Case: 19-2198 Document: 80 Page: 1 Filed: 10/23/2020
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
REALTIME DATA LLC, DBA IXO,
Plaintiff-Appellant
v.
REDUXIO SYSTEMS, INC., ARYAKA NETWORKS,
INC., PANZURA, INC., FORTINET, INC.,
Defendants-Appellees
______________________
2019-2198, 2019-2201, 2019-2202, 2019-2204
______________________
Appeals from the United States District Court for the
District of Delaware in Nos. 1:17-cv-01635-CFC, 1:17-cv-
01676-CFC, 1:18-cv-01200-CFC, 1:18-cv-02062-CFC,
Judge Colm F. Connolly.
______________________
Decided: October 23, 2020
______________________
BRIAN DAVID LEDAHL, Russ August & Kabat, Los Ange-
les, CA, argued for plaintiff-appellant. Also represented by
MARC AARON FENSTER, PAUL ANTHONY KROEGER, REZA
MIRZAIE.
JOHN NEUKOM, Skadden, Arps, Slate, Meagher & Flom
LLP, Palo Alto, CA, argued for all defendants-appellees.
Defendant-appellee Fortinet, Inc. also represented by
Case: 19-2198 Document: 80 Page: 2 Filed: 10/23/2020
2 REALTIME DATA LLC v. REDUXIO SYSTEMS, INC.
MICHELLE KAO, JAMES Y. PAK.
GUY YONAY, Pearl Cohen Zedek Latzer Baratz LLP,
New York, NY, for defendant-appellee Reduxio Systems,
Inc.
JOSHUA M. MASUR, Zuber Lawler & Del Duca LLP,
Redwood City, CA, for defendant-appellee Aryaka Net-
works, Inc.
BRIAN E. MITCHELL, Mitchell & Company, San Fran-
cisco, CA, for defendant-appellee Panzura, Inc.
______________________
Before NEWMAN, O’MALLEY, and TARANTO, Circuit Judges.
Opinion for court filed by Circuit Judge O’MALLEY.
Concurring opinion filed by Circuit Judge TARANTO.
O’MALLEY, Circuit Judge.
In 1955, Judge Learned Hand called the court-created
“invention requirement” “the most baffling concept” in all
of patent law. Lyon v. Bausch & Lomb Optical Co., 224
F.2d 530, 536 (2d Cir. 1955). 1 Today, he would likely save
1 Essentially, the invention requirement instructed
courts to invalidate patents that did not involve a true
measure of invention, with little explanation of what that
concept meant. See McClain v. Ortmayer, 141 U.S. 419,
427 (1891) (“In a given case we may be able to say that
there is present invention of a very high order. In another
we can see that there is lacking that impalpable something
which distinguishes invention from simple mechanical
skill.”). Congress did away with the requirement in the
1952 Patent Act and, instead, directed courts to assess
whether the invention was nonobvious, codifying that con-
cept in 35 U.S.C. § 103.
Case: 19-2198 Document: 80 Page: 3 Filed: 10/23/2020
REALTIME DATA LLC v. REDUXIO SYSTEMS, INC. 3
that characterization for the court-created exceptions to
what constitutes patentable subject matter under
35 U.S.C. § 101. Because those exceptions are complex and
their application is reviewed de novo, district courts might
be tempted to opt for an effective coin toss rather than a
reasoned analysis when faced with a challenge under
§ 101. This is especially so where the abstract idea excep-
tion is invoked. But the system is not supposed to work
that way. The parties are entitled to more and the Court
of Appeals needs more.
A district court opinion “must contain sufficient find-
ings and reasoning to permit meaningful appellate scru-
tiny.” Gechter v. Davidson, 116 F.3d 1454, 1458 (Fed. Cir.
1997). Although we have said that we review judgments,
not opinions, King Instrument Corp. v. Otari Corp., 767
F.2d 853, 862 (Fed. Cir. 1985), where a district court has
offered no reasoning for us to review we may, and most of-
ten do, decline to analyze a legal question in the first in-
stance. Proveris Sci. Corp. v. Innovasystems, Inc., 739 F.3d
1367, 1373 (Fed. Cir. 2014).
Realtime Data LLC (“Realtime”) appeals from a bench
ruling of the United States District Court for the District
of Delaware holding all 159 claims of U.S. Patent Nos.
7,415,530 (“’530 patent”), 8,717,203 (“’203 patent”),
9,054,728 (“’728 patent”), 9,116,908 (“’908 patent”), and
9,667,751 (“’751 patent”) (collectively “patents-in-suit”) pa-
tent ineligible under 35 U.S.C. § 101. See J.A. 52–59. Be-
cause this case presents one of those rare circumstances in
which a district court’s treatment of a complex and close
legal issue is too cursory to allow for meaningful appellate
review, we vacate and remand for the district court to give
additional consideration to the eligibility question and
elaborate on its reasoning.
Case: 19-2198 Document: 80 Page: 4 Filed: 10/23/2020
4 REALTIME DATA LLC v. REDUXIO SYSTEMS, INC.
I. BACKGROUND
A. The Patents-in-Suit
The patents-in-suit all relate, at a high level, to meth-
ods and systems for digital data compression. The ’728 pa-
tent and ’203 patent, which are in the same family and
share a common specification, are titled “Data Compres-
sion Systems and Methods.” The patents’ written descrip-
tions explain the problem of “data dependency” in prior art
systems. “Data dependency” is “content sensitive behav-
ior” that means “the compression ratio achieved is highly
contingent upon the content of the data being compressed.”
’728 patent, col. 2, ll. 29–35. One prior art solution was to
select a compression technique based on “file type de-
scriptors” (e.g., .doc, .txt, or .pdf) that are used to identify
“the application programs that normally act upon the data
contained within the file.” Id. at col. 3, ll. 2–5. The written
descriptions explain, however, that this solution’s efficacy
is limited by the sheer number and rate of development of
application program types. Id. at col. 3, ll. 9–19. The writ-
ten descriptions further describe a system for data com-
pression that looks beyond the file type descriptor, to the
underlying data, to complete the desired compression. See
generally id. at col. 3, l. 59–col. 5, l. 11.
The ’908 patent and the ’530 patent, which are in the
same family and share a common specification, are titled
“System and Methods for Accelerated Data Storage and Re-
trieval.” The patents’ written descriptions explain that the
disclosed invention relates to “improving data storage and
retrieval bandwidth utilizing lossless data compression
and decompression.” ’908 patent, col. 1, ll. 17–18. The
written descriptions describe certain drawbacks found in
prior art systems, including that they did not adequately
account for hardware limitations. Id. at col. 2, ll. 34–45.
The patents’ disclosed invention purports to overcome
these limitations by, for example, selecting encoding tech-
niques “based upon their ability to effectively encode
Case: 19-2198 Document: 80 Page: 5 Filed: 10/23/2020
REALTIME DATA LLC v. REDUXIO SYSTEMS, INC. 5
different types of input data.” Id. at col. 12, ll. 5–7. The
written descriptions explain that this is meant “to elimi-
nate the complexity and additional processing overhead as-
sociated with multiplexing concurrent encoding
techniques.” Id. at col. 12, ll. 31–33.
The ’751 patent is titled “Data Feed Acceleration” and
relates to “systems and method for providing accelerated
transmission of data . . . over a communication channel us-
ing data compression and decompression to . . . effectively
increase the bandwidth of the communication channel
and/or reduce the latency of data transmission.” ’751 pa-
tent, col 1., ll. 27–36. The ’751 patent’s written description
describes drawbacks in the prior art, including that “cur-
rent methods of encryption and compression take as much
or substantially more time than the actual time to transmit
the uncompressed, unencrypted data.” Id. at col. 3, ll. 31–
33. The disclosed invention purports to solve these prob-
lems via a “data compression ratio [that] is substantial and
repeatable on each data packet” that has “no packet-to-
packet data dependency.” Id. at col. 7, ll. 55–66.
The patents-in-suit and members of their patent fami-
lies have been widely litigated. See Appellees’ Br. 14 n.1
(collecting cases). Of particular relevance to this appeal,
Magistrate Judge John D. Love of the Eastern District of
Texas considered the patent eligibility of the ’728, ’530, and
’908 patents, as well as the eligibility of members of the
’203 and ’751 patents’ families, in two separate cases. See
Realtime Data, LLC v. Carbonite, Inc., No. 6:17-CV-00121,
2017 WL 4693969 (E.D. Tex. Sept. 20, 2017), report and
recommendation adopted, No. 1:17-cv-12499-WGY (D.
Mass. March 7, 2018), ECF No. 97; Realtime Data, LLC v.
Actian Corp., No. 6:15-CV-463-RWS-JDL, 2015 WL
11089485 (E.D. Tex. Nov. 30, 2015), report and recommen-
dation adopted, 2016 WL 259581 (E.D. Tex. Jan. 21, 2016).
In each case, Judge Love recommended that the challenged
claims be deemed patent eligible at both Alice step 1 and
step 2. His reports and recommendations were fully
Case: 19-2198 Document: 80 Page: 6 Filed: 10/23/2020
6 REALTIME DATA LLC v. REDUXIO SYSTEMS, INC.
adopted by two different district court judges—Judge Rob-
ert W. Schroeder III of the Eastern District of Texas and,
due to an intervening transfer, Judge William G. Young of
the District of Massachusetts—each with significant expe-
rience in patent cases.
B. District Court Proceedings
Realtime filed suit alleging infringement of various
combinations of the claims of the patents-in-suit against
Fortinet, Inc. (“Fortinet”) and Reduxio Systems, Inc. (“Re-
duxio”) in November 2017, against Panzura, Inc. (“Pan-
zura”) in August 2018, and against Aryaka Networks, Inc.
(“Aryaka”) in December 2018. Fortinet, Reduxio, Panzura,
and Aryaka (collectively “defendants”) filed motions to dis-
miss the suits for failure to state a claim in early 2019.
Among other things, the defendants argued that all 159
claims of the patents-in-suit are patent ineligible under 35
U.S.C. § 101.
Pursuant to a June 10, 2019 order, the parties were in-
structed to submit a letter to the court in advance of oral
argument identifying “which Supreme Court or Federal
Circuit case that party contends is most similar to the chal-
lenged claim(s).” See, e.g., Order, Realtime Data LLC v.
Fortinet, Inc., No. 17-cv-01635-CFC (D. Del. June 10,
2019), ECF No. 51. Defendants identified RecogniCorp,
LLC v. Nintendo Co., 855 F.3d 1322 (Fed. Cir. 2017). See,
e.g., Letter, Realtime Data LLC v. Fortinet, Inc., No. 17-cv-
01635-CFC (D. Del. July 3, 2019), ECF No. 56. Realtime
pointed to Visual Memory LLC v. Nvidia Corp., 867 F.3d
1253 (Fed. Cir. 2017). See Letter, Realtime Data LLC v.
Fortinet, Inc., No. 17-cv-01635-CFC (D. Del. July 3, 2019),
ECF No. 57.
On July 19, 2019, the district court heard argument on
the motions to dismiss. The proceeding lasted two hours
and eight minutes, including a recess. The argument fo-
cused primarily on claim 25 of the ’751 patent. See J.A.
29–51. The district court asked numerous questions of
Case: 19-2198 Document: 80 Page: 7 Filed: 10/23/2020
REALTIME DATA LLC v. REDUXIO SYSTEMS, INC. 7
Realtime—focusing on individual claim elements and ask-
ing Realtime to explain what made the claim “novel.” See
J.A. 33–34. At one point, the district court interjected that
the solution claimed in the ’751 patent was “obvious—it’s
just stating the obvious.” J.A. 48. The court then clarified,
“I don’t mean obviousness in the patent sense. I mean it is
obvious like it’s common sense.” Id. While Realtime’s
counsel attempted to focus the court to the question of
whether the claims were directed to an improvement on ex-
isting technology, as opposed to mere use of such technol-
ogy, the court did not appear to consider that question. See
J.A. 42–46. Having dissected claim 25 of the ’751 patent,
the district court ended the argument. See J.A. 52.
Following a short recess, the district court announced
it was “prepared to rule on the pending motions” and ex-
plained it would “not be issuing written opinions.” J.A. 52.
The transcript would serve as its ruling on all pending mo-
tions. The court stated that it had “followed a thorough
process before making the decision,” including considering
the briefing and engaging in oral argument, J.A. 52, but its
complete oral analysis of the patent eligibility of the 159
claims in the asserted patents fills only five pages of tran-
script. J.A. 53–57. At the end of those five pages, the court
declared all claims of U.S. Patent Nos. 7,415,530,
8,717,203, 9,054,728, 9,116,908, and 9,667,751 patent inel-
igible. J.A. 57.
After the district court announced its ruling, Realtime
asked for the court’s decision on its request for leave to
amend its complaints. J.A. 59. The district court re-
sponded, “my practice has been to ignore [requests for leave
to amend] and just to grant a motion to dismiss.” J.A. 60.
Although the district court conceded that “reasonable peo-
ple can disagree” on the eligibility of the asserted claims,
J.A. 58, it denied Realtime’s request for leave to amend its
complaint. J.A. 63. (“I think you can take your issues up
with the Federal Circuit, and if I’m wrong, I’m wrong.”).
Case: 19-2198 Document: 80 Page: 8 Filed: 10/23/2020
8 REALTIME DATA LLC v. REDUXIO SYSTEMS, INC.
Judgment was entered in each case on July 29, 2019.
J.A. 1–8. Realtime timely appealed. We have jurisdiction
pursuant to 28 U.S.C. § 1295(a)(1).
II. DISCUSSION
Courts must assess the patent eligibility of claims via
the two-part test established by the Supreme Court in Alice
Corp. v. CLS Bank International, 573 U.S. 208 (2014). At
Alice step 1, a court must “determine whether the claims
at issue are directed to a patent-ineligible concept.” Id. at
218. Patent ineligible concepts include laws of nature, nat-
ural phenomena, and abstract ideas. A court’s determina-
tion of whether a claim is directed to one of those patent
ineligible concepts must consider individual claim ele-
ments and the elements as an ordered combination. Id. at
217. At Alice step 2, a court must decide whether the
claims contain an “inventive concept” such that “the patent
in practice amounts to significantly more than a patent
upon the [ineligible concept] itself.” Id. at 217–18 (altera-
tion in original) (quoting Mayo Collaborative Servs. v. Pro-
metheus Labs., Inc., 566 U.S. 66, 73 (2012)).
The ultimate determination of patent eligibility under
35 U.S.C. § 101 is a question of law that we review de novo.
Berkheimer v. HP Inc., 881 F.3d 1360, 1365 (Fed. Cir.
2018). That we have de novo review does not, however,
mean that we are a court of first view. Despite the stand-
ard of review that we apply, we remain a court of appeal
not a court of original jurisdiction. Compare Original Ju-
risdiction, Black’s Law Dictionary (10th ed. 2014) (“A
court’s power to hear and decide a matter before any other
court can review the matter.”), with Appellate Jurisdiction,
id. (“The power of a court to review and revise a lower
court’s decision.”). District courts have an obligation to
provide us with a reviewable decision, commensurate with
the issues before it. See Nazomi Commc’ns, Inc. v. ARM
Holdings, PLC, 403 F.3d 1364, 1371 (Fed. Cir. 2005)
(“[T]his court must be furnished ‘sufficient findings and
Case: 19-2198 Document: 80 Page: 9 Filed: 10/23/2020
REALTIME DATA LLC v. REDUXIO SYSTEMS, INC. 9
reasoning to permit meaningful appellate scrutiny.’ This
requirement for sufficient reasoning applies with equal
force to issues of law . . . and issues of fact . . . .” (quoting
Gechter, 116 F.3d at 1458)). De novo appellate review cer-
tainly does not justify resolving a complex legal issue with-
out an opinion or reasoned analysis. Unfortunately, that
is exactly the type of improper justification the district
court proffered in this case. See J.A. 55 (district court dis-
cussing the de novo standard of review and concluding
“[t]hat’s why I’m not going to write anymore”); see also id.
(“[M]aybe Realtime is right and the Federal Circuit panel
will say differently and will have that opportunity to do
that.”).
We hold, on the record presented to us on appeal, that
the district court’s short analysis is insufficient to facilitate
meaningful appellate review. We are particularly con-
cerned with four shortcomings in the court’s process:
(1) the colloquy between the court and Realtime indicates
an apparently improper focus on factual questions that are
unsuitable for resolution at the pleading stage and a failure
to evaluate the claims as a whole; (2) to the extent the dis-
trict court purported to resolve the “directed to” question of
Alice step 1, its process is unclear and its conclusion ques-
tionable; (3) the court did not address or even acknowledge
Judge Love’s lengthy written opinions, which were adopted
by two district courts, addressing the precise question
faced by the court; and (4) although, as the district court
requested, Realtime identified Visual Memory LLC v.
NVIDIA Corp., 867 F.3d 1253 (Fed. Cir. 2017), as the case
most analogous to this one and directed the court to our
decision in Enfish, LLC v. Microsoft Corp., 822 F.3d 1327
(Fed. Cir. 2016), and DDR Holdings, LLC v. Hotels.com,
L.P., 773 F.3d 1245 (Fed. Cir. 2014), the district court failed
to address or distinguish those cases.
First, the colloquy between the district court and
Realtime leaves us unclear as to the true basis for the dis-
trict court’s decision. Rather than focus first on whether
Case: 19-2198 Document: 80 Page: 10 Filed: 10/23/2020
10 REALTIME DATA LLC v. REDUXIO SYSTEMS, INC.
the claims are “directed to” an abstract idea as we ex-
plained in Enfish is the initial inquiry in cases like this, the
district court repeatedly inquired whether claim limita-
tions were “novel.” See, e.g., J.A. 33 (“The Court: You are
not going to tell me it’s novel to have a data server imple-
mented on one or more processors, are you?”); id. at 34
(“The Court: Well, at the end, you can tell me what’s novel
about the configuration, so we’ll come back to that.”). The
district court later expressed a view that the claimed in-
vention of the ’751 patent was “obvious”—but not in the pa-
tent sense, “like it’s common sense.” Id. at 48. Novelty and
nonobviousness are well-established patent law doctrines
and, though they are not wholly divorced from some as-
pects of the § 101 inquiry, they are rarely issues appropri-
ate for resolution on the pleadings. That is especially true
where, as here, Realtime repeatedly contested as factually
incorrect propositions posited by the district court. See,
e.g., J.A. 45–46. Those concepts, moreover, are not part of
the Alice step 1 inquiry, they relate, if at all, to step 2. And,
to the extent the court was influenced by its subjective un-
derstanding of “common sense,” that is plainly irrelevant.
Nothing in the discussion between the court and
Realtime leads us to understand that the district court con-
sidered the claims as a whole or, for that matter, seriously
considered any claims beyond claim 25 of the ’751 patent.
With the little we have before us, it is hard, if not impossi-
ble, to put the district court’s commentary out of mind.
And, it is difficult to discern what part of the court’s con-
cerns with the claims were directed to which step of the
Alice analysis.
Second, to the extent the court purported to answer the
Alice step 1 “directed to” question, it is unclear that it did
so correctly. One critical shortcoming in the district court’s
analysis is a failure to identify which, if any, claims are
representative. Although the court articulated a “fair de-
scription” of each patent-in-suit, J.A. 56, it failed to tie
those descriptions to any specific claim or to clarify
Case: 19-2198 Document: 80 Page: 11 Filed: 10/23/2020
REALTIME DATA LLC v. REDUXIO SYSTEMS, INC. 11
whether those descriptions are the abstract ideas that the
claims are “directed to” within the meaning of § 101 juris-
prudence. It is, of course, incorrect to consider whether a
patent as a whole is abstract. The analysis is claim spe-
cific. If, as we suspect, the district court’s analysis simply
generalized the claims, absent a finding of the representa-
tiveness of certain claims and without considering the “di-
rected to” inquiry, that was error.
We further question the district court’s statements that
the claims are, to use the ’728 patent as an example, merely
“choosing a compression method based on the data type.”
J.A. 56. This statement seems to miss that the claims ex-
pressly achieve this result in certain ways, involving exam-
ining data blocks and not relying just on a descriptor. See
’728 patent, claim 24. Without more analysis, we cannot
identify the district court’s reasons for omitting key aspects
of the claims and we cannot say whether that rationale was
sound. It appears, however, that the district court improp-
erly equated the presence of an abstract idea with a conclu-
sion that the claims are directed to such an idea. Mayo,
566 U.S. at 71 (“[A]ll inventions at some level embody, use,
reflect, rest upon, or apply laws of nature, natural phenom-
ena, or abstract ideas.”). On remand, we caution the dis-
trict court away from sweeping generalizations and
encourage the court to carefully consider the “directed to”
question once more.
Third, as we discuss above, the patents-in-suit and
their relatives have been subject to § 101 scrutiny in the
past. Two district court judges and one magistrate judge,
across two judicial districts, have separately considered
whether the claims are patent eligible and concluded that
they are. This is not to say that those judges were neces-
sarily correct in their assessment of this issue nor that the
court was bound by those conclusions. We mean only to say
that, when deciding the motions to dismiss in this case, the
court should have, at a minimum, provided a considered
explanation as to why those judges were wrong. This could
Case: 19-2198 Document: 80 Page: 12 Filed: 10/23/2020
12 REALTIME DATA LLC v. REDUXIO SYSTEMS, INC.
have been done expressly; the court could have cited the
earlier cases and distinguished them. Or the analysis
could have been implied; the court could have analyzed the
arguments for eligibility in such a way that the reasons for
the differing conclusions are apparent. Here, however, ra-
ther than take either approach, the court recited a series of
legal conclusions and § 101 cases, without analysis. That
simply was not enough.
Fourth, the district court asked each party to identify
a single case that most closely supports its position on the
eligibility of the claims. Defendants selected RecogniCorp.
The district court mentioned RecogniCorp in its oral opin-
ion. It articulated the holding of that case as, “noting that
processes that start with data and add in an algorithm and
end with a new form of data are directed to an abstract
idea.” J.A. 54. It then concluded, without explanation,
“[t]hat’s what we have here.” Id. Prior to argument,
Realtime identified Visual Memory. It argued that the case
was analogous during the colloquy. J.A. 50–51. As noted,
Realtime also advocated that Enfish and DDR Holdings
are analogous. J.A. 28, 44. The district court, however,
never mentioned Visual Memory, Enfish, or DDR, much
less distinguished them. We do not today opine on the mer-
its of Realtime’s contention that its patents are akin to the
patent eligible claims of Visual Memory or to any of the
other cases where our court has found claims to be patent
eligible. We merely note that, by not addressing even the
one case held out as most comparable by Realtime, the dis-
trict court did not do enough. 2
2 This is an important failure. Assessments of pa-
tent eligibility are best done by reference to our numerous
cases engaging in those assessments and gleaning insight
from the resolutions. As that exercise reveals, there are
often very fine lines between those cases and between what
is patent eligible and what is not. A detailed analysis of
Case: 19-2198 Document: 80 Page: 13 Filed: 10/23/2020
REALTIME DATA LLC v. REDUXIO SYSTEMS, INC. 13
To be clear, we do not hold that a written order is al-
ways necessary. There are indeed times, even on a case
dispositive motion, where an oral order is enough. We have
seen and affirmed several such orders in the past. This
case is unique, however, in its paucity of analysis and the
closeness of the underlying legal issue. Our conclusion that
the district court must do more in this case is reinforced,
moreover, by the fact that through its abbreviated process
the district court eviscerated five of Realtime’s patents and
completely resolved four separate district court actions.
While much can be said on the benefits of judicial effi-
ciency, the process used here strays beyond efficient to the
realm of insufficient. 3
III. CONCLUSION
For the reasons discussed above, we vacate the district
court’s judgments and remand for further proceedings con-
sistent with this opinion. Nothing in this opinion should
be read as opining on the relative merits of the parties’ ar-
guments or the proper resolution of the case.
those cases and the record before the district court is often
needed if we are to appropriately assess the court’s resolu-
tion of a § 101 challenge.
3 Because we vacate the district court’s judgment, we
need not decide whether the district court abused its dis-
cretion by denying Realtime’s request for leave to amend
its complaints. We are concerned, however, with the dis-
trict court’s statement that its blanket practice is to deny
such requests. Factual allegations in a complaint can suf-
fice to overcome Alice step 2 and district courts should, as
in any civil case, freely grant leave to amend to allege the
necessary facts. See Cellspin Soft, Inc. v. Fitbit, Inc., 927
F.3d 1306, 1317 (Fed. Cir. 2019); Aatrix Software, Inc. v.
Green Shades Software, Inc., 882 F.3d 1121, 1127–30 (Fed.
Cir. 2018).
Case: 19-2198 Document: 80 Page: 14 Filed: 10/23/2020
14 REALTIME DATA LLC v. REDUXIO SYSTEMS, INC.
VACATED AND REMANDED
COSTS
No costs.
Case: 19-2198 Document: 80 Page: 15 Filed: 10/23/2020
NOTE: This disposition is nonprecedential.
United States Court of Appeals
for the Federal Circuit
______________________
REALTIME DATA LLC, DBA IXO,
Plaintiff-Appellant
v.
REDUXIO SYSTEMS, INC., ARYAKA NETWORKS,
INC., PANZURA, INC., FORTINET, INC.,
Defendants-Appellees
______________________
2019-2198, 2019-2201, 2019-2202, 2019-2204
______________________
Appeals from the United States District Court for the
District of Delaware in Nos. 1:17-cv-01635-CFC, 1:17-cv-
01676-CFC, 1:18-cv-01200-CFC, 1:18-cv-02062-CFC,
Judge Colm F. Connolly.
______________________
TARANTO, Circuit Judge, concurring in the judgment.
I concur in the judgment, which vacates the district
court’s judgments dismissing the cases and denying an
opportunity to amend the complaints and remands for
further proceedings.
The foundation of a proper determination of the
eligibility of claimed subject matter under 35 U.S.C. § 101
and the framework of Alice Corp. Pty. Ltd. v. CLS Bank
Int’l, 573 U.S. 208 (2014), is an accurate identification of
the focus of the claimed advance at Alice’s Step 1, to be
Case: 19-2198 Document: 80 Page: 16 Filed: 10/23/2020
2 REALTIME DATA LLC v. REDUXIO SYSTEMS, INC.
followed (if necessary) by an accurate identification of all
specifics of the claims at Alice’s Step 2. At both stages, it
is important to avoid “overgeneralizing [the] claims,”
Enfish, LLC v. Microsoft Corp., 822 F.3d 1327, 1337 (Fed.
Cir. 2016), i.e., “‘oversimplifying the claims’ by looking at
them generally and failing to account for the[ir] specific
requirements,” McRO, Inc. v. Bandai Namco Games
America, Inc., 837 F.3d 1299, 1313 (Fed. Cir. 2016). At
Alice’s Step 1, a claim must be “considered in light of the
specification” to identify “the focus of the claimed advance.”
Enfish, 822 F.3d at 1335; Solutran, Inc. v. Elavon, Inc., 931
F.3d 1161, 1168 (Fed. Cir. 2019) (internal quotation marks
omitted). In particular, that identification is crucial to
applying what is in the present cases the key doctrinal
distinction—derived from Alice, 573 U.S. at 225—between
using unimproved computers and networks as tools and
improving computers or networks as tools, i.e., improving
basic computer or network functions themselves (e.g.,
processing, memory, input/output, transmission) in
specific ways, see Enfish, 822 F.3d at 1335–36; see also
Uniloc USA, Inc. v. LG Electronics USA, Inc., 957 F.3d
1303, 1306–07 (Fed. Cir. 2020) (citing cases). Identifying
claim specifics is also crucial at Alice’s Step 2—to
determining whether the claim contains limitations that,
alone or in combination, are not aspects of the ineligible
matter itself and (if they are not) go beyond “‘well-
understood, routine, conventional activit[ies]’ previously
known in the industry.” Alice, 573 U.S. at 225 (alteration
in original) (citation omitted).
In the present cases, the district court erred at the
foundational stage. In the decision-announcing part of the
July 19, 2019 hearing, the court characterized the claims
without mention of what, for at least some (perhaps all) of
the claims at issue, the claim language and specifications
make clear are important parts of what the patents assert
are the advances in the art. For example, the court de-
scribed claim 1 of U.S. Patent No. 9,054,728 as a system for
Case: 19-2198 Document: 80 Page: 17 Filed: 10/23/2020
REALTIME DATA LLC v. REDUXIO SYSTEMS, INC. 3
“choosing a compression method based on the data type.”
J.A. 56. That description disregards claim language re-
quiring that the identification of data type rely on exami-
nation of data blocks and not on a file extension or
comparable descriptor of the data type. ’728 patent, col. 26,
lines 29–48 (“to analyze data within a data block to identify
one or more parameters or attributes of the data wherein
the analyzing of the data within the data block to identify
the one or more parameters or attributes of the data ex-
cludes analyzing based solely on a descriptor that is indic-
ative of the one or more parameters or attributes of the
data within the data block”). The specification describes
that data-examination basis for choosing a compressor
method as one of the claimed advances over the prior art.
Id., cols. 3, 4. The district court’s truncated characteriza-
tion of claim 1 of the ’728 patent, and of some or all of the
other claims at issue, created an incorrect starting point for
the required analysis.
A seemingly related error appears in the portion of the
July 2019 hearing devoted to colloquies between the dis-
trict court and counsel. Although such colloquies are in-
trinsically only exploratory, and thus could easily have
been superseded by the court’s articulation of its rationale
in the decisional portion of the hearing, in these cases the
court’s statements in the two portions align. In the collo-
quy portion, the district court made statements suggesting
adoption of a premise that the Alice test might be flunked
solely because the claimed systems and methods use hard-
ware components such as processors, servers, and memory.
See J.A. 33–41. To the extent that the district court
adopted that premise, it was mistaken. Eligibility analysis
in cases like these requires consideration of whether the
hardware components have been configured by program-
ming to improve their basic functionalities (e.g., processing
functions, memory functions, input/output functions,
transmission functions) in specific ways. Such
Case: 19-2198 Document: 80 Page: 18 Filed: 10/23/2020
4 REALTIME DATA LLC v. REDUXIO SYSTEMS, INC.
improvements can be eligible subject matter under Enfish
and many later cases.
The error at the foundational stage in these cases is not
a matter of choosing among an often-available range of for-
mulations that are relatively minor variations in how to
describe the claims for both Step 1 and Step 2 purposes.
The error here is far more basic, and more consequential
for the conduct of a sound analysis. The district court es-
sentially disregarded limitations, in at least some of the
patent claims at issue, that are part of the focus of the as-
serted advances. Because the court overgeneralized, or
oversimplified, the claims in that fundamental way, the
court in effect failed to conduct the inquiries required un-
der the branch of § 101 doctrine relevant here.
The § 101 inquiries demand close attention to the spe-
cific content of the patent claims at issue; the specifics mat-
ter under the growing body of precedents that provide both
significant analytical distinctions and fact-specific judg-
ments important to the assessment of later-litigated facts.
At least since Alice was decided, it has become clear that
sometimes those inquiries lead quickly, and without the
need for extensive discussion, to a conclusion that a claim,
despite its length, is merely elaborating on what are all ab-
stract ideas or reciting the details of what are conventional
tools of implementation. See, e.g., Electric Power Group,
LLC v. Alstrom S.A., 830 F.3d 1350 (Fed. Cir. 2016). But
the present cases are in a more challenging category, be-
cause the claims, on their face and understood in light of
the specifications, purport to solve engineering problems in
the transfer of data. Whatever conclusion is ultimately
reached for the claims before us, these cases require a
sounder starting point, and a more extensive analysis, than
the district court provided.
In these cases, I agree that it is appropriate to take
what is, and should remain, the unusual step of remanding
for reconsideration of the § 101 issue without ruling on the
Case: 19-2198 Document: 80 Page: 19 Filed: 10/23/2020
REALTIME DATA LLC v. REDUXIO SYSTEMS, INC. 5
issue ourselves. A remand will allow the district court to
characterize the claims more accurately and, on that new
basis, to consider relevant precedents of this court that the
district court did not address, including a number of post-
July 2019 precedents that provide clarifying guidance con-
cerning the inquiries pertinent to the analysis in cases like
the ones before us. See, e.g., TecSec, Inc. v. Adobe Inc., Nos.
2019-2192, -2258 (Fed. Cir. Oct. 23, 2020), slip op. at 20–31
(citing and discussing cases); Packet Intelligence LLC v.
NetScout Sys., Inc., 965 F.3d 1299, 1309–10 (Fed. Cir.
2020); Uniloc, 957 F.3d at 1306–07; Ericsson Inc. v. TCL
Commc’n Tech. Holdings Ltd., 955 F.3d 1317, 1327–28
(Fed. Cir. 2020); Customedia Techs., LLC v. Dish Network
Corp., 951 F.3d 1359, 1364–65 (Fed. Cir. 2020); Koninklijke
KPN N.V. v. Gemalto M2M GmbH, 942 F.3d 1143, 1149–
50 (Fed. Cir. 2019); see also SRI Int’l, Inc. v. Cisco Systems,
Inc., 930 F.3d 1295, 1303–04 (Fed. Cir. 2019) (mid-July
2019). A remand will also allow the district court, should
Step 2 be reached, to reconsider, after a re-focused analysis
proceeding through the Step 1 and Step 2 inquiries,
whether the filing of amended complaints should be per-
mitted. I therefore concur in the judgment of the court.