United States District Court, E.D. North Carolina, Western Division
W. FLANAGAN United States District Judge
matter is before the court on defendants' motion to
dismiss, pursuant to Federal Rule of Civil Procedure
12(b)(6). (DE 92, 101). The issues presented are ripe for
ruling. For the following reasons, defendants' motion is
October 14, 2013, plaintiff, inventor and owner of United
States Patent Number 6, 477, 503 (“ ‘503
patent”), initiated this suit asserting claims against
defendant Fandango, LLC, (“Fandango”), an online
retailer of movie tickets, for patent infringement in
violation of 35 U.S.C. § 271(a) and induced infringement
in violation of 35 U.S.C. § 271(b). Defendant
responded with a motion to dismiss, later mooted by the
court's allowance of plaintiff's motion to amend,
resulting in an amended complaint filed March 7, 2014. In
answer filed March 24, 2014, defendant denied liability and
asserted two counterclaims against plaintiff. (DE 37).
time plaintiff initiated this action, relevant law relating
to plaintiff's claims was in a state of flux. The court
allowed the parties joint motion to stay proceedings pending
outcome of Limelight Networks, Inc. v. Akamai
Technologies, Inc., 134 S.Ct. 2111 (2014). On June 2,
2014, in unanimous ruling, the Supreme Court held that
liability for induced infringement only can be found when
there is direct patent infringement. Id. at 2117.
The Supreme Court remanded the case back to the United States
Court of Appeals for the Federal Circuit for further
proceedings. Ultimately stay was lifted in this case, where
the court declined to continue it pending the Federal
Circuit's address on remand.
plaintiff moved to dismiss defendant Fandango's
counterclaims, (DE 50), and defendant filed a motion for
judgment on the pleadings. (DE 55). On February 26, 2015,
this court, applying relevant law as it then stood, granted
judgment on the pleadings in favor of defendant. (DE 60). The
February 26, 2015, order also held in abeyance
plaintiff's motion to dismiss, pending further briefing.
(Id.). However, before the court could address the
merits of plaintiff's motion, defendant Fandango's
counterclaims voluntarily were dismissed on March 5, 2015.
the court's February 26, 2015, order, plaintiff appealed
to the Federal Circuit. During briefing on the merits of
plaintiff's appeal, the Federal Circuit issued an en banc
decision in Akamai Technologies, Inc. v. Limelight
Networks, Inc., 797 F.3d 1020 (Fed. Cir. 2015) (en banc)
(Akamai IV), which revised the legal standards this
court had applied in granting judgment on the pleadings in
favor of defendant. In Akamai IV, the Federal
Circuit held that when more than one actor is involved in
practicing the steps of a claimed method, a single entity
will be liable for others' performance of method steps,
and ultimately direct infringement, “where that entity
directs or controls the others' performance” or
“where the actors form a joint enterprise.”
Id. at 1022.
April 22, 2016, the Federal Circuit vacated this court's
judgment on the pleadings against plaintiff and remanded the
case for further proceedings in light of Akamai IV.
Mankes v. Vivid Seats Ltd., 822 F.3d 1302, 1309
(Fed. Cir. 2016). Specifically, the Federal Circuit held that
because this court's decision was “squarely based
on [an] earlier, narrower [legal] standard, ”
reinstatement and remand were appropriate for determining
whether or not plaintiff's claims survived the new legal
standard. Id. at 1305. Following the Federal
Circuit's opinion, this court directed plaintiff to file
an amended complaint.
30, 2016, plaintiff filed the instant second amended
complaint against defendants Fandango and Regal Entertainment
Group (“Regal”), asserting claims for patent
infringement in violation of 35 U.S.C. § § 271
et seq. (DE 81). Plaintiff alleges that defendant
Fandango's operation of an Internet-based reservation
system, in conjunction with defendant Regal's operation
of a local reservation system, infringes the ‘503
patent. Plaintiff seeks declaratory and injunctive relief,
monetary damages, and trial by jury.
August 24, 2016, defendant Fandango moved to dismiss the
instant complaint (DE 92). Defendant Regal joined in that
motion. (DE 101). Defendants argue that plaintiff's
patent claims are directed to an abstract idea and therefore
fail to cover patentable subject matter under 35 U.S.C.
facts alleged in plaintiff's second amended complaint are
summarized as follows. Plaintiff is owner and inventor of the
‘503 patent, which issued on November 5, 2002. (DE 81
¶ 12-13). The ‘503 patent, entitled “Active
Reservation System, ” claims methods for a system to
control inventory when goods and services are sold both
through the Internet and at a physical site. (Id.
¶ 13). Ordinarily, when vendors sell inventory online
and at a physical site, inventory is divided and allocated
between the two locations. U.S. Patent No. 6, 477, 503, col.
1.ll. 30-58. However, when inventory is divided,
“neither [site] ha[s] contemporaneous information on
the overall state of the local inventory.” Id.
at col. 1.ll. 43-67. As a result, inventory is often
undersold. Id. at col. 1.ll. 57-58.
‘503 patent specification describes a method
reservation system which allows vendors to control entire
inventory at a single, local site. Id. at col. 2.ll.
58-60. The local site uses a local server to allocate,
control and reserve inventory. Id. at col. 2.ll.
61-63. The local server communicates over the Internet to an
online reservation server certain information regarding
available inventory. Id. at col. 3.ll. 6-9. The
reservation system then makes the available inventory
accessible for purchase by consumers online. Id. at
col. 3.ll. 10-12. When inventory is sold online, the Internet
site communicates the sale to the local site, which then
confirms the sale and updates total available inventory.
Id. at col. 3.ll. 16-19. Confirmation of the sale,
along with updated inventory, is then transmitted to the
reservation server and forwarded to the consumer.
Id. at col. 3.ll. 37-41. Any time a sale is made,
the local site is able to control available inventory and
communicate information regarding the same, regardless of
whether the sale was made online or at the local site.
Id. at col. 3.ll. 42-46.
features of plaintiff's invention generally are found in
the four claims of the ‘503 patent. Of the four claims,
Claims 1 through 3 are at issue. Claim 1 is representative of
the asserted claims, stating:
1. A method for operating an Internet based active
reservation system for the purchase of goods and services,
(a) providing an owner event server located at and operated
by a local event owner having an available inventory of goods