Unreported / Non-Citable
Background
Induction Devices LLC brought patent-infringement actions against Dick’s Sporting Goods and several other retailers and financial institutions, alleging infringement involving branded contactless credit cards and payment systems. The court addressed substantively identical dismissal motions filed in the lead action and consolidated member cases involving BPS Direct and Cabela’s, Dillard’s, Williams-Sonoma, Mavis Tire Express Services, and Capital One.
The moving defendants argued, as applicable, that Induction Devices had not plausibly pleaded induced infringement or underlying direct infringement, that the asserted patents claimed patent-ineligible abstract ideas under 35 U.S.C. § 101, and that references to contactless-payment standards did not provide adequate notice of infringement. Defendants other than Dillard’s also sought dismissal of any claim for pre-suit damages. Dillard’s challenged only patent eligibility.
The Court’s Holding
The court granted the motions only as to pre-suit damages. Because Induction Devices did not respond to that argument, the court treated the issue as unopposed and dismissed any claim for damages predating suit.
The court denied the remaining requests for dismissal. It held that allegations that defendants encouraged customers to use contactless payment functionality through advertising, instructions, and services plausibly stated induced-infringement claims. Induction Devices also plausibly alleged direct infringement by comparing the asserted claims with EMV contactless-payment standards and alleging that defendants’ branded cards operated in accordance with those protocols.
On patent eligibility, the court found that the challenged claims of the ’926 and ’628 patents were not directed to abstract ideas. It concluded that challenged claims of the ’145, ’543, ’885, ’500, and ’465 patents were directed to abstract ideas, but held that Induction Devices plausibly alleged inventive concepts and that the pleadings did not establish the claimed techniques as well-understood, routine, or conventional. Those claims therefore survived dismissal at the second step of the Alice framework.
Key Takeaways
- Induction Devices’ induced-infringement allegations were sufficient because they plausibly described defendants encouraging customers to make allegedly infringing contactless payments.
- Compliance with an identified industry standard may support direct-infringement allegations when the complaint plausibly connects the accused products to that standard.
- Even claims found directed to abstract ideas may survive a Rule 12(b)(6) motion when pleaded facts plausibly support an inventive concept and conventionality cannot be resolved from the pleadings.
- The court dismissed pre-suit damages as unopposed while permitting the substantive infringement claims to proceed.
Why It Matters
The decision illustrates the difficulty of obtaining patent-ineligibility dismissal at the pleading stage when the complaint contains factual allegations that the claimed combination was unconventional. A finding of abstraction at Alice step one did not end the inquiry because factual questions remained at step two.
The ruling also confirms that patent owners may plead infringement through technical standards when they plausibly allege that accused products comply with those standards. At the same time, the dismissal of pre-suit damages shows the consequence of failing to oppose a discrete damages argument.