Court Opinion

ID: 4658382
Source: CourtListenerOpinion
Date Created: 2021-02-08 16:00:57.672867+00
Date Added: 2024-06-11T08:01:52.596300
License: Public Domain

Case: 20-1777   Document: 33     Page: 1    Filed: 02/08/2021

        NOTE: This disposition is nonprecedential.

   United States Court of Appeals
       for the Federal Circuit
                 ______________________

                   VERIPATH, INC.,
                   Plaintiff-Appellant

                            v.

                       DIDOMI,
                   Defendant-Appellee
                 ______________________

                       2020-1777
                 ______________________

    Appeal from the United States District Court for the
 Southern District of New York in No. 1:19-cv-01702-GBD,
 Judge George B. Daniels.
                  ______________________

                Decided: February 8, 2021
                 ______________________

     JONATHAN K. WALDROP, Kasowitz Benson Torres LLP,
 Redwood Shores, CA, for plaintiff-appellant. Also repre-
 sented by HEATHER KIM.

    CHARLES R. MACEDO, Amster Rothstein & Ebenstein
 LLP, New York, NY, for defendant-appellee. Also repre-
 sented by CHRISTOPHER LISIEWSKI.
                 ______________________

    Before LOURIE, CHEN, and HUGHES, Circuit Judges.
Case: 20-1777     Document: 33      Page: 2     Filed: 02/08/2021

2                                      VERIPATH, INC.   v. DIDOMI

 LOURIE, Circuit Judge.
     VeriPath, Inc. (“VeriPath”) appeals from a decision of
 the United States District Court for the Southern District
 of New York holding that the claims of U.S. Patent
 10,075,451 (“the ’451 patent”) are ineligible for patent un-
 der 35 U.S.C. § 101. VeriPath, Inc. v. Didomi, No. 19 CIV.
 1702 (GBD), 2020 WL 1503687 (S.D.N.Y. Mar. 30, 2020)
 (“Decision”). Because we agree with the district court that
 the patent claims patent-ineligible subject matter, we af-
 firm.
                         BACKGROUND
      VeriPath owns the ’451 patent, which is generally di-
 rected to a data privacy system. ’451 patent, Abstract. The
 patent describes that users can use mobile device applica-
 tions to “socialize, bank, shop, [and] navigate.” Id. col. 1 ll.
 25–27. However, as users interact with the applications,
 “information about [their] activities or status may be col-
 lected automatically.” Id. col. 1 ll. 38–41. The patent states
 that “[b]ecause of the sensitivity of this personal infor-
 mation, many states and countries” have enacted laws re-
 quiring companies that collect such data to (1) present
 users with a specific privacy disclosure explaining how
 their personal information will be used and (2) obtain the
 users’ consent before the information is collected. Id. col 1
 ll. 51–55. We are told that the laws governing privacy dis-
 closures and consent requirements can differ from locality
 to locality, requiring companies to present and collect dif-
 ferent privacy disclosures and consents based upon the us-
 ers’ location. See id. col. 2 ll. 1–13.
     The patent purports to address the drawbacks “of cur-
 rent data collection/privacy schemes by providing an im-
 proved, more transparent opt-in process.” Id. col. 2 ll. 29–
 31. Specifically, the patent describes an “arrangement
 [that] allows a component of an application (e.g., a mobile
 app), in conjunction with other components of a distributed
 system, to determine what information is to be collected
Case: 20-1777       Document: 33   Page: 3    Filed: 02/08/2021

 VERIPATH, INC.   v. DIDOMI                                  3

 from a user, how that information will be used, and what
 permissions are required from that user for that user.” Id.
 col. 2 ll. 29–36. “In some embodiments, the user may be
 presented with certain offers in exchange for the user’s con-
 sent to a proposed use of certain personal information.” Id.
 col. 2 ll. 46–48.
     Claim 1, which is representative of the claims before
 us, reads as follows:
     1. A method for controlling access to a user’s per-
     sonal information comprising:
     providing a software component for inclusion in an
     application, the software component having an ap-
     plication programming interface (API);
     obtaining, from the application executing on a de-
     vice of a user of the application, personal infor-
     mation about the user of the application, the
     personal information obtained via the API by the
     software component executing on the device;
     identifying the type of the obtained personal infor-
     mation;
     determining, based on at least the type of obtained
     personal information, a required permission from
     the user for at least one proposed use of the ob-
     tained personal information;
     presenting, to the user, a first offer to provide ac-
     cess to at least one enhanced function of the appli-
     cation in exchange for the required permission; and
     responsive to the user providing the required per-
     mission, providing the user with access to the at
     least one enhanced function of the application.
 Id. col. 16 ll. 7–28.
     VeriPath sued Didomi, asserting that Didomi had in-
 fringed “at least claim 1 of the ’451 Patent.” J.A. 276.
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4                                     VERIPATH, INC.   v. DIDOMI

 Didomi then filed a motion to dismiss the complaint for fail-
 ure to state a claim pursuant to Federal Rule of Civil Pro-
 cedure 12(b)(6), asserting that the claims of the ’451 patent
 are ineligible for patent under 35 U.S.C. § 101. See J.A.
 553–77.
     The district court considered the claims under the Su-
 preme Court’s two-step Alice framework for determining
 patent eligibility. At Alice step one, the court observed that
 claim 1 of the patent is directed to “the abstract idea of
 granting permission to access personal information in ex-
 change for enhanced functionality via the API, a routine
 piece of software.” Decision, 2020 WL 1503687, at *3. At
 Alice step two, the court determined that claim 1 lacks an
 inventive concept sufficient to convert the abstract concept
 into a patent-eligible application. Id. at *4. Additionally,
 the court asserted that the dependent claims are also inel-
 igible because they are “considerably analogous to claim 1
 and suffer from similar defects.” Id. Having concluded
 that the claims are ineligible for patent under § 101, the
 court granted Didomi’s motion to dismiss. Id. at *5. Veri-
 Path appealed to this court. We have jurisdiction pursuant
 to 28 U.S.C. § 1295(a)(1).
                         DISCUSSION
     We review the grant of a motion to dismiss under the
 law of the regional circuit. OIP Techs., Inc. v. Amazon.com,
 Inc., 788 F.3d 1359, 1362 (Fed. Cir. 2015) (citing K–Tech
 Telecomms., Inc. v. Time Warner Cable, Inc., 714 F.3d
 1277, 1282 (Fed. Cir. 2013)). In the Second Circuit, “grant
 of a motion to dismiss is reviewed de novo to determine
 whether the claim is plausible on its face, accepting the ma-
 terial factual allegations in the complaint and drawing all
 reasonable inferences in favor of the plaintiff.” Ottah v.
 Fiat Chrysler, 884 F.3d 1135, 1141 (Fed. Cir. 2018) (citing
 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)); Bascuñan v.
 Elsaca, 927 F.3d 108, 116 (2d Cir. 2019).
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 VERIPATH, INC.   v. DIDOMI                                   5

      Patent eligibility under § 101 is an issue of law that
 may contain underlying issues of fact. See Berkheimer v.
 HP Inc., 881 F.3d 1360, 1365 (Fed. Cir. 2018). We review
 the district court’s ultimate conclusion on patent eligibility
 de novo. Id. To determine whether a patent claims eligible
 subject matter, we follow the Supreme Court’s familiar
 two-step framework. See Alice Corp. v. CLS Bank Int’l, 573
 U.S. 208, 217 (2014); Mayo Collaborative Servs. v. Prome-
 theus Labs., Inc., 566 U.S. 66, 70–73 (2012). First, we de-
 termine whether the claims are directed to a law of nature,
 natural phenomenon, or abstract idea. See Alice, 573 U.S.
 at 217. If so, we proceed to the second step and determine
 whether the claims nonetheless include an “inventive con-
 cept” sufficient to “‘transform the nature of the claim’ into
 a patent-eligible application.” Id. (quoting Mayo, 566 U.S.
 at 72, 78). To recite an “inventive concept,” at step two, a
 patent must do more than recite an abstract idea “while
 adding the words ‘apply it.’” Id. at 221 (quoting Mayo, 566
 U.S. at 72). “[S]imply appending conventional steps, spec-
 ified at a high level of generality, to laws of nature, natural
 phenomena, and abstract ideas cannot make those laws,
 phenomena, and ideas patentable.” Mayo, 566 U.S. at 82.
     At Alice step one, VeriPath argues that claim 1 is
 not directed to an abstract idea, but rather to “a patent-el-
 igible improvement to computer functionality.” Appellant
 Br. 25. Specifically, VeriPath asserts that the claimed sys-
 tem (i) “can generate different privacy disclosures based on
 a user’s location in real-time”; and (ii) the remote database
 managing the “privacy disclosure policies upon which the
 user-specific disclosure is generated can be regularly up-
 dated without the need for users to agree to the updates.”
 Id. at 32.
     We disagree with VeriPath. As the district court cor-
 rectly observed “[s]tripped of excess verbiage, at its most
 basic level, claim 1 is anchored on the abstract idea of ex-
 changing privacy for functionality.” Decision, 2020 WL
 1503687, at *3 (citation omitted). Specifically, it describes
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6                                      VERIPATH, INC.   v. DIDOMI

 an agreement wherein (1) an API obtains personal infor-
 mation, (2) the type information is identified, (3) a required
 permission for use of the personal information is deter-
 mined based on the type of personal information, (4) the
 user is offered access to an enhanced function of an appli-
 cation in exchange for permission to use the personal infor-
 mation, and (5) the user gets access to the enhanced
 function after consenting. See ’451 patent col. 16 ll. 8–28.
 Moreover, claim 1 is not focused on any technological im-
 provement to computer functionality. Rather, at most,
 claim 1 is directed to no more than an improvement to the
 abstract notion of exchanging privacy for functionality that
 utilizes an API to achieve the desired result. “[I]t is not
 enough, however, to merely improve a fundamental prac-
 tice or abstract process by invoking a computer merely as
 a tool.” Customedia Techs., LLC v. Dish Network Corp.,
 951 F.3d 1359, 1364 (Fed. Cir. 2020) (citations omitted).
 Accordingly, we conclude that claim 1 is directed to an ab-
 stract idea.
      At Alice step two, VeriPath contends that claim 1 co-
 vers patent-eligible subject matter because it is directed to
 a “distributed data privacy system” that allows for the
 “generation of a user-specific privacy disclosure based on a
 user’s personal information before presenting the user-spe-
 cific privacy disclosure to the user, receiving the user’s opt-
 in consent, collecting a user’s personal information, and
 providing the user with the use of an enhance[d] function-
 ality of the application in exchange for the consent.” Ap-
 pellant Br. 39–40.
      We disagree with VeriPath. None of these steps,
 viewed “both individually and ‘as an ordered combination,’”
 transform the nature of the claim into patent-eligible sub-
 ject matter. Alice, 573 U.S. at 217 (quoting Mayo, 566 U.S.
 at 78–79). Instead, claim 1 comprises implementing the
 above-identified abstract idea using “conventional steps,
 specified at a high level of generality.” Alice, 573 U.S. at
 222 (quoting Mayo, 566 U.S. at 82). That is insufficient to
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 VERIPATH, INC.   v. DIDOMI                                    7

 supply an “inventive concept.” Id. For example, the claim
 recites “identifying the type of the obtained personal infor-
 mation” and “presenting, to the user, a first offer to provide
 access to at least one enhanced function.” See ’451 patent
 col. 16 ll. 8–28 (emphases added); BSG Tech LLC v.
 Buyseasons, Inc., 899 F.3d 1281, 1290 (Fed. Cir. 2018) (“It
 has been clear since Alice that a claimed invention’s use of
 the ineligible concept to which it is directed cannot supply
 the inventive concept that renders the invention ‘signifi-
 cantly more’ than that ineligible concept.”). VeriPath em-
 phasizes that the order of the specific steps of the claim
 constitutes inventive subject matter. See Appellant Reply
 Br. 19 (“[T]he generation of a user-specific privacy disclo-
 sure before presenting the user-specific privacy disclosure
 to the user . . . transform[s] the claims into . . . patent-eli-
 gible subject matter under this Court’s precedent.”) (em-
 phasis in original). However, VeriPath fails to explain how
 generating a disclosure before it is presented to the user is
 anything but routine and conventional under Alice step
 two.
     We additionally conclude that the dependent claims
 are directed to substantially similar subject matter as
 claim 1 and are therefore ineligible under § 101. As the
 district court observed, the dependent claims “are consid-
 erably analogous to claim 1 and suffer from similar de-
 fects.” Decision, 2020 WL 1503687, at *4. Specifically, the
 dependent claims “merely use vague terms to implement
 claim 1’s abstract concept.” Id. For example, claim 2, re-
 cites “[t]he method of claim 1, wherein the at least one en-
 hanced function of the application is functionality not
 available to at least one other group of users of the appli-
 cation.” ’451 patent col. 16 ll. 29–32. Claim 3 recites “[t]he
 method of claim 1, wherein the at least one enhanced func-
 tion of the application is a reduced number of commercial
 advertisements presented to the user in the application.”
 Id. col. 16 ll. 33–36. Plainly, like claim 1, the dependent
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8                                     VERIPATH, INC.   v. DIDOMI

 claims are directed to the abstract idea of exchanging pri-
 vacy for functionality.
      Finally, we reject VeriPath’s argument that “the dis-
 trict court erred by overlooking potentially narrowing
 claim constructions.” Appellant Br. 35. Here, VeriPath
 “did not raise any claim construction dispute and did not
 provide any proposed construction” to the court. See Mortg.
 Application Techs., LLC v. MeridianLink, Inc., No. 2020-
 1504, 2021 WL 97347, at *3 (Fed. Cir. Jan. 12, 2021). Ra-
 ther, it merely stated before the district court that there
 are issues of fact that “may necessitate claim construction.”
 J.A. 638–39 (emphasis added). We thus conclude that the
 district court did not err in granting Didomi’s motion to dis-
 miss.
                         CONCLUSION
     We have considered VeriPath’s remaining arguments
 but find them unpersuasive. For the foregoing reasons, the
 judgment of the district court is affirmed.
                         AFFIRMED