Unreported / Non-Citable
Background
Induction Devices LLC sued Recreational Equipment, Inc., accusing REI of indirectly infringing five patents through its support for purchases made with branded contactless consumer credit cards. Induction Devices did not allege that REI itself directly infringed the patents.
REI moved to dismiss, arguing that the complaint did not plausibly allege induced infringement or underlying direct infringement, that the asserted patents claimed patent-ineligible abstract ideas, and that references to payment-industry standards did not provide adequate notice of infringement. REI also sought dismissal of any claim for pre-suit damages.
The Court’s Holding
The court granted the motion only as to pre-suit damages, which Induction Devices expressly stated it was not seeking. It denied the remainder of the motion. The court held that the complaint plausibly alleged inducement by asserting that REI encouraged customers to make contactless payments through instructions and services, and plausibly alleged direct infringement by comparing the patent limitations with EMV contactless-payment standards allegedly followed by REI’s branded cards.
On patent eligibility, the court found that the challenged claims of the ’145, ’543, and ’885 patents were directed to abstract ideas at the first step of the Alice framework. Those claims nevertheless survived because Induction Devices plausibly alleged unconventional arrangements that could supply an inventive concept, and REI had not established at the pleading stage that the claimed techniques were well-understood, routine, or conventional. The court found that the challenged claims of the ’628 and ’926 patents were directed to specific technological implementations rather than abstract ideas and also noted that REI had not shown their claimed processes or circuits to be conventional.
Key Takeaways
- Allegations that REI provided instructions and services encouraging customers to use contactless payments were sufficient to plead active inducement.
- A complaint may use an industry standard to plead direct infringement when it plausibly alleges that the accused product operates in accordance with that standard.
- Even claims found abstract at Alice step one may survive a pleading-stage challenge when plausible factual allegations support an inventive concept.
Why It Matters
The decision illustrates the difficulty of resolving patent eligibility at the motion-to-dismiss stage when the complaint plausibly alleges that claimed hardware configurations or component interactions were unconventional. It also confirms that standards-based infringement allegations can provide a sufficient foundation for indirect-infringement claims when compliance with the identified standard is plausibly tied to the accused products or conduct.