In Integrated Technology Solutions, LLC v. iRacing.com Motorsport Simulations, LLC, No. 1:21-cv-11477, Judge Talwani granted iRacing's motion to dismiss, finding that ITS's patent directed to modifying components of a video game racing track to alter user experience was invalid under 35 U.S.C. § 101. The Court applied the two-step framework laid out by the Supreme Court in Alice Corp. Pty. Ltd. v. CLS Bank Int'l., 573 U.S. 208 (2014), examining first whether the claims at issue are directed to laws of nature, natural phenomena, or abstract ideas, and, second, whether the elements of each claim both individually and as an ordered combination transform the nature of the claim into a patent-eligible application.
Applying Alice Step One, the Court found the claims recite an abstract idea. The Court agreed with iRacing that the asserted patent “does not extend beyond an abstract concept where it does not specify how to perform the purported concepts and is overly broad in its attempt to specify numerous variations on the overarching idea.” The Court further analogized the claims at bar to those considered in Bot M8 LLC v. Sony Corp. of Am., 465 F. Supp. 3d 1013 (N.D. Cal. 2020), finding that in both cases “[t]he specifications provide numerous applications of the claimed process, but fail to detail the ‘how.'” More specifically, the Court found that the asserted patent “invokes the use of unspecified computer technology to run an abstract process of identifying, checking, determining, and modifying” and do not recite specific steps or processes to effectuate the claims.
As to Alice Step Two, the Court rejected ITS' assertion that whether the claimed steps were in the prior art and are transformative is an issue of fact needing further development of the record. Instead, the Court noted that the asserted patent merely “invoke[s] alterations of virtual worlds and the components therein, and [that] in the setting of a virtual world, none of these components are inventions of ITS.” The Court concluded the claims fail to recite an “ordered combination of claim limitations that transform the abstract idea of [modifiable virtual worlds] into a particular, practical application of [the] abstract idea.”
Accordingly, the Court granted iRacing's motion to dismiss, finding ITS' patent invalid as directed to unpatentable subject matter.
In Cozy, Inc. V. Dorel Juvenile Group, Inc., No. 21-cv-10134, Magistrate Judge Dein denied Cozy's motion to dismiss Dorel's inequitable conduct counterclaims finding that Dorel “had alleged sufficient facts to warrant development of the record beyond the motion to dismiss stage.” Dorel alleged two bases for inequitable conduct: 1) the “pattern and practice of misrepresentations to the USPTO” by inventor, Dr. Rajasingham; and 2) Cozy's owner Dr. Rajasingham's knowing “failure to disclose prior and intervening art” during prosecution of the Asserted Patents. Dr. Rajasingham had prosecuted the Asserted Patents pro se.
In its Motion, Cozy did not dispute the “who, what, when, where, and how” of the inequitable conduct claims, instead focusing on materiality and intent. Both Cozy and Dorel make juvenile vehicle seats. In May of 2009, Dr. Rajasingham and Dorel discussed entering into a business relationship, and Dorel disclosed its Air Protect® technology to Dr. Rajasingham, which technology was on sale in 2009 and is accused by Cozy of infringing the Asserted Patents. Dorel contends that, after learning of Dorel's technology, Dr. Rajasingham went to great lengths before the Patent Office to obtain an earlier priority date for patent claims reading on the Dorel technology and, in the process, affirmatively misrepresented the priority dates of the Asserted Patents. Dorel further contends that if Dr. Rajasingham's patents did not, in fact, have a priority date earlier than 2009, the Dorel technology should have been disclosed as material prior art during prosecution of the Asserted Patents.
“Cozy admits to a rather convoluted patent history for its patents,” but claims this stemmed from Dr. Rajasingham's inexperience with the patent system. As the Court explained, “these counterclaims are all based on actions taken by Cozy/Dr. Rajasingham in filings with the PTO which resulted in Cozy being able to claim a patent date many years before the date the applications for the Asserted Patents were actually filed, lengthened the terms of the Asserted Patents, and which resulted in patents being read to cover child seats which, at a minimum, were not the primary focus of the patents.”
As an initial matter, the Court found that, while Cozy had established there were several facts in dispute, the disputes did not warrant dismissal but instead required further development of the record. The Court noted that “development of the factual record is critical” in inequitable conduct allegations, which weighed against dismissing the counterclaims at an early stage.
On the issue of materiality, the Court found that the counterclaims were sufficiently pled to state a claim that Dr. Rajasingham had made affirmative misrepresentations and omissions that led to the issuance of the Asserted Patents. The Court noted that but-for materiality need not be established “[w]hen the patentee has engaged in affirmative acts of egregious misconduct,” and found that the merits of the allegations could only be established by further development of the record.
On the issue of intent, the Court concluded that Dorel “had alleged sufficient facts to support its contention that Dr. Rajasingham acted with the requisite intent to deceive when he made (mis)representations to the PTO.” The Court found that “one can infer that Dr. Rajasingham believed he did not have sufficient grounds to sustain a claim of patent infringement without modifying his patent portfolio in significant ways, and that his interactions with the PTO were designed to accomplish that goal.” In reaching this conclusion, the Court cautioned that Dr. Rajasingham's “pro se status alone does not shield a patent applicant from a finding of inequitable conduct.”
Accordingly, the Court denied Cozy's motion to dismiss Dorel's inequitable conduct counterclaims.
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