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Checksum Ventures, LLC v. Dell Inc.

United States District Court, N.D. Illinois, Eastern Division

September 30, 2019

CHECKSUM VENTURES, LLC, Plaintiff,
v.
DELL INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          Robert M. Dow, Jr. United States District Judge

         Plaintiff Checksum Ventures, LLC brings one claim of patent infringement, seeking damages pursuant to 35 U.S.C. § 284. Before the Court is Defendant Dell Inc.'s motion to dismiss. For the reasons set forth below, Defendant's motion to dismiss is granted without prejudice and with leave to file an amended complaint by October 28, 2019. The case is set for further status hearing on November 7, 2019 at 9:00 a.m.

         I. Background[1]

         Patent 8, 301, 906 (the ‘906 patent) was issued by the U.S. Patent and Trademark Office on October 30, 2012. [1-1 at 1 (hereinafter cited as ‘906 patent).] The ‘906 patent concerns a particular form of data identifier called the “checksum.”[2] See generally [id.]. Plaintiff Checksum Ventures is the owner of the ‘906 patent by assignment. [1, ¶7.]

         The patent teaches that “[c]onventional data administration concepts lack the possibility for users to allow other users to verify or integrity check data.” ‘906 patent at 1:27-29. This is especially problematic when data “season and tend to become more and more erroneous with time.” Id. at 1:30-32. The ‘906 patent's specification describes the intended end goal as follows: “Embodiments of the present invention provide the advantage that data can be verified and their origin can be authenticated.” ‘906 patent at 10:35-38. The “invention is based on the finding that based on checksums, respectively encrypted checksums, data validity and integrity can be verified.” Id. at 2:34-36. The claims, however, do not include any verification or authentication capabilities, and instead merely describe an apparatus, method, and computer program for providing checksums, and writing and storing them in such a way that they can be disaggregated and read separately from the underlying data. Claim 1 is exemplary:

         1. An apparatus for writing checksum information on a data content on a storage medium, comprising:

a provider for providing checksum information based on a data content; and a writer for writing the data content, the checksum information and control information on a physical or logical location of the checksum information on the storage medium, such that a baseline reader can read the data content, the enhanced reader can read and process the control information and the checksum information and the baseline reader ignores, skips, or does not read the checksum information.

         Independent claims 9 and 10 use almost identical language to describe a method for writing checksum information and computer program code, respectively. Claims 2-8 are derivative of claim 1. The ‘906 patent does not purport to invent checksums or an innovative way to generate them, and instead suggests using “conventional algorithms” to compute them. See ‘906 patent at 3:1-6.

         Plaintiff alleges that Defendant, Dell Inc. has infringed on the ‘906 patent, asserting claim 1 in its complaint. [1, ¶ 14.] Although not the subject of the motion to dismiss, an overview of Dell's alleged infringement is instructive in understanding how checksums are used in practice. According to the complaint, Defendant's EMC VNX Storage System uses checksums extensively. [Id., ¶¶ 14-20.] For example, the EMC VNX uses checksums to identify and remove duplicate files-if two files' respective checksums match, then the EMC VNX recognizes that they are identical and deletes one to save space. [Id., ¶¶ 14-18]; see also generally [1-3]; [1-4]. The EMC VNX also uses checksums to retrieve commonly used files more efficiently-it saves commonly used files at a more convenient location (the Fast Cache) and uses checksums to query the Fast Cache. [1, ¶¶ 19-20]; see also generally [1-5]. If the checksum of the queried file matches the checksum of a file in the Fast Cache, the EMC VNX pulls from the Fast Cache. [Id.] Defendant moved to dismiss [15] on the ground that the ‘906 patent does not meet the threshold patent-eligibility requirements of 35 U.S.C. § 101. See also [18].

         II. Legal Standard

         To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, the complaint first must comply with Rule 8(a) by providing “a short and plain statement of the claim showing that the pleader is entitled to relief, ” Fed.R.Civ.P. 8(a)(2), such that the defendant is given “fair notice of what the * * * claim is and the grounds upon which it rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) (alteration in original). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the “speculative level.” E.E.O.C. v. Concentra Health Servs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555). “A pleading that offers ‘labels and conclusions' or a ‘formulaic recitation of the elements of a cause of action will not do.' ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 555). Dismissal for failure to state a claim under Rule 12(b)(6) is proper “when the allegations in a complaint, however true, could not raise a claim of entitlement to relief.” Twombly, 550 U.S. at 558. In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court accepts as true all of Plaintiff's well-pleaded factual allegations and draws all reasonable inferences in Plaintiff's favor. Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007). Evaluating whether a “claim is sufficiently plausible to survive a motion to dismiss is ‘a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.'” Id. (quoting McCauley v. City of Chicago, 671 F.3d 611, 616 (7th Cir. 2011)).

         The Federal Circuit has “repeatedly recognized that in many cases it is possible and proper to determine patent eligibility under 35 U.S.C. § 101 on a Rule 12(b)(6) motion.” Genetic Technologies, Ltd. v. Merial LLC, 818 F.3d 1369, 1373 (Fed. Cir. 2016) (citation omitted); see also SAP America, Inc. v. InvestPic, LLC, 898 F.3d 1161, 1166 (Fed. Cir. 2018) (collecting recent cases). Likewise, “claim construction is not an inviolable prerequisite to validity determinations under § 101.” Genetic Technologies, Ltd., 818 F.3d at 1374. In sum, the Federal Circuit has “repeatedly affirmed § 101 rejections at the motion to dismiss stage, before claim construction or significant discovery has commenced.” Cleveland Clinic Foundation v. True Health Diagnostics LLC, 859 F.3d 1352, 1360 (Fed. Cir. 2017) (collecting cases and affirming dismissal of complaint when plaintiff “provided no proposed construction of any terms”).

         III. Analysis

         Federal statute establishes the baseline threshold for patent-eligibility: “Whoever 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 therefor.” 35 U.S.C. § 101. The Supreme Court, however, has recognized in this definition of patentability “an important implicit exception: Laws of nature, natural phenomena, and abstract ideas are not patentable.” Alice Corp. Pty. Ltd. v. CLS Bank Intern., 573 U.S. 208, 216 (2014). This exception is applied considering two competing policy principles. First, the exception applies when the patent would “preempt” other inventions by “improperly tying up the future uses of [the] building blocks of human ingenuity.” Id. (internal quotation marks and citations omitted). At the same time, however, applying the exception to abstract ideas could “swallow all of patent law” because “[a]t some level, all inventions [] embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id. at 217 (internal quotation marks and citations omitted).

         The Supreme Court has established a two-part framework (known as the “Alice/Mayo test”) to determine whether claim is patent eligible. See generally Alice Corp. Pty. Ltd. v. CLS Bank Intern., 573 U.S. 208 (2014).; Mayo Collaborative Services v. Prometheus Laboratories, Inc., 566 U.S. 66 (2012). First, the Court must determine whether the claim is directed toward a patent ineligible concept-that is the laws of nature, natural phenomena, and abstract ideas. Alice, 573 U.S. at 217; Mayo, 566 U.S. at 77. If so, the Court must proceed to step two, the “search for an inventive concept.” Alice, 573 U.S. at 217 (quotation marks and citation omitted). Specifically, the Court will examine “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. at 217-18 (quoting Mayo, 566 U.S. at 79, 73) (quotation marks omitted).

         Defendant asserts that the ‘906 patent is ineligible for patenting because it is an uninventive application of an abstract idea. Plaintiff counters that the invention embodied in ‘906 patent is not abstract, and that the claims embody an inventive concept. Plaintiff further contends that dismissing the complaint is premature because Plaintiff has raised questions of fact and the Court has not yet construed the claim.

         A. Alice/ ...


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