Western Digital Technologies, Inc. v. Viasat, Inc.

Background

The plaintiffs are Western Digital Technologies, Inc.; Western Digital Ireland Ltd.; SanDisk 3D IP Holdings Ltd.; SanDisk Technologies LLC; and SanDisk Storage Malaysia Sdn. Bhd. They alleged that Viasat, Inc. infringed claims of U.S. Patent Nos. 9,424,400; 10,447,667; and 8,504,834. Count Three alleged infringement of at least Claim 14 of the ’834 patent, titled “Method and system for activation of local content with legacy streaming systems.”

Claim 14 describes a method in which a host device receives data from a network, derives a key from that data, and uses the key to decrypt content stored on a storage device.

Motion and Rule 12(b)(6) standard

Viasat moved under Federal Rule of Civil Procedure 12(b)(6), which allows dismissal when a complaint does not state a legally sufficient claim. Viasat argued that the asserted ’834 patent claims covered subject matter that is not eligible for patent protection under 35 U.S.C. § 101.

The plaintiffs argued that Viasat had waived the patent-eligibility defense by not raising it in an earlier motion under Rule 12(b)(1). The court rejected that argument. It explained that omitting a Rule 12(b)(6) defense from an earlier motion does not waive the defense, and it exercised its discretion to consider Viasat’s eligibility argument in the pending motion rather than require a later motion under Rule 12(c).

Patent eligibility analysis

The court treated Claim 14 as representative of the asserted ’834 patent claims because the plaintiffs did not object and did not identify meaningful differences in other claim limitations.

Under the two-step framework from Alice Corp. v. CLS Bank International, the court first asks whether a claim is directed to an abstract idea. If it is, the court then asks whether the claim includes an “inventive concept”—additional elements that transform the abstract idea into a patent-eligible application.

At step one, the court held that Claim 14 was directed to the abstract idea of delivering and deriving a decryption key from a stream of data. The claim required only generic components—a host device, storage device, and network—and conventional actions such as receiving, deriving, and decrypting. In the court’s view, the claim did not explain how the key was delivered or derived in a practical, specific way. The court also concluded that the claimed steps, considered apart from the generic computer and networking components, could be performed as a mental process or with ordinary tools.

At step two, the court held that the claim did not contain an inventive concept. The plaintiffs argued that the inventive concept was using streaming data in an unconventional and advantageous way to convey decryption keys. The court found that this alleged improvement was not tied to the actual claim language, which broadly covered methods using a key delivered through and derived from network data. The court also stated that novelty or an asserted advantage over earlier technology does not, by itself, make an abstract idea patent-eligible.

The plaintiffs argued that determining eligibility was premature because of possible claim-construction and factual issues. The court disagreed, noting that the plaintiffs had not proposed specific claim constructions or identified concrete factual disputes that needed to be resolved before deciding eligibility. The court therefore concluded, under the plain and ordinary meaning of the claims, that the ’834 patent was directed to a patent-ineligible abstract idea and lacked an inventive concept.

Disposition

The court GRANTED Viasat’s motion to dismiss Count Three of the Amended Complaint with leave to amend. It declined Viasat’s request for dismissal with prejudice because it could not conclude at that stage that further amendment would necessarily be futile. Any Second Amended Complaint had to be filed within 21 days of the order. The order stated that failure to remedy the identified deficiencies would result in dismissal with prejudice and without further leave to amend.

Judge Haywood S. Gilliam, Jr. signed the order.