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Insidesales.Com, Inc. v. Salesloft, Inc.

United States District Court, D. Utah, Central Division

June 13, 2017

INSIDESALES.COM, INC., Plaintiff,
v.
SALESLOFT, INC., Defendant.

          MEMORANDUM DECISION AND ORDER

          DALE A. KIMBALL, United States District Judge

         Judge Dale A. Kimball This matter is before the court on Defendant SalesLoft's Motion to Dismiss Based On Unpatentability Under 35 U.S.C. § 101 and SalesLoft's Motion to Dismiss Based On FRCP 12(b)(6). On April 4, 2017, the court held a hearing on the motions. At the hearing, Plaintiff was represented by Paul B. Gaffney and Samuel C. Straight, and Defendant was represented by Karineh Khachatourian, and H. Dickson Burton. The court took the motions under advisement. After carefully considering the parties' memoranda and the law and facts relevant to the pending motions, the court issues the following Memorandum Decision and Order.

         BACKGROUND

         This is a patent infringement case involving “sales acceleration” software. InsideSales' patented Vision software is used by sales representatives to track the unique email and website behavior of sales leads, which provides insight into whether those leads are likely to be interested in making a purchase.

         Vision builds upon the tracking technology developed for internet marketing and sales in the 1990s. The prior technology permitted a company to send tracked mass emails to potential customers and identify at a rudimentary level who was opening those emails, who was clicking on the links to the emails, and what portions of the company's website were being visited. The prior technology, however, did not allow individual sales representatives to track the behavior of individual sales leads in response to their own emails sent from their own email program, such as Microsoft Office.

         iHance, a predecessor of InsideSales, built the first version of Vision in 2001 to allow sales representatives to use their own regular email program to correspond with potential customers while also tracking that email correspondence to see if and when it was opened, whether the recipient visited the company's website, and what sections of the website the recipient visited. iHance obtained two patents in connection with the Vision software: (1) United States Patent No. 7, 072, 947 (“‘947 patent”), titled “Method and System for Monitoring E-Mail and Website Behavior of an E-Mail Recipient, ” which issued on July 4, 2006; and (2) United States Patent No. 7, 076, 533 (“‘533 patent”), also titled “Method and System for Monitoring E-Mail and Website Behavior of an E-Mail Recipient, ” which issued July 11, 2006.[1]

         The United States Patent and Trademark Office (“PTO”) has re-examined both patents. On September 15, 2009, the PTO issued Ex Parte Reexamination Certificate 7, 033, confirming the patentability of all claims in the '947 patent. On April 26, 2011, the PTO issued Ex Parte Reexamination Certificate 8, 183, confirming the patentability of all claims in the ‘533 patent.

         SalesLoft was formed in 2014 and began offering for sale a system for monitoring email and web behavior called “Cadence.” One embodiment of the Cadence system uses an Outlook-based plug-in. Customers can send emails from their email program and then track the email and the website behavior of the recipient. SalesLoft also offers a browser extension that enables email and web-behavior monitoring from emails sent from a Gmail account. InsideSales contends that SalesLoft's products infringe the ‘947 and ‘533 patents and that it has lost sales and revenue from SalesLoft's alleged infringement.

         DISCUSSION

         35 U.S.C. § 101 Motion to Dismiss

         SalesLoft brings this motion to dismiss, arguing that the ‘947 patent and ‘533 patent are invalid as a matter of law under 35 U.S.C. § 101 because they do not claim patent-eligible inventions. To be eligible for a patent, a claimed invention must be directed to a patentable subject matter as defined in 35 U.S.C. § 101. Patentable subject matter means a “new and useful process, machine, manufacture or composition of matter, or any new and useful improvement thereof.” Id. Section 101 has an expansive definition of patentability and Congress intended patent laws to “be given wide scope.' Diamond v. Chakrabarty, 447 U.S. 303, 308-09 (1980).

         However, there are exceptions to patentability. The Supreme Court has made clear that abstract ideas are not patentable. Alice Corp. v. CLS Bank Int'l, 134 S.Ct. 2347, 2350 (2014); Bilski v. Kappos, 561 U.S. 593, 594 (2010). Abstract ideas are fundamental concepts that belong to everyone and cannot be patented without a sufficient inventive concept to transform the abstract idea into a patent eligible invention. Alice, 134 S.Ct. at 2350-51.

         Courts employ a two-step framework to distinguish abstract ideas “from patent-eligible applications of those concepts.” Id. at 2355. First, a court must determine whether the claims at issue are directed at an “abstract idea.” Id. If so, the second step asks whether the claims contain an “inventive concept”: “an element or combination of elements that is sufficient to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.” Id. The accused infringer bears the burden of proof on both steps.

         The exclusion for abstract ideas is applied narrowly. Mayo Collaborative Servs. v. Prometheus Labs, Inc., 132 S.Ct. 1289, 1293 (2012). “[T]oo broad an interpretation of this exclusionary principle would undermine patent law, ” because “all inventions at some level, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Id. Courts, therefore, have been directed to ‚Äútread ...


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