trulia motion to dismiss zillow suit

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 DEFENDANT’S MOTION TO DISMISS COMPLAINT FOR PATENT INFRINGEMENT Case No. 2:12-cv-01549-JLR WILSON SONSINI GOODRICH & ROSATI 701 Fifth Avenue, Suite 5100 Seattle, Washington 98104-7036 Tel: (206) 883-2500 / Fax: (206) 883-2699 The Honorable James L. Robart UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE ZILLOW, INC., Plaintiff, vs. TRULIA, INC., Defendant. Case No. 2:12-cv-01549-JLR TRULIA, INC.’S MOTION TO DISMISS COMPLAINT FOR PATENT INFRINGEMENT NOTE ON MOTION CALENDAR: January 11, 2013 ORAL ARGUMENT REQUESTED Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 1 of 21

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Trulia motion to dismiss Zillow suit

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Page 1: Trulia motion to dismiss Zillow suit

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENTCase No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

The Honorable James L. Robart

UNITED STATES DISTRICT COURTWESTERN DISTRICT OF WASHINGTON

AT SEATTLE

ZILLOW, INC.,

Plaintiff,

vs.

TRULIA, INC.,

Defendant.

Case No. 2:12-cv-01549-JLR

TRULIA, INC.’S MOTION TODISMISS COMPLAINT FORPATENT INFRINGEMENT

NOTE ON MOTION CALENDAR:January 11, 2013

ORAL ARGUMENT REQUESTED

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 1 of 21

Page 2: Trulia motion to dismiss Zillow suit

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page iCase No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

TABLE OF CONTENTSPage

I. INTRODUCTION .............................................................................................................. 1

II. FACTUAL BACKGROUND............................................................................................. 2

III. ZILLOW’S COMPLAINT FOR PATENT INFRINGEMENT SHOULD BEDISMISSED. ...................................................................................................................... 5

A. Legal Standards....................................................................................................... 5

B. Because the ’674 Patent Claims Do Not Satisfy the EligibilityRequirements of Section 101, Zillow’s Complaint Should be Dismissed.............. 6

1. The ’674 Patent Claims Unpatentable Abstract Ideas. ............................... 8

2. The Claimed Routine and Conventional Steps Do Not Render theAbstract Ideas and Mental Processes Patentable. ....................................... 9

3. The ’674 Patent Claims Fail the Machine-or-Transformation Test.......... 10

a. The ’674 Patent Claims Fail the Machine Prong. ......................... 10

b. The ’674 Patent Claims Fail the Transformation Prong. .............. 12

C. Alternatively, Trulia Requests a Stay Pending the Federal Circuit’sEn Banc Ruling in CLS Bank................................................................................ 12

D. The Indirect Infringement Claims Must Be Dismissed for Failure to Meetthe Pleading Requirements of Rule 8.................................................................... 13

IV. CONCLUSION................................................................................................................. 16

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 2 of 21

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page iiCase No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

TABLE OF AUTHORITIES

Page(s)

CASES

Alloc, Inc. v. Int’l Trade Comm’n,342 F.3d 1361 (Fed. Cir. 2003)................................................................................................. 15

Ashcroft v. Iqbal,556 U.S. 662 (2009) .............................................................................................................. 5, 14

Bancorp Servs. L.L.C., v. Sun Life Assurance Co. of Canada (U.S.),687 F.3d 1266 (Fed. Cir. 2012)................................................................................... 5, 8, 10, 11

Bell Atl. Corp. v. Twombly,550 U.S. 554 (2007) .................................................................................................................... 5

Bilski v. Kappos,130 S. Ct. 3218 (2010) ...................................................................................................... 6, 7, 10

Broadcom Corp. v. Qualcomm Inc.,543 F.3d 683 (Fed. Cir. 2009)................................................................................................... 14

CLS Bank Int’l v. Alice Corp. Pty. Ltd.,685 F.3d 1341 (Fed. Cir. 2012)........................................................................................... 12, 13

Cross Med. Prods., Inc. v. Medtronic Sofamor Danek, Inc.,424 F.3d 1293 (Fed. Cir. 2005)................................................................................................. 15

CyberSource Corp. v. Retail Decisions, Inc.,654 F.3d 1366 (Fed. Cir. 2011).......................................................................................... passim

Dealertrack, Inc. v. Huber,674 F.3d 1315 (Fed. Cir. 2012)..................................................................................... 5, 8, 9, 12

Diamond v. Diehr,450 U.S. 175 (1981) .................................................................................................................... 7

Emblaze Ltd. v. Apple Inc.,No. C 11-01079 SBA, slip op., 2012 WL 5940782 (N.D. Cal. Nov. 27, 2012) ................. 14, 15

Fort Props., Inc. v. Am. Master Lease LLC,671 F.3d 1317 (Fed. Cir. 2012)................................................................................................... 8

Global-Tech Appliances, Inc. v. SEB S.A.,131 S. Ct. 2060 (2011) .............................................................................................................. 14

Glory Licensing LLC v. Toys “R” Us, Inc.,No. 09-4252 (FSH), 2011 WL 1870591 (D.N.J. May 16, 2011) ................................................ 6

Gottschalk v. Benson,409 U.S. 63 (1972) .............................................................................................................. 6, 7, 8

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 3 of 21

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page iiiCase No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

Halton Co. v. Streivor, Inc.,No. C 10-00655 WHA, 2010 WL 2077203 (N.D. Cal. May 21, 2010) .................................... 15

Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc.,687 F.3d 1300 (Fed. Cir. 2012)................................................................................................... 8

In re Bilski (Bilski I),545 F.3d 943 (Fed. Cir. 2008)....................................................................................... 10, 11, 12

In re Grams,888 F.2d 835 (Fed. Cir. 1989)..................................................................................................... 9

Le Roy v. Tatham,55 U.S. 156 (1852) ...................................................................................................................... 1

Lucent Techs., Inc. v. Gateway, Inc.,580 F.3d 1301 (Fed. Cir. 2009)................................................................................................. 14

Mayo Collaborative Servs. v. Prometheus Labs., Inc.,132 S. Ct. 1289 (2012) ........................................................................................................ 6, 7, 9

Medtrica Solutions, Ltd. v. Cygnus Med., LLC,No. C12-538RSL, slip op., 2012 WL 5726799 (W.D. Wash. Nov. 15, 2012) ......................... 15

Nazomi Commc’n, Inc. v. Nokia Corp.,No. 10-CV-4686, 2011 WL 2837401 (N.D. Cal. July 14, 2011) .............................................. 14

OIP Techs., Inc. v. Amazon.com, Inc.,No. C-12-1233 EMC, 2012 WL 3985118 (N.D. Cal. Sept. 11, 2012).................................. 5, 11

Pac. Biosci. Labs., Inc. v. Nutra Luxe MD, LLC,No. C10-0230 JLR (W.D. Wash. Jan. 9, 2011 Order) .............................................................. 13

Parks Sch. of Bus., Inc. v. Symington,51 F.3d 1480 (9th Cir. 1995)....................................................................................................... 5

Vacation Exh., LLC v. Wyndham Exch. & Rentals, Inc.,No. 12-04229 RGK (FFMx) (C.D. Cal. Sept. 18, 2012)............................................................. 6

Wistron Corp. v. Phillip M. Adams & Assoc., LLC,No. C-10-4458 EMC, 2011 WL 4079231 (N.D. Cal. Sept. 12, 2011)...................................... 14

STATUTES

35 U.S.C. § 101........................................................................................................................... 1, 6

RULES

Fed. R. Civ. P.Rule 12(b)(6)........................................................................................................................5Rule 8 ...................................................................................................................................2

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 4 of 21

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page 1Case No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

I. INTRODUCTION

Plaintiff Zillow, Inc. (“Zillow”) and defendant Trulia, Inc. (“Trulia”) both run real estate

information websites. Dkt. No. 1 at 2-3. Days after Trulia commenced the “roadshow” for its

initial public offering to begin marketing its stock to investors, Zillow filed the subject complaint

against Trulia. See Dkt. No. 1 at 5. Zillow seeks damages and an injunction—based on a feature

that had been on Trulia’s website for over a year—that allows homeowners to enter information

about their homes to better value their homes. Dkt. No. 1 at 3, 5, 7. Zillow claims to own this

business method and has claimed it in the asserted U.S. Patent No. 7,970,674 B2 (“the ’674

patent”). Dkt. No. 1 at 3. Because the business method claimed in the ’674 patent is

unpatentable, Zillow’s complaint should be dismissed.

Abstract ideas and principles are not patentable under 35 U.S.C. § 101. Le Roy v.

Tatham, 55 U.S. 156, 175 (1852). The Supreme Court has reiterated this time and time again, in

the seminal cases of Benson, Flook, Bilski, and most recently, in Mayo. An abstract idea is

exactly, and exclusively, what is claimed in the ’674 patent. The ’674 patent claims the abstract

idea of allowing a homeowner to adjust information about a home, such as correcting the number

of bedrooms or bathrooms, and the calculation and display of a refined valuation based on the

adjusted information. The claims at issue do not limit the manner in which the information is

obtained or even the method used for calculating the refined valuation.

Asking a homeowner for information about the home and using it to refine a valuation

consists entirely of mental processes, which the Supreme Court and Federal Circuit have

maintained do not meet the eligibility requirements of Section 101. The claims’ incidental use of

a computer or recitation of “a computer readable medium” does not convert them into patentable

material. This is especially true where, as here, the steps of the claim—displaying, obtaining,

and generating information—are routine and conventional and do not represent “an inventive

concept.” For the reasons set forth below, the ’674 patent is not eligible under Section 101.

Accordingly, Trulia respectfully moves the Court to dismiss Zillow’s complaint for infringement

with prejudice.

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 5 of 21

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page 2Case No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

Trulia further moves the Court to dismiss the complaint’s allegations of indirect

infringement as to the ’674 patent for falling far short of the pleading requirements of Rule 8 of

the Federal Rules of Civil Procedure, upon which the Supreme Court elaborated in the seminal

cases of Iqbal and Twombly. Zillow’s complaint fails to make even insufficient “threadbare

recitations” of any of the elements necessary to state a claim for contributory or induced

infringement.

II. FACTUAL BACKGROUND

On August 17, 2012, Trulia commenced the process to become a public company. Dkt.

No. 1 at 5. On September 7, 2012, Trulia commenced the “roadshow” for its initial public

offering to begin marketing its stock to investors, and, on September 12, Zillow filed the subject

complaint against Trulia. See Dkt. No. 1 at 5. Zillow’s complaint against Trulia alleges

infringement of the ’674 patent, entitled “Automatically Determining a Current Value for a Real

Estate Property, Such as a Home, that is Tailored to Input from a Human User, Such as its

Owner.” Dkt. No. 1 at 3; Dkt. No. 1-1 (the ’674 patent). The ’674 patent was filed on February

3, 2006, and issued over five years later on June 28, 2011. Dkt. No. 1-1 at 1. It purports to claim

a “new approach to valuing homes that [is] responsive to owner input, as well as having a high

level of accuracy, and being inexpensive and convenient.” ’674 patent at 1:53-56. The accused

Trulia Estimates feature launched over a year prior to Zillow’s complaint. Dkt. No. 1 at 3.

The ’674 patent recites 40 claims. Claims 1, 2, and 15 are the only independent claims.

This motion concerns each independent claim and their respective dependent claims.

Claim 15 recites:

15. A method in a computing system for refining an automatic valuation of adistinguished home based upon input from a user knowledgeable about thedistinguished home, comprising:(a) obtaining user input adjusting at least one aspect of information about the

distinguished home used in the automatic valuation of the distinguished home;(b) automatically determining a refined valuation of the distinguished home that

is based on the adjustment of the obtained user input; and(c) presenting the refined valuation of the distinguished home.

’674 patent at 21:49-59.

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 6 of 21

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page 3Case No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

Although including a “computer readable medium,” claim 2 essentially recites the same

underlying method as claim 15:

2. A computer readable medium for storing contents that causes a computingsystem to perform a method for procuring information about a distinguishedproperty from its owner that is usable to refine an automatic valuation of thedistinguished property, the method comprising:(a) displaying at least a portion of information about the distinguished property

used in the automatic valuation of the distinguished property;(b) obtaining user input from the owner adjusting at least one aspect of

information about the distinguished property used in the automatic valuationof the distinguished property; and

(c) displaying to the owner a refined valuation of the distinguished property thatis based on the adjustment of the obtained user input.

’674 patent at 20:18-32.

Finally, although claim 1 is much longer than claims 2 and 15, it adds no patentable

subject matter. Indeed, it merely repeats slight variations of the unpatentable steps of claim 15

over and over again.

1. A method in a computing system for automatically determining a valuation fora subject home in response to input from an owner of the home, comprising:(a) presenting a display that includes an indication of a first valuation determined

for the subject home and indications of attributes of the subject home used inthe determination, the indicated valuation being determined by applying tothe indicated attributes a geographically-specific home valuation model isbased upon a plurality of homes near the subject home recently sold;

(b) presenting a display that solicits input from the owner that updates one ormore of the indicated attributes;

(c) receiving first input from the owner that updates one or more of the indicatedattributes;

(d) applying the geographically-specific home valuation model to attributes ofthe subject home as updated by the first input to determine and display asecond valuation for the subject home;

(e) presenting a display that solicits input from the owner that identifies the type,cost, and timing of one or more home improvements performed on thesubject home;

(f) receiving second input from the owner that identifies the type, cost, andtiming of one or more home improvements performed on the subject home;

(g) using the second input to determine and display (a) a present value of theidentified home improvements and (b) a third valuation that takes intoaccount the present value of the identified home improvements;

(h) presenting a display that solicits input from the owner that identifies otherassets or liabilities of the subject home and the value attributed to them by theowner;

(i) receiving third input from the owner that identifies other aspects of thesubject home affecting its value and the value attributed to them by theowner;

(j) determining a valuation adjustment corresponding to the identified aspects;

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 7 of 21

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page 4Case No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

(k) displaying a fourth valuation that takes into account the determined valuationadjustment corresponding to the identified aspects;

(l) presenting a display that solicits input from the owner that identifies homesnear the subject home that the owner regards as similar to the subject home;

(m) receiving fourth input from the owner that identifies homes near the subjecthome recently sold that the owner regards as similar to the subject home;

(n) using the fourth input to generate a tailored geographically-specific homevaluation model that (1) is based upon a plurality of homes near the subjecthome recently sold that is a superset of the homes identified by the fourth

input, but (2) places special emphasis on the homes identified by the fourthinput;

(o) applying by a computer the tailored valuation model to the updated attributesof the subject home to obtain a fifth valuation of the subject home; and

(p) displaying the fifth valuation based on the application of the tailoredvaluation model.

’674 patent at 19:29-67.

In the specification, the ’674 patent acknowledges that “[a] variety of conventional

approaches exist for valuing homes,” such as relying upon recent selling prices and professional

appraisals. ’674 patent at 1:24-51. It also recognizes that it is possible to design systems that

automatically value houses, but notes that such automatic valuations “would generally be

performed based upon the contents of a public database, and without input from each home’s

owner or other information not in the public database.” Id. at 1:45-49. Such systems, according

to the ’674 patent, fail to consider owner input and as a result, may be inaccurate. Thus, the

invention claimed in the ’674 patent is the idea of allowing a homeowner to input information

about a house that is considered in the valuation of the property. Id. at 1:45-56. This owner-

provided information is then considered in a refined valuation of the home. Id. at 3:18-22.

Zillow’s complaint purports to allege both direct and indirect infringement by Trulia.

However, the allegations of indirect infringement fail to include the necessary factual elements.

Indeed, the entirety of Zillow’s indirect infringement claims allege:

Trulia has infringed and continues to infringe the ’674 patent by its use of, forexample, the Trulia Estimate feature, and by Trulia’s contributing to the use of,and inducement of others to use, infringing features and services. Under 35U.S.C. § 271, Trulia is liable for its infringement of the ’674 patent.

Dkt. No. 1 at ¶ 19.

Based on the legal insufficiencies of the complaint, Trulia now moves for dismissal.

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 8 of 21

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page 5Case No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

III. ZILLOW’S COMPLAINT FOR PATENT INFRINGEMENT SHOULD BEDISMISSED.

A. Legal Standards

Under Federal Rule of Civil Procedure 12(b)(6), a party may move to dismiss based on

the failure to state a claim upon which relief may be granted. See Fed. R. Civ. P. 12(b)(6). A

motion to dismiss under Rule 12(b)(6) challenges the legal sufficiency of the claims alleged. See

Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir. 1995).

In order to survive a motion to dismiss, the Supreme Court has held that a complaint must

contain sufficient factual matter “to state a claim of relief that is plausible on its face.” Bell Atl.

Corp. v. Twombly, 550 U.S. 554, 570 (2007). “A claim has facial plausibility when the plaintiff

pleads factual content that allows the court to draw the reasonable inference that the defendant is

liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (citations

omitted). “A pleading that offers ‘labels and conclusions’ or a ‘formulaic recitation of the

elements of a cause of action will not do.’ Nor does a complaint suffice if it tenders ‘naked

assertion[s]’ devoid of ‘further factual enhancement.’” Iqbal, 566 U.S. at 678 (quoting Twombly,

550 U.S. at 555, 557). “Threadbare recitals of the elements of a cause of action, supported by

mere conclusory statements, do not suffice.” Id.

Whether a claim recites patent-eligible subject matter is a question of law. See

Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012); CyberSource Corp. v. Retail

Decisions, Inc., 654 F.3d 1366, 1369 (Fed. Cir. 2011). Accordingly, district courts have

dismissed complaints for patent infringement upon a finding that the asserted patents do not meet

the patent eligibility requirements of Section 101.1 See, e.g., OIP Techs., Inc. v. Amazon.com,

Inc., No. C-12-1233 EMC, 2012 WL 3985118, at *20 (N.D. Cal. Sept. 11, 2012) (granting

1 As recently confirmed by the Federal Circuit, claim construction is not a prerequisite to adetermination of subject matter eligibility under § 101. See Bancorp Servs. L.L.C., v. Sun LifeAssurance Co. of Canada (U.S.), 687 F.3d 1266, 1273 (Fed. Cir. 2012) (recognizing that theCourt “has never set forth a bright line rule requiring district courts to construe claims beforedetermining subject matter”).

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 9 of 21

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page 6Case No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

motion to dismiss under § 101 where patent claimed “an automatic pricing method and apparatus

for use in electronic commerce environments”); Glory Licensing LLC v. Toys “R” Us, Inc., No.

09-4252 (FSH), 2011 WL 1870591, at *4-5 (D.N.J. May 16, 2011) (granting motion to dismiss

under § 101 where patent claimed a system for processing information from a template file to an

application program); Vacation Exh., LLC v. Wyndham Exch. & Rentals, Inc., No. 12-04229

RGK (FFMx) (C.D. Cal. Sept. 18, 2012, Order) (attached hereto as Exhibit 1) (granting motion

to dismiss under § 101 for a patent that discloses a method and system for allowing a user to

automatically and electronically trade timeshare properties by communicating with a central

computer system that has access to a database).

B. Because the ’674 Patent Claims Do Not Satisfy the Eligibility Requirementsof Section 101, Zillow’s Complaint Should be Dismissed.

Section 101 of the Patent Act provides that “[w]hoever invents or discovers any new and

useful process, machine, manufacture, or composition of matter, or any new and useful

improvement thereof, may obtain a patent therefore, subject to the conditions and requirements

of this title.” 35 U.S.C. § 101. The Supreme Court has long held that there are three specific

exceptions to this provision: “laws of nature, physical phenomena, and abstract ideas.” Mayo

Collaborative Servs. v. Prometheus Labs., Inc., 132 S. Ct. 1289, 1293 (2012); Bilski v. Kappos,

130 S. Ct. 3218, 3225 (2010). “Phenomena of nature, though just discovered, mental processes,

and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and

technological work.” Gottschalk v. Benson, 409 U.S. 63, 67 (1972).

In Bilski, 130 S. Ct. 3218, the Supreme Court considered a petitioner’s attempt to patent a

procedure for instructing buyers and sellers how to protect against the risk of price fluctuations

in a discrete section of the economy. Id. at 3230-31. Noting that the patent essentially claimed a

basic concept of hedging, or protecting against risk, which is a “fundamental economic practice,”

the Court held that allowing petitioners to patent risk hedging would “effectively grant a

monopoly over an abstract idea” and found the application unpatentable. Id. at 3231.

/ / /

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 10 of 21

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page 7Case No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

Recently in Mayo, the Supreme Court explained that “to transform an unpatentable

[abstract idea] into a patent-eligible application of such [idea], one must do more than simply

state the [idea] while adding the words ‘apply it.’” Mayo Collaborative Servs., 132 S. Ct. at

1294 (finding a method for the use of thiopurine drugs in the treatment of autoimmune disease

not patent-eligible where the steps “involve well-understood routine, conventional activity

previously engaged in by researchers in the field”) (emphasis added). To be eligible, the patent

must “contain other elements or combinations of elements, sometimes referred to as an

‘inventive concept.” Id. at 1294. Simply adding “steps in the claimed process” that “involve

well-understood, routine, conventional activity” is insufficient. Id. Nor can “the prohibition

against patenting abstract ideas ‘[] be circumvented by attempting to limit the use of the formula

to a particular technological environment’ or adding ‘insignificant postsolution activity.’” Bilski,

130 S. Ct. 3218, 3230 (quoting Diamond v. Diehr, 450 U.S. 175, 191-2 (1981)).

Further, “methods which can be performed mentally, or which are the equivalent of

human mental work, are unpatentable abstract ideas—the ‘basic tools of scientific and

technological work’ that are open to all.” CyberSource, 654 F.3d at 1371 (quoting Benson, 409

U.S. at 67). An invention that “simply provided a new and presumably better method for

calculating alarm limit values,” but could still be made with a pencil and paper is not patent

eligible under Section 101. Flook, 437 U.S. at 584. Even a method of programming a general-

purpose computer to convert binary-coded decimal numbers into pure binary through the use of a

mathematical algorithm was deemed unpatentable because such conversion, while complicated,

“can be done mentally” and without the use of a computer. Benson, 409 U.S. at 67.

The Federal Circuit has also held an invention to be unpatentable if the “method steps can

be performed in the human mind, or by a human using a pen and paper.” CyberSource, 654 F.3d

at 1372. “Such a method that can be performed by human thought alone is merely an abstract

idea and is not patent-eligible under § 101. Methods which can be performed entirely in the

human mind are unpatentable not because there is anything wrong with claiming mental steps as

part of a process containing non-mental steps but rather because computational methods which

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Tel: (206) 883-2500 / Fax: (206) 883-2699

can be performed entirely in the human mind are the types of methods that embody the ‘basic

tools of scientific and technological work’ that are free to all men and reserved exclusively to

none.” Id. at 1373 (emphasis added).

1. The ’674 Patent Claims Unpatentable Abstract Ideas.

The ’674 patent involves the “fundamental practice” of assessing the value of real

property, and claims the abstract idea of allowing a homeowner to adjust information regarding a

house that is subsequently factored into a refined valuation of the home.2 Simply reciting the use

of a general computer to perform the routine and conventional step of allowing a homeowner to

input information regarding a home, the ’674 patent contains no “inventive concept” that would

render the claims patent-eligible. Indeed, the patent claims are indistinguishable from abstract

ideas previously rejected by the Supreme Court and the Federal Circuit. See Benson, 409 U.S. at

67 (method of programming a general purpose computer to convert binary-coded decimal

numbers into pure binary through the use of a mathematical algorithm was not patent eligible);

CyberSource, 654 F.3d at 1370 (method for verifying the validity of a credit card transaction

over the Internet was not patent eligible); Dealertrack, 674 F.3d at 1317 (a computer-aided

method and system for processing credit applications over electronic networks was unpatentable

abstract idea); Bancorp Servs., 687 F.3d at 1277-78 (system for administering and tracking the

value of separate-account life insurance policies not patent eligible); Fort Props., Inc. v. Am.

Master Lease LLC, 671 F.3d 1317, 1318 (Fed. Cir. 2012) (patent describing an investment tool

designed to enable property owners to buy and sell properties without incurring tax liabilities not

eligible under § 101); Highmark, Inc. v. Allcare Health Mgmt. Sys., Inc., 687 F.3d 1300 (Fed.

Cir. 2012) (Mayer, J., dissenting-in-part) (noting that if Bilski had been decided prior to the trial,

the district court have resolved the case under § 101 and finding system in which a user enters

2 Although reciting a “computer readable medium,” independent claim 2 (and its dependentclaims) should be subject to the same scrutiny for purposes of determining eligibility under§ 101. “[A] claim directed to a ‘computer readable medium,’ despite its format, should betreated no differently from the comparable process claims held to be patent ineligible under§ 101.” Bancorp Servs., 687 F.3d at 1276.

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data regarding a patient’s symptoms and a computer generates a list of possible diseases or

conditions was not patent eligible).

2. The Claimed Routine and Conventional Steps Do Not Render theAbstract Ideas and Mental Processes Patentable.

In the context of this precedent, there can be no doubt that the steps of presenting and

inputting information, and even the more “complicated” step of calculating a valuation of a

home, can be performed mentally and “with a pencil and paper.” Indeed, it is beyond dispute

that the valuations of a home can and have in the past been performed entirely by the human

mind. That the steps claimed in the ’674 patent can be performed mentally further demonstrates

that the claims are unpatentable abstract ideas. Further, simply adding “steps in the claimed

process” that “involve well-understood, routine, conventional activity” is insufficient to render

an abstract idea patentable. Mayo Collaborative Servs., 132 S. Ct. at 1294. Each of the steps of

the ’674 patent claims comprise such routine and conventional activity: (a) presenting or

displaying information about the property; (b) obtaining adjusted information from the owner

about the property; (c) automatically determining a refined valuation based upon the input from

the owner; and (d) presenting or displaying the refined valuation to the owner. The ’674 patent’s

steps are precisely the type that the Federal Circuit has found to be ineligible.

The steps of displaying or presenting information used in a valuation do not render the

’674 patent-eligible. Similarly routine steps such as receiving and forwarding data have

previously been found to “not ‘impose meaningful limits on the claim’s scope.’” Dealertrack,

674 F.3d at 1333 (quoting Bilski I, 545 F.3d at 961-62). Likewise, the claimed step of obtaining

information about a home from the owner is not a meaningful limitation. In CyberSource, 654

F.3d at 1370, the Federal Circuit considered “a method for verifying the validity of a credit card

transaction over the Internet,” which required one to “obtain and compare intangible data

pertinent to business risks.” The Court found that the “mere collection and organization of data

regarding credit card numbers” cannot make an otherwise nonstatutory claim statutory.

CyberSource, 654 F.3d at 1370 (citing In re Grams, 888 F.2d 835, 840 (Fed. Cir. 1989)).

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Tel: (206) 883-2500 / Fax: (206) 883-2699

In Bancorp Servs., 687 F.3d at 1279-80, the claimed steps included determining values

and then storing, removing, and/or accumulating those values in managing a stable value

protected life insurance policy. The Court determined that performing calculations and

manipulating the results of the values—similar to what is claimed in the ’674 patent—were

ineligible subject matter. Id. That the method claimed in the ’674 patent is limited to the real

estate market makes no difference. The Federal Circuit rejected the idea that the limited use to

the life insurance market saves the claim, noting that “limiting an abstract idea to one field of use

or adding token post-solution components did not make the concept patentable.” Id. at 1280

(citing Bilski, 130 S. Ct. at 3231). The steps of the claimed method do not impose a meaningful

limitation that would render the ’674 claims patentable.

3. The ’674 Patent Claims Fail the Machine-or-Transformation Test.

Though not dispositive, the machine-or-transformation test is nevertheless “a useful and

important clue, an investigative tool, for determining whether some claimed inventions are

processes under § 101.” Bilski, 130 S. Ct. at 3227. In Bilski, the Federal Circuit held that a

claimed process would only be patent-eligible under Section 101 if: (1) it is tied to a particular

machine or apparatus; or (2) it transforms a particular article into a different state or thing. In re

Bilski (Bilski I), 545 F.3d 943, 954 (Fed. Cir. 2008). Application of the machine-or-

transformation test to the ’674 claims further demonstrates that they are not patent-eligible.

a. The ’674 Patent Claims Fail the Machine Prong.

The methods claimed in the ’674 patent fail to identify a specific machine. In fact, the

’674 specification confirms that no specific machine is required. Rather, the specification

describes the invention as “[a] software facility for automatically determining a current value for

a home or other property is tailored to input from its owner or another user (‘the facility’) is

described.” ’674 patent at 2:57-59. Figure 1 illustrates that any general computer can be used to

practice the claimed method, and the specification lists typical components including: a central

processing unit, a computer memory, a storage device such as a hard drive, a computer-readable

media drive such as a CD-ROM, and a network connection such as the internet. ’674 patent at

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4:25-46 (“computer systems configured as described above are typically used to support the

operation of the facility”); Figure 1. This list of general components found on any computer

does not tie the ’674 patent to a particular machine. “[M]erely identifying general ‘machine

elements’ does not satisfy the [machine-or-transformation test]; were that so virtually any use of

devices beyond the human body for a claimed method would satisfy the test.” OIP Techs., 2012

WL 3985118, at *13.

Nor do the ’674 patent claims “impose meaningful limits on the claim’s scope.” See

Bilski I, 545 F.3d at 961; CyberSource, 654 F.3d at 1369. Although claim 2 recites “a computer

readable medium for storing contents that causes a computing system to perform a method for

procuring information about a distinguished property from its owner,” and claims 1 and 15

require “a method in a computing system,” the Federal Circuit has repeatedly held such

incidental use of a computer to be insufficient to satisfy the machine prong. “[T]he use of a

computer in an otherwise patent-ineligible process for no more than its basic function—making

calculations or computations—fails to circumvent the prohibition against patenting abstract ideas

and mental processes.” Bancorp Servs., 687 F.3d at 1278.

“To salvage an otherwise patent-ineligible process, a computer must be integral to the

claimed invention, facilitating the process in a way that a person making calculations or

computations could not.” Id. (“the performance of repetitive calculations” does not impose

meaningful limits on the claims). The machine must play a significant part in permitting the

claimed method to be performed. See CyberSource, 654 F.3d at 1375 (finding the computer

readable medium limitation unpatentable under § 101). Merely reciting a “computer readable

medium” for performing the claimed method does not render the claim patentable. “[T]he basic

character of a process claim drawn to an abstract idea is not changed by claiming only its

performance by computers, or by claiming the process embodied in program instructions on a

computer readable medium. Thus, merely claiming a software implementation of a purely

mental process that could otherwise be performed without the use of a computer does not satisfy

the machine prong of the machine-or-transformation test.” Id.

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701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

Where, as here, the claims do not “specify how the computer hardware and database are

specially programmed to perform the steps claimed in the patent,” the patent is ineligible under

Section 101. See Dealertrack, 674 F.3d at 1333. Like the patent at issue in Dealertrack, the

’674 patent’s “claims are silent as to how a computer aids the method, the extent to which a

computer aids the method, or the significance of a computer to the performance of the method.”

Id. Moreover, “[b]ecause the computer here ‘can be programmed to perform very different tasks

in very different ways,’ it does not ‘play a significant part in permitting the claimed method to be

performed.’” Id. (citations omitted). Thus, the ’674 patent fails the machine prong of the test.

b. The ’674 Patent Claims Fail the Transformation Prong.

Nor do the ’674 claims transform a physical object or substance, or something

representing a physical object or substance, into a different state or thing. See Bilski I, 545 F.3d

at 963. “Purported transformation or manipulations simply of public or private legal obligations

or relationships, business risks, or other such abstractions cannot meet the test because they are

not physical objects or substances, and they are not representative of physical objects or

substances.” Id. “The mere manipulation or reorganization of data, however, does not satisfy

the transformation prong.” CyberSource, 654 F.3d at 1375. Manipulation of information is

precisely what the ’674 patent claims and, as in Bilski, does not effect a transformation.

The ’674 patent does not meet the eligibility requirements of Section 101; therefore, the

complaint should be dismissed with prejudice.

C. Alternatively, Trulia Requests a Stay Pending the Federal Circuit’sEn Banc Ruling in CLS Bank.

Trulia believes the Court should rule in its favor on the instant motion to dismiss

irrespective of the outcome of the Federal Circuit’s upcoming rehearing en banc in CLS Bank

Int’l v. Alice Corp. Pty. Ltd., 685 F.3d 1341 (Fed. Cir. 2012), vacated, scheduled for February 8,

2013. Specifically, CLS Bank should not affect the outcome here because, in CLS Bank, the

computer limitations played a far more significant role in the performance of a far more specific

application of an inventive concept than that at issue here. CLS Bank Int’l, 685 F.3d at 1355

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(claims cover computer-implemented steps of exchanging obligations maintained at an exchange

institution by creating electronically maintained shadow credit and shadow debit records).

Nonetheless, the questions presented in CLS Bank are:

a. What test should the court adopt to determine whether a computer-implementedinvention is a patent ineligible “abstract idea”; and when, if ever, does thepresence of a computer in a claim lend patent eligibility to an otherwise patent-ineligible idea?

b. In assessing patent eligibility under 35 U.S.C. § 101 of a computer-implemented invention, should it matter whether the invention is claimed as amethod, system, or storage medium; and should such claims at times beconsidered equivalent for § 101 purposes?

Trulia recognizes that the Court may believe that the rehearing en banc will impact its

determination of the present motion or provide guidance useful to the present motion. Should

the Court so believe, Trulia requests that the Court defer resolution of the present motion and

stay the case pending the Federal Circuit’s ruling. See e.g., Pac. Biosci. Labs., Inc. v. Nutra Luxe

MD, LLC, No. C10-0230 JLR (W.D. Wash. Jan. 9, 2011, Order) (analogous situation granting

motion to stay pending reexamination due, in part, to potentially significant impact of

reexamination on case).

D. The Indirect Infringement Claims Must Be Dismissed for Failure to Meet thePleading Requirements of Rule 8.

The sum total of Zillow’s pleading related to indirect infringement constitutes a

conclusory mention in paragraph 19 of the complaint that “Trulia has infringed and continues to

infringe the ’674 Patent by its use of, for example, the Trulia Estimatefeature, [sic] and by

Trulia’s contributing to the use of, and inducement of others to use, infringing features and

services” and a similar conclusory mention of indirect infringement in its Prayer for Relief. Dkt.

No. 1 at 6-7. Zillow’s allegations of indirect infringement should, therefore, also be dismissed

for their failure to make even threadbare recitations of the elements required to support

contributory and induced infringement.

To state a claim for inducement, a plaintiff must establish “first that there has been direct

infringement, and second that the alleged infringer knowingly induced infringement and

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701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

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possessed specific intent to encourage another’s infringement.” Broadcom Corp. v. Qualcomm

Inc., 543 F.3d 683, 697-98 (Fed. Cir. 2009) (citations omitted); see also Global-Tech Appliances,

Inc. v. SEB S.A., 131 S. Ct. 2060, 2068 (2011) (“Accordingly, we now hold that induced

infringement under § 271(b) requires knowledge that the induced acts constitute patent

infringement.”). “In order to succeed on a claim of contributory infringement, in addition to

proving an act of direct infringement, plaintiff must show that defendant ‘knew that the

combination for which its components were especially made was both patented and infringing’

and that defendant’s components have ‘no substantial non-infringing uses.’” Lucent Techs., Inc.

v. Gateway, Inc., 580 F.3d 1301, 1320 (Fed. Cir. 2009) (citations omitted).

Zillow failed to plead any of the elements required to state a claim for contributory or

induced infringement. The absence of even a single element warrants dismissal. See Iqbal, 129

S. Ct. at 1949. Zillow’s multiple omissions require dismissal.

1. Zillow Pled No Factual Allegations Regarding Knowledge and Intent.

For both inducement and contributory infringement, the complaint must allege

knowledge of the patent and specific intent. See Global-Tech Appliances, 131 S. Ct. at 2068;

Lucent Techs., 580 F.3d at 1320. Zillow’s complaint is completely silent, and fails to allege even

conclusory allegations of knowledge, for which Courts in this Circuit have routinely dismissed

indirect infringement claims. See, e.g., Emblaze Ltd. v. Apple Inc., No. C 11-01079 SBA, slip

op., 2012 WL 5940782, at *7 (N.D. Cal. Nov. 27, 2012) (dismissing indirect infringement claims

where complaint was “devoid of any allegations alleging how [defendant] actively induced

infringement with knowledge that the induced acts constitute patent infringement”); Wistron

Corp. v. Phillip M. Adams & Assoc., LLC, No. C-10-4458 EMC, 2011 WL 4079231, at *5 (N.D.

Cal. Sept. 12, 2011) (dismissing indirect infringement claims and noting that “[p]ost-Twombly

and Iqbal, courts have typically rejected conclusory allegations of knowledge”); Nazomi

Commc’n, Inc. v. Nokia Corp., No. 10-CV-4686, 2011 WL 2837401, at *3 (N.D. Cal. July 14,

2011) (dismissing claim for inducement where plaintiff failed to “allege specific facts” to

support the conclusory allegations that defendant “actively and knowingly induced”).

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2. Zillow Pled No Factual Allegations Regarding Direct Infringement bya Third Party.

Claims for induced infringement and contributory infringement cannot exist in the

absence of direct infringement by third parties. See Cross Med. Prods., Inc. v. Medtronic

Sofamor Danek, Inc., 424 F.3d 1293, 1312 (Fed. Cir. 2005); Alloc, Inc. v. Int’l Trade Comm’n,

342 F.3d 1361, 1374 (Fed. Cir. 2003). Zillow’s failure to allege direct infringement by any third

party therefore provides a separate, independent ground for dismissal. See Emblaze Ltd., 2012

WL 5940782, at *7 (dismissing indirect infringement claims where complaint “failed to allege

facts plausibly showing direct infringement by any third party”); Halton Co. v. Streivor, Inc., No.

C 10-00655 WHA, 2010 WL 2077203, at *2 (N.D. Cal. May 21, 2010) (dismissing indirect

infringement claims where “no entity other than defendant has been accused of directly

infringing” the asserted patent) (emphasis added).

3. Zillow Pled No Factual Allegations That Trulia’s Products WereEspecially Designed for Infringing Use.

Finally, Zillow’s contributory infringement claim should be dismissed “in the complete

absence of allegations [] that [the accused product] is a component of a patented invention, or

that the component has no substantial noninfringing use.” Medtrica Solutions, Ltd. v. Cygnus

Med., LLC, No. C12-538RSL, slip op., 2012 WL 5726799, at *2 (W.D. Wash. Nov. 15, 2012);

see also Emblaze Ltd., 2012 WL 5940782, at *7 (granting dismissal where plaintiff failed to

allege that no substantial non-infringing uses); Halton Co., 2010 WL 2077203, at *2 (complaint

failed to state a claim for contributory infringement where there was “no allegation by plaintiff

that the accused . . . product was a ‘component of a patented machine . . . constituting a material

part of the [patented] invention’ or that the accused product was not capable of ‘substantial

noninfringing use’”).

In sum, Zillow’s complaint makes no attempt to plead any of the elements necessary to

state a claim for contributory and induced infringement—it pleads nothing relating to knowledge

of the patent and intent to infringe, nothing relating to direct infringement by a third party, and

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nothing related to a lack of noninfringing use. Lacking each and every required element,

Zillow’s indirect infringement claims should be dismissed.

IV. CONCLUSION

For the foregoing reasons, defendant Trulia respectfully requests that the Court grant its

motion to dismiss.

Dated: December 19, 2012

Stefani E. Shanberg, Pro Hac ViceJennifer J. Schmidt, Pro Hac ViceWILSON SONSINI GOODRICH & ROSATIProfessional CorporationOne Market PlazaSpear Street Tower, Suite 3300San Francisco, California 94105Telephone: (415) 947-2000Facsimile: (415) 947-2099Email: [email protected]

Barry M. Kaplan, WSBA #8661WILSON SONSINI GOODRICH & ROSATIProfessional Corporation701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036Telephone: (206) 883-2500Facsimile: (206) 883-2699Email: [email protected]

Attorneys for DefendantTRULIA, INC.

/s/ Stefani E. Shanberg

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DEFENDANT’S MOTION TO DISMISS COMPLAINTFOR PATENT INFRINGEMENT – Page 17Case No. 2:12-cv-01549-JLR

WILSON SONSINI GOODRICH & ROSATI

701 Fifth Avenue, Suite 5100Seattle, Washington 98104-7036

Tel: (206) 883-2500 / Fax: (206) 883-2699

CERTIFICATE OF SERVICE

I hereby certify that on December 19, 2012, I electronically filed the foregoing with the

Clerk of the Court using the CM/ECF system, which will send notification to counsel of record.

Stefani E. Shanberg/s/ Stefani E. Shanberg

Case 2:12-cv-01549-JLR Document 19 Filed 12/19/12 Page 21 of 21