Court Opinion

ID: 4580083
Source: CourtListenerOpinion
Date Created: 2020-10-23 15:00:32.447123+00
Date Added: 2024-06-11T13:41:00.487535
License: Public Domain

Case: 19-2198    Document: 80      Page: 1   Filed: 10/23/2020

         NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                  ______________________

           REALTIME DATA LLC, DBA IXO,
                 Plaintiff-Appellant

                              v.

  REDUXIO SYSTEMS, INC., ARYAKA NETWORKS,
     INC., PANZURA, INC., FORTINET, INC.,
               Defendants-Appellees
              ______________________

       2019-2198, 2019-2201, 2019-2202, 2019-2204
                ______________________

     Appeals from the United States District Court for the
 District of Delaware in Nos. 1:17-cv-01635-CFC, 1:17-cv-
 01676-CFC,      1:18-cv-01200-CFC,    1:18-cv-02062-CFC,
 Judge Colm F. Connolly.
                   ______________________

                 Decided: October 23, 2020
                  ______________________

      BRIAN DAVID LEDAHL, Russ August & Kabat, Los Ange-
 les, CA, argued for plaintiff-appellant. Also represented by
 MARC AARON FENSTER, PAUL ANTHONY KROEGER, REZA
 MIRZAIE.

    JOHN NEUKOM, Skadden, Arps, Slate, Meagher & Flom
 LLP, Palo Alto, CA, argued for all defendants-appellees.
 Defendant-appellee Fortinet, Inc. also represented by
Case: 19-2198    Document: 80     Page: 2    Filed: 10/23/2020

 2               REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.

 MICHELLE KAO, JAMES Y. PAK.

      GUY YONAY, Pearl Cohen Zedek Latzer Baratz LLP,
 New York, NY, for defendant-appellee Reduxio Systems,
 Inc.

    JOSHUA M. MASUR, Zuber Lawler & Del Duca LLP,
 Redwood City, CA, for defendant-appellee Aryaka Net-
 works, Inc.

     BRIAN E. MITCHELL, Mitchell & Company, San Fran-
 cisco, CA, for defendant-appellee Panzura, Inc.
                   ______________________

 Before NEWMAN, O’MALLEY, and TARANTO, Circuit Judges.
     Opinion for court filed by Circuit Judge O’MALLEY.
     Concurring opinion filed by Circuit Judge TARANTO.
 O’MALLEY, Circuit Judge.
     In 1955, Judge Learned Hand called the court-created
 “invention requirement” “the most baffling concept” in all
 of patent law. Lyon v. Bausch & Lomb Optical Co., 224
 F.2d 530, 536 (2d Cir. 1955). 1 Today, he would likely save

     1    Essentially, the invention requirement instructed
 courts to invalidate patents that did not involve a true
 measure of invention, with little explanation of what that
 concept meant. See McClain v. Ortmayer, 141 U.S. 419,
 427 (1891) (“In a given case we may be able to say that
 there is present invention of a very high order. In another
 we can see that there is lacking that impalpable something
 which distinguishes invention from simple mechanical
 skill.”). Congress did away with the requirement in the
 1952 Patent Act and, instead, directed courts to assess
 whether the invention was nonobvious, codifying that con-
 cept in 35 U.S.C. § 103.
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 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.                 3

 that characterization for the court-created exceptions to
 what constitutes patentable subject matter under
 35 U.S.C. § 101. Because those exceptions are complex and
 their application is reviewed de novo, district courts might
 be tempted to opt for an effective coin toss rather than a
 reasoned analysis when faced with a challenge under
 § 101. This is especially so where the abstract idea excep-
 tion is invoked. But the system is not supposed to work
 that way. The parties are entitled to more and the Court
 of Appeals needs more.
     A district court opinion “must contain sufficient find-
 ings and reasoning to permit meaningful appellate scru-
 tiny.” Gechter v. Davidson, 116 F.3d 1454, 1458 (Fed. Cir.
 1997). Although we have said that we review judgments,
 not opinions, King Instrument Corp. v. Otari Corp., 767
 F.2d 853, 862 (Fed. Cir. 1985), where a district court has
 offered no reasoning for us to review we may, and most of-
 ten do, decline to analyze a legal question in the first in-
 stance. Proveris Sci. Corp. v. Innovasystems, Inc., 739 F.3d
 1367, 1373 (Fed. Cir. 2014).
     Realtime Data LLC (“Realtime”) appeals from a bench
 ruling of the United States District Court for the District
 of Delaware holding all 159 claims of U.S. Patent Nos.
 7,415,530 (“’530 patent”), 8,717,203 (“’203 patent”),
 9,054,728 (“’728 patent”), 9,116,908 (“’908 patent”), and
 9,667,751 (“’751 patent”) (collectively “patents-in-suit”) pa-
 tent ineligible under 35 U.S.C. § 101. See J.A. 52–59. Be-
 cause this case presents one of those rare circumstances in
 which a district court’s treatment of a complex and close
 legal issue is too cursory to allow for meaningful appellate
 review, we vacate and remand for the district court to give
 additional consideration to the eligibility question and
 elaborate on its reasoning.
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 4                 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.

                        I. BACKGROUND
                    A. The Patents-in-Suit
      The patents-in-suit all relate, at a high level, to meth-
 ods and systems for digital data compression. The ’728 pa-
 tent and ’203 patent, which are in the same family and
 share a common specification, are titled “Data Compres-
 sion Systems and Methods.” The patents’ written descrip-
 tions explain the problem of “data dependency” in prior art
 systems. “Data dependency” is “content sensitive behav-
 ior” that means “the compression ratio achieved is highly
 contingent upon the content of the data being compressed.”
 ’728 patent, col. 2, ll. 29–35. One prior art solution was to
 select a compression technique based on “file type de-
 scriptors” (e.g., .doc, .txt, or .pdf) that are used to identify
 “the application programs that normally act upon the data
 contained within the file.” Id. at col. 3, ll. 2–5. The written
 descriptions explain, however, that this solution’s efficacy
 is limited by the sheer number and rate of development of
 application program types. Id. at col. 3, ll. 9–19. The writ-
 ten descriptions further describe a system for data com-
 pression that looks beyond the file type descriptor, to the
 underlying data, to complete the desired compression. See
 generally id. at col. 3, l. 59–col. 5, l. 11.
     The ’908 patent and the ’530 patent, which are in the
 same family and share a common specification, are titled
 “System and Methods for Accelerated Data Storage and Re-
 trieval.” The patents’ written descriptions explain that the
 disclosed invention relates to “improving data storage and
 retrieval bandwidth utilizing lossless data compression
 and decompression.” ’908 patent, col. 1, ll. 17–18. The
 written descriptions describe certain drawbacks found in
 prior art systems, including that they did not adequately
 account for hardware limitations. Id. at col. 2, ll. 34–45.
 The patents’ disclosed invention purports to overcome
 these limitations by, for example, selecting encoding tech-
 niques “based upon their ability to effectively encode
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 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.                 5

 different types of input data.” Id. at col. 12, ll. 5–7. The
 written descriptions explain that this is meant “to elimi-
 nate the complexity and additional processing overhead as-
 sociated    with    multiplexing      concurrent     encoding
 techniques.” Id. at col. 12, ll. 31–33.
     The ’751 patent is titled “Data Feed Acceleration” and
 relates to “systems and method for providing accelerated
 transmission of data . . . over a communication channel us-
 ing data compression and decompression to . . . effectively
 increase the bandwidth of the communication channel
 and/or reduce the latency of data transmission.” ’751 pa-
 tent, col 1., ll. 27–36. The ’751 patent’s written description
 describes drawbacks in the prior art, including that “cur-
 rent methods of encryption and compression take as much
 or substantially more time than the actual time to transmit
 the uncompressed, unencrypted data.” Id. at col. 3, ll. 31–
 33. The disclosed invention purports to solve these prob-
 lems via a “data compression ratio [that] is substantial and
 repeatable on each data packet” that has “no packet-to-
 packet data dependency.” Id. at col. 7, ll. 55–66.
      The patents-in-suit and members of their patent fami-
 lies have been widely litigated. See Appellees’ Br. 14 n.1
 (collecting cases). Of particular relevance to this appeal,
 Magistrate Judge John D. Love of the Eastern District of
 Texas considered the patent eligibility of the ’728, ’530, and
 ’908 patents, as well as the eligibility of members of the
 ’203 and ’751 patents’ families, in two separate cases. See
 Realtime Data, LLC v. Carbonite, Inc., No. 6:17-CV-00121,
 2017 WL 4693969 (E.D. Tex. Sept. 20, 2017), report and
 recommendation adopted, No. 1:17-cv-12499-WGY (D.
 Mass. March 7, 2018), ECF No. 97; Realtime Data, LLC v.
 Actian Corp., No. 6:15-CV-463-RWS-JDL, 2015 WL
 11089485 (E.D. Tex. Nov. 30, 2015), report and recommen-
 dation adopted, 2016 WL 259581 (E.D. Tex. Jan. 21, 2016).
 In each case, Judge Love recommended that the challenged
 claims be deemed patent eligible at both Alice step 1 and
 step 2. His reports and recommendations were fully
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 6                REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.

 adopted by two different district court judges—Judge Rob-
 ert W. Schroeder III of the Eastern District of Texas and,
 due to an intervening transfer, Judge William G. Young of
 the District of Massachusetts—each with significant expe-
 rience in patent cases.
                B. District Court Proceedings
     Realtime filed suit alleging infringement of various
 combinations of the claims of the patents-in-suit against
 Fortinet, Inc. (“Fortinet”) and Reduxio Systems, Inc. (“Re-
 duxio”) in November 2017, against Panzura, Inc. (“Pan-
 zura”) in August 2018, and against Aryaka Networks, Inc.
 (“Aryaka”) in December 2018. Fortinet, Reduxio, Panzura,
 and Aryaka (collectively “defendants”) filed motions to dis-
 miss the suits for failure to state a claim in early 2019.
 Among other things, the defendants argued that all 159
 claims of the patents-in-suit are patent ineligible under 35
 U.S.C. § 101.
      Pursuant to a June 10, 2019 order, the parties were in-
 structed to submit a letter to the court in advance of oral
 argument identifying “which Supreme Court or Federal
 Circuit case that party contends is most similar to the chal-
 lenged claim(s).” See, e.g., Order, Realtime Data LLC v.
 Fortinet, Inc., No. 17-cv-01635-CFC (D. Del. June 10,
 2019), ECF No. 51. Defendants identified RecogniCorp,
 LLC v. Nintendo Co., 855 F.3d 1322 (Fed. Cir. 2017). See,
 e.g., Letter, Realtime Data LLC v. Fortinet, Inc., No. 17-cv-
 01635-CFC (D. Del. July 3, 2019), ECF No. 56. Realtime
 pointed to Visual Memory LLC v. Nvidia Corp., 867 F.3d
 1253 (Fed. Cir. 2017). See Letter, Realtime Data LLC v.
 Fortinet, Inc., No. 17-cv-01635-CFC (D. Del. July 3, 2019),
 ECF No. 57.
     On July 19, 2019, the district court heard argument on
 the motions to dismiss. The proceeding lasted two hours
 and eight minutes, including a recess. The argument fo-
 cused primarily on claim 25 of the ’751 patent. See J.A.
 29–51. The district court asked numerous questions of
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 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.                 7

 Realtime—focusing on individual claim elements and ask-
 ing Realtime to explain what made the claim “novel.” See
 J.A. 33–34. At one point, the district court interjected that
 the solution claimed in the ’751 patent was “obvious—it’s
 just stating the obvious.” J.A. 48. The court then clarified,
 “I don’t mean obviousness in the patent sense. I mean it is
 obvious like it’s common sense.” Id. While Realtime’s
 counsel attempted to focus the court to the question of
 whether the claims were directed to an improvement on ex-
 isting technology, as opposed to mere use of such technol-
 ogy, the court did not appear to consider that question. See
 J.A. 42–46. Having dissected claim 25 of the ’751 patent,
 the district court ended the argument. See J.A. 52.
     Following a short recess, the district court announced
 it was “prepared to rule on the pending motions” and ex-
 plained it would “not be issuing written opinions.” J.A. 52.
 The transcript would serve as its ruling on all pending mo-
 tions. The court stated that it had “followed a thorough
 process before making the decision,” including considering
 the briefing and engaging in oral argument, J.A. 52, but its
 complete oral analysis of the patent eligibility of the 159
 claims in the asserted patents fills only five pages of tran-
 script. J.A. 53–57. At the end of those five pages, the court
 declared all claims of U.S. Patent Nos. 7,415,530,
 8,717,203, 9,054,728, 9,116,908, and 9,667,751 patent inel-
 igible. J.A. 57.
     After the district court announced its ruling, Realtime
 asked for the court’s decision on its request for leave to
 amend its complaints. J.A. 59. The district court re-
 sponded, “my practice has been to ignore [requests for leave
 to amend] and just to grant a motion to dismiss.” J.A. 60.
 Although the district court conceded that “reasonable peo-
 ple can disagree” on the eligibility of the asserted claims,
 J.A. 58, it denied Realtime’s request for leave to amend its
 complaint. J.A. 63. (“I think you can take your issues up
 with the Federal Circuit, and if I’m wrong, I’m wrong.”).
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 8                REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.

     Judgment was entered in each case on July 29, 2019.
 J.A. 1–8. Realtime timely appealed. We have jurisdiction
 pursuant to 28 U.S.C. § 1295(a)(1).
                       II. DISCUSSION
      Courts must assess the patent eligibility of claims via
 the two-part test established by the Supreme Court in Alice
 Corp. v. CLS Bank International, 573 U.S. 208 (2014). At
 Alice step 1, a court must “determine whether the claims
 at issue are directed to a patent-ineligible concept.” Id. at
 218. Patent ineligible concepts include laws of nature, nat-
 ural phenomena, and abstract ideas. A court’s determina-
 tion of whether a claim is directed to one of those patent
 ineligible concepts must consider individual claim ele-
 ments and the elements as an ordered combination. Id. at
 217. At Alice step 2, a court must decide whether the
 claims contain an “inventive concept” such that “the patent
 in practice amounts to significantly more than a patent
 upon the [ineligible concept] itself.” Id. at 217–18 (altera-
 tion in original) (quoting Mayo Collaborative Servs. v. Pro-
 metheus Labs., Inc., 566 U.S. 66, 73 (2012)).
     The ultimate determination of patent eligibility under
 35 U.S.C. § 101 is a question of law that we review de novo.
 Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir.
 2018). That we have de novo review does not, however,
 mean that we are a court of first view. Despite the stand-
 ard of review that we apply, we remain a court of appeal
 not a court of original jurisdiction. Compare Original Ju-
 risdiction, Black’s Law Dictionary (10th ed. 2014) (“A
 court’s power to hear and decide a matter before any other
 court can review the matter.”), with Appellate Jurisdiction,
 id. (“The power of a court to review and revise a lower
 court’s decision.”). District courts have an obligation to
 provide us with a reviewable decision, commensurate with
 the issues before it. See Nazomi Commc’ns, Inc. v. ARM
 Holdings, PLC, 403 F.3d 1364, 1371 (Fed. Cir. 2005)
 (“[T]his court must be furnished ‘sufficient findings and
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 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.                   9

 reasoning to permit meaningful appellate scrutiny.’ This
 requirement for sufficient reasoning applies with equal
 force to issues of law . . . and issues of fact . . . .” (quoting
 Gechter, 116 F.3d at 1458)). De novo appellate review cer-
 tainly does not justify resolving a complex legal issue with-
 out an opinion or reasoned analysis. Unfortunately, that
 is exactly the type of improper justification the district
 court proffered in this case. See J.A. 55 (district court dis-
 cussing the de novo standard of review and concluding
 “[t]hat’s why I’m not going to write anymore”); see also id.
 (“[M]aybe Realtime is right and the Federal Circuit panel
 will say differently and will have that opportunity to do
 that.”).
      We hold, on the record presented to us on appeal, that
 the district court’s short analysis is insufficient to facilitate
 meaningful appellate review. We are particularly con-
 cerned with four shortcomings in the court’s process:
 (1) the colloquy between the court and Realtime indicates
 an apparently improper focus on factual questions that are
 unsuitable for resolution at the pleading stage and a failure
 to evaluate the claims as a whole; (2) to the extent the dis-
 trict court purported to resolve the “directed to” question of
 Alice step 1, its process is unclear and its conclusion ques-
 tionable; (3) the court did not address or even acknowledge
 Judge Love’s lengthy written opinions, which were adopted
 by two district courts, addressing the precise question
 faced by the court; and (4) although, as the district court
 requested, Realtime identified Visual Memory LLC v.
 NVIDIA Corp., 867 F.3d 1253 (Fed. Cir. 2017), as the case
 most analogous to this one and directed the court to our
 decision in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327
 (Fed. Cir. 2016), and DDR Holdings, LLC v. Hotels.com,
 L.P., 773 F.3d 1245 (Fed. Cir. 2014), the district court failed
 to address or distinguish those cases.
      First, the colloquy between the district court and
 Realtime leaves us unclear as to the true basis for the dis-
 trict court’s decision. Rather than focus first on whether
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 10                REALTIME DATA LLC    v. REDUXIO SYSTEMS, INC.

 the claims are “directed to” an abstract idea as we ex-
 plained in Enfish is the initial inquiry in cases like this, the
 district court repeatedly inquired whether claim limita-
 tions were “novel.” See, e.g., J.A. 33 (“The Court: You are
 not going to tell me it’s novel to have a data server imple-
 mented on one or more processors, are you?”); id. at 34
 (“The Court: Well, at the end, you can tell me what’s novel
 about the configuration, so we’ll come back to that.”). The
 district court later expressed a view that the claimed in-
 vention of the ’751 patent was “obvious”—but not in the pa-
 tent sense, “like it’s common sense.” Id. at 48. Novelty and
 nonobviousness are well-established patent law doctrines
 and, though they are not wholly divorced from some as-
 pects of the § 101 inquiry, they are rarely issues appropri-
 ate for resolution on the pleadings. That is especially true
 where, as here, Realtime repeatedly contested as factually
 incorrect propositions posited by the district court. See,
 e.g., J.A. 45–46. Those concepts, moreover, are not part of
 the Alice step 1 inquiry, they relate, if at all, to step 2. And,
 to the extent the court was influenced by its subjective un-
 derstanding of “common sense,” that is plainly irrelevant.
     Nothing in the discussion between the court and
 Realtime leads us to understand that the district court con-
 sidered the claims as a whole or, for that matter, seriously
 considered any claims beyond claim 25 of the ’751 patent.
 With the little we have before us, it is hard, if not impossi-
 ble, to put the district court’s commentary out of mind.
 And, it is difficult to discern what part of the court’s con-
 cerns with the claims were directed to which step of the
 Alice analysis.
     Second, to the extent the court purported to answer the
 Alice step 1 “directed to” question, it is unclear that it did
 so correctly. One critical shortcoming in the district court’s
 analysis is a failure to identify which, if any, claims are
 representative. Although the court articulated a “fair de-
 scription” of each patent-in-suit, J.A. 56, it failed to tie
 those descriptions to any specific claim or to clarify
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 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.               11

 whether those descriptions are the abstract ideas that the
 claims are “directed to” within the meaning of § 101 juris-
 prudence. It is, of course, incorrect to consider whether a
 patent as a whole is abstract. The analysis is claim spe-
 cific. If, as we suspect, the district court’s analysis simply
 generalized the claims, absent a finding of the representa-
 tiveness of certain claims and without considering the “di-
 rected to” inquiry, that was error.
      We further question the district court’s statements that
 the claims are, to use the ’728 patent as an example, merely
 “choosing a compression method based on the data type.”
 J.A. 56. This statement seems to miss that the claims ex-
 pressly achieve this result in certain ways, involving exam-
 ining data blocks and not relying just on a descriptor. See
 ’728 patent, claim 24. Without more analysis, we cannot
 identify the district court’s reasons for omitting key aspects
 of the claims and we cannot say whether that rationale was
 sound. It appears, however, that the district court improp-
 erly equated the presence of an abstract idea with a conclu-
 sion that the claims are directed to such an idea. Mayo,
 566 U.S. at 71 (“[A]ll inventions at some level embody, use,
 reflect, rest upon, or apply laws of nature, natural phenom-
 ena, or abstract ideas.”). On remand, we caution the dis-
 trict court away from sweeping generalizations and
 encourage the court to carefully consider the “directed to”
 question once more.
     Third, as we discuss above, the patents-in-suit and
 their relatives have been subject to § 101 scrutiny in the
 past. Two district court judges and one magistrate judge,
 across two judicial districts, have separately considered
 whether the claims are patent eligible and concluded that
 they are. This is not to say that those judges were neces-
 sarily correct in their assessment of this issue nor that the
 court was bound by those conclusions. We mean only to say
 that, when deciding the motions to dismiss in this case, the
 court should have, at a minimum, provided a considered
 explanation as to why those judges were wrong. This could
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 12               REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.

 have been done expressly; the court could have cited the
 earlier cases and distinguished them. Or the analysis
 could have been implied; the court could have analyzed the
 arguments for eligibility in such a way that the reasons for
 the differing conclusions are apparent. Here, however, ra-
 ther than take either approach, the court recited a series of
 legal conclusions and § 101 cases, without analysis. That
 simply was not enough.
      Fourth, the district court asked each party to identify
 a single case that most closely supports its position on the
 eligibility of the claims. Defendants selected RecogniCorp.
 The district court mentioned RecogniCorp in its oral opin-
 ion. It articulated the holding of that case as, “noting that
 processes that start with data and add in an algorithm and
 end with a new form of data are directed to an abstract
 idea.” J.A. 54. It then concluded, without explanation,
 “[t]hat’s what we have here.” Id. Prior to argument,
 Realtime identified Visual Memory. It argued that the case
 was analogous during the colloquy. J.A. 50–51. As noted,
 Realtime also advocated that Enfish and DDR Holdings
 are analogous. J.A. 28, 44. The district court, however,
 never mentioned Visual Memory, Enfish, or DDR, much
 less distinguished them. We do not today opine on the mer-
 its of Realtime’s contention that its patents are akin to the
 patent eligible claims of Visual Memory or to any of the
 other cases where our court has found claims to be patent
 eligible. We merely note that, by not addressing even the
 one case held out as most comparable by Realtime, the dis-
 trict court did not do enough. 2

      2   This is an important failure. Assessments of pa-
 tent eligibility are best done by reference to our numerous
 cases engaging in those assessments and gleaning insight
 from the resolutions. As that exercise reveals, there are
 often very fine lines between those cases and between what
 is patent eligible and what is not. A detailed analysis of
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 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.               13

     To be clear, we do not hold that a written order is al-
 ways necessary. There are indeed times, even on a case
 dispositive motion, where an oral order is enough. We have
 seen and affirmed several such orders in the past. This
 case is unique, however, in its paucity of analysis and the
 closeness of the underlying legal issue. Our conclusion that
 the district court must do more in this case is reinforced,
 moreover, by the fact that through its abbreviated process
 the district court eviscerated five of Realtime’s patents and
 completely resolved four separate district court actions.
 While much can be said on the benefits of judicial effi-
 ciency, the process used here strays beyond efficient to the
 realm of insufficient. 3
                       III. CONCLUSION
     For the reasons discussed above, we vacate the district
 court’s judgments and remand for further proceedings con-
 sistent with this opinion. Nothing in this opinion should
 be read as opining on the relative merits of the parties’ ar-
 guments or the proper resolution of the case.

 those cases and the record before the district court is often
 needed if we are to appropriately assess the court’s resolu-
 tion of a § 101 challenge.
      3   Because we vacate the district court’s judgment, we
 need not decide whether the district court abused its dis-
 cretion by denying Realtime’s request for leave to amend
 its complaints. We are concerned, however, with the dis-
 trict court’s statement that its blanket practice is to deny
 such requests. Factual allegations in a complaint can suf-
 fice to overcome Alice step 2 and district courts should, as
 in any civil case, freely grant leave to amend to allege the
 necessary facts. See Cellspin Soft, Inc. v. Fitbit, Inc., 927
 F.3d 1306, 1317 (Fed. Cir. 2019); Aatrix Software, Inc. v.
 Green Shades Software, Inc., 882 F.3d 1121, 1127–30 (Fed.
 Cir. 2018).
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 14                 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.

                  VACATED AND REMANDED
                             COSTS
      No costs.
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         NOTE: This disposition is nonprecedential.

    United States Court of Appeals
        for the Federal Circuit
                  ______________________

           REALTIME DATA LLC, DBA IXO,
                 Plaintiff-Appellant

                              v.

   REDUXIO SYSTEMS, INC., ARYAKA NETWORKS,
      INC., PANZURA, INC., FORTINET, INC.,
                Defendants-Appellees
               ______________________

        2019-2198, 2019-2201, 2019-2202, 2019-2204
                 ______________________

     Appeals from the United States District Court for the
 District of Delaware in Nos. 1:17-cv-01635-CFC, 1:17-cv-
 01676-CFC,      1:18-cv-01200-CFC,    1:18-cv-02062-CFC,
 Judge Colm F. Connolly.
                   ______________________

 TARANTO, Circuit Judge, concurring in the judgment.
     I concur in the judgment, which vacates the district
 court’s judgments dismissing the cases and denying an
 opportunity to amend the complaints and remands for
 further proceedings.
      The foundation of a proper determination of the
 eligibility of claimed subject matter under 35 U.S.C. § 101
 and the framework of Alice Corp. Pty. Ltd. v. CLS Bank
 Int’l, 573 U.S. 208 (2014), is an accurate identification of
 the focus of the claimed advance at Alice’s Step 1, to be
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 2                REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.

 followed (if necessary) by an accurate identification of all
 specifics of the claims at Alice’s Step 2. At both stages, it
 is important to avoid “overgeneralizing [the] claims,”
 Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1337 (Fed.
 Cir. 2016), i.e., “‘oversimplifying the claims’ by looking at
 them generally and failing to account for the[ir] specific
 requirements,” McRO, Inc. v. Bandai Namco Games
 America, Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016). At
 Alice’s Step 1, a claim must be “considered in light of the
 specification” to identify “the focus of the claimed advance.”
 Enfish, 822 F.3d at 1335; Solutran, Inc. v. Elavon, Inc., 931
 F.3d 1161, 1168 (Fed. Cir. 2019) (internal quotation marks
 omitted). In particular, that identification is crucial to
 applying what is in the present cases the key doctrinal
 distinction—derived from Alice, 573 U.S. at 225—between
 using unimproved computers and networks as tools and
 improving computers or networks as tools, i.e., improving
 basic computer or network functions themselves (e.g.,
 processing, memory, input/output, transmission) in
 specific ways, see Enfish, 822 F.3d at 1335–36; see also
 Uniloc USA, Inc. v. LG Electronics USA, Inc., 957 F.3d
 1303, 1306–07 (Fed. Cir. 2020) (citing cases). Identifying
 claim specifics is also crucial at Alice’s Step 2—to
 determining whether the claim contains limitations that,
 alone or in combination, are not aspects of the ineligible
 matter itself and (if they are not) go beyond “‘well-
 understood, routine, conventional activit[ies]’ previously
 known in the industry.” Alice, 573 U.S. at 225 (alteration
 in original) (citation omitted).
     In the present cases, the district court erred at the
 foundational stage. In the decision-announcing part of the
 July 19, 2019 hearing, the court characterized the claims
 without mention of what, for at least some (perhaps all) of
 the claims at issue, the claim language and specifications
 make clear are important parts of what the patents assert
 are the advances in the art. For example, the court de-
 scribed claim 1 of U.S. Patent No. 9,054,728 as a system for
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 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.                3

 “choosing a compression method based on the data type.”
 J.A. 56. That description disregards claim language re-
 quiring that the identification of data type rely on exami-
 nation of data blocks and not on a file extension or
 comparable descriptor of the data type. ’728 patent, col. 26,
 lines 29–48 (“to analyze data within a data block to identify
 one or more parameters or attributes of the data wherein
 the analyzing of the data within the data block to identify
 the one or more parameters or attributes of the data ex-
 cludes analyzing based solely on a descriptor that is indic-
 ative of the one or more parameters or attributes of the
 data within the data block”). The specification describes
 that data-examination basis for choosing a compressor
 method as one of the claimed advances over the prior art.
 Id., cols. 3, 4. The district court’s truncated characteriza-
 tion of claim 1 of the ’728 patent, and of some or all of the
 other claims at issue, created an incorrect starting point for
 the required analysis.
      A seemingly related error appears in the portion of the
 July 2019 hearing devoted to colloquies between the dis-
 trict court and counsel. Although such colloquies are in-
 trinsically only exploratory, and thus could easily have
 been superseded by the court’s articulation of its rationale
 in the decisional portion of the hearing, in these cases the
 court’s statements in the two portions align. In the collo-
 quy portion, the district court made statements suggesting
 adoption of a premise that the Alice test might be flunked
 solely because the claimed systems and methods use hard-
 ware components such as processors, servers, and memory.
 See J.A. 33–41. To the extent that the district court
 adopted that premise, it was mistaken. Eligibility analysis
 in cases like these requires consideration of whether the
 hardware components have been configured by program-
 ming to improve their basic functionalities (e.g., processing
 functions, memory functions, input/output functions,
 transmission functions) in specific ways.               Such
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 4                REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.

 improvements can be eligible subject matter under Enfish
 and many later cases.
     The error at the foundational stage in these cases is not
 a matter of choosing among an often-available range of for-
 mulations that are relatively minor variations in how to
 describe the claims for both Step 1 and Step 2 purposes.
 The error here is far more basic, and more consequential
 for the conduct of a sound analysis. The district court es-
 sentially disregarded limitations, in at least some of the
 patent claims at issue, that are part of the focus of the as-
 serted advances. Because the court overgeneralized, or
 oversimplified, the claims in that fundamental way, the
 court in effect failed to conduct the inquiries required un-
 der the branch of § 101 doctrine relevant here.
      The § 101 inquiries demand close attention to the spe-
 cific content of the patent claims at issue; the specifics mat-
 ter under the growing body of precedents that provide both
 significant analytical distinctions and fact-specific judg-
 ments important to the assessment of later-litigated facts.
 At least since Alice was decided, it has become clear that
 sometimes those inquiries lead quickly, and without the
 need for extensive discussion, to a conclusion that a claim,
 despite its length, is merely elaborating on what are all ab-
 stract ideas or reciting the details of what are conventional
 tools of implementation. See, e.g., Electric Power Group,
 LLC v. Alstrom S.A., 830 F.3d 1350 (Fed. Cir. 2016). But
 the present cases are in a more challenging category, be-
 cause the claims, on their face and understood in light of
 the specifications, purport to solve engineering problems in
 the transfer of data. Whatever conclusion is ultimately
 reached for the claims before us, these cases require a
 sounder starting point, and a more extensive analysis, than
 the district court provided.
      In these cases, I agree that it is appropriate to take
 what is, and should remain, the unusual step of remanding
 for reconsideration of the § 101 issue without ruling on the
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 REALTIME DATA LLC   v. REDUXIO SYSTEMS, INC.                 5

 issue ourselves. A remand will allow the district court to
 characterize the claims more accurately and, on that new
 basis, to consider relevant precedents of this court that the
 district court did not address, including a number of post-
 July 2019 precedents that provide clarifying guidance con-
 cerning the inquiries pertinent to the analysis in cases like
 the ones before us. See, e.g., TecSec, Inc. v. Adobe Inc., Nos.
 2019-2192, -2258 (Fed. Cir. Oct. 23, 2020), slip op. at 20–31
 (citing and discussing cases); Packet Intelligence LLC v.
 NetScout Sys., Inc., 965 F.3d 1299, 1309–10 (Fed. Cir.
 2020); Uniloc, 957 F.3d at 1306–07; Ericsson Inc. v. TCL
 Commc’n Tech. Holdings Ltd., 955 F.3d 1317, 1327–28
 (Fed. Cir. 2020); Customedia Techs., LLC v. Dish Network
 Corp., 951 F.3d 1359, 1364–65 (Fed. Cir. 2020); Koninklijke
 KPN N.V. v. Gemalto M2M GmbH, 942 F.3d 1143, 1149–
 50 (Fed. Cir. 2019); see also SRI Int’l, Inc. v. Cisco Systems,
 Inc., 930 F.3d 1295, 1303–04 (Fed. Cir. 2019) (mid-July
 2019). A remand will also allow the district court, should
 Step 2 be reached, to reconsider, after a re-focused analysis
 proceeding through the Step 1 and Step 2 inquiries,
 whether the filing of amended complaints should be per-
 mitted. I therefore concur in the judgment of the court.