Bot M8 LLC v. Sony Corporation of America
Document: 44, Page: 1, Filed: 07/13/2021 (2021)
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Rule of Law:
While patent infringement complaints must plead plausible factual allegations, they are not required to provide element-by-element proof at the pleading stage; however, factual allegations that are conclusory, merely track claim language, or contradict the patent's claims are insufficient. Furthermore, a patent claim directed to an abstract idea, without an inventive concept, is ineligible under 35 U.S.C. § 101.
Facts:
- Bot M8 LLC is the assignee of five asserted patents related to gaming machines: U.S. Patent Nos. 8,078,540 ('540 patent), 8,095,990 ('990 patent), 7,664,988 ('988 patent), 8,112,670 ('670 patent), and 7,338,363 ('363 patent).
- The '540 patent requires a game program and an authentication program to be stored on the same memory board, separate from the motherboard.
- The '990 patent claims a mutual authentication program where gaming information and the program are stored on the same removable storage medium.
- The '988 and '670 patents relate to a gaming device with a fault inspection program that must complete execution "before the game is started."
- The '363 patent describes a gaming machine that changes future game conditions (a "specification value") based on a total game result aggregated from multiple players.
- Bot M8 accused Sony’s PlayStation 4 (PS4) video game consoles and aspects of its PlayStation network of infringing the ’540, ’990, ’988, and ’670 patents.
- Bot M8 also accused certain PS4 video games of infringing the ’363 patent.
- Sony's PlayStation 4 (PS4) software is encrypted and protected by Sony’s access control technology, and reverse engineering (sometimes called "jailbreaking") the PS4 is considered illegal under the Digital Millennium Copyright Act (DMCA) and other anti-hacking statutes.
Procedural Posture:
- Bot M8 LLC filed suit against Sony Corporation of America, et al. in the United States District Court for the Southern District of New York, alleging infringement of six patents.
- Sony filed an answer, asserting non-infringement, and moved to transfer the case to the Northern District of California.
- The New York district court granted Sony’s motion and transferred the case to the United States District Court for the Northern District of California.
- After transfer, the California district court held a case management conference where it "directed" Bot M8 to file an amended complaint with element-by-element allegations.
- Bot M8 filed a First Amended Complaint (FAC).
- Sony moved to dismiss the FAC for failure to state a claim.
- The district court granted Sony’s motion to dismiss as to the ’540, ’990, ’988, and ’670 patents, but denied it as to the ’363 patent.
- Bot M8 moved for leave to file a Second Amended Complaint (SAC), which the district court denied for lack of diligence.
- Bot M8 sought leave to move for reconsideration of the denial of leave to amend, which the district court also denied.
- Both parties filed motions for summary judgment as to claim 1 of the ’363 patent (Bot M8 for infringement, Sony for non-infringement and patent ineligibility).
- The district court granted Sony’s motion for summary judgment, finding claim 1 of the ’363 patent ineligible under 35 U.S.C. § 101.
- The parties entered into a Joint Stipulation Regarding Case Management and Dismissal, dismissing the remaining claims without prejudice, with Bot M8 reserving the right to appeal.
- The district court entered final judgment in favor of Sony.
- Bot M8 timely appealed to the United States Court of Appeals for the Federal Circuit.
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Issue:
1. Does a patent infringement complaint fail to state a plausible claim under the Iqbal/Twombly standard if it contains conclusory allegations, merely tracks claim language, or includes factual allegations that are inconsistent with the requirements of the asserted patent claims? 2. Did the district court abuse its discretion by denying leave to file a second amended complaint when the plaintiff claimed delayed reverse engineering due to DMCA concerns but had previously represented to the court that such work had already been performed? 3. Is a patent claim describing a gaming machine that changes game conditions based on aggregate prior results directed to an abstract idea and lacking an inventive concept, thereby rendering it ineligible under 35 U.S.C. § 101?
Opinions:
Majority - O’Malley, Circuit Judge
1. Yes, a patent infringement complaint fails to state a plausible claim if it includes factual allegations that contradict the patent's requirements or if its allegations are conclusory and merely track claim language without sufficient factual support. Regarding the '540 patent, the court affirmed dismissal because Bot M8's complaint explicitly alleged that the authentication program was stored on the PS4 motherboard, directly contradicting the patent's claim that such a program must be stored on a board separate from the motherboard. This inconsistency effectively pleaded Bot M8 "out of court." For the '990 patent, the court affirmed dismissal because Bot M8's allegations were conclusory, merely tracking the patent's language without providing plausible factual content that the gaming information and mutual authentication program were stored together on the same memory. While the court disagreed with the district court's requirement for source-code level evidence at the pleading stage, the allegations were still found insufficient under the Iqbal/Twombly standard. However, the court reversed the dismissal of claims related to the '988 and '670 patents. It found that Bot M8's complaint did plausibly allege infringement by stating multiple times that the fault inspection program completes before the game starts and by supporting these assertions with specific factual allegations, such as identifying PS4 error codes displayed during boot-up before a game begins. The district court had demanded too much detail at the pleading stage for these patents. 2. No, the district court did not abuse its discretion in denying Bot M8 leave to file a second amended complaint. The court reviewed the motion under Federal Rule of Civil Procedure 16(b)(4)'s "good cause" standard because the deadline set in the scheduling order had passed. Bot M8 lacked diligence, having failed to raise concerns about reverse engineering or DMCA implications at an earlier case management conference where it had stated it already "torn down" the PS4 and agreed to incorporate those results into its complaint. The court found no authority supporting Bot M8's belated fears or its failure to timely raise them. 3. Yes, claim 1 of the '363 patent is ineligible under 35 U.S.C. § 101. Applying the two-part Alice test, the court found at step one that the claim was directed to the abstract idea of changing the difficulty or risk-to-reward ratio of a multiplayer game based on previous aggregate results. At step two, the court concluded that the claim lacked an inventive concept. It found that the claim merely recited result-oriented uses of conventional computer devices and generic hardware performing conventional tasks (gathering, manipulating, transmitting, and using data), without transforming the abstract idea into a patent-eligible application. Bot M8's own experts admitted that connecting multiple game machines, aggregating results, and changing game parameters were known practices before the '363 patent.
Analysis:
This case provides crucial guidance on the pleading standards for patent infringement under Iqbal/Twombly, clarifying that while an element-by-element accounting isn't always required, specific factual allegations are necessary to show plausibility. Critically, it highlights that pleadings containing facts that contradict the asserted claims can be fatal. The ruling also reinforces the application of the Alice two-part test in determining patent eligibility for software-related inventions, particularly in gaming, emphasizing that generic computer implementation of an abstract idea does not add an inventive concept. Finally, it underscores the importance of diligence when seeking to amend pleadings after scheduling order deadlines, particularly when a party has previously made representations to the court regarding its ability to comply with discovery-related requests.
