BWB Co Ltd v. Alibaba Group Holding Limited

Background

BWB Co. Ltd. sued Alibaba Group (US) Inc., Alibaba Cloud US LLC, and Alibaba.com U.S. LLC for infringement of four patents concerning customs preclearance information in e-commerce: United States Patent Nos. 10,460,366, 11,138,644, 11,776,027, and 11,776,028. The patents describe a system using e-commerce servers, a customs-clearance authentication server, and an administration server to exchange product and customs-clearance information and display that information to users.

The parties agreed to treat Claim 1 of the ’366 patent as a representative claim for the patent-eligibility analysis. The claim describes servers that generate, transmit, receive, and display pre-customs-clearance information and accept a user’s instruction to send a product through customs.

Motion to Dismiss and Legal Standard

Alibaba moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not plausibly state a claim for relief. Alibaba argued that the patents were directed to patent-ineligible subject matter under 35 U.S.C. § 101 and that BWB had not plausibly alleged direct infringement.

The court decided that it needed to reach only the Section 101 argument. It rejected BWB’s contention that deciding patent eligibility at the pleading stage was premature because BWB had not identified any factual or claim-construction dispute that had to be resolved first.

Under the two-step test for patent eligibility, the court first asks whether a claim is directed to an ineligible concept, such as an abstract idea. If so, the court asks whether the claim contains an “inventive concept”—an element or combination of elements that adds significantly more than the abstract idea itself.

Court’s Analysis

At the first step, the court held that Claim 1 was directed to the abstract idea of collecting, processing, and displaying information. In the court’s view, the claim described three servers that generated, sent, and received information. The court said these activities involved handling information and could be performed mentally or by hand, even though the claim used computer servers.

The court rejected the argument that automating customs-clearance procedures with computers made the claim a patentable improvement in computer technology. It explained that using generic computers to automate manual processes does not, by itself, make an abstract idea patent-eligible.

At the second step, the court held that Claim 1 lacked an inventive concept. The e-commerce servers, customs-clearance authentication server, and administration server required no special hardware and performed no specialized tasks. The claim required only conventional computer, network, and display technology for gathering, sending, and presenting information. The court also found no allegation that the ordered combination of the servers operated in an unconventional way or improved on prior technology.

BWB relied on findings by the United States Patent and Trademark Office that some claims met the Section 101 threshold. The court declined to defer to those findings, explaining that patent eligibility is a legal issue that courts review independently. The court also noted that the Patent Office had initially found the ’366 patent directed to an abstract idea and its additional elements no more than generic computer functions.

Disposition

The court dismissed the complaint under Rule 12(b)(6) because the representative claim was directed to an abstract idea and lacked an inventive concept. The court granted BWB leave to amend and permitted an amended complaint to be filed by September 13, 2024. The court stated that failure to meet that deadline would result in dismissal under Federal Rule of Civil Procedure 41(b). The opinion does not decide Alibaba’s separate argument concerning direct infringement.