Recent Alice Order in Delaware Invites Comparison with the Western District of Texas

April 5, 2020

District Judge Richard G. Andrews has invalidated claims from two patents “directed to a ‘nano gas sensor device’ that detects and changes in reaction to the presence of a gas, chemical, or biological object” under Alice. The court held that the claims are patent-ineligibly directed to the abstract idea of a sensor, observing along the way that the plaintiff, NPE Rondevoo Technologies, LLC, has filed numerous complaints throughout the country with “virtually no real litigation in any of these cases”. Judge Andrews’s order comes as the Western District of Texas has cemented its place at the top of the list of patent venues favored by NPE plaintiffs, outpacing Delaware in the first quarter.

Rondevoo Technologies, one of several NPEs associated with California attorney Daniel C. Cotman and his “IP accelerator” 2S Ventures, LLC (see here for details concerning those connections), sued AerNos in April 2019, following up with June and July cases against Avalanche Technology and Sensirion, respectively, in the same campaign. The latter two cases each ended within eight weeks. Rondevoo has filed roughly three dozen cases across five litigation campaigns, the first of which was initiated in October 2017, including multiple cases filed in Delaware, as well as multiple cases filed throughout various districts across the US.

In its suit against AerNos, Rondevoo asserted two patents (9,453,8149,927,391)—as noted, generally directed to “nano sensors”. The patents are two among several assets naming Bao Tran as an inventor that 2S Ventures entities have acquired. (A rundown of the transfers of Tran patents to Rondevoo and fellow 2S Ventures affiliate Eloqui Voice Systems, LLC is available at “Prolific Inventor Assigns “Nano” Portfolio to Red Dragon’s Rondevoo, Three Other Patents to Red Dragon’s Eloqui Voice Systems” (March 2019).) In response to AerNos’s Rule 12 motion to dismiss under Alice, Judge Andrews considered claim 1 of the ‘814 patent and claim 19 of the ‘391 patent, the first of which reads as follows:

A device, comprising:

an upper metallic layer,

a lower layer,

a nano sensor array positioned between the upper and lower layers to detect a presence of gas, a chemical, or a biological object, wherein each sensor’s electrical characteristic changes when encountering the gas, chemical or biological object, and

a matrix film on the nano sensor array wherein a physical parameter of the matrix film changes to measure gas or liquid concentration.

Claim 19 reads similarly.

“Claims may be abstract even when they are directed to physical devices”, began Judge Andrews, indicating that the “breadth of the claims at issue implicate the Court’s concern with preemption of all application in all fields due to patenting abstract concepts”. He agreed with the defendant that even though the claims recite a physical sensor, “their focus is on the ability of the sensor to change characteristics when encountering a gas, chemical, or biological object”, and that “[d]etecting and sensing gas, chemical, and biological phenomena are abstract ideas”. The court ruled that adding “[c]onventional semiconductor structures” and other generally available technologies does not render that “underlying abstract idea” any more “concrete”. As such, and further finding that the “claims at issue here do not contain meaningful limitations restricting them to nonroutine, specific applications of the abstract idea”, Judge Andrews invalidated both.

Prior to his Alice analysis, Judge Andrews concluded the “Background” section of his order with this curious passage:

This lawsuit is one of a series of fourteen patent infringement cases brought by Plaintiff in this district, twelve of the others having already been resolved, and the thirteenth pending settlement. A Pacer search suggests Plaintiff has filed about another twenty-three other lawsuits in various district courts throughout the country, the great bulk of which have also been quickly resolved. While I have not studied the dockets of these other cases, from the speed with which they have been resolved, it seems fairly likely there has been virtually no real litigation in any of these cases.

As Judge Andrews did not reference this commentary in the body of the court’s analysis, it is unclear what relevance, if any, such figures and filing patterns have to consideration of an Alice challenge generally, or what role they might have played in Judge Andrew’s analysis of AerNos’s specific challenge. Judge Andrews has previously taken an NPE to task for its litigation posture, admonishing Finnavations LLC, an IP Edge LLC plaintiff, for its Alice defense in a March 2019 order, characterizing it is as “not just mediocre or bad” but as “ugly”. “The issuance of a patent cannot and should not be a license to sue with abandon”, continued Judge Andrews in that case; however, those criticisms came in an order declaring the Finnavations cases exceptional and justifying the award of attorney fees to the defendants in light of IP Edge’s litigation positions. (Further details concerning that Octane order, and the underlying Alice order, can be read here.)

The Rondevoo decision joins two other 2020 Alice opinions from Judge Andrews, both in cases brought by NPEs: more recently, an early March decision in a case brought by CG Technology Development, LLC, in which Judge Andrews invalidated a single claim of the asserted patent as patent-ineligibly drawn to the abstract idea of “determining game configuration based on location”, indicating that the defendant “gambled with a Rule 12(c) motion and won the jackpot”; and before that, a January 2020 decision in a case brought by Fast 101 Pty Ltd., in which Judge Andrews invalidated 234 claims from five patents as patent-ineligibly drawn to the abstract idea of “an intermediated settlement system, the same abstract ideas presented in Alice” itself.

Although Judge Andrews’s body of Alice decisions in cases brought by NPEs over the past two years has produced a variety of results—see also his 2019 decision granting an Alice motion in a lawsuit brought by TPP Tech LLC; denying such motions in separate cases filed by Carrum Technologies, LLC, TQ Delta LLC, and Groove Digital, Inc.; and a mixed-result decision in litigation brought by IPA Technologies Inc., a subsidiary of Quarterhill Inc. (f/k/a Wi-LAN Inc.)—his inclusion of a PACER search as to a plaintiff’s nationwide filing behavior may give NPE plaintiffs additional motivation to file litigation elsewhere, rather than in the District of Delaware, which had overtaken the Eastern District of Texas at the top of the list of preferred venues in patent cases since the US Supreme Court’s TC Heartland decision on patent venue in May 2017.

Indeed, RPX noted in mid-February that the Western District of Texas had, at least at that point, jumped above the District of Delaware as the favorite patent venue for all plaintiffs. Since then, Delaware has pulled back ahead when all patent plaintiffs are considered, but West Texas has kept out in front when it comes to NPE plaintiffs.

Top Patent Litigation Districts in Q1 2020 by Defendants Added

Since his confirmation to the bench in September 2018, District Judge Alan D. Albright has taken active steps to make the Western District of Texas that hotbed for patent litigation, including issuing a standing order that implements rules designed to appeal to all parties; balancing convenience factors in a way that suggests that it will be difficult for defendants to meet its “heavy burden” of showing that another venue is “clearly more convenient”; and treating early motions challenging claims from asserted patents as directed to unpatentable subject matter with heavy skepticism. (For example, a treatment of Judge Albright’s most recent denial of a motion to transfer out of his district can be read here.)

That skepticism comes in an operating company case, brought by Slyce Acquisition, through an early January 2020 order (redacted version here) denying reconsideration of Judge Albright’s earlier decision to “refrain from ruling on patent invalidity at the pleadings stage”; the court refused to reconsider that decision “because . . . resolving a patent’s § 101 eligibility is rarely appropriate as a Rule 12(b) motion to dismiss”. Judge Albright skirted the application of the two-step Alice test based on several factors that outline his general approach to early Alice motions.

First, Judge Albright cited the presumption of validity that issued patents enjoy: “. . . because a patent is presumed valid and requires clear and convincing evidence to prove its invalidity, a Rule 12(b) motion to dismiss is a procedurally awkward place for a court resolve a patent’s § 101 eligibility”.

Next, Judge Albright cited the general notion that claim construction may be needed: “. . . because claim construction can affect—and perhaps, in most cases, will affect—a court’s § 101 eligibility analysis, the Court believes that it is generally wiser—and more efficient—to wait to determine a patent’s § 101 eligibility until after issuing its claim construction order.” However, the court explicitly declined to rule on whether claim construction was needed to resolve the motion before it: “But, to be clear, the Court takes no position on whether claim construction is necessary for any of the asserted claims”.

In addition, Judge Albright acknowledged the likely need for fact discovery to resolve an Alice motion but—again—explicitly declined to rule on whether a factual dispute over inventiveness was present in the case before him: “. . . the Court takes no position on whether there are any factual disputes that preclude dismissal at the pleadings stage”.

Finally, and perhaps most indicative of an overarching skepticism toward the Alice framework, Judge Albright noted an overall difficulty in applying the Alice test: “Alice is a difficult test to apply and yields inconsistent results. This lack of predictability and consistency is widely known and extremely problematic”. He characterized a court as standing “a better chance of making the correct § 101 eligibility decision by delaying that decision in order to spend more time understanding the patents and its nuances, as well as technology in general, and what was ‘well-understood, routine, and conventional activities previously known to the industry’”.

The court then summarized its approach to early Alice motions: “. . . because an issued patent enjoys the presumption of validity which requires clear and convincing evidence to prove otherwise, because claim construction and fact discovery can completely change the Court’s § 101 analysis, and because the Court gains a greater understanding of the patents and the technology by delaying the resolution of eligibility, the Court believes that delaying the determination of a patents § 101 eligibility is the wisest course of action”.

Obviously, Judge Andrews is not the only judge in the District of Delaware, nor is Judge Albright the only judge in West Texas, but the relative number of filings in each district no doubt follows close consideration of the general approaches to motions like those seeking dismissal under Alice or to transfer for convenience, as well as the final results of, and language used in, orders issued by judges across each district.