Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_16-cv-00962/USCOURTS-cand-4_16-cv-00962-5/pdf.json

Parties Involved:
KHN Solutions Inc.
Counter-defendant
Vertisense Inc.
Counter-claimant

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

KHN SOLUTIONS INC.,

Plaintiff,

v.

VERTISENSE INC.,

Defendant.

Case No. 16-cv-00962-HSG 

ORDER DENYING MOTION TO 

DISMISS

Re: Dkt. No. 22

In this patent infringement action, Defendant Vertisense, Inc. moves to dismiss on the 

ground that the asserted patent claims ineligible subject matter. Dkt. No. 28 (“Mot.”). For the 

reasons articulated below, the motion is DENIED WITHOUT PREJUDICE.

I. BACKGROUND

For purposes of this motion, the Court accepts the following alleged facts as true. Plaintiff 

KHN Solutions, Inc. is “dedicated to developing and commercializing cutting-edge, patented 

technology for measuring blood alcohol content (‘BAC’), [and] monitoring and analyzing 

intoxication and intoxication patterns specific to a user.” Dkt. No. 1 (“Compl.”) ¶ 9. Since 

creating the world’s first smartphone breathalyzer, Plaintiff “has become the market leader in 

portable breathalyzer technology.” Id. ¶ 11. Defendant Vertisense, Inc. “develops, manufactures, 

assembles, markets, offers for sale, sells, and tests breathalyzer devices,” including the 

“Alcohoot,” “TRANSIT Connect,” and “INTREPID CONNECT” products (together, the 

“Accused Products”). Id. ¶¶ 4, 12.

On February 26, 2016, Plaintiff filed the current action, asserting that the Accused 

Products infringe United States Patent 9,076,317 (“the ‘317 Patent”) entitled, “Method and System 

for Monitoring Intoxication.” Claim one of the ‘317 Patent purports to cover:

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1. A method for monitoring intoxication of a user, comprising:

receiving a set of signals, derived from a set of breath samples 

collected from the body of the user at a set of time points, at a 

sample receiving module;

at a processing subsystem, determining a value of an intoxication 

metric, derived from the set of signals upon receiving information 

derived from the set of signals by way of a data link coupled to 

the processing subsystem;

at the processing subsystem, generating a predicted temporal profile 

of the intoxication metric for the user based upon the value of the 

intoxication metric and the set of time points;

at the processing subsystem, generating an analysis of the user’s 

sobriety based upon the predicted temporal profile; and

at a device comprising a user interface, providing a notification to 

the user based upon the analysis, thus facilitating monitoring of 

the user’s intoxication.

Dkt. No. 1, Ex. A at 22:11-29. The dependent claims describe receiving supplementary 

demographic information from the user, administering sobriety tasks, and predicting when the 

user’s intoxication metric will return to zero. Id. at 22:30-65. Independent claim eight adds 

“transmitting at least one of the predicted profile, the analysis, and the notification to an entity 

associated with the user, thus facilitating monitoring of the user’s intoxication.” Id. at 23:22-25. 

Finally, independent claim fourteen describes training a user to become more aware of his or her 

actual intoxication state by comparing the user’s self-estimated intoxication state with the user’s 

actual intoxication state. Id. at 24:4-31.

Defendant moves to dismiss on the ground that the ‘317 Patent claims an abstract idea, and 

is therefore invalid under 35 U.S.C. § 101.

II. DISCUSSION

A. Legal Standard

Federal Rule of Civil Procedure 8(a) requires that a complaint contain “a short and plain 

statement of the claim showing that the pleader is entitled to relief[.]” A defendant may move to 

dismiss a complaint for failing to state a claim upon which relief can be granted under Federal 

Rule of Civil Procedure 12(b)(6). “Dismissal under Rule 12(b)(6) is appropriate only where the 

complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory.” 

Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008). To survive a Rule 

12(b)(6) motion, a plaintiff must plead “enough facts to state a claim to relief that is plausible on 

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its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 540, 570 (2007). A claim is facially plausible 

when a plaintiff pleads “factual content that allows the court to draw the reasonable inference that 

the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). 

Under 35 U.S.C. § 101, an invention is patentable if it claims “any new and useful process, 

machine, manufacture, or composition of matter, or any new and useful improvement thereof.” 

Although § 101 is interpreted broadly, the Supreme Court has defined three patent-ineligible 

concepts: laws of nature, physical phenomena, and abstract ideas. Alice Corp. Pty. v. CLS Bank 

Int’l, 134 S. Ct. 2347, 2355 (2014) (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 

132 S. Ct. 1289, 1293 (2012)); Diamond v. Chakrabarty, 447 U.S. 303, 308-09 (1980).

To determine whether an invention is patentable, courts apply the two-step framework 

articulated by the Supreme Court in Alice. First, a court must “determine whether the claims at 

issue are directed to one of those patent-ineligible concepts.” Alice, 134 S. Ct. at 2355. If they 

are, a court must then “consider the elements of each claim both individually and as an ordered 

combination to determine whether the additional elements transform the nature of the claim into a 

patent-eligible application.” Id. (internal quotations and citations omitted).

The issue of patent invalidity under § 101 presents a question of law. See DDR Holdings, 

LLC v. Hotels.com, L.P., 773 F.3d 1245, 1255 (Fed. Cir. 2014). Accordingly, a district court may 

resolve the issue of § 101 patent eligibility on a motion to dismiss. See e.g., Content Extraction & 

Transmission LLC v. Wells Fargo Bank, 776 F.3d 1343, 1349 (Fed. Cir. 2014) (affirming 

determination of ineligibility made on motion to dismiss); Ultramercial, Inc. v. Hulu, LLC, 772 

F.3d 709, 714, 717 (Fed. Cir. 2014) (reviewing determination of ineligibility made on motion to 

dismiss). However, a court may need to defer the § 101 analysis until after claim construction

when a patentee identifies terms requiring construction and explains how resolution of 

construction disputes is material to resolving the § 101 challenge. See Protegrity USA, Inc. v. 

Netskope, Inc., No. 15-CV-02515-YGR, 2015 WL 6126599, at *3 (N.D. Cal. Oct. 19, 2015)

(“[T]he Court notes that where a patentee fails to explain which terms require construction or how 

the analysis would change were those constructions adopted, the Court may rule on the validity 

challenge prior to construing claims.”); see also Morsa v. Facebook, Inc., 77 F. Supp. 3d 1007, 

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1012 (C.D. Cal. 2014), aff’d, 622 F. App’x 915 (Fed. Cir. 2015) (“[C]laim construction is a 

prerequisite to the § 101 inquiry only where claim construction disputes are relevant.”).

B. Analysis

Defendant moves to dismiss Plaintiff’s complaint on the ground that the ‘317 Patent is 

directed to the patent-ineligible, abstract idea of “using the results of a breathalyzer test to predict 

how intoxicated a person will be in the future,” and thus is invalid under § 101. Mot. at 3. 

Plaintiff responds that the claims of the ‘317 Patent constitute a patentable improvement and 

transformation of an existing technological process — breath alcohol content analysis using a 

breathalyzer. Dkt. No. 28 (“Opp’n”) at 17-22; Dkt. No. 52 (“Pl. Supp. Br.”) at 1-2. Moreover, 

Plaintiff contends, there are factual issues regarding the proper construction of the “receiving” and 

“determining” terms that make dismissal on a Rule 12(b)(6) motion premature. Opp’n at 6, 10. 

The Court holds that claim construction is necessary to fully understand the basic character of the 

claimed subject matter, making dismissal premature at this stage.

The Federal Circuit has recently issued two decisions, Enfish, LLC v. Microsoft Corp., 822 

F.3d 1327 (Fed. Cir. 2016), and In re: TLI Communications LLC Patent Litig., 823 F.3d 607 (Fed. 

Cir. 2016), which provide additional clarification regarding step one of the Alice test. Issued first, 

Enfish instructs that claims are not directed to an abstract idea if their “plain focus . . . is on an 

improvement to computer functionality” or computer capabilities. Enfish, 822 F.3d at 1336. 

Published less than a week later, TLI emphasizes that claims are abstract, however, if they are 

directed to “the use of conventional or generic technology in a nascent but well-known 

environment, without any claim that the invention reflects an inventive solution to any problem 

presented by combining the two.” TLI, 823 F.3d at 612. Thus, claims that describe “a new 

telephone, a new server, or a new physical combination of the two” are not abstract, but claims 

that describe a system and methods in “purely functional terms” without “any technical details for 

the tangible components” are abstract. Id.

In the wake of Enfish and TLI, the parties disagree over whether the ‘317 Patent’s claims, 

when properly construed, are directed at a patent-ineligible concept under step one of the Alice

test. Plaintiff asserts that, like the claims in Enfish, the claims of the ‘317 Patent “improve an 

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existing technological process of measuring intoxication with a breathalyzer, which only has the 

capability of determining a user’s current level of intoxication.” Pl. Supp. Br. at 2. Specifically, 

Plaintiff contends that the “receiving” and “determining” steps of the ‘317 Patent require the use 

of a physical breathalyzer to “receive” a user’s breath sample and “determine” a user’s 

intoxication metric. Opp’n at 10-14. Plaintiff argues that the ‘317 Patent then improves upon the 

traditional breathalyzer by using the breathalyzer’s output to generate a predicted temporal profile

and notify the user of his projected future levels of intoxication or the effects of his current level of 

intoxication. Id.; Pl. Supp. Br. at 2.

In contrast, Defendant contends that under its interpretation of the “receiving” and 

“determining” steps, the ‘317 Patent can be infringed “without using or possessing a 

breathalyzer.” Dkt. No. 51 (“Def. Supp. Br.”) at 2. Defendant argues that the first step of the ‘317 

Patent can begin with an individual “receiving a set of signals” that has at some point in the past 

been derived from a breathalyzer, and that the remainder of the ‘317 Patent’s claims only recite

the use of a generic processor to manipulate the information received. Id. at 2-3. Defendant 

argues that under its construction, the ‘317 Patent fails to recite a technological improvement to a 

breathalyzer, “instead mak[ing] use of the existing computational capabilities of a generic 

processing system.” Id. 

Given this dispute, the Court finds claim construction necessary to determine whether the 

‘317 Patent is directed at a patentable concept because it claims an improvement to breathalyzer 

technology. Defendant’s motion is premature because the Court needs to construe material 

disputed claims in order to fully understand the basic nature of the claimed invention. See 

Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1273–74 (Fed. Cir. 

2012) (“[T]he determination of patent eligibility requires a full understanding of the basic 

character of the claimed subject matter.”). Specifically, the Court must determine whether, for 

example, the “receiving,” “determining,” and “processing” steps of the ‘317 Patent recite “the use 

of conventional or generic technology in a nascent but well-known environment” or describe a 

truly innovative solution in breathalyzer technology. See TLI, 823 F.3d at 612. 

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III. CONCLUSION

The Court finds Defendant’s motion to dismiss on the basis of patent ineligibility under 35 

U.S.C. § 101 premature, and denies the motion without prejudice. Defendant may bring a 

renewed motion on § 101 patent ineligibility grounds after the completion of claim construction.

The Court sets a case management conference on October 18, 2016, at 2:00 p.m. The 

parties are directed to meet and confer and file a joint case management statement by October 11, 

2016. In particular, the parties should discuss whether they agree on a proposed case schedule.

IT IS SO ORDERED.

Dated: September 30, 2016

______________________________________

HAYWOOD S. GILLIAM, JR.

United States District Judge

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