SAP Am., Inc. v. InvestPic, LLC

• Decision Date: 15 May 2018
• Docket Number: 2017-2081
• Citation: 898 F.3d 1161
• Parties: SAP AMERICA, INC., Plaintiff-Appellee v. INVESTPIC, LLC, Defendant-Appellant
• Court: U.S. Court of Appeals — Federal Circuit

898 F.3d 1161

SAP AMERICA, INC., Plaintiff-Appellee

v.INVESTPIC, LLC, Defendant-Appellant

2017-2081

United States Court of Appeals, Federal Circuit.

Opinion Issued: May 15, 2018

Opinion Modified: August 2, 2018^*

Katherine Vidal, Winston & Strawn LLP, Menlo Park, CA, argued for plaintiff-appellee. Also represented by Michael A. Bittner, Thomas M. Melsheimer, Dallas, TX; Tyler Johannes, Chicago, IL; Steffen Nathanael Johnson, Washington, DC; John D. Vandenberg, Klarquist Sparkman, LLP, Portland, OR.

Cecil E. Key, DiMuroGinsberg PC - DGKeyIP Group, Tysons Corner, VA, argued for defendant-appellant. Also represented by Teresa Marie Summers ; Jay P. Kesan, McLean, VA.

Before Lourie, O’Malley, and Taranto, Circuit Judges.

Taranto, Circuit Judge.

InvestPic, LLC’s U.S. Patent No. 6,349,291 describes and claims systems and methods for performing certain statistical analyses of investment information. We addressed this patent in In re Varma , 816 F.3d 1352 (Fed. Cir. 2016), where we construed key claim terms and partly reversed and partly vacated the Patent Trial and Appeal Board’s cancellations of various claims in two reexamination proceedings involving issues of anticipation and obviousness under 35 U.S.C. §§ 102 and 103. The present appeal involves a declaratory judgment action filed in 2016 by SAP America, Inc., which alleges, among other things, that the claims of the ’291 patent are invalid because their subject matter is ineligible for patenting under 35 U.S.C. § 101. When SAP moved for a judgment on the pleadings on that ground, the district court granted the motion, holding all claims ineligible under § 101 and hence invalid. SAP Am., Inc. v. Investpic, LLC , 260 F.Supp.3d 705, 718–19 (N.D. Tex. 2017).

We affirm. We may assume that the techniques claimed are "[g]roundbreaking, innovative, or even brilliant," but that is not enough for eligibility. Ass’n for Molecular Pathology v. Myriad Genetics, Inc. , 569 U.S. 576, 591, 133 S.Ct. 2107, 186 L.Ed.2d 124 (2013) ; accord buySAFE, Inc. v. Google, Inc. , 765 F.3d 1350, 1352 (Fed. Cir. 2014). Nor is it enough for subject-matter eligibility that claimed techniques be novel and nonobvious in light of prior art, passing muster under 35 U.S.C. §§ 102 and 103. See Mayo Collaborative Servs. v. Prometheus Labs., Inc. , 566 U.S. 66, 89–90, 132 S.Ct. 1289, 182 L.Ed.2d 321 (2012) ; Synopsys, Inc. v. Mentor Graphics Corp. , 839 F.3d 1138, 1151 (Fed. Cir. 2016) ("[A] claim for a new abstract idea is still an abstract idea. The search for a § 101 inventive concept is thus distinct from demonstrating § 102 novelty."); Intellectual Ventures I LLC v. Symantec Corp. , 838 F.3d 1307, 1315 (Fed. Cir. 2016) (same for obviousness) ( Symantec ). The claims here are ineligible because their innovation is an innovation in ineligible subject matter. Their subject is nothing but a series of mathematical calculations based on selected information and the presentation of the results of those calculations (in the plot of a probability distribution function). No matter how much of an advance in the finance field the claims recite, the advance lies entirely in the realm of abstract ideas, with no plausibly alleged innovation in the non-abstract application realm. An advance of that nature is ineligible for patenting.

I

A

Describing aspects of existing practices declared to be in need of improvement, the ’291 patent states that "conventional financial information sites" on the World Wide Web "perform rudimentary statistical functions" that "are not useful to investors in forecasting the behavior of financial markets because they rely upon assumptions that the underlying probability distribution function (‘PDF’) for the financial data follows a normal or Gaussian distribution." ’291 patent, col. 1, lines 24–36. That assumption, the patent says, "is generally false": "the PDF for financial market data is heavy tailed (i.e., the histograms of financial market data typically involve many outliers containing important information)," rather than symmetric like a normal distribution. Id. , col. 1, lines 36–37, 41–44. Moreover, "statistical measures such as the standard deviation provide no meaningful insight into the distribution of financial data." Id ., col. 1, lines 44–46. As a result, the patent asserts, conventional "analyses understate the true risk and overstate [the] potential rewards for an investment or trading strategy." Id ., col. 1, lines 53–54.

To remedy those deficiencies, the patent proposes a technique that "utilizes resampled statistical methods for the analysis of financial data," which do not assume a normal probability distribution. Id ., col. 1, line 65 through col. 2, line 3. One such method is a bootstrap method, which estimates the distribution of data in a pool (a sample space) by repeated sampling of the data in the pool. Id ., col. 10, lines 20–38. A sample space in a bootstrap method can be defined by selecting a specific investment or a particular period of time. Id ., col. 12, lines 62–66. Data samples are drawn from the sample space "with replacement": samples are drawn from the sample space and then returned to the pool before the next sample is drawn. Id ., col. 10, lines 60–62, col. 11, lines 18–20. The patent also describes using a "bias parameter" to "specif[y] the degree of randomness in the resampling process." Id ., col. 11, lines 55–58. In order to "perform a resampled statistical analysis," a client "may specify a number of parameters including an investment or investments (e.g., a portfolio) to be analyzed, a financial function, a sample size, a period, a type of plot and a bias parameter, which controls the randomness of the resampling process." Id ., col. 2, lines 50–56.

As this case came to us from the district court, claims 1, 11, and 22 were the remaining independent claims of the ’291 patent.¹ Claims 1 and 11 are method claims. Claim 1 read as follows:

1. A method for calculating, analyzing and displaying investment data comprising the steps of:

(a) selecting a sample space, wherein the sample space includes at least one investment data sample;

(b) generating a distribution function using a resampled statistical method and a bias parameter, wherein the bias parameter determines a degree of randomness in a resampling process; and,

(c) generating a plot of the distribution function.

Id ., col. 16, lines 35–43. Claim 11 stated the following:

11. A method for providing statistical analysis of investment data over an information network, comprising the steps of:

(a) storing investment data pertaining to at least one investment;

(b) receiving a statistical analysis request corresponding to a selected investment;

(c) receiving a bias parameter, wherein the bias parameter determines a degree of randomness in a resampling process; and,

(d) based upon investment data pertaining to the selected investment, performing a resampled statistical analysis to generate a resampled distribution.

Id ., col. 17, lines 17–30.

Claim 22, a system claim, read as follows:

22. A system for providing statistical analysis of investment information over an information network comprising:

a financial data database for storing investment data;

a client database;

a plurality of processors collectively arranged to perform a parallel processing computation, wherein the plurality of processors is adapted to:

receive a statistical analysis request corresponding to a selected investment;

based upon investment data pertaining to the selected investment, perform a resampled statistical analysis to generate a resampled distribution; and,

provide a report of the resampled distribution.

Id ., col. 18, lines 14–27.²

B

In May 2017, the district court granted SAP’s motion for judgment on the pleadings.

SAP , 260 F.Supp.3d at 718–19. The court concluded that the claims of the ’291 patent are directed to "performing statistical analysis," specified using words in the claims and using more technical, mathematical notation in the written description. Id . at 711. Because mathematical calculations and formulas are not patent eligible, the court concluded, all of the claims of the ’291 patent, including the dependent claims (which contain more specific mathematical steps) are not directed to patent-eligible subject matter. Id . at 714–15, 717–18. The court then ruled that the claims add no inventive concept to the mathematics to which they are directed—merely (a) further-specified mathematical calculations and (b) pre- and post-solution activities like use of the internet or generic computer hardware. Id . at 715–18.

The district court issued its final judgment on May 18, 2017, and InvestPic filed its notice of appeal on May 22, 2017, within the 30-day time limit. See 28 U.S.C. § 2107(a). We therefore have jurisdiction to hear this appeal pursuant to 28 U.S.C. § 1295(a)(1).

II

We review a judgment on the pleadings under Rule 12(c) de novo. See Hughes v. The Tobacco Inst., Inc. , 278 F.3d 417, 420 (5th Cir. 2001). "The standard for deciding a Rule 12(c) motion is the same as a Rule 12(b)(6) motion to dismiss. The court accepts all well-pleaded facts as true, viewing them in the light most favorable to the plaintiff," which "must plead enough facts to state a claim to relief that is plausible on its face." Guidry v. American Public Life Ins. Co. , 512 F.3d 177, 180 (5th Cir. 2007) (internal citations and quotation marks omitted).

Eligibility under 35 U.S.C. § 101 is a question of law, based on underlying facts. See Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1125 (Fed. Cir. 2018) ; Berkheimer v. HP Inc., 881 F.3d 1360, 1364–65 (Fed. Cir. 2018). Like other legal questions based on underlying facts, this question may be, and frequently has been, resolved on a Rule 12(b)(6) or (c) motion where the undisputed facts, considered under the standards required by that Rule, require a holding of ineligibility under the substantive standards of law. See , e.g. , Two-Way Media Ltd. v. Comcast Cable Commc’ns, LLC , 874...