Glory Licensing LLC v. Toys "R" Us, Inc.: The Machine-or-Transformation Test Is Not Satisfied

May 30, 2011

In a recent decision from New Jersey, the district court granted a motion to dismiss for failure to state a claim. The district court granted the motion because the plaintiff's patents did not qualify as patentable subject matter under the machine-or-transformation, which the United States Supreme Court has recently determine remains a useful test in determining patentable subject matter. In re Bilski, 130 S. Ct. 3218 (2010).

The patents at issue claim processes directed to a system for processing information from a template file to an application using "content instructions" and "customizable transmission format instructions" on a programmed computer. The plaintiff alleged that the defendant's website infringed the patents because the website allowed customers to input information into a template as part of the purchase process. The defendant argued that the patents were invalid because they claim unpatentable abstract ideas.

After reviewing the Bilski decision and noting that the "machine or transformation test," while still a useful test, is not the sole test to apply to determine patentable subject matter, the district court found that the "machine or transformation test" was the appropriate test in this case. The district court made this determination because the plaintiff had conceded that all of the claims at issue were essentially process claims. In analyzing the machine or apparatus prong of the test, the district court looked at whether the machine in the claim could be specifically identified. The plaintiff argued that the claims reference to a "first computer" satisfied the machine prong.

The district court disagreed stating that "simply the use of a programmed computer is not sufficient to satisfy the machine or apparatus prong of the test." The district court found that this general purpose computer could not satisfy the test under well established Federal Circuit precedent. Here, as the district court found, the plaintiff was not able to identify any combination of computers or any particular algorithm that was used by the general purpose computer. The district court also found that plaintiff's reliance on the general terms of "content instructions" and "customizable transmission format instructions" were generic terms that shed no light on what the instructions entail or who programs them according to what specifications. Thus, the machine prong could not be satisfied.

Turning to the transformation prong, the district court examined whether the process transformed an article into a different state or thing and whether such a transformation was central to the purpose of the claimed process. The district court also found that this prong was not satisfied as the patents "claim processes involving the extraction of information entered into and stored in a document or file and the formatting and transmission of that information to an application program." Concluding that there is no change in the forms and that the data is merely transferred from one format to another, the district court found that there is no transformation as a result of the patented process.
Accordingly, the district court held that the patents were invalid.

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An important aspect of this case is the procedural status--the district court found the patents invalid on a motion to dismiss at a very early stage of the proceedings. These types of dismissals are much more common with the full development of a factual record, expert testimony and even a Markman hearing. This will be a case worth watching on appeal to the Federal Circuit to see if the Federal Circuit determines that the district court made its ruling without a full factual record and without benefit of Markman hearing.

Glory Licensing LLC v. Toys "R" Us, Inc., Case No. 2-09-cv-04252 (D.N.J. May 16, 2011)

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The authors of www.PatentLawyerBlog.com are patent litigation lawyers at Jeffer Mangels Butler & Mitchell LLP. We represent inventors, patent owners and technology companies in patent licensing and litigation. Whether pursuing patent violations or defending infringement claims, we are aggressive and effective advocates for our clients. For more information contact Stan Gibson at 310.201.3548 or SGibson@jmbm.com.