On September 28, 2022, the Federal Circuit reversed and remanded a decision from the Northern District of California granting a Rule 12 Motion to Dismiss on the basis that claims of U.S. Patent No. 9,432,452 were invalid under 35 U.S.C. § 101. Coop. Entm’t, Inc. v. Kollective Tech., Inc., 2022 U.S. App. LEXIS 27138 (Fed. Cir. Sept. 28, 2022). The ’452 patent claims systems and methods for structuring dynamic peer-to-peer (P2P) networks for distributing large files. In its reversal, the Federal Circuit determined that there were plausible factual allegations that the claims recited inventive concepts. In Cooperative, the record included only the patent and the amended complaint. The Court nonetheless found plausible factual disputes precluding dismissal.
The Federal Circuit noted and agreed with Cooperative’s argument that the amended complaint plausibly alleged that the ’452 patent claims recited inventive concepts at step two of the two-part Alice test for patent eligibility. The Court found that the specification touted specific improvements in the distribution of data compared to the prior art and that the amended complaint plausibly alleged these inventive concepts. Id. at *6.
The Court found at least two alleged inventive concepts in claim 1 that should have precluded dismissal, including (1) the required dynamic P2P network wherein multiple peer nodes consume the same content and are configured to communicate outside the content distribution networks (CDNs); and (2) the requirement that trace routes be used in content segmentation. Id. Regarding the first inventive concept, the Court found that the specification explained how claim 1’s dynamic P2P network structure differed from and improved upon the prior art, especially the structural limitation that the peer nodes consuming the same content be distributed outside a controlled network or a CDN. Id. at *8. Significantly, the Court found Cooperative’s allegations in its amended complaint addressing system capacity were plausibly tethered to claim 1’s distribution of content within its P2P network outside the control of a CDN. Id. at *11. Thus, the Court concluded that claim 1 recited a specific technical solution that was an inventive concept—a particular arrangement of peer nodes for distributing content outside controlled networks and/or CDNs, which did not exist in the prior art. Id. at *11-12. The Court found that the amended complaint and the ’452 patent’s written description created a plausible factual issue regarding the inventiveness of claim 1’s dynamic P2P network structure. Id. at *12.
Regarding the second inventive concept—trace route segmentation—the Court found plausible allegations in the amended complaint that using trace routes to segment content in claim 1’s dynamic P2P network was not well understood, routine, or conventional. Id. at *15. Indeed, the amended complaint alleged that the prior art did not deliver P2P content using content segmentation where the content segmentation was based on a trace route. Id. at *16. The Court found that the allegations mirrored statements in the specification and the prosecution history that using trace route segmentation was inventive and improved the efficiency, redundancy, and reliability of content delivery systems. Id. Kollective had argued that the patent was not inventive because P2P networks and CDNs are conventional. The Federal Circuit, however, stated that this argument missed the point, and reiterated that “useful improvements to computer networks are patentable regardless of whether the network is comprised of standard computing equipment.” Id. at *17.
In summary, the Court held that the district court erred in dismissing the amended complaint because the claim language, the written description, and the amended complaint “describe how [the ’452 patent’s] particular arrangements of elements is a technical improvement over prior art ways of” arranging networks for distributing video content. Id. at *17-18. Cooperative highlights the importance of pleading plausible factual allegations supported by the intrinsic record in order to survive § 101 patent-eligibility challenges at the Rule 12 stage. In particular, Cooperative placed significant weight on the specification’s description of the improvements over the prior art and the benefits achieved by the invention in concluding that the claims plausibly recite an inventive concept. As such, Cooperative provides additional guidance as to what is required to satisfy the inventive concept prong of the two-part Alice test.