Crypto currency company requests dismissal of patent infringement case. COOPERATIVE ENTERTAINMENT v. RIPPLE

A patent grants its owner the exclusive right to sell their invention, for a limited period of time. In exchange for that exclusive right the inventor describes how the invention works to the general public. Any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof is eligible for patent protection. §35 U.S.C. 101 The patent laws in the United States were written before computers were common appliances. Because of this the patent law in the United States does not explicitly address the question whether or not computer software can be patented. Generally, in the United States, when the law does not address a question it is up to the courts to craft rules to answer the question.

Whether computer software is eligible subject matter for patent protection is an evolving question. Computer software typically takes algorithms, which can be considered an abstract idea, and applies these algorithms to perform a task. The first United States patent on a piece of computer software was issued in April 23, 1968. Since that time the definition of eligible subject matter has changed significantly, first enlarging and then shrinking the definition of what is considered patent eligible. Alice Corp. Pty. Ltd. v. CLS Bank Int’l, 573 U.S. 208 (2014) articulates the present test to determine if computer software is eligible for patent protection. The first step in the Alice test is to determine whether the claims of the patent are directed to a patent-ineligible concept, like an abstract idea. If the first step is true, then each patent claim is reviewed both individually and ‘as an ordered combination’ to determine whether the additional elements ‘transform the nature of the claim’ into a patent-eligible application. This can be a difficult concept to grasp.

The Alice test will be a central part of COOPERATIVE ENTERTAINMENT, INC., vs. RIPPLE LABS INC., 3:19-cv-06025 (N.D.CA 2019). The plaintiff in this case is the owner of United States Patent No. 9,432,452 (the ‘452
patent) which is titled “Systems and Methods for Dynamic Networked Peer-to-peer content distribution”. The patent relates to a method of distributing large files across a computer network.

The defendant in this case operates a crypto currency network called RippleNet. RippleNet allows a user to distribute large computer files over the internet. In September 2019 the plaintiff sued the defendant for patent infringement.

In January 2020 The defendant filed a motion to dismiss on the grounds that the patent claims ineligible subject matter and that the complaint fails to explain how RippleNET infringes on the ‘452 Patent. In its motion the defendant asserts that the claims of the ’452 Patent fails to provide an inventive concept beyond the abstract idea. To support its argument the defendant offers the patent itself as evidence. The description of prior are in the patent notes that, it is known in the relevant prior art to provide peer-to-peer (P2P) networks via the internet for sharing digital content, including video, for live streaming service over content distribution networks (CDNs). The same section of the patent also talks about redistributing segments of information between nodes in a network. The defendant asserts that this shows the ‘452 Patent is little more than an abstract idea.

The defendant makes a strong argument in favor of dismissal. The plaintiff will be given an opportunity to rebut the defendant’s argument, however a rebuttal would be unnecessary if the plaintiff had better articulated how RippleNET infringed on the patent in the original complaint.

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