Written by: Douglas B. Wentzel

SANDERLING MANAGEMENT LTD. v. SNAP INC.

Before Chen, Cunningham, and Stark. Appeal from the United States District Court for the Central District of California.

Summary: The district court properly found that digital imaging processing method claims were patent ineligible under 35 U.S.C. §101.

Sanderling Management Ltd. (“Sanderling”) sued Snap Inc. in the Northern District of Illinois, asserting infringement of three patents that share a common specification. The patents each claim methods of using distribution rules to load digital image branding functions to users when certain conditions are met. Snap moved to dismiss, alleging the claims were invalid under 35 U.S.C. §101 for being directed to patent-ineligible subject matter. The case was subsequently transferred to the Central District of California, where the court granted Snap’s motion to dismiss. Sanderling appealed.

The Federal Circuit affirmed the district court’s decision that the asserted claims were patent ineligible. Regarding step one of the two-part Alice test, Sanderling analogized its claims to those in McRO, Inc. v. Bandai Namco Games Am. Inc., 837 F. 3d 1299 (Fed. Cir. 2016), and argued that the District Court erred by reading the claims at too high of a level of abstraction. The Federal Circuit disagreed and distinguished McRO because the patents in McRO were not directed to an abstract idea, but provided “a combined order of specific rules that rendered information into a specific format.” The Federal Circuit explained that the “distribution rule” of the asserted patents “merely receives, matches, and then distributes the corresponding function based on the user’s location,” which is a much more generic set of steps than McRO’s specific claim language. Thus, the Federal Circuit affirmed the finding that the claims were directed to an abstract idea under step one of Alice. The Federal Circuit also found that the district court did not err by deciding Snap’s motion without claim construction because Sanderling did not propose constructions for the terms it wanted construed or explain how any such constructions would make a difference to the Alice analysis.

Regarding step two of the Alice test, the Federal Circuit held that the asserted claims’ “distribution rule” was not an inventive concept because it was the application of the abstract idea using common computer components. The Federal Circuit also rejected Sanderling’s argument that factual disputes should have precluded Snap’s motion to dismiss from being granted because Sanderling failed to timely identify any specific factual disputes. Further, the Federal Circuit found there was no evidence that the district court failed to presume the patents were valid, and noted that courts are not required to defer to the Patent Office’s eligibility determination because patent eligibility is an issue that is reviewed de novo.

Additionally, the Federal Circuit affirmed the district court’s denial of Sanderling’s motion to amend its complaint because the proposed amendment contained only conclusory allegations that would not have cured the original complaint’s deficiencies.

Editor: Paul Stewart

Julie Kim Washington, DC Bar Admission Pending