NantWorks, LLC v. Niantic, Inc.

Background

NantWorks, LLC sued Niantic, Inc. for infringing three NantWorks patents through Niantic’s augmented-reality games, “Pokémon Go” and “Harry Potter: Wizards Unite.” The first amended complaint asserted three patent claims. Niantic challenged the second claim, which alleged infringement of U.S. Patent No. 10,614,477, and also challenged the claims for willful infringement and pre-suit induced infringement.

The ’477 patent is titled “Subscription Bill Service, Systems and Methods.” The patent describes reconciling transactions between two computer-game players based on the first player’s physical location. Claim 20 describes a system that determines the first player’s location, calculates game-point amounts for two accounts using location-related information and a reconciliation matrix, and completes transfers between the accounts when a location-based condition is met. The patent uses a processor, memory, software instructions, and a location sensor, but the court noted that it does not describe new hardware or software.

Patent eligibility under 35 U.S.C. § 101

Niantic argued that the ’477 patent claims were directed to an abstract idea and therefore did not claim patent-eligible subject matter under 35 U.S.C. § 101. The court applied the two-part framework from Alice Corp. v. CLS Bank. First, it considered whether the claims were directed to an abstract idea. Second, because it found that they were, it considered whether the claims contained an “inventive concept”—an element or combination of elements that transformed the abstract idea into a patent-eligible application.

At the first step, the court characterized the patent as covering the abstract idea of reconciling transactions between users based on a user’s location, using generic computer technology. It reasoned that reconciling transactions is a longstanding economic practice and that adding location information did not remove the claims from the category of abstract ideas. The court also concluded that claim 20 did not focus on a specific improvement in computer capabilities. NantWorks argued that the patent improved computer functionality by allowing faster, coordinated transfers among multiple user accounts in one transaction. The court rejected that argument because the claim and specification did not recite a specific improvement in computer technology; the complaint’s allegations about improvement did not change what the patent claimed.

At the second step, the court concluded that the claims contained no inventive concept. The claims used conventional and generic computer components to carry out the abstract idea of reconciling location-based transactions. The court therefore granted Niantic’s motion to dismiss the § 101 challenge to claim two.

Pre-suit notice and willfulness

Niantic also moved to dismiss the claims for pre-suit induced infringement and willful infringement. The court explained that a plaintiff must plausibly allege that the defendant knew about the patents before the lawsuit to support an induced-infringement claim. Knowledge of the asserted patents is also required for a willful-infringement claim seeking enhanced damages.

The complaint did not allege pre-suit notice. NantWorks alleged that Niantic hired several former employees of a NantWorks-related company in 2014 and released the allegedly infringing games between 2016 and 2019. NantWorks argued that these allegations and the patents’ priority dates supported an inference that Niantic knew about NantWorks’ technology and chose to infringe it. The court found that argument speculative and insufficient to plausibly allege pre-suit notice. The court also found that NantWorks did not plead facts describing the egregious conduct required for willful infringement and enhanced damages.

Disposition

The court granted Niantic’s motion to dismiss. The court granted the motion with prejudice as to the § 101 challenge and without prejudice otherwise. NantWorks was required to file any amended complaint within 30 days.