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Coca-Cola Co. succeeded in killing inventory management patents it was accused of infringing with some beverage dispensers.
The U.S. Court of Appeals for the Federal Circuit Feb. 16, upholding a 2016 lower court ruling, found Automated Tracking Solutions LLC’s patents covering a specialized radio frequency identification (RFID) system used in inventory management were ineligible for patenting because they covered an abstract idea.
The ruling helps Coca-Cola end a patent fight that threatened sales from dispensers such as self-serve “Coca-Cola Freestyle” touchscreen machines widely used in public spaces such as theaters, malls, and restaurants.
The Federal Circuit did “not see any error in the district court’s conclusion that the asserted claims do not possess an inventive concept sufficient to confer patent eligibility,” it said in its ruling.
The Federal Circuit applied the eligibility test laid down by the Supreme Court in 2014 in Alice Corp. v. CLS Bank Int’l. In that case, the high court held that an invention covering an abstract idea isn’t patentable unless it includes an inventive concept that takes it beyond the abstract.
Automated Tracking, a patent licensing company, sued Coca-Cola in the U.S. District Court for the Eastern District of Virginia in 2015, claiming infringement of four of its patents by some of the beverage maker’s soda dispensers.
Shortly after, Coca-Cola succeeded in moving the lawsuit to the U.S. District Court for the Northern District of Georgia. It then filed a motion for early dismissal of Automatic Tracking’s patent infringement complaint before trial.
The Federal Circuit’s nonprecedential decision upheld the district court’s dismissal of the lawsuit in the dispute’s early stages. However, in a couple of precedential rulings earlier this month, it may have signaled a shift that would make it harder to knock out patents early in a case, especially when eligibility questions involve factual issues that can’t be resolved until later.
Since Alice, alleged infringers have been largely successful in killing patents as ineligible either through an initial motion to dismiss or in summary judgment, avoiding a factual dispute.
The district court and appeals court analyzed only two claims of two out of four Automated Tracking patents they found were representative of all the claims.
Coca-Cola told the district court that the asserted patents did not pass the Alice test. For its part, Automated Tracking argued that the patent claims were nonabstract as they relate to a particular configuration to collect data from sensors, and electromagnetically transmit and analyze it to more accurately and systematically determine the location and identity of objects.
Moreover, the patents specify movement of devices that receive and transmit radio signals using specially programmed readers, storage devices, and processors configured to perform those functions, it said.
Automated Tracking argued on appeal that its system was invented just as a RFID technology was developing. The district court, it said, “erred in resolving a disputed fact question—whether the claims recite routine and conventional uses of an RFID system—in Coca-Cola’s favor.”
But the Federal Circuit found Automated Tracking’s asserted claims were broad, and mentioned uses of RFID system components that were routine and conventional.
“The complaint at issue has no allegations, which when accepted as true, would even create a factual issue, and ATS’s specification indicates that the components of the claimed invention are conventional,” it said.
Judge Kara F. Stoll wrote the decision, which Judges Evan J. Wallach and Kimberly A. Moore joined. Sterne Kessler Goldstein & Fox PLLC represented Automated Tracking Solutions. Alston & Bird LLP represented Coca-Cola.
The case is: Automated Tracking Sols., LLC v. Coca-Cola Co. , Fed. Cir., 2017-1494, 2/16/18
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