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ChargePoint, Inc. v. SemaConnect, Inc.

United States District Court, D. Maryland

March 23, 2018

CHARGEPOINT, INC. Plaintiff
v.
SEMACONNECT, INC. Defendant

          MEMORANDUM AND ORDER: MOTION TO DISMISS

          Marvin J. Garbis United States District Judge

          The Court has before it Defendant's Motion to Dismiss for Failure to State a Claim [ECF No. 41] and the materials submitted related thereto. The Court has held a hearing and has had the benefit of the arguments of counsel.

         I. INTRODUCTION

         Plaintiff ChargePoint, Inc. (“ChargePoint”), founded in 2007, is a Delaware corporation with its principal place of business in Campbell, California. Compl. ¶ 21, ECF No. 1. ChargePoint claims itself to be the “pioneer in the electric vehicle charging infrastructure industry, ” boasting “tens of thousands of stations that have been used more than 16 million times” worldwide. Id. ¶ 5. ChargePoint owns United States Patent Nos. 7, 956, 570 (the “‘570 Patent”); 8, 138, 715 (the “‘715 Patent”); 8, 432, 131 (the “‘131 Patent”); and 8, 450, 967 (the “‘967 Patent”) (collectively, the “Asserted Patents”). Id. ¶ 8.

         The Asserted Patents generally relate to various methods, systems, and apparatuses for networked electric vehicle (“EV”) charging stations.

         Defendant SemaConnect, Inc. (“SemaConnect”), a Maryland corporation based in Bowie, Maryland, manufactures EV charging equipment. Id. ¶ 22.

         ChargePoint's Complaint [ECF No. 1] accuses SemaConnect of offering to sell, selling, and using EV charging devices that infringe on the Asserted Patents. Id. ¶ 30-33.

         On December 28, 2017, by the Memorandum & Order Re: Temporary Injunction [ECF No. 39], the Court denied ChargePoint's attempt to obtain a Temporary Injunction. SemaConnect subsequently filed the present motion and has submitted its Identification of Non-infringement Defenses [ECF No. 42], which includes the defense that the Asserted Patents are invalid under 35 U.S.C. § 101.

         By the instant motion, Defendant SemaConnect contends that United States Patent Nos. 7, 956, 570; 8, 138, 715; 8, 432, 131; and 8, 450, 967 are invalid because they are not directed to patent-eligible subject matter pursuant to 35 U.S.C. § 101. The Asserted patents were all issued prior to the Supreme Court's decision in Alice Corp. v. CLS Bank Int'l, 134 S.Ct. 2347 (2014).

         II. BACKGROUND

         A. The Alleged Invention

         The four Asserted Patents share a specification and claim priority to United States Provisional Application No. 61/019, 474 filed on January 7, 2008.

         The specification describes a system of EV charging stations that are connected to a remote server via a network (i.e., the Internet). ‘570 Patent 3:35-45. The remote server stores a variety of information including customer profiles, load data from the electric grid (updated in real time), and electricity consumption data. Id. The EV charging station and server can be remotely accessed and controlled by a user via a cell phone or other electronic device. Id. at 3:48-53.

         The system may also contain features such as an electric meter to measure consumption of electricity through each charging station, a payment station (separate from the individual charging station), or a device to detect whether a parking spot is occupied. Id. at 3:54-65.

         The specification essentially states that the system provides two main improvements over previously-available technology: (1) a customized and convenient user experience and (2) management of electric flow based on electric grid load data. Id. at 3:64-5:3. The specification purports to achieve these alleged improvements by filling the need for an “efficient communication network” between charging stations, customers, and electric utility companies. Id. at 1:30-35, 2:19-23.

         The customized user experience allows the user to monitor, control, and pay for charging a vehicle from a remote device such as a cell phone. Id. at 4:16. It allows a user to “enabl[e] charge transfer” and monitor electric consumption by communicating a request to the server. Id. at 4:16-43. The server then sends a command to enable (or disable) electric flow between the vehicle and charging station, and the charging station reports consumption data back to the server which is relayed to the customer's cell phone. Id.

         A customer may pay for a charging session by using payment information stored in a user profile on the server. Id. The user profile may also include custom payment rates for each user based on a user's subscription status and the location of the charging station (e.g., a resident of a community may be charged a lower rate when using a charging station in that community). Id. at 3:64-5:3. A user profile may also contain charging preferences such as only charging during periods of lower power rates, not charging during periods of peak power grid load, or selling power from the vehicle back to the power grid. Id. at 4:56-60. These features provide greater control and convenience for a customer over existing technology because a customer may remotely manage the vehicle charging process (which takes several hours to complete) rather than having to be present physically at the site of the vehicle and charging station. Id.

         Furthermore, management of electric grid load data through a communication network may include the ability to “manage peak load leveling” using “Demand Response” and “vehicle-to-grid (V2G).” Id. at 2:1-8, 4:44-57. Demand Response is a “preplanned load prioritization scheme” provided by the utility company that is used to “reduc[e] consumption of electricity during periods of high demand.” Id. at 1:37-54. When the electric grid is strained due to increased demand, the utility company may transmit a command (over a network) to the server, “requiring a reduction in load.” Id. at 10:50-60. The server then sends a signal (over a network) to individual charging stations, commanding certain charging stations to turn off. Id. at 4:44-57, 10:50-60. The server may rely on a customer's user profile (e.g., a customer may only want their vehicle to be charged during periods of low power rates) or “the requirements of the [utility company's] Demand Response system” when deciding which charging stations to turn off. Id. The specification also states that the Demand Response system and customer profile information may allow for vehicle-to-grid (“V2G”) in which electricity stored in the vehicle is transferred back to the electric grid during times of peak demand. Id. at 1:55-67, 9:58-60.

         The specification states that the need for electric grid load management of EV charging stations is made possible through the communication network as claimed in the Asserted Patents. Id. at 2:1-8.

         B. Factual Background

         In August 2016, Volkswagen settled the lawsuit brought by the United States government for its well-known vehicle emissions scandal (commonly known as “Dieselgate”). The settlement totaled $15 billion, of which $2 billion was appropriated to fund an EV infrastructure in the United States. ChargePoint formally objected to that settlement during the preliminary court-approval process stating that the $2 billion investment would “flood a competitive market” and “threaten[] the survival of the current participants in the market, and thus the market itself.”[1] Nonetheless, the settlement was approved, and a company called Electrify America, LLC (“Electrify America”) was formed to manage the implementation of the plan.

         A major part of Electrify America's plan includes funding the cost of equipment and installation for electric vehicle charging stations, which will be installed at workplaces, garages, retail centers, and residential locations in chosen major metropolitan areas.

         Electrify America considered bids for contracts to manufacture and install EV charging stations during Phase I of Electrify America's infrastructure plan. Electrify America narrowed the list of bidders to four companies, including SemaConnect, ChargePoint, and two others. Ultimately, Electrify America awarded contracts to SemaConnect and two other companies but not ChargePoint.

         ChargePoint has since filed the Complaint [ECF No. 1], asserting that SemaConnect's EV charging station model infringes claims in the Asserted Patents. ChargePoint specifically points to network control features in SemaConnect's advertised models that allegedly infringe on the claims. Compl. ¶¶ 34-77. By the instant motion, Defendant SemaConnect contends that United States Patent Nos. 7, 956, 570; 8, 138, 715; 8, 432, 131; and 8, 450, 967 are invalid because they are not directed to patent-eligible subject matter pursuant to 35 U.S.C. § 101.

         C. Claims at Issue

         The Asserted Patents present apparatus claims (involving charging station hardware), system claims (involving a server, charging station, and other components which interact with one another), and method claims (involving a process in a server for deciding to enable charge through a network).

         In this case, ChargePoint asserts eight claims (“the Asserted Claims”) that are addressed in regard to the instant motion:

‘570 Patent: Claims 31 and 32 (system claims);
‘715 Patent: Claims 1 and 2 (apparatus claims);
‘131 Patent: Claims 1 and 8 (apparatus claims); and
‘967 Patent: Claims 1 and 2 (method claims).

         The Court would not be required to evaluate each claim separately if it were clear that they do not “differ in any manner that is material to the patent-eligibility inquiry.” Mortg. Grader, Inc. v. First Choice Loan Servs., Inc., 811 F.3d 1314, 1324 n.6 (Fed. Cir. 2016). However, considering that ChargePoint is the non-moving party and has demonstrated to some degree that the claims are different, the Court will analyze each claim separately for patent eligibility.

         II. LEGAL STANDARD

         A. In General

         Federal courts must dismiss a complaint that fails to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6).

         Patent eligibility under 35 U.S.C. § 101 is a question of law and a threshold issue that can be suitable for resolution on a motion to dismiss. Intellectual Ventures I LLC v. Erie Indemnity Co., 850 F.3d 1315, 1319 (Fed. Cir. 2017)(citing OIP Techs., Inc. v. Amazon.com, Inc., 788 F.3d 1359, 1362 (Fed. Cir. 2015)).

         When reviewing a motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6), a plaintiff's well-pleaded allegations are accepted as true, and the complaint is viewed in the light most favorable to the plaintiff. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)(citations omitted). To survive a motion to dismiss, a plaintiff's complaint must contain sufficient facts that, if assumed to be true, state a claim to relief that is plausible on its face. Id. at 570.

         B. Clear and Convincing Standard

         While patent eligibility under § 101 is a question of law, the issues may include underlying questions of fact. Mortg. Grader, 811 F.3d at 1325. In regard to a patent that has been issued, “any fact... that is pertinent to the invalidity conclusion must be proven by clear and convincing evidence.” Berkheimer v. HP Inc., __ F.3d __, No. 2017-1437, 2018 WL 774096, at *5 (Fed. Cir. Feb. 8, 2018)(citing Microsoft Corp. v. i4i Ltd. P'ship, 564 U.S. 91, 95 (2011)). “Whether a claim element or combination of elements is well-understood, routine, and conventional to a skilled artisan at the time of the patent is a factual determination.” Id. When the invention's improvements, as alleged in the specification, create a factual dispute regarding whether they describe well-understood, routine, and conventional activities, a court “must analyze the asserted claims and determine whether they actually capture these improvements.” Id. at *6.

         C. Available Evidence

         The Court's review of a Rule 12(b)(6) motion is generally limited to the contents of the complaint. Zak v. Chelsea Therapeutics Int'l, Ltd., 780 F.3d 597, 606 (4th Cir. 2015)(motion to dismiss considers the sufficiency of allegations set forth in the complaint and “documents attached or incorporated into the complaint”)(citations omitted). Consideration of other documents at this stage could convert the motion into one for summary judgment, which would be premature because the parties have not yet conducted any discovery. Id. at 606; see also Theune v. U.S. Bank, N.A., No. MJG-13-1015, 2013 WL 5934114, at *4, n.12 (D. Md. 2013). An exception to this rule is that courts may consider documents that are “integral to and [are] explicitly relied on in the judgment complaint, ” without converting the motion to one for summary judgment. Zak, 780 F.3d at 606-7 (quoting Phillips v. LCI Int'l Inc., 190 F.3d 609, 618 (4th Cir. 1999)).

         ChargePoint has incorporated several expert declarations into its Memorandum in Opposition to Defendant's Motion to Dismiss [ECF No. 43] in order to establish the convention of the field and the subsequent inventiveness of the claims at the time of the filing date of the Asserted Patents. See ECF No. 43-1; 43-2; 43-3. The declarations were not relied on in the Complaint; thus, the exception does not apply. The Court notes the existence of the declarations but will not herein consider the contents (or the incorporated arguments as they apply to the eligibility analysis) as they are not appropriate at the Rule 12(b)(6) stage.

         D. Claim Construction

         There is no hard-and-fast rule that claim construction is required before a court performs a § 101 analysis. Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1273-74 (Fed. Cir. 2012). In some cases, claim construction may be unnecessary. Content Extraction & Transmission LLC v. Wells Fargo Bank, Ass'n, 776 F.3d 1343, 1349 (Fed. Cir. 2014)(concluding that even adopting the plaintiff's proposed construction at the Rule 12(b)(6) stage may not alter the abstract nature of the claims).

         In this case, SemaConnect alleges that the claims are directed to ineligible subject matter even when accepting ChargePoint's asserted plain and ordinary meaning of all claim terms. Def.'s Mem. 17-18, ECF No. 41-1. Thus, no terms require judicial construction in order for the Court to resolve the instant motion.

         III. DISCUSSION

         SemaConnect contends that the Complaint fails to state a claim upon which relief can be granted because the Asserted Claims are directed to patent-ineligible subject matter pursuant to 35 U.S.C. § 101. SemaConnect contends that each claim is directed to the abstract idea of “turning a switch on and off” and that the abstract idea does not amount to an inventive concept because the claims recite generic processes and equipment. Def.'s Mem. 20, ECF No. 41-1.

         ChargePoint contends that the claims are not directed to an abstract idea but are, instead, directed to a technological improvement in EV charging station systems. Pl.'s Resp. 9-13, ECF No. 43. ChargePoint also contends that even if the claims are directed to an abstract idea, the abstract idea amounts to an inventive concept because the claims recite non-conventional and non-generic arrangements of EV charging stations. Id. at 25.

         The Court shall examine herein each Asserted Claim to determine if they are eligible for patent protection by virtue of 35 U.S.C. § 101.

         A. § 101 Subject Matter Eligibility

         Section 101 of the Patent Act defines subject matter that is eligible for patent protection. It provides:

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, subject to the conditions and requirements of this title.

35 U.S.C. § 101. In interpreting the meaning of Section 101, the Supreme Court has held that “[l]aws of nature, natural phenomena, and abstract ideas are not patentable.” Alice, 134 S.Ct. at 2355 (citations omitted). The Supreme Court reasoned that these exceptions are “the basic tools of scientific and technological work” and that monopolization of those tools would “pre-empt use of this approach in all fields” and “impede innovation more than it would tend to promote it, thereby thwarting the primary object of the patent laws.” Id. (citing Ass'n for Molecular Pathology v. Myriad Genetics, Inc., 569 U.S. 576, 589-90 (2013); Mayo Collaborative Servs. v. Prometheus Lab., Inc., 566 U.S. 66, 70-84 (2012)).

         However, the Supreme Court warned that courts must “tread carefully in construing this exclusionary principle” because “[a]t some level, all inventions . . . embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id. (citing Mayo, 566 U.S. at 71).

         The Supreme Court set forth a two-step test to determine whether an invention is patent-eligible subject matter. A court must determine:

(1) whether the claim is directed to a patent ineligible concept, i.e., a law of nature, a natural phenomenon, or an abstract idea; and if so
(2) whether the elements of the claim, considered both individually and as an ordered combination, add enough to transform the nature of the claim into a patent-eligible application.

Intellectual Ventures I LLC v. Erie Indem. Co., 850 F.3d 1315, 1325 (Fed. Cir. 2017)(citing Alice, 132 S.Ct. at 2355). The Federal Circuit typically refers to step one as the “abstract idea step” and step two as the “inventive idea step” when applying the test to claims challenging an abstract idea exception. Id. If the claims are found to be directed to a patent-eligible concept (not abstract) during step one, the claims will satisfy § 101, and the inquiry ends. Visual Memory LLC v. NVIDIA Corp., 867 F.3d 1253, 1262 (Fed. Cir. 2017).

         B. Step One: Abstract Idea Test

         1. Legal Standard

          Under step one of the Alice test, the court must determine whether the claims are directed to a patent-ineligible concept such as an abstract idea. Alice, 134 S.Ct. at 2355. In determining whether a claim is abstract, “claims are considered in their entirety to ascertain whether their character as a whole is directed to excluded subject matter.” Internet Patents Corp. v. Active Network, Inc., 790 F.3d 1343, 1346 (Fed. Cir. 2015); see also Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1303 (Fed. Cir. 2018)(quoting Affinity Labs of Tex., LLC v. DIRECTV, LLC, 838 F.3d 1253, 1257 (Fed. Cir. 2016)(finding that a court must examine the “patent's ‘claimed advance' to determine whether the claims are directed to an abstract idea”)). The Federal Circuit has cautioned against assessing a claim's “character as a whole” and “describing the claims at such a high level of abstraction and untethered from the language of the claims [such that it] all but ensures that the exceptions to § 101 swallow the rule.” Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1335-37 (Fed. Cir. 2016). Nonetheless, first, a court must identify the claimed concept's character as a whole. Id.

         Next, a court must compare the claimed concept's character as a whole to claims that have been held to be abstract. Enfish, 822 F.3d at 1334 (finding that although the Supreme Court “has not established a definitive rule to determine what constitutes an abstract idea, ” the Federal Circuit and Supreme Court have outlined factors to consider and have “found it sufficient to compare claims at issue to those claims already found to be directed to an abstract idea in previous cases.”).

         The Federal Circuit has held that in determining whether a claim encompasses an abstract idea, “it is often useful to determine the breadth of the claims in order to determine whether the claims extend to cover a fundamental . . . practice long prevalent in our system . . . .” In re TLI Commc'ns LLC Patent Litigation, 823 F.3d 607, 611 (Fed. Cir. 2016)(citing Intellectual Ventures I LLC v. Capital One Bank (USA), 792 F.3d 1363, 1369 (Fed. Cir. 2015)). The Federal Circuit has also stated that in order to prevent the risk of preemption of an approach to an entire field, courts must:

look to whether the claims in the patent focus on a specific means or method, or are instead directed to a result or effect that itself is the abstract idea and merely invokes generic processes and machinery. Claims directed to generalized steps to be performed on a computer using conventional computer activity are not patent eligible.

Two-Way Media Ltd. v. Comcast Cable Communications, LLC, 874 F.3d 1329, 1337 (2017)(citing McRO, Inc. v Bandai Namco Games America Inc., 837 F.3d 1299, 1314 (2016)); Internet Patents, 790 F.3d at 1348-49). Even if the claims recite tangible components, the physical components of the claims cannot “merely be conduits” for the abstract idea. In re TLI, 823 F.3d at 612; see also Alice, 134 S.Ct. at 2360 (noting that not every claim that recites concrete tangible components escapes the reach of the abstract-idea inquiry). The claims must focus on how a result is achieved instead of reciting “result-based functional language.” Two-Way Media, 874 F.3d at 1337-8; see also Electric Power Grp. LLC v. Alstom S.A., 830 F.3d 1350, 1354 (Fed. Cir. 2016)(finding that “there is a critical difference between patenting a particular concrete solution to a problem and attempting to patent the abstract idea of a solution to the problem in general”).

         Furthermore, the Federal Circuit has consistently held that gathering, analyzing, transmitting, receiving, filtering, organizing, or displaying data, and combinations thereof, is an abstract idea without something more. Electric Power, 830 F.3d at 1353-54 (the collection, manipulation, and display of electric power grid data, without changing the character of the information, is abstract); Open Parking, LLC v. ParkMe, Inc., No. 2:15-CV-976, 2016 WL 3547957, at *8 (W.D. Pa. June 30, 2016), aff'd, 683 Fed. App'x 932 (Mem)(Fed. Cir. 2017)(moving data from one place to another, such as transmitting the availability of a parking space to a driver's cell phone, is abstract); Content Extraction and Transmission LLC v. Wells Fargo Bank Nat'l Ass'n, 776 F.3d 1343, 1347 (Fed. Cir. 2014)(collecting data, recognizing certain data, and storing that data is abstract); Intellectual Ventures I LLC v. Capital One Fin. Corp., 850 F.3d 1332, 1340(Fed. Cir. 2017)(collecting, displaying, and manipulating data is abstract).

         Claims directed to fundamental financial practices, particularly validating a payment source over a network and determining a custom price for a customer based on predetermined rules, have also been construed to be abstract. Smart Sys. Innovations, LLC v. Chicago Transit Auth., 873 F.3d 1364, 1371 (Fed. Cir. 2017)(validating a payment source with stored account information on a server in order to open a turnstile in a mass transit system is abstract and non-inventive); Versata Dev. Group v. SAP Am., Inc., 793 F.3d 1306, 1312-13 (Fed. Cir. 2015)(determining the customized price of a product for a customer using organizational and product group hierarchies is abstract); buySAFE, Inc. v. Google, Inc., 765 F.3d 1354-5 (Fed. Cir. 2014)(computer applications for guaranteeing a party's performance of its online transaction are abstract and ineligible subject matter).

         On the other hand, claims that are directed to a specific improvement to the functioning of computers or any other technology or technical field may not be abstract. Enfish, 822 F.3d at 1335-6 (claims for a specific database structure involved, but were not directed to, the abstract idea of organizing information using tabular formats and instead were directed to improving the way a computer stores and retrieves data); McRO, 837 F.3d at 1315 (the incorporation of specific rules for producing accurate and realistic lip synchronization and facial expressions in animated characters was not abstract because it improved on the pre-existing process and because the patent claimed specific rules for achieving the improvement); Amdocs (Israel) Ltd. v. Openet Telecom, Inc., 841 F.3d 1288, 1300 (Fed. Cir. 2016)(a distributed network architecture wherein data is collected and combined from several sources improved upon the technical field because it reduced network congestion while generating massive amounts of accounting data); Thales Visionix Inc. v. United States, 850 F.3d 1343, 1345 (Fed. Cir. 2017)(claims reciting a unique configuration of inertial sensors and the use of a mathematical equation for calculating the location and orientation of an object relative to a moving platform were directed to a technological improvement, not an abstract idea); Visual Memory, 867 F.3d at 1262 (a computer memory system connectable to a processor and having programmable operational characteristics allowed interoperability with different processors and was not directed to the abstract idea of categorical data storage).

         While the search for an improvement to technology does overlap with the Alice step two analysis, courts have found it sufficient to conclude that claims are directed to an improvement in technology functioning, as opposed to an abstract idea, in step one. Enfish, 822 F.3d at 1335-36.

         In contrast, the Federal Circuit has provided examples of claims that are not, in fact, directed to an improvement in the functioning of technology. For example, a court must look to the specification to determine whether it discloses the manner in which the alleged improvement is achieved. Affinity Labs of Tex. v. DirecTV, LLC, 838 F.3d 1253, 1263-4 (Fed. Cir. 2016)(finding that the claimed methods of delivering broadcast content to cellphones ineligible because the specific process by which the improvement is achieved was not disclosed, and claims were written with high generality). Mere automation of a manual process is also an abstract idea and not directed to an improvement in technology. Credit Acceptance Corp. v. Westlake Services, 859 F.3d 1044, 1055 (Fed. Cir. 2017)(using generic technology to process a car loan that could otherwise be done manually is abstract). Analyzing information in a way that can be performed mentally is also abstract. Digitech Image Techs., LLC v. Elecs. for Imaging, Inc., 758 F.3d 1344, 1351 (Fed. Cir. 2014). Moreover, claims are not directed to an improvement in technology if the purported improvements arise solely from the capabilities of generic technology and computer parts. FairWarning IP, LLC v. Iatric Sys., 839 F.3d 1089, 1095 (Fed. Cir. 2016)(“While the claimed system and method certainly purport to accelerate the process of analyzing audit log data, the speed increase comes from the capabilities of a general-purpose computer, rather than the patented method itself.”). As previously discussed, a claim must include more than conventional implementation of generic components to qualify as an improvement to technology. Affinity Labs, 838 F.3d at 1264-65, (Fed. Cir. 2016); In re TLI, 823 F.3d at 612-13.

         Lastly, “limiting the invention to a technological environment does ‘not make an abstract concept any less abstract under step one.'” Berkheimer, 2018 WL 774096, at *6 (citing Intellectual Ventures I LLC v. ...


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