IP Law Daily Security system patents asserted against U.S. government survive initial Alice challenge
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Thursday, September 27, 2018

Security system patents asserted against U.S. government survive initial Alice challenge

By Joseph Arshawsky, J.D.

In light of the recent Federal Circuit decision in Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121 (Fed. Cir. 2018) ("Aatrix I "), it would be an abuse of discretion to deny leave to amend where the proposed amendments alleged facts sufficient to raise an issue of an inventive concept sufficient to survive a motion to dismiss on the ground that the asserted patent claims were directed to patent-ineligible abstract ideas, the U.S. Court of Federal Claims has ruled. The court denied a motion for judgment on the pleadings filed by the U.S. government and four corporate defendant-intervenors, and granted the patent holder leave to amend its complaint (3rd Eye Surveillance, LLC v. U.S., September 25, 2018, Lettow, C.).

Plaintiffs are the patent holder and the assignee of three patents, U.S. Patent Nos. 6,778,085 (the "’085 patent"), 6,798,344 (the "’344 patent"), and 7,323,980 (the "’980 patent"), each relating to security systems with attendant imagery capabilities. Plaintiffs assert that their intellectual property is being infringed by security systems in use in secured locations owned, operated, or managed by or for the United States. Defendant-intervenors are suppliers of various hardware, software and other IT services to the federal government, who received notice under the indemnity clauses in their respective government contracts. Defendant-intervenor Northrop Grumman Systems Corporation ("Grumman"), joined by the U.S. and all other defendant-intervenors, moved for judgment on the pleadings on the grounds that "the asserted claims are directed to unpatentable abstract ideas and do not contain any inventive concepts." Plaintiffs then moved for leave to file a Second Amended Complaint. The court denied the motion for judgment on the pleadings without prejudice and granted the motion for leave to amend.

Invalidity under Alice. Under Section 1498(a), "[i]n the absence of a statutory restriction, any defense available to a private party is equally available to the United States." Under this two-part Alice test, a court must (1) "determine whether the claims at issue are directed to one of those patent-ineligible concepts," and (2) if so, "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." The second step has been characterized as "a search for an ‘inventive concept.’"

The three patent claims at issue in this case each deal with a system of relaying "realtime video" of a secured location "over a high-speed communications link."

The court held that, contrary to Grumman’s contentions, the patents are not "analogous to the process long-employed in the 911 emergency response system," because the patented system eliminates any need for human intervention in both monitoring information about events at the secured location and deciding whether, after human evaluation, to route the information to an appropriate responder. In contrast, under the patented system, the receipt, evaluation, and transmission of information is fully integrated and proceeds without delay. In effect, the claims at issue use computers "as a tool" to improve the efficiency and effectiveness of first responders. Thus, the court concluded that at step one of the Alice test, the patents at issue are directed towards the abstract idea of relaying information from a secured site to first responders, but in an enhanced manner.

Whether the claim elements or the claimed combination are well-understood, routine, or conventional is a question of fact. That question cannot be answered adversely to the patentee based on the sources properly considered on a motion to dismiss, such as the complaint, the patent, and materials subject to judicial notice, the court noted. Under the guidance from the Supreme Court in Alice and the Federal Circuit in Aatrix, the court opined that granting judgment on the pleadings under Federal Rule of Civil Procedure 12(c) at the current time would be premature. At this point in the litigation, the court could not conclude that the claimed patents are not among the category of specific improvements in technology, method, or conventional activities that improves, or makes more useful, concepts, ideas, or activities that are patent eligible.

The proposed amended complaint describes the issues with the prior art, e.g., delay, human error in relaying information, that decreased the efficiency of first responders and how the claimed patent systems improve this process by integrating data collection and significantly eliminating the risk of human error by providing first responders with realtime evidence of the unfolding situation. It also presents specific allegations related to the "inventive features" of the patents at issue. These allegations in the proposed amended complaint are directed towards the improvement of emergency response systems through computer technology and internet communications. When taken as a whole (or as an "ordered combination"), in the court’s view, the claims at issue in this case are akin to the ones in Aatrix I, where the "claimed software uses less memory, results in faster processing speed, and reduces the risk of a condition that slowed down prior art systems which makes the computer process more efficient." Here, the patent claims allegedly improve the efficiency and effectiveness of emergency response systems and eliminate or reduce the risk of human error in relaying the pertinent information. As the determination of whether the claim elements or claim combinations are "well understood, routine, [or] conventional is a question of fact," the court, considering all proper sources available at this stage in the litigation, could not determine at this time that plaintiffs’ claims failed this test. Therefore, the amendment of plaintiffs’ complaint would not be futile. The court denied Grumman’s motion without prejudice in light of plaintiffs’ proffered second amended complaint.

Leave to amend the complaint. The "party seeking leave must proffer sufficient facts supporting the amended pleading that the claim could survive a dispositive pretrial motion." Aatrix I held that in a patent case, it is an abuse of discretion to deny leave to amend at a preliminary stage of the proceedings where the proposed amendments allege facts sufficient to raise an allegation of an inventive concept sufficient to survive a motion under Rule 12.

Taken at this stage of the pleadings, where the court is required to accept the plaintiffs’ factual allegations as true, it could not be said that the amendment would be futile, as the proposed second amended complaint contains sufficient facts establishing inventive concepts. The plaintiffs alleged enough facts in their proposed second amended complaint to demonstrate sufficient inventive concepts to survive under step two of the Alice test. The plaintiffs were not bringing in new claims that would unfairly surprise the government and defendant-intervenors. Nor were they broadening their claims to expand the issues litigated. If anything, plaintiffs were narrowing their claims to provide greater specificity. Therefore, the court determined the proposed amendments would not be futile and were timely. For good cause shown, the plaintiffs’ motion for leave to amend the complaint was granted.

This case is No. 15-501C.

Attorneys: Steven A. Kennedy (Kennedy Law, PC) for 3rd Eye Surveillance, LLC and Discovery Patents, LLC. Lee Perla, U.S. Department of Justice, for the United States.

Companies: 3rd Eye Surveillance, LLC; Discovery Patents, LLC

MainStory: TopStory Patent

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