.3d 988, 992 (9th Cir. 2012) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). Conversely, " [w]here the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial." Scott v. Harris, 550 U.S. 372, 380,

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127 S.Ct. 1769, 167 L.Ed.2d 686 (2007).

          The movant has the burden of persuading the court as to the absence of a genuine issue of material fact. Avalos v. Baca, 596 F.3d 583, 587 (9th Cir. 2010). If the movant satisfies its burden, the nonmovant must present evidence of a " genuine issue for trial," Fed.R.Civ.P. 56(e), that is " significantly probative or more than merely colorable," [7] LVRC Holdings LLC v. Brekka, 581 F.3d 1127, 1137 (9th Cir. 2009) (citation omitted). When evaluating a motion for summary judgment, the court must " view the facts and draw reasonable inferences in the light most favorable to the party opposing the summary judgment motion." Scott, 550 U.S. at 378.

         II. Standards Related to Patent Eligibility Under 35 U.S.C. § 101

          Issues of patent-eligible subject matter under 35 U.S.C. § 101 (" Section 101" ) are questions of law. CyberSource Corp. v. Retail Decisions, Inc., 654 F.3d 1366, 1369 (Fed. Cir. 2011). To the extent that the Court must resolve underlying questions of fact related to eligibility, they must be proven by clear and convincing evidence. See, e.g., Affinity Labs. of Texas, LLC v. DirecTV, LLC, 109 F.Supp.3d 916, 2015 WL 3764356 *16 (W.D. Tex. July 7, 2015); Kickstarter, Inc. v. Fan Funded, LLC, No. 11 Civ. 6909 (KPF), 2015 WL 3947178 * 5 n. 7 (S.D.N.Y. June 29, 2015). Defendants, as the moving parties, bear the burden of establishing that the claims are patent-ineligible under Section 101. See, e.g., Modern Telecom Sys. LLC v. Juno Online Servs., Inc., No. SA CV 14-0348-DOC (ANx), 2015 WL 1240182 * 7 (C.D. Cal. Mar. 17, 2015).

          Courts disagree regarding whether a presumption of eligibility should apply in Section 101 cases. A recent Federal Circuit concurrence stated that " no presumption of eligibility attends the section 101 inquiry." Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 717 (Fed. Cir. 2014) (Mayer, J., concurring). District courts have taken different approaches. Compare, e.g., Tranxition, Inc. v. Lenovo (U.S.) Inc., No. 3:12-cv-01065-HZ, 2015 WL 4203469 *4 (D. Or. July 9, 2015) (declining to apply presumption of eligibility in Section 101 challenge) with Exergen Corp. v. Brooklands Inc., Civil Action No. 12-12243-DPW, 125 F.Supp.3d 307, 2015 WL 5096464 * 2 (D. Mass. Aug. 28, 2015) (applying presumption of eligibility in Section 101 challenge but noting that it " has less significance in the context of a largely legal determination" ). Given the most recent available guidance from the Federal Circuit, the Court will assume that such a presumption does not apply.[8]


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         HTI argues in the instant motion that the '336 Patent is invalid as directed to unpatentable subject matter under 35 U.S.C. § 101. For the reasons set forth below, the Court agrees. Accordingly, the '336 Patent is invalid and may not be enforced against HTI in this case.

          Under 35 U.S.C. § 101, an invention is eligible for patenting if it fits into one of four subject-matter categories: processes, machines, manufactures, and compositions. The Supreme Court has recognized three implicit exclusions from eligible subject matter: " laws of nature, natural phenomena, and abstract ideas." Alice, 134 S.Ct. at 2354 (citation omitted). The latter exclusion, " abstract ideas," is relevant here.

          To determine whether an invention impermissibly claims a law of nature, natural phenomenon, or abstract idea, courts undertake a two-step test. First, they must determine " whether the claims at issue are directed to one of those patent-ineligible concepts." Id. at 2355 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 132 S.Ct. 1289, 1296-97, 182 L.Ed.2d 321 (2012)).[9]

         If so, courts next " consider the elements of each claim both individually and 'as an ordered combination' to determine whether the additional elements 'transform the nature of the claim' into a patent-eligible application." Id. (citation omitted). This second step was described in Alice as a " search for 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.'" Id. (quoting Mayo, 132 S.Ct. at 1294, 1298).

          The Supreme Court explained that the second step of the Alice test is designed to ensure that a patent reflects " more than a drafting effort designed to monopolize the abstract idea." Id. at 2347 (citation and alteration omitted). Recognizing that all inventions depend, at some level, on abstract concepts, courts are nonetheless to invalidate patents that would " t[ie] up the future use of these building blocks of human ingenuity." The Supreme Court has cautioned that doing otherwise would threaten the " pre-emption" of further innovation through the operation of patent monopolies on abstract ideas. Id. at 2354-55 (quotation omitted).[10]

         In the wake of Alice, the Federal Circuit has observed that " any given analysis in a § 101 'abstract idea' case is hardly a clear guidepost for future cases arising under § 101 -- each case stands on its own." Versata Dev. Grp., Inc. v. SAP Am., Inc., 793 F.3d 1306, 1336 (Fed. Cir. 2015). Nonetheless, certain general principles are clear. For example, mathematical algorithms, even when executed on computers,

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are unpatentable abstract ideas. See Gottschalk v. Benson, 409 U.S. 63, 64, 93 S.Ct. 253, 34 L.Ed.2d 273 (1972). Certain fundamental economic and business practices are also unpatentable abstract ideas, even when computers are used to implement them. See Bilski v. Kappos, 561 U.S. 593, 611, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010) (risk-hedging strategy reduced to mathematical formula was not patent eligible); Alice, 134 S.Ct. at 2356 (same for " computer-implemented scheme" for exchanging financial obligations to mitigate risk).

          In general, even if claims " recite[] various computer hardware elements," they are ineligible for patenting if they are directed simply to the " performance of an abstract business practice on the Internet or using a conventional computer." DDR Holdings, LLC v., LP, 773 F.3d 1245, 1256 (Fed. Cir. 2014). This is because " [t]he improved speed or efficiency inherent with applying an abstract idea on a computer does not provide an inventive concept." Personalized Media Commc'ns, 2015 WL 4730906 at *9 (citation omitted). Conversely, a patent directed to an " inventive concept for resolving [a] particular Internet-centric problem" may not be unpatentable. See DDR Holdings, 773 F.3d at 1259.

         I. The '336 Patent Claims an Abstract Idea

         The Court begins by considering Step 1 of the Alice analysis: identifying " the concept" of the '336 Patent and whether it claims an abstract idea. See, e.g., Ultramercial, 772 F.3d at 715 (" Although certain additional limitations, such as consulting an activity log, add a degree of particularity, the concept embodied by the majority of the limitations describes only the abstract idea of showing an advertisement before delivering free content." ); Alice, 134 S.Ct. at 2355. For the reasons discussed below, the Court finds that the '336 Patent claims an abstract idea.

         As a preliminary matter, the Court summarizes the claims of the '336 Patent (of which Claims 1-4 and 7 are asserted against TWC and HTI). Claim 1 is the only independent claim in the patent. In summary, Claim 1 discloses:

1. A method for " automatically enabling the converting, navigating and displaying" of videos from a publisher on an " open online network" to a TV service provider for inclusion in its electronic program guide (" EPG" ), by:
a. Enabling the online uploading of videos to a Web-based content management server (" WBCMS" ) connected to a TV service provider's " VOD platform," [11] along with metadata specifying certain hierarchical category information related to the videos;
b. Converting the uploaded videos into standard TV digital format and storing " local instances" of the videos at video ID (" VID" ) addresses in the service provider's VOD platform;
c. Listing the titles of the videos in the service provider's EPG using the same hierarchical category information that was uploaded as metadata;
d. Giving TV subscribers access to the service provider's EPG to choose from among the " hierarchically-arranged titles of video content; "
e. Enabling a chosen video to be retrieved and sent to a subscriber's set-top box (" STB" ) after the subscriber

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sends his video request to the VOD platform using his remote control.

See '336 Patent at Col. 21, ln. 15-Col. 22, ln. 7.

         Claims 2-4 and 7 are much shorter: Claims 2 and 3 disclose uploading videos from a user's computer and using a uniform resource locator (" URL" ), Claim 4 discloses using metadata expressed as a " string of category and subcategory terms and the title delimited by standard delimiters," and Claim 7 discloses using an EPG in which users can ...

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