Court Opinion

ID: 4252020
Source: CourtListenerOpinion
Date Created: 2018-03-06 16:00:43.27522+00
Date Added: 2024-06-11T14:43:55.078809
License: Public Domain

NOTE: This disposition is nonprecedential.

  United States Court of Appeals
      for the Federal Circuit
                ______________________

                 WILLIAM GRECIA,
                  Plaintiff-Appellant

                           v.

           MCDONALD’S CORPORATION,
                Defendant-Appellee
              ______________________

                      2017-1672
                ______________________

   Appeal from the United States District Court for the
Northern District of Illinois in No. 1:16-cv-02560, Judge
Sharon Johnson Coleman.
                ______________________

                Decided: March 6, 2018
                ______________________

   MATTHEW MICHAEL WAWRZYN, Wawrzyn & Jarvis
LLC, Glenview, IL, argued for plaintiff-appellant.

    EDWARD H. RICE, Freeborn & Peters, LLP, Chicago,
IL, argued for defendant-appellee. Also represented by
DAVID JAMES DOYLE, MARINA SAITO.
                ______________________

      Before DYK, REYNA, and TARANTO, Circuit Judges.
2                         GRECIA   v. MCDONALD'S CORPORATION

REYNA, Circuit Judge.
    William Grecia appeals from the dismissal of his com-
plaint for failure to state a claim for relief by the United
States District Court for the Northern District of Illinois.
Grecia alleged that McDonald’s Corporation through its
use of various credit card companies’ authorization net-
works directly infringed two of his patents that claim
systems for managing access to digital data. Because we
hold that Grecia’s complaint fails to plausibly allege that
McDonald’s obtained a benefit from each and every claim
element, we affirm.
                        BACKGROUND
    Appellant Grecia is the sole inventor and owner of
United States Patent Nos. 8,533,860 (“’860 patent”) and
8,402,555 (“’555 patent”). Both the ’860 and ’555 patents
relate to the field of digital rights management, which
aims to restrict access rights to digital media in order to
curb unlawful copying. See, e.g., ’860 patent col. 1 ll. 19–
26.
    Relevant here, the ’860 patent claims a system “for
authorizing access to digital content using a worldwide
cloud system infrastructure . . . comprising connected
modules in operation.” Id. col. 15 ll. 45–49. The preamble
of claim 9 of the ’860 patent states that these modules
serve to “facilitate access rights between a plurality of
data processing devices” such that the “system work[s] as
a front-end agent for access rights authentication between
the plurality of data processing devices.” Id. col. 15 ll. 51–
54. These modules include a (1) receipt module to receive
a digital content access request that includes a verifica-
tion token provided by a user, such as inter alia a pass-
word, email address, payment system, or credit card, (2)
an authentication module that authenticates the verifica-
tion token, (3) a connection module that establishes a
connection to a communications console capable of a two
way data exchange to complete the verification process,
GRECIA   v. MCDONALD'S CORPORATION                          3

(4) a request module to obtain an identification reference
from the communications console, (5) a secondary receipt
module that receives the identification reference, and (6) a
branding module “writing at least one of the verification
token or the identification reference into the metadata”
for subsequent purchases. Id. at col. 15 l. 45–col. 16 l. 28.
Claim 12 of the ’555 patent similarly contains a preamble
reciting a system to “monitor access to an encrypted
digital media” by “working as a front-end agent for access
rights authorization between a plurality of data pro-
cessing devices.” ’555 patent col. 15 l. 65–col 16 l. 2. Like
the ’860 patent, independent system claim 12 in the ’555
patent is comprised of six modules that are substantively
similar to claim 9 of the ’860 patent. Compare ’555 patent
col. 15 l. 65–col. 16 l. 35 with ’860 patent col. 15 l. 45–col
16 l. 28.
    On February 24, 2016, Grecia filed a complaint
against McDonald’s Corporation (“McDonald’s”) alleging
direct infringement of system claims 9 and 10 of the ’860
patent and system claims 12–14 and 24–26 of the ’555
patent. Grecia alleged that McDonald’s infringed these
claims “through its use of the tokenization systems of”
various credit card companies including Visa Inc., Ameri-
can Express Company, MasterCard Incorporated, and
Discover Financial Services (collectively, “Visa”). J.A. 44,
53. Grecia claimed McDonald’s “uses the system of claim
9 each time that McDonald’s puts the Visa tokenization
system into service.” J.A. 44, 53 (alleging the same use
for claim 12 of the ’555 patent). In other words, Grecia
alleged that McDonald’s directly infringed its patents
every time it accepted Visa cards as a payment tool for
food purchases. See id.
    In lieu of an answer, McDonald’s moved to dismiss
Grecia’s complaint for failure to state a claim under
Federal Rule of Civil Procedure 12(b)(6). McDonald’s
argued that because it did not control any of the accused
system’s components, it did not “use” the claimed system
4                        GRECIA   v. MCDONALD'S CORPORATION

as required to plausibly plead direct infringement under
35 U.S.C. § 271(a). J.A. 2–3. For support, McDonald’s
relied on Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d
1292, 1309 (Fed. Cir. 2011), which held that Microsoft
could directly infringe for its manufacture and use of a
patented software registration system, where the claims
required end-user participation on a local computer.
Specifically, the system claims required the user to input
information into the program, such as a software serial
number, which resulted in the generation of a unique
software ID number. Id. Microsoft had argued that it did
not use the asserted system claims under § 271(a) because
it was the end-users’ computers, which Microsoft did not
supply, that generated the unique ID necessary to regis-
ter the software. Id. at 1308–09. We disagreed with
Microsoft, concluding that because the system claims
were drafted to focus solely on the actions of Microsoft, as
the one entity performing the software registration, that
Microsoft infringed despite the need for end-user partici-
pation through its “use [of] the remote registration system
in the environment required by the claims.” Id. McDon-
ald’s argued that like the claims in Uniloc, the asserted
claims of the ’860 and ’555 patents are drafted to focus on
the actions of one entity, Visa, and because Visa pos-
sessed and controlled all the claimed systems’ six mod-
ules, only Visa could directly infringe the asserted claims
under § 271(a) through use of its authorization network.
McDonald’s sought dismissal with prejudice, arguing that
Grecia could not possibly amend his complaint to state a
claim for relief given the claim language. Suppl. J.A. at
122.
    Grecia countered that his complaint is facially plausi-
ble because to allege use under § 271, he needed only to
plead that McDonald’s has put the system as a whole into
service and obtained a benefit. J.A. 3. For this proposi-
tion, Grecia relied on Centillion Data Systems, LLC v.
Qwest Communications International, Inc., 631 F.3d 1279,
GRECIA   v. MCDONALD'S CORPORATION                          5

1283 (Fed. Cir. 2011), a case in which we reviewed what
constitutes “use” under § 271(a) of a system claim that
included “elements in the possession of more than one
actor.” In Centillion, we held that “use” should be broadly
interpreted to require only that an accused infringer “put
the invention into service, i.e., control[led] the system as a
whole and obtain[ed] a benefit from it.” Id. at 1284.
    The district court agreed with McDonald’s. Grecia v.
McDonald’s Corp., No. 16-cv-02560, 2016 WL 4439953, at
*1 (N.D. Ill. Aug. 23, 2016). It concluded that Centillion
did not apply because the holding was limited to divided
systems, while in the instant dispute, Visa possessed all
of the allegedly infringing systems’ components. Id. at *2.
Instead, the district court found Uniloc to be controlling.
Id. It found that McDonald’s role in sending customers’
credit card data to Visa was akin to that of “Microsoft
customers’ computers in Uniloc, merely part the environ-
ment in which the claimed inventions function.” Id.
Thus, the district court held that the “users of the claimed
inventions are the credit companies themselves, not
McDonald’s.” Id. The court entered final judgment in
favor of McDonald’s.
    Grecia sought reconsideration, arguing that the
district court erred in holding that McDonald’s point of
sale devices were not an element of the claimed system
and in denying him leave to amend his complaint. The
district court denied his motion. Grecia v. McDonald’s
Corp., No. 16-cv-02560, 2017 WL 345556, at *1 (N.D. Ill.
Jan. 24, 2017). First, it held that Grecia had pleaded that
only the six modules comprise the claimed system, and
that “[n]owhere in the complaint, which is laced with
direct quotes from and citations to specific portions of the
patents, did Grecia allege that McDonald’s point-of-sale
devices are part of the claimed systems.” Id. Second, it
found that it was not manifest error to deny Grecia the
opportunity to amend his complaint because Grecia had
6                        GRECIA   v. MCDONALD'S CORPORATION

failed to “suggest any amendments that would save his
complaint.” Id. at *2.
    Grecia appeals. We have jurisdiction under 28 U.S.C.
§ 1295.
                   STANDARD OF REVIEW
    We review the grant of a motion to dismiss for failure
to state a claim according to the law of the regional cir-
cuit, here the Seventh Circuit. Glenayre Elecs. Inc. v.
Jackson, 443 F.3d 851, 855 (Fed. Cir. 2006). The Seventh
Circuit reviews motions to dismiss for failure to state a
claim de novo and construes all well-pleaded facts and
draws all inferences in the light most favorable to the
plaintiff. Vesely v. Armslist LLC, 762 F.3d 661, 664 (7th
Cir. 2014); Olson v. Wexford Clearing Servs. Corp., 397
F.3d 488, 490 (7th Cir. 2005). The Seventh Circuit does
“not accept as true any legal assertions or recital of claim
elements of a cause of action supported by mere concluso-
ry statements.” Vesely, 762 F.3d at 664 (internal quota-
tion marks and citation omitted).
                       DISCUSSION
    Section 271(a) of the Patent Act defines direct in-
fringement as “whoever without authority makes, uses,
offers to sell, or sells any patented invention, within the
United States or imports into the United States any
patented invention during the term of the patent therefor,
infringes the patent.” 35 U.S.C. § 271(a). The matter at
hand reveals a gap in our jurisprudence on what consti-
tutes “use” under § 271(a). Namely, the parties ask us to
define what is considered “use” of a claimed system when
the accused infringer must act to put the claimed system
into service, but the accused infringer does not appear to
possess any element of the claimed system. We have not
found, and the parties have not directed us to, any con-
trolling precedent that involves these facts and answers
this question.
GRECIA   v. MCDONALD'S CORPORATION                         7

    As before the district court, McDonald’s takes the
view that Uniloc stands for the proposition that where
system claims are drafted to focus on the actions of one
party, only that party could be liable for direct infringe-
ment for its use of the claimed invention. McDonald’s
overstates our holding in Uniloc. We concluded in Uniloc
that a single party can still use, and thus directly infringe
under § 271(a), a claimed system even when that system
requires multiple parties to function. 632 F.3d at 1309
(“That other parties are necessary to complete the envi-
ronment in which the claimed element functions does not
necessarily divide the infringement between the neces-
sary parties. For example, a claim that reads ‘An algo-
rithm incorporating means for receiving e-mails’ may
require two parties to function, but could nevertheless be
infringed by a single party who uses an algorithm that
receives emails.”). Therefore, Uniloc only broadened the
scope of potential direct infringers under § 271(a). The
holding in Uniloc was also predicated on the system
claims being drafted in a way that focuses on “one entity,”
such that only that entity used the claimed system. Id.
Here, unlike Uniloc, that predicate is not facially appar-
ent in the drafting of the asserted claims. For example,
claim 9 of the ’860 patent requires users of the system to
provide a verification token corresponding to the digital
content requested by the user. ’860 patent col. 15 ll. 64–
66 (“[T]he [digital content access] request comprising a
verification token provided by a user corresponding to the
digital content.”). We disagree with the district court’s
holding that Uniloc controls the outcome of this case.
    We also disagree with Grecia that Centillion controls
in this case. In Centillion, we held that “to ‘use’ a system
for purposes of infringement, a party must put the inven-
tion into service, i.e., control the system as a whole and
obtain benefit from it.” 631 F.3d at 1284. Centillion,
however, pertained to circumstances where the claimed
system “include[d] elements in the possession of more
8                        GRECIA   v. MCDONALD'S CORPORATION

than one actor.” Id. at 1283. Indeed, it was undisputed in
Centillion that different parties possessed different claim
elements, and no single party possessed each and every
claim element. Id. at 1282. Here, unlike in Centillion, it
does not appear that McDonald’s is in the possession of
any of the six modules claimed in either claim 9 of the
’860 patent or claim 12 of the ’555 patent. Grecia at-
tempts to overcome this fact by arguing that the claims’
preambles reciting a “plurality of data processing devices”
are limiting and encompass McDonald’s point-of-sale
devices that send customers’ data to the “first receipt
module.” Appellant’s Suppl. Br. 10. Grecia thus contends
that McDonald’s possesses an element of the claimed
system via its point-of-sale devices, and therefore Centil-
lion applies.
    We decline the parties’ invitations to expand our doc-
trine on the control aspect of “use” of system claims under
§ 271(a). Even were we to accept Grecia’s argument that
the asserted claims’ preambles are limiting and Centillion
is controlling, Grecia’s complaint nevertheless fails to
plausibly allege that McDonald’s benefits from each
element of the claimed system necessary to allege “use”
under § 271. In our recent case, Intellectual Ventures I
LLC v. Motorola Mobility LLC, 870 F.3d 1320, 1329 (Fed.
Cir. 2017), we rejected the notion that to find direct
infringement, an accused infringer needs only to “benefit
from the system as a whole” by deriving a benefit from
“any claimed component of the claimed system.” 1 Rather,

    1    Because Intellectual Ventures issued after briefing
in this case concluded, we requested the parties supple-
ment their briefing on the question of whether Grecia’s
complaint passes muster in view of the rule articulated in
Intellectual Ventures, that requires direct infringer benefit
from each claimed element of the systems claim. Order
GRECIA   v. MCDONALD'S CORPORATION                        9

we clarified that the infringer must “benefit from each
claimed component,” i.e., from “each and every element of
the claimed system.” Id.
    Here, Grecia has only identified a vague benefit to
McDonald’s in that it could use a token stored in metada-
ta associated with a customer’s primary account number
with Visa for “subsequent hamburger purchases at” the
McDonald’s where the first purchase was made. Appel-
lant’s Suppl. Br. 11–12; see J.A. 46. In addition, Grecia
asserts that he “will further allege that McDonald’s
benefits from use of his claimed systems by triggering
indemnity obligations of the credit card companies if the
credit card transactions are hacked.” Appellant’s Suppl.
Br. 13.
    We find Grecia’s recitation of general benefits to be
equivalent to stating that McDonald’s benefits from the
claimed system as a whole—the argument we rejected in
Intellectual Ventures. The alleged benefit should be
tangible, not speculative, and tethered to the claims.
Here, Grecia fails to explain how McDonald’s benefits
from each and every element of the claimed system. For
example, the sixth module, the “branding module writing
at least one of the verification token or the identification
reference into the metadata,” does not appear to benefit
McDonald’s whatsoever. As alleged in Grecia’s complaint,
the branding module permits Visa to “write[] the token to
the token vault, associating the token to the [primary
account number] for later cross-referencing upon subse-
quent hamburger purchases at McDonalds.” J.A. 46. But
McDonald’s does not receive or store the token. Rather it
is a potential tool employed by Visa to facilitate future
Visa transactions. Any benefit from the branding element
rests solely with Visa. Grecia’s assertion that McDonald’s

at 2, Grecia v. McDonald’s Corp, No. 2017-1672 (Fed. Cir.
Dec. 11, 2017).
10                       GRECIA   v. MCDONALD'S CORPORATION

somehow benefits by Visa’s cross-referencing the token
upon subsequent hamburger requests is speculative,
conclusory, and ultimately insufficient to state a plausible
claim for relief for an infringing use of a claimed system
under § 271(a). Intellectual Ventures, 870 F.3d at 1331
(rejecting theories of benefit that “amount to mere specu-
lation or attorney argument); Vesely, 762 F.3d at 664
(“[W]e need not accept as true any legal assertions or
recital of the elements of a cause of action ‘supported by
mere conclusory statements.’” (quoting Alam v. Miller
Brewing Co., 709 F.3d 662, 666 (7th Cir. 2013))).
    Following oral argument, we requested the parties to
brief the issue of whether the district court abused its
discretion in refusing leave for Grecia to amend his com-
plaint following entry of final judgment. Order at 1,
Grecia v. McDonald’s Corp, No. 2017-1672 (Fed. Cir. Dec.
11, 2017). While we decide this case on different grounds
than that of the district court, we see no abuse of discre-
tion in the district court’s decision to deny Grecia leave to
amend because he failed to describe or attach an amended
complaint to his request for leave, nor did he “offer any
meaningful indication of how [he] would plead different-
ly.” Indep. Trust Corp. v. Stewart Info. Servs. Corp., 665
F.3d 930, 943 (7th Cir. 2012); Twohy v. First Nat’l Bank of
Chi., 758 F.2d 1185, 1195 (7th Cir. 1985). Under Seventh
Circuit law, the need for a plaintiff to provide this mean-
ingful indication is particularly strong in the post-
judgment context. Hecker v. Deere & Co., 556 F.3d 575,
590–91 (7th Cir. 2009) (“Once judgment has been entered,
there is a presumption that the case is finished, and the
burden is on the party who wants to upset that judgment
to show the court that there is good reason to set it
aside.”). Even now on appeal, Grecia fails to meaningfully
indicate how McDonald’s would benefit from each and
every limitation of the claimed system. Grecia has not
sufficiently explained how any amended complaint would
survive under Rule 12(b)(6). We therefore decline to
GRECIA   v. MCDONALD'S CORPORATION                       11

remand this matter to the district court to permit Grecia
to amend.
                       CONCLUSION
     Although we reject the district court’s conclusion that
Uniloc requires dismissal of this case, we find that Grecia
failed to allege that McDonald’s obtained a benefit from
each and every claim element. We therefore hold that he
has failed to state a claim upon which relief can be grant-
ed based on use of the claimed system under § 271(a). We
affirm.
                       AFFIRMED
                          COSTS
   No costs.