CAFC Gives Targeted Ads Patent Owner Second Shot at Meta Due to District Court Error

The U.S. Court of Appeals for the Federal Circuit (CAFC) on Friday vacated and remanded a district court’s decision in favor of Meta, rejecting the court’s finding that patent owner Adnexus had failed to state a plausible claim for direct infringement. The decision was precedential and authored by Judge Stark, with whom Judges Taranto and Prost joined.

U.S. Patent No. 8,719,101 is directed to online advertising methods, with its stated goal being “‘to promote products and services to potential customers’ without ‘the risk o[f] pushing numerous advertisements to potential customers that are not relevant or desired by the recipient.’” Adnexus sued Meta in the U.S. District Court for the Western District of Texas for infringement of the patent, alleging that Meta’s Lead Ads product infringes at least claim 1 of the patent.

Meta informed Adnexus that it planned to move to dismiss the complaint for failure to state a claim and in response, Adnexus filed an amended complaint that included a claim chart that it said mapped the limitations of claim 1 onto the Lead Ads product. Meta then moved to dismiss the amended complaint, arguing that Adnexus had still failed to state an adequate claim for direct infringement “because it failed to plausibly allege that Lead Ads practices limitation [1f], which requires retrieval of a ‘user profile compris[ing] at least delivery method preferences’ for delivery of online ads to a user.”

The district court ultimately agreed with Meta and granted the motion to dismiss, stating that the Amended Complaint “makes no allegation that Meta Lead Ads retrieves any user profile that includes any delivery method preferences.” Adnexus had argued that its claim charts pointing to Facebook users’ profiles and prefilled contact information demonstrated “a plausible theory of how Lead Ads satisfies this claim element,” but the district court found that “‘contact information [is] sufficiently distinct from delivery method preferences’ such that ‘contact information’ cannot be a ‘delivery method preference.’”

The district court also dismissed Adnexus’ doctrine of equivalents theory because “the prosecution history precludes [Adnexus] from relying on the doctrine of equivalents.”

On appeal, the CAFC began by noting its disagreement with the district court’s contention that its interpretation of “contact information” as being sufficiently distinct from “delivery method preferences” did not require claim construction. “The only way Meta could win dismissal based on lack of plausibility would be to obtain a claim construction rendering Adnexus’ ‘delivery method preferences’ allegations implausible,” wrote the CAFC. The district court acknowledged Adnexus’ argument that Meta’s argument was premature and required claim construction, but then “implicitly constru[ed]” the terms anyway, which the CAFC said was error.

While district courts have broad discretion to conduct cases as they see fit, here, “the district court’s discretion did not include the option of implicitly construing the disputed claim term against Adnexus, the non-moving party, without first giving Adnexus the opportunity it requested to be heard on the issue of the proper construction of this term,” said the opinion.

In cases where a claim term’s meaning is clear, dismissal may be warranted, but that is not the case here, added the CAFC, where each party pointed to parts of the specification that support its position.

Next, the CAFC found that Adnexus adequately pled limitation [1f], explaining that “[a]t the motion to dismiss stage, these allegations, which are expressly incorporated in the Amended Complaint, ‘must be taken as true.’” The opinion added:

“Adnexus has ‘articulate[d] why it is plausible that the accused product infringes the patent claim’ at issue here… To wit: Meta stores a user’s delivery preferences through cookies that can be retrieved by Lead Ads and used to automatically populate prefilled forms from  advertisers, thereby allowing the advertiser to deliver its ads to the user’s stored preferred contact method.”

The decision was thus vacated and remanded to the court for proceedings consistent with the opinion.