Bot M8 LLC v. Sony Corporation of America ( 2021 )

Case: 20-2218 Document: 44 Page: 1 Filed: 07/13/2021
United States Court of Appeals
for the Federal Circuit
______________________
BOT M8 LLC,
Plaintiff-Appellant
v.
SONY CORPORATION OF AMERICA, SONY
CORPORATION, SONY INTERACTIVE
ENTERTAINMENT LLC,
Defendants-Appellees
______________________
2020-2218
______________________
Appeal from the United States District Court for the
Northern District of California in No. 3:19-cv-07027-WHA,
Judge William H. Alsup.
______________________
Decided: July 13, 2021
______________________
PAUL J. ANDRE, Kramer Levin Naftalis & Frankel LLP,
Menlo Park, CA, argued for plaintiff-appellant. Also rep-
resented by JAMES R. HANNAH, LISA KOBIALKA; AARON M.
FRANKEL, CRISTINA MARTINEZ, New York, NY.
JOHN C. O'QUINN, Kirkland & Ellis LLP, Washington,
DC, argued for defendants-appellees. Also represented by
CALVIN ALEXANDER SHANK; GREG AROVAS, New York, NY;
DAVID ROKACH, Chicago, IL.
______________________
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2 BOT M8 LLC v. SONY CORPORATION OF AMERICA
Before DYK, LINN, and O’MALLEY, Circuit Judges.
O’MALLEY, Circuit Judge.
Once more, we address the stringency of pleading re-
quirements in cases alleging patent infringement. Once
more, we explain that patentees need not prove their case
at the pleading stage. See In re Bill of Lading Transmis-
sion & Processing Sys. Patent Litig., 681 F.3d 1323, 1339
(Fed. Cir. 2012) (citing Skinner v. Switzer, 562 U.S. 521,
529–30 (2011)); 1 Nalco Co. v. Chem-Mod, LLC, 883 F.3d
1337, 1350 (Fed. Cir. 2018). And we, once more, explain
that, while a patentee’s pleading obligations are not insur-
mountable, a patentee may subject its claims to early dis-
missal by pleading facts that are inconsistent with the
requirements of its claims. See Nalco, 883 F.3d at 1348–
50.
Bot M8 LLC (“Bot M8”) filed suit against Sony Corpo-
ration of America, et al. (“Sony”) in the United States Dis-
trict Court for the Southern District of New York, alleging
infringement of six patents, five of which remain at issue
on appeal: U.S. Patent Nos. 8,078,540 (“the ’540 patent”);
8,095,990 (“the ’990 patent”); 7,664,988 (“the ’988 patent”);
8,112,670 (“the ’670 patent”); and 7,338,363 (“the ’363 pa-
tent”) (collectively, “the asserted patents”).
After the case was transferred to the United States Dis-
trict Court for the Northern District of California, the dis-
trict court held a case management conference, during
which Bot M8 agreed to file an amended complaint. Bot
1 Although one portion of the decision in Bill of Lad-
ing dealt with Federal Rule of Civil Procedure 84 and its
attendant Form 18, both of which have been eliminated
from the Federal Rules, the portion of the decision address-
ing pleading obligations not governed by Form 18 remains
governing precedent.
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BOT M8 LLC v. SONY CORPORATION OF AMERICA 3
M8 filed a first amended complaint and Sony moved to dis-
miss for failure to state a claim. The district court granted
dismissal as to the ’540, ’990, ’988, and ’670 patents. The
court subsequently denied Bot M8’s motion for leave to file
a second amended complaint. Bot M8 moved for reconsid-
eration, which the district court also denied.
As to the ’363 patent, Sony moved for summary judg-
ment, arguing that claim 1 is invalid under 35 U.S.C. § 101.
The district court agreed, and granted Sony’s motion for
summary judgment. The parties entered into a joint stip-
ulation dismissing the remaining claims and the district
court entered final judgment.
Bot M8 appeals from the district court’s final judgment
and from several underlying orders and decisions. In par-
ticular, Bot M8 appeals the district court’s orders: (1) “di-
recting” Bot M8 to file a first amended complaint;
(2) dismissing Bot M8’s claims of infringement of the ’540,
’990, ’988, and ’670 patents; (3) denying Bot M8’s motion to
file a second amended complaint, as well as the subsequent
order denying leave to move for reconsideration; and
(4) granting summary judgment as to the ’363 patent. See
Bot M8 LLC v. Sony Corp., No. C19-07027, 2020 WL
418938 (N.D. Cal. Jan. 27, 2020) (“Order on Mot. to Dis-
miss”); Bot M8 LLC v. Sony Corp., No. C19-07027, 2020
WL 1643692 (N.D. Cal. Apr. 2, 2020) (“Order Den. Mot. to
Amend”); Bot M8 LLC v. Sony Corp., No. C19-07027, 2020
WL 1904102 (N.D. Cal. Apr. 16, 2020) (“Order Den. Leave
to Move for Recons.”); Bot M8 LLC v. Sony Corp., No. C19-
07027, 465 F.Supp.3d 1013 (N.D. Cal. 2020) (“Order on
Summ. J.”).
To the extent the district court characterized its collo-
quy with counsel during the case management conference
as “directing” Bot M8 to file a first amended complaint, we
find no abuse of discretion in that decision. Nor do we find
any error in the district court’s decision dismissing Bot
M8’s claims as to the ’540 and ’990 patents for failure to
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4 BOT M8 LLC v. SONY CORPORATION OF AMERICA
state a plausible claim of infringement. With respect to the
’988 and ’670 patents, however, we conclude that the dis-
trict court erred in finding Bot M8’s infringement allega-
tions insufficient.
On this record, we find that the district court acted
within its discretion in denying Bot M8 leave to file a sec-
ond amended complaint and in denying reconsideration of
that decision. Finally, we agree with the district court that
claim 1 of the ’363 patent is invalid under § 101.
We therefore affirm in part, reverse in part, and re-
mand to the district court for further proceedings as to the
’988 and ’670 patents.
I. BACKGROUND
A. The Asserted Patents
Bot M8 is the assignee on all five of the asserted pa-
tents. The asserted patents relate to gaming machines and
are directed to casino, arcade, and video games generally.
The ’540 patent relates to an authentication mecha-
nism to verify that a game program has not been manipu-
lated. In relevant part, the ’540 patent requires that a
“game program for executing a game” and an “authentica-
tion program for authenticating the game program” are
stored on the same “board including a memory,” which is
separate from the motherboard and its memory. ’540 pa-
tent, col. 12, ll. 64–col. 13, ll. 5.
The ’990 patent likewise relates to a gaming machine
and requires storing gaming information and a mutual au-
thentication program on the same medium. Specifically,
the ’990 patent claims an “authentication unit” that au-
thenticates “gaming information,” and a separate “mutual
authentication unit” that authenticates the “authentica-
tion program.” ’990 patent, col. 17, ll. 23–31. The claims
require “a removable storage medium storing therein gam-
ing information including a mutual authentication
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BOT M8 LLC v. SONY CORPORATION OF AMERICA 5
program,” with “the mutual authentication program [be-
ing] included in the gaming information authenticated by
the authentication unit.” Id. at col. 17, ll. 6–8, 29–31.
The ’988 and ’670 patents generally relate to a gaming
device with a fault inspection program. In both patents,
execution of the “fault inspection program” must be com-
pleted “before the game is started.” See ’988 patent, col. 5,
ll. 1–5; ’670 patent, col. 5, ll. 4–7.
Finally, the ’363 patent describes a gaming machine
that changes future game conditions based on players’
prior game results. Generally, claim 1 recites a machine
that sets an initial “specification value,” which is a value
that controls game conditions, and then “renew[s]” that
value based on “a total game result” achieved by the
claimed machine and a second recited machine. See ’363
patent, col. 23, l. 61–col. 24, l. 15. These machines have
various components that locate other players, set a “speci-
fication value,” transmit game results to a server, receive
total game results, which aggregate game results from the
players, and then update the game conditions by setting a
new specification value based on the aggregate game re-
sults. See id. The claimed machines can send game results
to a server over “a public phone line network, a cellular
phone line network, a local area network (LAN), or the
like.” Id. at col. 10, ll. 30–36.
B. Sony’s Products
Bot M8 accused Sony’s PlayStation 4 (“PS4”) video
game consoles and aspects of Sony’s PlayStation network
of infringing the ’540, ’990, ’988, and ’670 patents. Bot M8
also accused certain PS4 videogames of infringing the ’363
patent. Sony relies on a variety of authentication and cop-
yright protection technologies to prevent unauthorized use
of the PS4 and copying of PS4 games.
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6 BOT M8 LLC v. SONY CORPORATION OF AMERICA
C. Procedural History
As noted, Bot M8 initially sued Sony in the Southern
District of New York. Sony filed an answer, asserting non-
infringement of the asserted patents and arguing that “the
Complaint fails to identify legitimate theories for how the
claim limitations of the patents-in-suit are allegedly satis-
fied.” J.A. 504. Sony also moved to transfer the case to the
Northern District of California. The New York district
court granted Sony’s motion and transferred the case to
California. Sony did not move to dismiss the complaint for
failure to state a claim and did not seek a more definite
statement of the claims.
After the case was transferred, the district court held a
case management conference on November 21, 2019. Dur-
ing that conference, the court sua sponte directed Bot M8
to file an amended complaint specifying “every element of
every claim that you say is infringed and/or explain why it
can’t be done.” Order on Mot. to Dismiss, 2020 WL 418938,
at *1. The court instructed Bot M8 that, “if this is a product
you can buy on the market and reverse engineer, you have
got to do that.” Id. Counsel for Bot M8 responded that they
“would be happy to put in an Amended Complaint with
claim charts” and “element-by-element” allegations. J.A.
533 at 3:10–18. Bot M8 further explained that reverse en-
gineering would not be a problem because it had already
“torn down the Sony PlayStation.” Order on Mot. to Dis-
miss, 2020 WL 418938, at *1. Pursuant to Rule 16 of the
Federal Rules of Civil Procedure, the court set a deadline
of December 5, 2019 for Bot M8 to file its amended com-
plaint.
1. First Amended Complaint
On December 5, 2019, Bot M8 timely filed a 223-page
first amended complaint (“FAC”). This time, Sony did
move to dismiss. The district court held oral argument on
Sony’s motion on January 23, 2020. At the hearing, the
court questioned why Bot M8 had not cited to Sony’s source
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BOT M8 LLC v. SONY CORPORATION OF AMERICA 7
code in the FAC, a failing Sony did not identify in its mo-
tion to dismiss. J.A. 1541 at 20:16–17 (“Why can’t you buy
one of these products and take whatever code is on there
off and analyze it?”). In response, Bot M8 indicated that
the PS4 source code is not publicly available and that the
software on the PS4 is encrypted and protected by Sony’s
access control technology.
In a decision dated January 27, 2020, the district court
granted Sony’s motion to dismiss as to the ’540, ’990, ’988
and ’670 patents. 2 For the ’540 patent—which describes an
authentication mechanism for video games—the district
court found that “the complaint fails to allege when or
where the game program and authentication program are
stored together on the same memory board.” Order on Mot.
to Dismiss, 2020 WL 418938, at *2.
Likewise, for the ’990 patent—which describes a mu-
tual authentication mechanism for video games—the court
found that “the complaint fails to allege when or where the
game program and mutual authentication program are
stored together.” Id. at *3. Although Bot M8 pointed to an
assertion in the complaint that the “game program on the
hard drive or disc contains a mutual authentication pro-
cess,” the court explained that “allegations that track the
claim language that closely are conclusory and require sup-
port not found in the substantive allegations.” Id. Because
the allegations “do not address where the game program is
stored,” the court found them insufficient. Id.
For the ’988 and ’670 patents—which describe com-
puter program fault inspection—the court found that “the
complaint provides no basis to infer the proper timing of
the inspection”—i.e., whether a “fault inspection program”
is “completed before the game starts.” Id. at *4. The court
2 The court denied Sony’s motion to dismiss as to the
’363 patent, however.
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8 BOT M8 LLC v. SONY CORPORATION OF AMERICA
explained that Bot M8’s “allegation too closely tracks the
claim language to be entitled to the presumption of truth,”
and “[n]o underlying allegations of fact are offered.” Id.
At the end of its decision, the district court explained
that Bot M8 “already enjoyed its one free amendment un-
der the rules” and was instructed to “plead well, element-
by-element.” Order on Mot. to Dismiss, 2020 WL 418938,
at *6. Although the court stated that Bot M8 “does not de-
serve yet another chance to re-plead,” the court neverthe-
less gave Bot M8 until February 13, 2020 to do so. Id. The
court added that, if Bot M8 “move[d] for leave to file yet
another amended complaint, it should be sure to plead its
best case.” Id.Two days after the district court issued its order on the
motion to dismiss, it held a discovery hearing where
Bot M8 raised, for the first time, concerns about the legal-
ity of reverse engineering the PS4’s software, otherwise
known as “jailbreaking.” During the hearing, counsel for
Bot M8 explained that they had not previously reverse en-
gineered the PS4 to support the prior pleadings because
“jailbreaking” the PS4 is illegal under the Digital Millen-
nium Copyright Act (“DMCA”) and other anti-hacking stat-
utes. In response, the district court asked Sony to give Bot
M8 “permission, for whatever good it is” to reverse engineer
the PS4, which Sony agreed to do. J.A. 1561–63.
2. Motion for Leave to Amend
On February 13, 2020, Bot M8 filed a motion for leave
to amend its complaint and attached a redlined version of
its proposed Second Amended Complaint (“SAC”). Bot M8
explained that the SAC was based on new evidence ob-
tained only after it was authorized to “jailbreak” the PS4.
Though Bot M8 moved for leave to file the SAC within
the time frame authorized by the district court, the court
still denied Bot M8’s motion for lack of diligence. The dis-
trict court found that Bot M8 should have done the
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BOT M8 LLC v. SONY CORPORATION OF AMERICA 9
“jailbreak” of the PS4 and included that evidence in the
FAC. At the outset, the court explained that Bot M8’s mo-
tion was governed by Rule 16 of the Federal Rules of Civil
Procedure, which permits modification “only for good
cause.” Order Den. Mot. to Am., 2020 WL 1643692, at *2.
The court found that, “[f]or nine weeks” after the November
21 case management conference, Bot M8 “raised no con-
cerns about its ability to reverse engineer the [PS4]” and
said “not a word about the DMCA or anti-hacking stat-
utes.” Id. Indeed, at that initial conference, Bot M8 repre-
sented that it already had reverse engineered the PS4.
Further, Bot M8 never cited any authority supporting its
“professed fear of the DMCA or other anti-hacking stat-
utes.” Id. at *3 (“[T]here remains no basis for either patent
owner’s fears or its failure to timely raise them.”). Because
Bot M8’s amendments “could have, and should have, been
included in the December 5 amended complaint,” the court
found the proposed amendments untimely. Id.
3. Motion for Reconsideration
Bot M8 sought leave to move for reconsideration of the
court’s order denying leave to amend. In doing so, Bot M8
reiterated its position that it could not have reverse engi-
neered the PS4 before obtaining permission to disable the
PS4’s access control technology in light of the DMCA, other
anti-hacking statutes, and the Sony customer license
agreement.
The district court denied the motion, finding that Bot
M8’s “theory of the [DMCA] crossing paths with patent
rights remain[ed] unsupported by caselaw,” and Bot M8
“offer[ed] no binding decision directing a different pleading
or amendment standard.” Order Den. Leave to Move for
Recons., 2020 WL 1904102, at *1. The court also reminded
Bot M8 that it was directed to reverse engineer the PS4 at
the initial case management conference and that Bot M8
had agreed to do so. Given the record, the court found that
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10 BOT M8 LLC v. SONY CORPORATION OF AMERICA
Bot M8 was not entitled to the “extraordinary relief” of re-
consideration. Id.
4. Summary Judgment under 35 U.S.C. § 101Both parties filed motions for summary judgment as to
claim 1 of the ’363 patent. Bot M8 moved for summary
judgment of infringement and Sony moved for summary
judgment of non-infringement and patent ineligibility un-
der 35 U.S.C. § 101. Applying the two-part test set forth in
Alice Corp. v. CLS Bank International, 573 U.S. 208, 217–
18 (2014), the district court found claim 1 of the ’363 patent
ineligible.
At Alice step one, the court found that claim 1 recites
“the abstract idea of increasing or decreasing the risk-to-
reward ratio, or more broadly the difficulty, of a multi-
player game based upon previous aggregate results.” Or-
der on Summ. J., 465 F. Supp. 3d at 1020. The court
explained that updating future “game conditions based on
past results to keep players engaged” is “a result, not a
means to achieve it[,]” and the ’363 patent provides “no ex-
planation how to accomplish the result.” Id. at 1021.
At Alice step two, the court concluded that “claim 1 of-
fers no inventive concept.” Id. at 1024. The court held that
each claim element “invoke[s] no more than ‘generic and
functional hardware’ to accomplish their abstract tasks.”
Id. at 1025. And, “[t]hough given special names, each part
remains a generic computer part invoked to effect the con-
ventional computer task of gathering, manipulating, trans-
mitting, and using data.” Id. The court further held that,
“[e]ven taken as an ordered combination, the elements fail
to transform the claimed abstract concept” because “the
functionally described parts do only conventional computer
tasks” without “offer[ing] something more.” Id. at 1025–
26.
Bot M8 submitted two expert declarations to prove in-
ventive concept. The first expert, Dr. Stacy Friedman,
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BOT M8 LLC v. SONY CORPORATION OF AMERICA 11
“admitted the video game field knew well how to connect
multiple game machines, aggregate results, and change
game parameters before the ’363 patent.” Id. at 1027. The
second expert, Dr. Ian Cullimore, “could articulate no spe-
cific inventive concept in claim 1 of the ’363 patent other
than [a generic reference to] ‘the totality’ based on his ex-
pert report” and “effectively admitted that he could not ar-
ticulate anything unconventional about the ’363 patent’s
disclosure of changing the game parameters during play.”
Id. The court concluded that Bot M8’s expert testimony
was thus insufficient “to forestall summary judgment.” Id.
Given the district court’s decisions, the parties entered
into a Joint Stipulation Regarding Case Management and
Dismissal, dismissing the remaining claims without preju-
dice, with Bot M8 reserving the right to appeal the district
court’s various orders. The district court entered final
judgment in favor of Sony on August 19, 2020. Bot M8
timely appealed. We have jurisdiction under 28 U.S.C.
§ 1295(a)(1).
II. DISCUSSION
A. The ’540, ’990, ’988, and ’670 Patents
As noted, the district court dismissed Bot M8’s allega-
tions related to the ’540, ’990, ’988, and ’670 patents for
failure to sufficiently state a claim of infringement. On ap-
peal, Bot M8 alleges that the district court erred in sua
sponte requiring an amended complaint. Bot M8 also ar-
gues that the district court erred in dismissing its FAC and
abused its discretion by denying Bot M8 leave to amend the
FAC. We address each issue in turn.
1. Amending the Original Complaint
At the outset, Bot M8 argues that “the district court
erred in sua sponte forcing Bot M8 to replead” its original
complaint. Appellant’s Br. 23. We find Bot M8’s argu-
ments unpersuasive.
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12 BOT M8 LLC v. SONY CORPORATION OF AMERICA
First, while the district court made its impression of
Bot M8’s original complaint clear, it did not force Bot M8
to replead. The record reveals that, during the November
21, 2019 case management conference, the court told coun-
sel for Bot M8 that it would give Bot M8 “another chance
to plead if [it] want[ed] to try again; but, otherwise, [the
court was] going to let [Sony] bring a Motion to Dismiss.”
J.A. 533 at 3:7–9. Counsel indicated that Bot M8 “would
be happy to put in an Amended Complaint with claim
charts”—particularly given that it had already “torn down
the Sony PlayStation.” Id. at 3:10–12. Bot M8 therefore
chose to file an amended complaint rather than defend its
original complaint; it was not forced to do so.
Second, Ninth Circuit law is clear that “[a] trial court
may act on its own initiative to note the inadequacy of a
complaint and dismiss it for failure to state a claim” if it
“give[s] notice of its intention to dismiss and give[s] the
plaintiff some opportunity to respond unless the ‘plaintiffs
cannot possibly win relief.’” Sparling v. Hoffman Constr.
Co., 864 F.2d 635, 638 (9th Cir. 1988) (quoting Wong v. Bell,
642 F.2d 359, 361 (9th Cir. 1981)). Accordingly, the district
court had the authority to request an amended complaint,
and the court’s procedure here was fair—it gave Bot M8 the
option to re-plead or respond to any motion from Sony.
That Bot M8 agreed to put together the requested claim
chart at the case management conference weighs against
Bot M8’s objections on appeal. We therefore find no error
in the court’s decision directing Bot M8 to file the FAC.
2. Dismissal of the FAC
Federal Rule of Civil Procedure 8(a)(2) “generally re-
quires only a plausible ‘short and plain’ statement of the
plaintiff’s claim,” showing that the plaintiff is entitled to
relief. Skinner, 562 U.S. at 530. To survive a motion to
dismiss under Rule 12(b)(6), a complaint must “contain suf-
ficient factual matter, accepted as true, to ‘state a claim to
relief that is plausible on its face.’” Ashcroft v. Iqbal, 556
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BOT M8 LLC v. SONY CORPORATION OF AMERICA 13
U.S. 662, 678 (2009) (quoting Bell v. Twombly, 550 U.S.
544, 570 (2007)). “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.” Id. “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. (citing Twombly, 550 U.S.
at 555). “Determining whether a complaint states a plau-
sible claim for relief [is] a context-specific task that re-
quires the reviewing court to draw on its judicial
experience and common sense.” Id. at 679.
Here, the district court instructed counsel for Bot M8
that it must “explain in [the] complaint every element of
every claim that you say is infringed and/or explain why it
can’t be done.” J.A. 532 at 2:21–24. We disagree with the
district court’s approach and reiterate that a plaintiff “need
not ‘prove its case at the pleading stage.’” Nalco, 883 F.3d
at 1350 (quoting Bill of Lading, 681 F.3d at 1339). A plain-
tiff is not required to plead infringement on an element-by-
element basis. Id. (“[T]he Federal Rules of Civil Procedure
do not require a plaintiff to plead facts establishing that
each element of an asserted claim is met.”); see Disc Disease
Sols. Inc. v. VGH Sols., Inc., 888 F.3d 1256, 1260 (Fed. Cir.
2018) (finding that a plaintiff need not plead every ele-
ment, but must only give the alleged infringer fair notice of
infringement). Instead, it is enough “that a complaint
place the alleged infringer ‘on notice of what activity . . . is
being accused of infringement.’” Lifetime Indus., Inc. v.
Trim-Lok, Inc., 869 F.3d 1372, 1379 (Fed. Cir. 2017) (quot-
ing K-Tech Telecomms., Inc. v. Time Warner Cable, Inc.,
714 F.3d 1277, 1284 (Fed. Cir. 2013)). To the extent this
district court and others have adopted a blanket element-
by-element pleading standard for patent infringement,
that approach is unsupported and goes beyond the stand-
ard the Supreme Court articulated in Iqbal and Twombly.
See Twombly, 550 U.S. at 556 (“[A] well-pleaded complaint
may proceed even if it strikes a savvy judge that actual
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14 BOT M8 LLC v. SONY CORPORATION OF AMERICA
proof of those facts is improbable, and that a recovery is
very remote and unlikely.”) (internal quotation marks and
citation omitted).
The relevant inquiry under Iqbal/Twombly is whether
the factual allegations in the complaint are sufficient to
show that the plaintiff has a plausible claim for relief. Iq-
bal, 556 U.S. at 679. “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.”
Id. at 678. In other words, a plausible claim must do more
than merely allege entitlement to relief; it must support
the grounds for that entitlement with sufficient factual
content. Id. “[A] plaintiff’s obligation to provide the
‘grounds’ of his ‘entitle[ment] to relief’ requires more than
labels and conclusions, and a formulaic recitation of the el-
ements of a cause of action will not do.” Twombly, 550 U.S.
at 555. The level of detail required in any given case will
vary depending upon a number of factors, including the
complexity of the technology, the materiality of any given
element to practicing the asserted claim(s), and the nature
of the allegedly infringing device.
Accordingly, a plaintiff cannot assert a plausible claim
for infringement under the Iqbal/Twombly standard by re-
citing the claim elements and merely concluding that the
accused product has those elements. There must be some
factual allegations that, when taken as true, articulate why
it is plausible that the accused product infringes the patent
claim. While the Supreme Court has said that “[f]actual
allegations must be enough to raise a right to relief above
the speculative level,” Twombly, 550 U.S. at 555, it has
also indicated that “[s]pecific facts are not necessary; the
statement need only ‘give the defendant fair notice of what
the . . . claim is and the grounds upon which it rests,’” Er-
ickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Twombly,
550 U.S. at 555).
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BOT M8 LLC v. SONY CORPORATION OF AMERICA 15
Having clarified the appropriate standard, we turn to
the district court’s decision on Sony’s motion to dismiss.
The district court dismissed Bot M8’s claims as to the ’540,
’990, ’988, and ’670 patents for lack of sufficient factual al-
legations. We review a district court’s Rule 12(b)(6) dismis-
sal under the law of the regional circuit. Juniper Networks,
Inc. v. Shipley, 643 F.3d 1346, 1350 (Fed. Cir. 2011). Ap-
plying Ninth Circuit law, we review “dismissals for failure
to state a claim without deference.” Id. In doing so, “we
accept all factual allegations in the complaint as true and
construe the pleadings in the light most favorable to”
Bot M8. Knievel v. ESPN, 393 F.3d 1068, 1072 (9th Cir.
2005); see also Bill of Lading, 681 F.3d at 1340.
As explained below, while we agree with the district
court that Bot M8’s allegations as to the ’540 and ’990 pa-
tents were conclusory and at times contradictory, we find
that the court erred in dismissing the allegations as to the
’988 and ’670 patents. With respect to the ’988 and ’670
patents, the court simply required too much.
a. The ’540 Patent
Claim 1 of the ’540 patent requires “a board including
a memory in which a game program . . . and an authenti-
cation program . . . are stored” separate from “a mother-
board” (“the board limitation”). ’540 patent, col. 12, l. 65–
col. 13, l. 5. The district court found Bot M8’s allegations
insufficient because the FAC “fails to plausibly plead the
shared location of the game and authentication programs
according to claim 1 of the ’540 patent.” Order on Mot. to
Dismiss, 2020 WL 418938, at *3.
On appeal, Bot M8 contends that the FAC describes
how the PS4 meets all elements of the ’540 patent with
“fourteen pages of factual allegations” and “fifteen pages of
claim charts applying the publicly available evidence to the
claim elements.” Appellant’s Br. 29. Specifically, Bot M8
argues that its FAC identified three different components
that independently satisfy the board limitation: (1) the
Case: 20-2218 Document: 44 Page: 16 Filed: 07/13/2021
16 BOT M8 LLC v. SONY CORPORATION OF AMERICA
PS4’s internal hard drive; (2) PS4 Blu-ray discs;
and (3) PlayStation Network Servers. According to
Bot M8, these allegations alone provide Sony with the req-
uisite fair notice of its infringement claim with respect to
the ’540 patent.
Sony responds that Bot M8’s FAC failed to plausibly
plead that the shared location of the game and authentica-
tion programs is any of the three components that Bot M8
identified. Sony further submits that the FAC actually al-
leges away from infringement by asserting that the pur-
ported “authentication program” is stored on the PS4
motherboard—an allegation that is inconsistent with Bot
M8’s infringement theory. As explained below, because we
agree with Sony on its second point, we need not address
the first in any detail, except to reiterate that conclusory
allegations are insufficient.
While a plaintiff need not prove infringement at the
pleading stage, here, the FAC contains too much rather
than too little, to the point that Bot M8 has essentially
pleaded itself out of court. While Bot M8 repeatedly em-
phasizes the number of pages in its FAC, it is the quality
of the allegations, not the quantity, that matters. And un-
fortunately for Bot M8, its allegations, which take a
“kitchen sink” approach to pleading, reveal an incon-
sistency that is fatal to its infringement case with respect
to the ’540 patent.
Claim 1 of the ’540 patent requires that a “game pro-
gram for executing a game” and an “authentication pro-
gram for authenticating the game program” are stored on
the same “board including a memory,” separate from the
“motherboard” and its memory. ’540 patent, col. 12, l. 65–
col. 13, l. 5. In the FAC, however, Bot M8 asserts that
“[t]he authentication program for the PlayStation 4 hard
drive, Operating System, and games is stored on
PlayStation 4 MX25L25635FMI 256Mb Serial Flash
Memory,” which is allegedly in the PS4 “motherboard.”
Case: 20-2218 Document: 44 Page: 17 Filed: 07/13/2021
BOT M8 LLC v. SONY CORPORATION OF AMERICA 17
J.A. 633; see J.A. 630 (“The PlayStation 4 motherboard con-
tains flash memory. The CMOS Serial Flash Memory . . .
is a Macronix MX25L25635FMI 256Mb Serial Flash
Memory chip.”). That allegation renders Bot M8’s infringe-
ment claim not even possible, much less plausible. While
claim 1 requires that the game program and authentication
program be stored together, separately from the mother-
board, the FAC alleges that the authentication program is
located on the PS4 motherboard itself.
Under Iqbal/Twombly, allegations that are “merely
consistent with” infringement are insufficient. Twombly,
550 U.S. at 557. Where, as here, the factual allegations are
actually inconsistent with and contradict infringement,
they are likewise insufficient to state a plausible claim. 3
As we have said before, while a plaintiff’s pleading obliga-
tions are not onerous, it is possible that, in pleading its
claims, a plaintiff may find it has pleaded itself out of court.
See Nalco, 883 F.3d at 1348–50. We agree with the district
court that Bot M8 failed to provide factual allegations sup-
porting a plausible inference that the PS4 infringes claim
1 of the ’540 patent. We therefore find no error in the dis-
trict court’s decision dismissing Bot M8’s infringement
claims as to the ’540 patent.
b. The ’990 Patent
The ’990 patent describes a “mutual authentication”
program for video games. The claims require storing “gam-
ing information including a mutual authentication pro-
gram” on the same memory, referred to as the “removable
storage medium” (“the mutual authentication limitation”).
See ’990 patent, col. 17, ll. 6–8. As with the ’540 patent, the
district court found that the FAC “fails to allege when or
where the game program and mutual authentication
3 Notably, Bot M8’s allegations were not pled in the
alternative.
Case: 20-2218 Document: 44 Page: 18 Filed: 07/13/2021
18 BOT M8 LLC v. SONY CORPORATION OF AMERICA
program are stored together.” Order on Mot. to Dismiss,
2020 WL 418938, at *3.
According to Bot M8, the FAC alleges four different
storage components that satisfy the mutual authentication
limitation: (1) the PS4’s hard drives; (2) Blu-ray game
discs; (3) PlayStation Network Servers; and (4) flash
memory on the PS4 console. On appeal, Bot M8 argues
that the district court ignored its factual allegations be-
cause they were not supported by source-code-level evi-
dence. While we agree with Bot M8 that there is no
requirement to provide source code at the pleadings stage,
and that the district court was wrong to demand that it do
so, we disagree that it was the absence of source code that
prompted dismissal. Instead, the district court found that
Bot M8 failed to offer factual allegations that support a
plausible inference that the PS4 actually stores the gaming
information and mutual authentication program together.
Id. While Bot M8 points to different storage components
in the allegedly infringing devices, it never says which one
or ones satisfy the mutual authentication limitation.
We find no error in the district court’s analysis as to
the ’990 patent. As noted, mere recitation of claim ele-
ments and corresponding conclusions, without supporting
factual allegations, is insufficient to satisfy the Iq-
bal/Twombly standard. Although the FAC alleges that the
PS4 contains multiple storage media and multiple authen-
tication programs, we agree with the district court that Bot
M8’s allegations are conclusory, merely track the claim lan-
guage, and do not plausibly allege that gaming information
and a mutual authentication program are stored together
on the same memory. Id. The district court therefore cor-
rectly determined that Bot M8’s allegations do not plausi-
bly allege infringement as to the ’990 patent.
c. The ’988 and ’670 Patents
The ’988 and ’670 patents require a control device that
executes a “fault inspection program” and “completes the
Case: 20-2218 Document: 44 Page: 19 Filed: 07/13/2021
BOT M8 LLC v. SONY CORPORATION OF AMERICA 19
execution of the fault inspection program before the game
is started” (the “fault inspection limitation”). ’988 patent,
col. 4, l. 64–col. 5, l. 5; ’670 patent, col. 5, ll. 1–7. The dis-
trict court acknowledged that the FAC “plausibly allege[d]
the inspection for both the memory device and the game
stored therein,” but nonetheless dismissed the claims re-
lated to these patents on grounds that Bot M8’s allegations
regarding the timing of the inspection too closely tracked
the claim language to be deemed plausible. Order on Mot.
to Dismiss, 2020 WL 418938, at *4 (“[T]he complaint pro-
vides no basis to infer the proper timing of the inspection”).
On appeal, Bot M8 argues that the district court erred
in its dismissal because the FAC “includes specific evidence
demonstrating that the PS4 includes a fault inspection pro-
gram that concludes prior to a game starting.” Appellant’s
Br. 43. In particular, the FAC identifies twelve different
error codes that the PS4 displays upon boot up and prior to
the game starting. According to Bot M8, those codes and
error messages “support a plausible inference that the
PS4’s fault inspection program can be concluded prior to
the start of a game program.” Id.We agree with Bot M8 that the FAC plausibly alleges
infringement of the ’988 and ’670 patents. Bot M8 ex-
pressly alleges—at least four different times in the FAC—
that the fault inspection program completes before the
game is started. J.A. 688 (“The PlayStation CPU will exe-
cute the fault inspection program when the gaming device
is started to operated [sic] and completed before the game
is started.”); J.A. 696 (“The PlayStation CPU will execute
the fault inspection program when the gaming device is
started to operated [sic] and completed before the game is
started.”); J.A. 705 (“The PlayStation CPU will execute the
boot program before executing of the fault inspection pro-
gram when the gaming device is started to operate. The
CPU will then execute the fault inspection program and
complete execution before the game is started.”); J.A. 716
(“The PlayStation CPU will execute the fault inspection
Case: 20-2218 Document: 44 Page: 20 Filed: 07/13/2021
20 BOT M8 LLC v. SONY CORPORATION OF AMERICA
program when the device is booted up and before the game
is started.”).
Sony argues that these allegations are conclusory and
track the claim language too closely. But the FAC also
identifies specific error messages that are displayed by the
PS4 when faults are detected. For example, one alleged
error code states: “Cannot start the PS4. Cannot access
system storage.” J.A. 687 (alleging that the “PlayStation 4
CPU will report various error codes if there is a problem
detected while running the fault inspection program to in-
spect the second memory device during boot up”). Another
alleged error message says that “required information to
start the application cannot be found”—an error that seem-
ingly must be resolved before the game is started. J.A. 686.
These allegations give rise to a reasonable inference that
the fault inspection program is completed before a game
starts.
Sony maintains that the passages Bot M8 relies upon
fail to allege that execution of a fault inspection program
completes before a game starts. According to Sony,
“[a]lthough these allegations may suggest that execution of
an alleged fault inspection program commences during
startup, they say nothing about whether it completes exe-
cution before a game starts.” Appellee’s Br. 52. We find
that Sony—like the district court—demands too much at
this stage of the proceedings. Bot M8 need not “prove its
case at the pleading stage.” Nalco, 883 F.3d at 1350 (cita-
tion omitted). The FAC plausibly alleges that the PS4
completes its execution of the fault inspection program be-
fore the game is started and supports those assertions with
specific factual allegations. Nothing more is required. Ac-
cordingly, we find that the district court erred in dismiss-
ing Bot M8’s claims as to the ’988 and ’670 patents.
3. Denial of Leave to Amend the FAC
We next address whether the district court properly de-
nied leave to amend. While we have concluded that the
Case: 20-2218 Document: 44 Page: 21 Filed: 07/13/2021
BOT M8 LLC v. SONY CORPORATION OF AMERICA 21
FAC was sufficient as to the ’988 and ’670 patents, we con-
clude that leave to amend was properly denied as to all four
patents.
After the district court dismissed the FAC as to the
’540, ’990, ’988, and ’670 patents, Bot M8 sought leave to
file another amended complaint and submitted a proposed
SAC. Bot M8 maintained that amendment was necessary
because the DMCA and other anti-hacking statutes re-
strained its earlier reverse engineering efforts. The district
court denied the motion. In doing so, the court explained
that, where the court has imposed a deadline, Rule 16(b)(4)
permits modification “only for good cause,” and the central
inquiry is “whether the requesting party was diligent in
seeking the amendment.” Order Den. Mot. to Amend, 2020
WL 1643692, at *2. Because Bot M8 did not raise any con-
cerns about its ability to reverse engineer the PS4 until af-
ter the district court issued its decision on Sony’s motion to
dismiss, the court found that Bot M8 was not diligent. Id.In denying leave to amend, the district court found no
authority to support Bot M8’s belated “fear of the DMCA or
other anti-hacking statutes” and no explanation for why
Bot M8 failed to raise its concerns at the November 21 case
management conference where it represented to the court
that it had already “torn down the Sony PlayStation.” Id.
at *3. Because it believed the proposed amendments
should have been included in Bot M8’s FAC, the court
found them untimely. The court subsequently denied Bot
M8’s request for reconsideration, noting that it had “di-
rected reverse engineering of the Sony PlayStation 4 at the
November 21, 2019, case management conference.” Order
Den. Leave to Move for Recons., 2020 WL 1904102, at *1.
On appeal, Bot M8 submits that the district court
abused its discretion in denying leave to amend. Bot M8
maintains that it “sought leave to amend in view of new
evidence uncovered after obtaining permission to jailbreak
the PS4 and then deciphering its software.” Appellant’s Br.
Case: 20-2218 Document: 44 Page: 22 Filed: 07/13/2021
22 BOT M8 LLC v. SONY CORPORATION OF AMERICA
47. According to Bot M8, the district court should have re-
viewed the motion using Rule 15(a)’s liberal amendment
policy—not the “good cause” standard of Rule 16—because
the court’s order on the motion to dismiss gave until Feb-
ruary 13, 2020 to seek leave to amend and Bot M8 complied
with that deadline. Bot M8 also argues that, because it
filed the motion for leave to amend less than three weeks
after the court dismissed the FAC, and “within two weeks
of obtaining permission to jailbreak the PS4,” the court
abused its discretion in denying the motion. Id. at 49.
We apply regional circuit law to district court “proce-
dural decisions that relate to issues not unique to our ex-
clusive jurisdiction, including motions for leave to amend.”
Ultimax Cement Mfg. Corp. v. CTS Cement Mfg. Corp., 587
F.3d 1339, 1354 (Fed. Cir. 2009). Under Ninth Circuit law,
a district court’s denial of leave to amend a pleading after
the deadline has passed is reviewed for an abuse of discre-
tion. Id. Where, as here, a party seeks leave to amend
after the deadline set in the scheduling order has passed,
Federal Rule of Civil Procedure 16 applies to motions to
amend the pleadings. Id. 4 Rule 16 provides that “[a]
schedule may be modified only for good cause and with the
judge’s consent.” Fed. R. Civ. P. 16(b)(4).
While the district court perhaps should not have re-
quired reverse engineering of Sony’s products as a prereq-
uisite to pleading claims of infringement (a question we
would consider on a case-by-case basis), Bot M8 waived its
objection to that obligation when it told the court it was
happy to undertake that exercise. The court requested re-
verse engineering at the November 2019 case management
4 After the district court’s November 21, 2019 case
management conference, the court issued a case manage-
ment order setting December 5, 2019 as the deadline for
amendment. Bot M8 did not file its motion for leave to
amend until February 13, 2020.
Case: 20-2218 Document: 44 Page: 23 Filed: 07/13/2021
BOT M8 LLC v. SONY CORPORATION OF AMERICA 23
conference—two weeks before Bot M8 filed its FAC in De-
cember 2019 and twelve weeks before Bot M8 moved for
leave to amend in February 2020. At that November con-
ference, Bot M8 did not object to reverse engineering, did
not suggest that compliance would be difficult, and did not
argue that it needed permission. Instead, Bot M8 repre-
sented that it had already “torn down” the PS4 and would
be “happy to” put its results into claim charts.
We, thus, are not reviewing the court’s original reverse
engineering order at this stage, but may only review the
court’s later conclusion that Bot M8 was not diligent in
raising its concerns with the reverse engineering order un-
til its request to file the SAC. That ruling presents us with
a close question. Were we reviewing that order under Rule
15’s standards, we might well find that the district court
abused its discretion in denying leave to amend. And, were
we in the district court’s role and considering the request
in the first instance, we likely would have allowed the filing
of the SAC. But we are faced with neither of those circum-
stances. Reviewing the district court order on appeal and
under Rule 16, we cannot conclude that the district court
abused its discretion.
Even if we might have reached a different decision if
asked to consider the matter in the first instance, we do not
find that the district court abused its discretion in denying
leave to amend a second time. See United States v. Fergu-
son, 246 F.3d 129, 133 (2d Cir. 2001) (“[W]e are mindful
that a judge has not abused h[is] discretion simply because
[he] has made a different decision than we would have
made in the first instance.”). We therefore affirm the dis-
trict court’s denial of Bot M8’s motion to amend its com-
plaint, and its order denying reconsideration of that
decision.
B. The ’363 Patent
As to the ’363 patent, the district court granted sum-
mary judgment in favor of Sony, finding claim 1 ineligible
Case: 20-2218 Document: 44 Page: 24 Filed: 07/13/2021
24 BOT M8 LLC v. SONY CORPORATION OF AMERICA
under § 101. We review a district court’s summary judg-
ment decision under the law of the regional circuit. Erics-
son v. TCL Commc’ns Tech. Holdings, 955 F.3d 1317, 1324
(Fed. Cir. 2020). The Ninth Circuit “reviews de novo a dis-
trict court’s grant of summary judgment.” Monzon v. City
of Murrieta, 978 F.3d 1150, 1155 (9th Cir. 2020). “[P]atent
eligibility under §101 is a question of law that we review
without deference.” Ericsson, 955 F.3d at 1325.
Here, the district court found that claim 1 of the ’363
patent is directed to an abstract idea and lacks any in-
ventive concept. Specifically, the court found that claim 1
“recites the abstract idea of increasing or decreasing the
risk-to-reward ratio, or more broadly the difficulty, of a
multiplayer game based upon previous aggregate results.
But the claim leaves open how to accomplish this, and the
specification provides hardly any more direction.” Order
on Summ. J., 465 F. Supp. 3d at 1020. The court further
found that the “claim merely recites result-oriented uses of
conventional computer devices” and that, “[a]t bottom, nei-
ther the patent specification, patent owner, or patent
owner’s experts articulate a technological problem solved
by the ’363 patent.” Id.
On appeal, Bot M8 argues that the court erred in find-
ing claim 1 “to be directed to an abstract idea” and further
erred in finding that it “was nothing more than an applica-
tion of conventional gaming technology.” Appellant’s Br.
22–23. We disagree. After careful consideration, we dis-
cern no error in the district court’s § 101 analysis, and find
no need to discuss that analysis in any detail. For the rea-
sons explained by the district court, claim 1 of the ’363 pa-
tent is ineligible under § 101.
III. CONCLUSION
For the foregoing reasons, the district court’s judgment
is affirmed in part and reversed in part. The case is re-
manded to the district court for further proceedings regard-
ing infringement of the ’988 and ’670 patents.
Case: 20-2218 Document: 44 Page: 25 Filed: 07/13/2021
BOT M8 LLC v. SONY CORPORATION OF AMERICA 25
AFFIRMED IN PART, REVERSED IN PART, AND
REMANDED
Costs
No costs.