In Cooperative, Fed. Cir. Panel Gets It Right.

It’s Not Enough, But Every Journey Begins with One Step.

You can’t breath in space without oxygen. And these days, it can feel like Alice and the AIA sucked all the air out of the room for patentees. But there are signs of hope.

On Sept. 28, I took a deep breath of fresh air after a Federal Circuit reversed a ruling of the U.S. District Court (N.D. Cal.) in a precedential decision favoring AddyHart’s client Cooperative Entertainment, Inc. 

The decision came on our appeal of a Rule 12(b)(6) pleadings dismissal in the U.S. District Court (N.D. Cal.) in favor of defendant Kollective Technology. We argued that Cooperative’s U.S. Patent No. 9,432,452 was not abstract, and that the district court’s ruling to hold as all the patent’s claims as unpatentable under 35 U.S.C. § 101 on the pleadings was error.

The Federal Circuit agreed, despite the panel’s avowed reliance on Alice Corp. v. CLS Bank Int’l. In a precedential decision written by Chief Judge Moore, the panel held that there were plausible factual allegations in the claim language of the patent, in the written description, and in the amended complaint that describe how the novel arrangement is a technical improvement. The ruling turned on the panel’s recognizing that CEI had properly pleaded that the ’452 Patent represents a technological advance over prior art.

The ’452 patent relates to systems and methods of structuring a peer-to-peer (P2P) dynamic network for distributing large files, namely videos and video games. In prior art systems, video streaming was controlled by content distribution networks (CDNs), where content was distributed directly from the CDN server originating the content. 

The ’452 patent claims methods and systems for a network in which content distribution occurs outside such controlled networks and/or CDNs using dynamic P2P networks comprising “peer nodes”—which is to say, nodes consuming the same content contemporaneously, that transmit content directly to each other instead of receiving content from the CDN. To facilitate content distribution, the claimed networks segment files into smaller clips and distribute them piecemeal using one or more specific techniques. Viewers’ systems obtain individual segments, preferably from other viewers, and reconstitute them as needed. 

The panel reversed and remanded the district court’s judgment on the pleadings that the ’452 patent lacked patent eligibility. 

I was pleased the decision went our way—for more than the simple reason that it represented a win in a Section 101 case. It’s a win for patentees and, dare I say it, for entities that own patents and seek to assert them despite the prevailing negativity toward such entities. 

Since the Supreme Court’s decision in Alice, software patentees in particular have been under siege in our courts, which have been hard-hearted in judging what is innovative with respect to prior art and too willing to dismiss valid claims as ineligible under § 101. 

But it’s more than that. Since patent assertion entities became more prevalent in the 1990s, a smear campaign focused on so-called patent “trolls” has become dominant—not least due to effective PR strategies by large technology firms that want to be insulated from accusations of infringement (that is, to be allowed to infringe anyway). Worse has been the “reform” of denying injunctive relief to patent-holders while a complaint is proceeding in the courts, dooming underfunded patentees to literally suffer in silence, muted by costs and aggressive counterpunches from infringers. 

The attitude in the U.S. courts and our Congress toward asserting patents has become so casually negative and ignorant of patent value that every small step toward a sort of sanity on valid claims is worth cheering. Far too much negative sentiment toward valid patents holds sway over our innovation ecosystem. The pendulum needs to swing back.

So, take heart! This decision should encourage those arguing cases under Section 101. I was also pleased to see that, as a precedential ruling, the outcome was noted in Law360Managing IP, and Bloomberg Law, and by Dennis Crouch on PatentlyO

Since our founding, AddyHart P.C. has specialized in appeals at the Federal Circuit, along with arguing cases in our district courts, before the PTAB, and in the Court of Federal Claims. We believe in protecting and defending innovation—and patent-holders. We continue in our work to seek to correct misperceptions or mistaken rulings with respect to patent validity. This win again demonstrates our commitment to holders of valid patents, our knowledge of the law and our courts, and our ability to prevail on appeal. 

Care to discuss the implications of this ruling? I’d love to hear from you. And we’ll see what the future holds.



Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

This site uses Akismet to reduce spam. Learn how your comment data is processed.