Per Judge Albright, Claim Preclusion Cannot Be Readily Applied to Analyzing Patent Eligibility

May 10, 2020

Last November, VideoShare, LLC sued Alphabet (GoogleYouTube) in the Western District of Texas over the fifth member of a family generally related to streaming video over a “structured hierarchical network”. The patent issued to VideoShare in July 2019, roughly two years after the Federal Circuit summarily affirmed the invalidation of two prior VideoShare patents under Alice by District of Delaware Judge Gregory M. Sleet. Google and YouTube moved to dismiss, arguing that claim preclusion should block VideoShare from pursuing the new case, but District Judge Alan D. Albright has just disagreed. The court’s order provides additional guidance about how Judge Albright views the intersection of claim preclusion and patent eligibility—guidance that may nonetheless do little to dissuade plaintiffs from filing patent litigation in the Western District, adding to already climbing numbers.

Judge Albright denied the motion to dismiss, ruling on the particular circumstances before the court but also widening the lens afterward to arrive at this general principle: “the doctrine of claim preclusion cannot be readily applied to analyzing patent eligibility . . . because one element of claim preclusion is whether or not the two patents have the same scope, if the scope of the first patent was not determined when evaluating its patent eligibility, then it is axiomatic that claim preclusion based on patent ineligibility cannot apply to the second patent”. Judge Albright announced this conclusion “[b]ecause this is a case of first impression” and “in case another court may benefit from the time this Court has spent analyzing this issue”.

Judge Sleet ruled in August 2016 that the claims of the prior two VideoShare patents (8,464,302; 8,438,608) are patent-ineligibly drawn to the abstract idea of “preparing a video in streaming video format for sharing over a computer network”. The patent asserted in the latest complaint against Google and YouTube (10,362,341) issued in July 2019 as a continuation of the ’302 patent, sharing the same specification. Claim preclusion (a/k/a res judicata) prevents a plaintiff from enjoying multiple bites at the exact same apple, and Judge Albright agreed with both sides that the two cases involve the same parties after a prior judgment on the merits in a court with proper jurisdiction, leaving only the fourth element of claim preclusion in dispute: “whether the earlier case and the later case involve the same cause of action”.

The defendants argued that the asserted patent claims are “essentially the same”, noting that VideoShare filed a terminal disclaimer during prosecution of the application that led to the ‘341 patent to overcome a double patenting rejection and contending that the new claims are simply narrower versions of the prior claims, rendering them “not patentably distinct”. However, Judge Albright agreed with VideoShare that the filing of a terminal disclaimer is not “an admission or presumption regarding the patentability of the claims of a continuation patent” and that—“[m]ore importantly” for Judge Albright—claim preclusion cannot apply to the present case because the Alice invalidation in the prior case involved “no determination of the scope of the [‘302] patent’s claims”.

The court substantiated the position that a determination of patent eligibility, unlike consideration of an anticipation or obviousness defense, “does not concern the scope of a patent’s claims. It only concerns whether or not the patents are directed to patent-eligible subject-matter”. In order to adjudicate a claim preclusion challenge, then, the court must be mindful that additional, “narrowing” limitations in a claim may render it patent eligible, “actually provid[ing] the inventive concept that transforms the abstract idea in a patentable invention”, a concept missing before such that a comparison between the two patents would require the court to establish both (1) the scope of the patent asserted before it at an early stage, “without the benefit of formal claim construction”; and (2) the scope of the prior, invalidated patent, a patent not even before the court.

The court ruled that such an exercise is inappropriate, leaving it unable to assess the particular claim preclusion theory before it and leading it to the conclusion, in the abstract, that “the doctrine of claim preclusion cannot be readily applied to analyzing patent eligibility”.

Judge Albright has previously enunciated a skeptical stance toward the resolution of early Alice challenges: “. . . 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 patent’s § 101 eligibility is the wisest course of action”. For additional details concerning this approach, which stands in contrast to that taken by other courts—including by Judge Sleet (although the prior ruling was in response to a motion to dismiss on the pleadings, not necessarily in lieu of an answer) and at least some of his colleagues on the District of Delaware bench—see RPX’s reporting at “Recent Alice Order in Delaware Invites Comparison with the Western District of Texas” (April 2020).

The issue of the ‘341 patent’s validity is squarely before Judge Albright, through the defendants’ defenses but also through VideoShare’s request for a declaratory judgment that the patent is valid. However, this year’s Alice orders from Judge Albright suggest that very few early motions challenging claims under Section 101 will enjoy success—now, even if those claims appear in a later-issuing patent, asserted by the same plaintiff, sharing the same specification as prior claims invalidated under Alice. Time will tell whether patent holders, hitting patent eligibility shoals elsewhere, may attempt to find smoother waters in a follow-on filing over a surviving, related patent in the Western District of Texas.

Time has already told oodles concerning whether patent holders find that forum appealing, at least the time that has passed so far in 2020 and at least as to NPE patent holders. The Western District of Texas has overtaken historical powerhouse Eastern District of Texas and more recent list-topper District of Delaware for NPE plaintiffs as of the date of this report:

District Defendants Added to Campaigns
Western District of Texas 203
District of Delaware 164
Eastern District of Texas 88
Northern District of Illinois 47
Central District of California 45

The Western District of Texas also currently holds a narrower lead over the District of Delaware for patent suits filed by all plaintiff types (NPEs and operating companies), with 266 defendants added in 2020 to date compared to Delaware’s 253.

VideoShare’s West Texas litigation will presumably proceed to other issues. For example, Judge Sleet’s judgment on the pleadings followed an order construing claims from the ‘302 and ‘608 patents and mooted a pending motion challenging VideoShare’s standing to sue over them, based on an alleged defect in the patents’ chain of title. Google contended that VideoShare, Inc., the Delaware entity (formed in September 1998) that owned the patents pursuant to earlier assignments from their named inventors—Gad Liwerant, VideoShare, Inc.’s president, and Guillaume Boissiere and Christopher Dodge, both vice presidents of the company—dissolved without properly transferring rights to the patents to Liwerant. It was Liwerant who assigned rights to VideoShare, the current plaintiff. VideoShare filed an opposition brief countering that the VideoShare, Inc. board did authorize the assignment to Liwerant before dissolution, through an “instrument in writing”, as required.

VideoShare’s new complaint against Google and YouTube recounts the purported development of its patented technology, beginning with Liwerant’s study at Harvard University; his creation of AllCam, “a service which composited various available camera feeds so that they could be viewed remotely by users in real-time”; and his collaboration with “MIT Media Lab members” Boissiere and Dodge. The complaint also includes language describing the ‘341 patent’s purportedly inventive nature, with Videoshare pleading that the ‘341 patent is “directed to improved functionality of streaming server systems” by “address[ing] the problem presented by streaming video over a network to arbitrarily distant viewers” and solving two “prominent problems”: “(1) uncertainty as to the destination platform and (2) limited network bandwidth”. VideoShare provides as its address that of a residential home in Chestnut Hill, Massachusetts that appears to belong to Liwerant.

VideoShare began this recently revived litigation campaign back in July 2012, with a couple of false starts in the District of Massachusetts, the first against Brightcove (dismissed without prejudice) and the second against YouTube (dismissed in favor of the overlapping Delaware actions). VideoShare’s patent portfolio can be viewed on RPX Insight here; prosecution of at least one related application continues before the USPTO.