Cooperative Entertainment Inc. v. Kollective Technology: The Importance of Creating a Narrative of the Merits of the Invention

In Cooperative Entertainment Inc. v. Kollective Technology the Court of Appeals for the Federal Circuit reversed the District Court’s dismissal of patent owner’s complaint on the basis that all claims of US 9,432,452 were patent ineligible under 35 U.S.C. § 101. The CAFC reasoned that the patent describes “several alleged inventive concepts which the specification touts as specific improvements in the distribution of data compared to the prior art.” This case highlights the criticality of drafting a patent specification that discloses inventive concepts satisfying one or both steps of the Supreme Court’s Alice Test.

Cooperative Entertainment Inc. sued Kollective Technology for infringement of at least claims 1-3 and 5 of the ‘452 patent, directed to a system for virtualized computing peer-based content sharing that includes a content delivery server configured for electrical connection and communication via a communications network, and a P2P dynamic network with multiple peer nodes. In response, Kollective filed a motion to dismiss alleging the claims were patent ineligible under 35 U.S.C. § 101.

In an amended complaint, Cooperative reiterated the benefits of the ‘452 patent claims, including emphasizing the “novel technique” of a dynamic P2P network based on at least one trace route for distributing content outside the control of CDN and sharing video in segments throughout P2P network, discussed what the prior art failed to disclose, and noted that the Examiner addressed the novel features of the invention in the Reasons for Allowance. In response, Kollective refiled its motion to dismiss, arguing that the use of trace routes is not required and thus is irrelevant to eligibility, but did not dispute that segmenting content based on trace routes is inventive.

The District Court did not conduct any claim construction or resolve whether claim 1 of the ‘452 requires segmenting content based on a trace route, but sided with Kollective and dismissed Cooperative’s complaint on eligibility grounds.  The District Court held that the claims of the ‘452 patent did not satisfy either of the steps of the Alice Test and found that 1) at step one, the focus of the ’452 patent is the abstract idea of the preparation and transmission of content to peers through a computer network and 2) at step two, the ‘452 patent merely implements the abstract idea of preparing and transmitting data over a computer network with generic computer components using conventional technology.

On appeal, the Federal Circuit found that the District Court’s dismissal on the grounds that the claims are patent ineligible under Section 101 was improper because the “claims contain[ed] alleged inventive concepts not limited to the abstract idea, which defeat Kollective’s Rule 12 motion.”  The Federal Circuit referred to the patent specification and amended complaint, which describe the benefits of the novel techniques and the advantages provided over prior art systems and methods as well as the Examiner’s Reasons for Allowance. The Reasons for Allowance stated that the alleged inventive concepts of the ‘452 patent were not present in the prior art.. The CAFC held that it was not deciding “today that the claims are patent eligible under § 101” but rather that “there are plausible factual allegations that the claims include inventive concepts.”

The Federal Circuit’s reversal of the dismissal underscores the value in disclosing improvements and technical advantages in the specification of an invention that is likely to be scrutinized for patent subject matter eligibility under 35 U.S.C. § 101. This decision provides some insights into the best practices to consider to help patentees survive eligibility challenges.