United States District Court, D. Colorado
BROOKE JACKSON UNITED STATES DISTRICT JUDGE.
matter is before the Court on defendant CPI Card Group,
Inc.'s (“CPI”) motion to dismiss plaintiff
Gemalto S.A.'s (“Gemalto”) patent
infringement suit. ECF No. 10. For the reasons described
below, the Court DENIES that motion.
The ‘418 Patent.
comprehend this case, one must understand U.S. Patent No. 6,
786, 418 (“the ‘418 patent”). See
ECF No. 1-1 (patent). That patent, which plaintiff Gemalto
obtained on September 7, 2004, see ECF No. 1-1 at 1; Compl.,
ECF No. 1 at ¶8, claims a computerized system for
individually customizing microcircuit cards, also known as
“smart cards, ” with customer information,
applications, and other data. See ECF No. 1-1 at cols.
1-6. Although Gemalto gave this system the deceptively
generic title of “Smart Card Customizing System,
” the customizing system Gemalto designed through the
‘418 patent was really a purported improvement upon
existing card customization systems. See Id. As the
specification explains, Gemalto's Smart Card Customizing
System improved prior systems by solving two problems
routinely encountered with those existing systems. See,
e.g., id. at col. 1:52-55, col. 2:3-4.
the Smart Card Customizing System allegedly improved how
“customizing stations” linked with corresponding
customizing data servers during the card customization
process. Id. at col. 2:3-67, col. 3:1-21; ECF No. 23
at 2-3. In prior art, the patent explained, customizing
stations linked to a single customizing data server to
retrieve customizing information in a predetermined fashion.
See ECF No. 1-1 at col. 2:3-4; see also ECF
No. 10-2 at 6 (prosecution history). This process caused
backups and inefficiencies if multiple customizing stations
tried to simultaneously link to the same data server to
retrieve information while other available customizing data
servers went unused. ECF No. 1-1 at col. 2:5-8. To fix those
issues, Gemalto created a system that utilized a management
interface with what it calls “bi-directional
communication” between customization devices and
servers. Id. at col. 5:1-15 (claim 1). In
layman's terms, Gemalto designed an improved, flexible
linking system with a “traffic cop” interface
that could send and receive information and therefore direct
customizing stations to servers that were available to
service their request. See id. This interface allegedly
enhanced functionality by reducing “traffic jams”
and therefore wait times during the customization process.
See Id. at col. 2:5-12.
Smart Card Customizing System's second claimed advance
came by separating out the transmission of customizing data
from the transmission of encryption data, both of which must
eventually be transmitted to smart cards. Id. at
col. 1:52-67. Prior customizing systems conveyed both sets of
data simultaneously via the same communication system (called
“the bus, ” see ECF No. 23 at 3). ECF No. 1-1 at
col. 6:30-43. This resulted in transfers of extremely large
data loads that could exceed the bus' capacity and
presumably stall the customization process. See id.
By separating out customizing data from encryption data and
transferring only the customizing data on the bus and the
encryption data via other “hardwire” computer
links, Gemalto designed a system that was supposed to be
faster than prior systems. See id., col. 6:30- 43
(Claim 13). It could also handle greater transmission volumes
and could be “scaled up” for enhanced customizing
flexibility. See id. at col. 3:1-21.
case, Gemalto has alleged that CPI infringed upon the
‘418 patent's improved customization system with
its own smart card personalization system called
“Card@Once®.” ECF No. 1 at ¶¶20-27.
Initially, Gemalto contended that CPI's Card@Once®
system infringed Claims 1 and 7 of the ‘418 patent.
Id. at ¶¶14-15, 25. On May 25, 2015 CPI
filed a motion to dismiss Gemalto's infringement suit.
ECF No. 10. That motion, which is the subject of this Order,
argues that this Court should invalidate the ‘418
patent under Section 101 of the Patent Act, 35 U.S.C. §
101. Id. at 1-2; see, e.g., Alice Corp.
Pty. Ltd. v. CLS Bank Int'l, 134 S.Ct. 2347, 2354-55
(2014). Summarized briefly, CPI's argument is that the
‘418 patent should be invalidated because it is merely
directed towards the “abstract idea” of
communicating orders through an intermediary (i.e., a
“traffic cop”), and that it does not involve any
patentable inventive concept. See ECF No. 10 at 1-2.
two months after CPI moved to dismiss Gemalto's suit,
Gemalto served CPI with a Disclosure of Asserted Claims and
Infringement Contentions pursuant to D.C.COLO.LPtR 4 and the
Court's Scheduling Order, see ECF No. 25. Gemalto alleged
additional infringements by CPI of Claims 1-2, 4, 7-13, and
15-17 of the ‘418 patent, see ECF No. 36. CPI
subsequently filed a motion to supplement its motion to
dismiss to include arguments related to those new claims. ECF
Nos. 37, 40. The Court initially denied defendant's
motion, but later granted it. ECF Nos. 39, 47.
Defendant's original motion and motion to supplement have
both been fully briefed.
STANDARD OF REVIEW
survive a Rule 12(b)(6) motion to dismiss, the complaint must
contain “enough facts to state a claim to relief that
is plausible on its face.” Ridge at Red Hawk,
L.L.C. v. Schneider, 493 F.3d 1174, 1177 (10th Cir.
2007) (quoting Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 570 (2007)). A plausible claim is a claim that
“allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). While
the Court must accept the well-pleaded allegations of the
complaint as true and construe them in the light most
favorable to the plaintiff, Robbins v. Wilkie, 300
F.3d 1208, 1210 (10th Cir. 2002), conclusory allegations are
not entitled to be presumed true, Iqbal, 556 U.S. at
681. However, so long as the plaintiff offers sufficient
factual allegations such that the right to relief is raised
above the speculative level, he has met the threshold
pleading standard. See, e.g., Twombly, 550
U.S. at 556; Bryson v. Gonzales, 534 F.3d 1282, 1286
(10th Cir. 2008).
35 U.S.C. § 101.
or not claims within a patent are directed to
patent-ineligible subject matter under § 101 of the
Patent Act, 35 U.S.C. § 101, is a question of law that
can be decided at the motion to dismiss stage even before
formal claim construction. See, e.g., Genetic
Techs. Ltd. v. Merial LLC., No. 2015-1202, 2016 WL
1393573, at *3 (Fed. Cir. Apr. 8, 2016) (“We have
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.”); Concaten, Inc. v.
Ameritrak Fleet Sols., LLC, 131 F.Supp.3d 1166, 1171 (D.
Colo. 2015), aff'd, No. 2016-1112, 2016 WL
5899749 (Fed. Cir. Oct. 11, 2016). However, while it is
proper to determine at the motion to dismiss stage this
question of validity, see, e.g., OIP
Technologies, Inc. v. Amazon.com, Inc., 788 F.3d 1359
(Fed. Cir. 2015), “it is appropriate for the Court to
take the proposed claim constructions in favor of the
non-moving party” at this point in the litigation,
see, e.g., Pragmatus Telecom, LLC v. Genesys
Telecommunications Labs., Inc., 114 F.Supp.3d 192, 199