McDonald's vs. Grecia: Patent Infringement Dispute over Digital Data Access Systems, Schemes and Mind Maps of Law

Download McDonald's vs. Grecia: Patent Infringement Dispute over Digital Data Access Systems and more Schemes and Mind Maps Law in PDF only on Docsity! NOTE: This disposition is nonprecedential.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. GRECIA v. MCDONALD'S CORPORATION 2 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 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 GRECIA v. MCDONALD'S CORPORATION 6 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 GRECIA v. MCDONALD'S CORPORATION 10 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.