United States District Court, E.D. Louisiana
ORDER AND REASONS
L. C. FELDMAN, UNITED STATES DISTRICT JUDGE
the Court are the plaintiff's and third-party
defendant's motions for a judgment on the pleadings
pursuant to Federal Rule of Civil Procedure 12(c). For the
reasons that follow, the motions are GRANTED.
declaratory judgment action arises out of the contention by
defendant IPT, LLC (“Paylock”) that the use of
“self-release” parking boot enforcement in the
City of New Orleans (“City”) infringes upon two
of Paylock's federally-registered patents.
16, 2014, the City awarded a prime contract to Professional
Account Management, LLC (“PAM”), the third-party
defendant in this action, to handle the city's parking
ticket processing operations. Two months later, on July 17,
2014, PAM entered a subcontract with SP Plus Corporation
(“SP Plus”), the plaintiff in this action. The
subcontract binds SP Plus to assist PAM in overseeing
“vehicle immobilization/release functions, ”
including the placement of immobilizing “boots”
on vehicles parked illegally or belonging to a driver with
outstanding fines or violations. To remove the boot
immobilizing the vehicle, the driver must pay a fee as well
as any outstanding fines.
in September 2014, SP Plus began attaching
“self-release” boots to infracting vehicles. By
calling a telephone number left by SP Plus personnel, the
driver of a booted vehicle could pay the costs over the
telephone and receive a code that enabled the driver to
immediately unlock and remove the boot before returning it to
a designated drop-off spot. SP Plus offered this self-release
option for more than 16 months.
is the holder of U.S. Patent No. 7, 950, 570, titled
“Parking Environment Management System and Method,
” and U.S. Patent No. 7, 988, 046, titled
“Vehicle Violation Enforcement System and Method”
(the “570” and “046” patents). Both
the ‘570 and ‘046 patents describe the steps
involved in and technology requisite for a particularized
process of enforcing parking violation penalties through
self-release booting. Relying on “commercially
available” components such as a Personal Digital
Assistant (PDA), an immobilizing boot, an encoded lock, and a
radio frequency identification (RFID) receiver, the patents
claim a method of facilitating vehicle immobilization,
penalty payment, and subsequent vehicle release without
compelling the vehicle owner to wait for a municipal or
booting company employee to arrive on scene and release the
following the processes outlined in the patents, an
individual authorized to issue tickets and summonses can use
the PDA to interact with a summons-issuing governing body
database (SDB) to determine whether a vehicle is in
violation and subsequently attach an immobilizing
boot with encoded lock and RFID receiver if appropriate. The
individual responsible for the booted vehicle can then pay
all outstanding fines by telephone before receiving the code
-- identifiable by the centralized SDB via the boot's
RFID receiver -- to unlock the immobilizing boot. According
to Paylock, its patents remedied an inefficiency that had
long maligned the parking violation enforcement industry.
Neither patent specifies the kind of PDA, RFID receiver, or
encoded lock that must be employed.
February 4, 2016, Paylock informed PAM in a letter that the
ongoing self-release booting operations in New Orleans
infringed upon at least claim 9 of the ‘570 patent and
claim 1 of the ‘046 patent. The letter threatened suit
unless PAM immediately ceased any and all infringing
activities and confirmed to Paylock within a month that its
self-release booting days were over.
claims to have learned about Paylock's letter on or
around February 19, 2016. Out of an “abundance of
caution, ” SP Plus discontinued its self-release
booting operations a week later. SP Plus has since dispatched
staff to manually unlock parking boots on an around-the-clock
basis. On Paylock's March 4 response deadline, SP Plus
identified itself as PAM's subcontractor to Paylock, and
requested an additional 30 days to investigate and respond to
Paylock's allegations. PAM asked for the same extension,
which Paylock subsequently granted.
of responding to Paylock, SP Plus filed a declaratory
judgment action with this Court on March 25, 2016. SP Plus
alleges that both the ‘570 and ‘046 patents are
facially invalid under the requirements for patentable
subject-matter in 35 U.S.C. § 101 or, in the
alternative, that its conduct infringes upon none of the
August 25, 2016, Paylock filed an infringement suit against
PAM -- and PAM alone -- in the United States District Court
for the District of New Jersey. There, Paylock alleges that
PAM, with either full awareness of or willful blindness to
the existence of Paylock's patents, knowingly and
intentionally infringed the ‘570 or ‘046 patents.
Paylock additionally accuses PAM of inducing the City into
infringement, selling and offering for sale the self-release
booting operations, and “contracting with others and
instructing others in connection with the
infringement.” Finally, paragraph 11 of the complaint
includes the allegation that PAM “has contacted
multiple municipalities in the United States with the intent
of engaging in booting operations, ” without specifying
whether PAM offered to engage in self-release
booting operations for those other municipalities.
Paylock's infringement suit arose largely out the same
nucleus of facts as SP Plus's first-filed declaratory
action, this Court exercised its discretion to enjoin the
prosecution of the New Jersey infringement action while this
declaratory action proceeds. See Order and Reasons
12/12/16 (granting SP Plus's motion for preliminary
injunction and denying Paylock's motion to dismiss, stay,
or transfer federal patent law claims, but granting
Paylock's motion to dismiss SP Plus's state law
claims).Thereafter, Paylock answered SP Plus's
complaint and filed a third-party complaint against PAM in
and PAM now ask this Court to enter judgment on
the pleadings, pursuant to Rule of Federal Rule of Civil
Procedure 12(c), and declare that the ‘570 and
‘046 patents are directed to ineligible subject matter
under 35 U.S.C. § 101. SP Plus asserts that the patents
merely spell out a conventional, non-inventive process for
implementing the abstract idea of “self-service”
in the parking enforcement industry.
Rule of Civil Procedure 12(c) permits any party to move for a
judgment on the pleadings, provided the motion is made early
enough to avoid delaying trial. A court may grant a Rule
12(c) motion only if the pleadings evince no disputes of
genuine material fact and questions of law alone remain.
Great Plains Trust Co. v. Morgan Stanley Dean Witter
& Co., 313 F.3d 305, 312 (5th Cir. 2002)(citations
omitted). Courts should thus adhere to the same standard in
reviewing a 12(c) motion as they do in reviewing motions to
dismiss under Rule 12(b)(6), accepting all well-pleaded facts
as true and drawing all factual inferences in favor of the
non-movant. See id. at 313 n.8; Thompson v. City
of Waco, Texas, 764 F.3d 500, 502 (5th Cir. 2014)
(citing Doe ex rel. Magee v. Covington Cnty. Sch. Dist.
ex rel. Keys, 675 F.3d 849, 854 (5th Cir. 2012)(en
banc)); Doe v. Myspace, Inc., 528 F.3d 413, 418 (5th
Cir. 2008); 5C Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 1368 (3d ed. 2004).
complaint must contain sufficient factual matter, accepted as
true, to state a claim to relief that is plausible on its
face.'” Gonzalez v. Kay, 577 F.3d 600, 603
(5th Cir. 2009)(quoting Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009))(internal quotation marks omitted).
“Factual allegations must be enough to raise a right to
relief above the speculative level, on the assumption that
all the allegations in the complaint are true (even if
doubtful in fact).” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007)(citations and footnote
omitted). “A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to
draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Iqbal, 556 U.S.
at 678 (“The plausibility standard is not akin to a
‘probability requirement, ' but it asks for more
than a sheer possibility that a defendant has acted
unlawfully.”). “Where a complaint pleads facts
that are merely consistent with a defendant's liability,
it stops short of the line between possibility and
plausibility of entitlement to relief.” Id. at
679 (internal quotations omitted) (citing Twombly, 550 U.S.
just like when it reviews a motion to dismiss under Rule
12(b)(6), when reviewing a Rule 12(c) motion, “a
district court ‘must consider the [pleadings in their]
entirety, as well as other sources ordinarily examined when
ruling on Rule 12(b)(6) motions to dismiss, in particular,
documents incorporated into the complaint by reference, and
matters of which a court may take judicial notice.”
Funk v. Stryker Corp., 631 F.3d 777, 783 (5th Cir.
2011)(quoting Tellabs, Inc. v. Makor Issues & Rights,
Ltd., 551 U.S. 308, 322 (2007)).
in addition to the pleadings, the Court may consider the
language of the ‘570 and ‘046 patents in reaching
its decision. See Anderson v. Kimberly-Clark Corp.,
570 Fed. App'x 927, 932 (Fed. Cir. 2014)(“[A] court
may rely on documents outside the pleadings if they are
integral to the plaintiff's claims and their authenticity
is not disputed.”). In reviewing this motion, then, the
Court will accept the well-pleaded factual allegations of
Paylock, the non-movant, as true, and draw all reasonable
inferences from the language of the claims of the ‘570
and ‘046 patents in Paylock's favor. This deference
to the non-movant, however, does not entail accepting as true
“allegations that are merely conclusory, unwarranted
deductions of fact, or unreasonable inferences.”
Iqbal, 556 U.S. at 678.
U.S.C. § 101 defines patentable subject matter:
Whoever invents or discovers any new and useful process,
machine, manufacture or composition of matter, or any new and
useful improvement thereof, may obtain a patent therefor,
subject to the conditions and requirements of this title.
35 U.S.C. § 101 (2012). This provision, the Supreme
Court has held, implicitly excepts “laws of nature,
physical phenomena, and abstract ideas” from these
general parameters of eligibility. Ass'n for
Molecular Pathology v. Myriad Genetics, Inc., 133 S.Ct.
2107, 2116 (2013)(citation omitted); Diamon ...