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Last week, the U.S. Court of Appeals for the Federal Circuit issued an opinion in <em>Cooperative Entertainment, Inc. v. Kollective Technology, Inc.</em>, No. 2021-2167 (Sept. 28, 2022), reversing a district court’s Rule 12(b)(6) dismissal of an amended complaint on patent eligibility grounds.

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Cooperative sued Kollective for infringing the ’452 patent, which relates to a peer-to-peer (P2P) dynamic network for distributing large files. Contrary to prior art content distribution networks (CDNs) that distributed content directly from the originating server, the ’452 patent disclosed distributing content via dynamic P2P networks comprising “peer nodes” by using “trace routes” and other content segmentation techniques. Kollective moved to dismiss, arguing that all claims of the ’452 patent are ineligible under 35 U.S.C. §&nbsp;101. After Cooperative amended its complaint, Kollective refiled its motion to dismiss, which the district court granted. Cooperative appealed.

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The Federal Circuit reversed. Applying the two-step <em>Alice </em>eligibility framework, the Court focused on step 2—whether the claims contain an inventive concept. The Court concluded that the amended complaint plausibly alleged that the patent claims contain inventive concepts beyond the abstract idea identified by the district court, “the preparation and transmission of content to peers through a computer network.”

First, the Court identified the claimed dynamic P2P network structure as an inventive concept. The Court pointed to specific structural elements recited by the claims; observed that the written description and the amended complaint touted the recited network structure as improving upon the prior art; and deemed the allegations regarding those improvements to be plausibly tethered to the claims. The Court also explained that the district court should have denied the motion to dismiss because questions as to whether the recited network structure was well-understood, routine, or conventional are factual disputes not amenable to resolution at the pleading stage.

Second, the Court concluded that Cooperative plausibly alleged that segmenting content using trace routes was inventive. Here, the parties disputed whether the claims required use of trace routes, not whether such use was inventive. The Court adopted Cooperative’s position that the claims required such use because it was the non-movant, and the district content had not construed the claims. Finally, the Court rejected Kollective’s argument that the claims lacked inventiveness because P2P networks and CDNs are conventional, explaining that useful improvements to computer networks are patentable even if the networks include standard computing equipment.

CAFC Reverses Rule 12(b)(6) Dismissal Based on Patent Ineligibility

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