Rothschild Digital Confirmation, LLC v. Skedulo Holdings Inc.

Background

Rothschild alleged that Skedulo’s products infringed U.S. Patent No. 7,456,872, titled “Device and Method for Embedding and Retrieving Information in Digital Images.” Skedulo moved to dismiss under 35 U.S.C. § 101 and the two-step test from Alice Corp. Pty. Ltd. v. CLS Bank International, which determines whether a patent claim covers patent-ineligible subject matter.

The complaint initially asserted claims 1 and 27. Rothschild acknowledged that claim 27 had been cancelled, so the court considered only claim 1. That claim described modules for verifying a user, capturing an image, recording the device’s location and the date and time, associating that information with the image file, and encrypting the file and related information.

Analysis

The court determined that it could decide patent eligibility at the motion-to-dismiss stage because the parties did not dispute the meaning of any claim terms and the relevant facts appeared in the complaint, the patent, or materials subject to judicial notice.

Under step one of the Alice test, the court asks whether the claim is directed to an abstract idea, a law of nature, or a natural phenomenon. The court held that claim 1 was directed to the abstract idea of associating traditional information—such as date, location, and photographer—with a picture and securing the image. It compared the claim to earlier cases involving the classification and storage of digital images and concluded that the claim’s user-verification, capture, location, date-and-time, processing, and encryption modules were unspecified, functional components that supplied a generic setting for carrying out that idea.

The court rejected Rothschild’s assertion that the patent provided a technical solution or improved computer functionality. It reasoned that the patent focused on associating information with images and organizing them, whether the images were digital or physical, rather than solving a specific computer problem.

Under step two, the court asks whether the claim contains an “inventive concept”—an element or combination of elements that adds significantly more than the ineligible concept itself. The court held that claim 1 lacked such an inventive concept. Rothschild’s allegations that the invention improved the ease and efficiency of organizing images merely restated the abstract idea. The court also found no sufficient allegations that the claimed combination was not well-understood, routine, or conventional. The court noted that Rothschild did not dispute that the elements apart from the abstract idea involved well-understood, routine, and conventional activity.

Disposition

The court dismissed the complaint. It stated that it could not conclude that amendment would necessarily be futile, so Rothschild may file an amended complaint by April 20, 2020. The court said the parties could agree to a new deadline by joint stipulation if necessary because of the public-health situation, and a party could ask the court to extend the deadline if they could not agree. The order states that failure to respond by April 20, 2020, would result in dismissal with prejudice under Rule 41(b).

The opinion contains one reference in its background section to claim 1 of the “’827 patent,” although the patent identified elsewhere and the claim quoted in the opinion are from the ’872 patent.