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Eagle View Technologies, Inc v. Xactware Solutions, Inc.

United States District Court, D. New Jersey, Camden Vicinage

January 29, 2019

Eagle View Technologies, Inc. et al., Plaintiffs,
v.
Xactware Solutions, Inc. et al., Defendants.

          OPINION

          ROBERT B. KUGLER UNITED STATES DISTRICT COURT JUDGE

         This is a patent infringement action brought by Eagle View Technologies and Pictometry International [together “Plaintiffs”] against Xactware Solutions and Verisk Analytics [together “Defendants”]. Before the Court is Defendants' summary judgment motion [“the motion”] (ECF Doc. 467) under Federal Rule of Civil Procedure [“Fed. R. Civ. P.” or “Rule”] 56(a) that the relevant patent claims are unpatentable under 35 U.S.C. § 101. For the reasons below, this motion is DENIED.

         An appropriate Order accompanies this Opinion.

         1.0 Background and Procedure

         Plaintiffs are the owners of the patents at issue[1] that recite, among other things, business methods, systems, and computer readable storage media for providing a roof repair estimate[2]. The claimed invention applies photogrammetric methods, that is, trigonometric calculations, to images of rooves in aerial photographs to compute roof measurements, in particular, roof pitch. Defendant Xactware Solutions, Inc., is a subsidiary of Defendant Verisk Analytics, and provides online technology tools and systems to insurance carriers, remodelers and construction service providers for determining replacement-cost. The parties have asserted they are competitors to each other (ECF Doc. 15:¶1)[3].

         The Court assumes the parties' familiarity with the procedural history of this litigation and points to only those events relevant to the motion. On 23 September 2015, plaintiffs filed their original complaint against defendants and on 30 November 2015, an amended complaint. Both of these (ECF Docs. 1 and 30) allege direct and indirect infringement under 35 U.S.C. § § 271(a) and (b) of at least one claim of each patent at issue. The case has proceeded through various milestones, including the Markman hearing and the Markman opinion (ECF Doc. 332). The parties have completed discovery, exchanged expert reports and disclosures, and submitted summary judgment motions aiming to dispose of certain issues or of the case itself, as well as motions in limine to exclude experts' testimony (“Daubert motions”). ECF Doc. 459 - 474. This is one of the summary judgment motions.

         2.0 Parties Contentions

         2.1 Defendants

         Defendants contend there is no dispute of material fact that the relevant claims are unpatentable as a matter of law in light of the Supreme Court's two-step test set forth in Alice Corp. v CLS Bank Int'l., 134 S.Ct. 2347, 2350 (2014). In particular, defendants assert the patent claims fail step 1 of Alice for reciting the abstract idea of using photogrammetry to calculate roof slope (pitch) and other geometric measurements of a building and then to generate a roof report from the calculations. ECF Doc. 468:6-9, 17-19. They further assert the claims also fail Alice step two, and specifically, no material fact dispute exists as to whether the claims recite computer elements operating in a manner that is well-understood, conventional, and routine. ECF Doc. 468:19-27-30.

         Plaintiffs counter that defendants' analysis of Alice step one is incorrect. Since the human mind cannot perform the claimed steps, in particular, the generation of a three- dimensional model of two or more correlated but different views of a roof, the recited method is not merely a computerized replacement of mental activity, but a new, computerized method of generating roof reports, improved over manual report creation. ECF Doc. 504: 19-20, 39-41.

         Plaintiffs also argue defendants' analysis of Alice step two is likewise incorrect. The specific improvements recited in the claims, in particular, the use of non-stereoscopic images of roofs, was neither known nor routine and is an inventive step over the prior art. ECF Doc. 504: 19-26, 41-44.

         3.0 Standards

         3.1 Summary Judgment Generally

         Summary judgment is appropriate “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). An issue is “genuine” if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A factual dispute is “material” if it might affect the outcome of the case under governing law. Id.

         The movant bears the initial burden of proof to present those portions of the record it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). After the moving party has met its initial burden, “the adverse party's response, by affidavits or otherwise as provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.” Fed. R. Civ. P. 56(e).

         Summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing “sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. The evidence introduced to defeat or support a motion for summary judgment must be capable of being admissible at trial. Callahan v. AEV, Inc., 182 F.3d 237, 252 n. 11 (3d Cir.1999) (citing Petruzzi's IGA Supermarkets, Inc. v. Darling-Delaware Co., 998 F.2d 1224, 1234 n. 9 (3d Cir.1993)).

         In evaluating whether there is a genuine dispute of material fact, the court looks at the evidence in the light most favorable to the non-movant and draws all reasonable inferences in their favor (Burns v. Pa. Dep't of Corr., 642 F.3d 163, 170 (3d Cir.2011)) but neither weighs the evidence nor makes credibility determinations, which are tasks for the fact finder. Petruzzi's IGA Supermarkets, 998 F.2d at 1230. Speculation, conclusory allegations, suspicions, or mere denials do not rise to the level of evidence that suffices to raise a genuine dispute of material fact. Jutrowski v. Township of Riverdale, 904 F.3d 280, 288-289 (3d Cir. 2018). Nor does reliance on the pleadings; rather the non-moving party “must present affirmative evidence … from which a jury might return a verdict in his favor.” Anderson, 477 U.S. at 256.

         3.2 Invalidity Standard Generally

         As a preliminary matter, defendants style this motion as seeking summary judgment of the unpatentability of the relevant claims. Although the statutory standards under 35 U.S.C. §§ 101, 102, 103, and 112 are the same for determining the unpatentability of the patent claims as well as their invalidity, the term patentability better describes an inquiry regarding not-yet- granted claims, while invalidity applies to an inquiry for claims already issued in U.S. patents, i.e., to the inquiry in this motion.

         The linguistic distinction is important in order to apply the correct burden of proof. Under 35 U.S.C. §282, a U.S. patent is afforded a statutory presumption of validity. A party seeking to prove an invalidity defense to infringement-such as patent ineligibility under § 101-can overcome this presumption only by clear and convincing evidence.[4] Microsoft Corp. v. i4i Ltd. Partnership, 564 U.S. 91, 97 (2011). Thus, the motion seeks to have this Court determine whether the relevant granted claims are patent ineligible under 35 U.S.C. §101, and thus invalid. The Federal Circuit has clarified the clear and convincing burden applies to all invalidity arguments (Sciele Pharma Inc. v. Lupin Ltd., 684 F.3d 1253, 1260 (Fed. Cir. 2012)) whether previously raised before the U.S. Patent and Trademark Office [“USPTO”] or newly raised during litigation. Id.

         3.3 Invalidity Standard Under 35 U.S.C. 101 [“§101” or “101”]

         Amendments to the U.S. Patent Act under the America Invents Act of 2011 did not change 35 U.S.C. §101, which provides four broad categories of patentable subject matter: any new and useful process, machine, manufacture, or composition of matter as well as any new and useful improvement of these. Id. The Supreme Court recognizes three exceptions to the statutory categories: “law of nature, physical phenomena, and abstract ideas”. Bilski v. Kappos, 561 U.S. 593, 601 (2010) [“Bilski II”].

         Moreover, the Supreme Court in Alice Corp. Pty. Ltd. v. CLS Bank Intern, 573 U.S. 208, 217 (2014) has articulated a two-step analysis [“§101 inquiry”] to identify whether claims are patent eligible (i.e., valid) or patent ineligible as a statutory exception (i.e., invalid). In step one of the §101 inquiry, the “abstract idea step”, a court analyzes whether the claims are directed to a patent-ineligible concept (law of nature, naturally occurring phenomena, or abstract idea). Id. If so, the court in step two considers the elements of each claim both individually and as an ordered combination to determine if additional elements in each claim “transform the nature of the claim” into a patent-eligible invention. Id. [quoting Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. 66, 78-79 (2012)].

         Step one is a meaningful first-stage filter and requires considering whether the character of the claims as a whole is directed to excluded subject matter. Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015).[5] For claims that recite a computerized method, the step one inquiry focuses on “whether the claims are directed to an improvement to computer functionality versus being directed to an abstract idea.” Visual Memory LLC, 867 F.3d at 1258 [quoting Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335 (Fed. Cir. 2016). Moreover, at step one, the court also reflects on the specifically recited elements in the claim to avoid characterizing the invention too generally. McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016).

         At this stage, if the court finds the claims recite a patent eligible invention, the § 101 inquiry ends. However, if a claim is found to recite a law of nature, a naturally occurring phenomenon, or an abstract idea, the court moves to step two, the “inventive concept” step. This inquiry looks at what else is recited in the claim besides the patent ineligible idea, and particularly for an inventive ...


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