Extraction v. Wells Fargo Bank

• Decision Date: 23 December 2014
• Docket Number: 2014–1687.,2014–1112,2013–1589,Nos. 2013–1588,s. 2013–1588
• Citation: 776 F.3d 1343
• Parties: CONTENT EXTRACTION AND TRANSMISSION LLC, Plaintiff–Appellant, v. WELLS FARGO BANK, NATIONAL ASSOCIATION, Defendant–Appellee, and The PNC Financial Services Group, Inc. and PNC Bank, N.A., Defendants–Appellees. Diebold, Incorporated, Plaintiff–Counterdefendant–Cross Appellant, v. Content Extraction and Transmission LLC, Defendant–Counterplaintiff–Appellant, and Mitchell Medina, Catherine Elias, and Jean–Marc Zimmerman, Defendants, and John Doe Companies 1–100, John Doe Companies 1–99, TD Bank Group, and TD Bank, N.A., Third–Party Defendants.
• Court: U.S. Court of Appeals — Federal Circuit

776 F.3d 1343

CONTENT EXTRACTION AND TRANSMISSION LLC, Plaintiff–Appellant,

v.WELLS FARGO BANK, NATIONAL ASSOCIATION, Defendant–Appellee,andThe PNC Financial Services Group, Inc. and PNC Bank, N.A., Defendants–Appellees.

Diebold, Incorporated, Plaintiff–Counterdefendant–Cross Appellant,

v.Content Extraction and Transmission LLC, Defendant–Counterplaintiff–Appellant,andMitchell Medina, Catherine Elias, and Jean–Marc Zimmerman, Defendants,

and

John Doe Companies 1–100, John Doe Companies 1–99, TD Bank Group, and TD Bank, N.A., Third–Party Defendants.

Nos. 2013–1588, 2013–1589, 2014–1112, 2014–1687.

United States Court of Appeals, Federal Circuit.

Dec. 23, 2014.

Anatoly S. Weiser, Zimmerman & Weiser LLP, of Westfield, New Jersey, argued for plaintiff-appellant Content Extraction and Transmission LLC. With him on the brief was Jean–Marc Zimmerman.

Frederick L. Whitmer, Kilpatrick, Townsend & Stockton LLP, of New York, New York, argued for defendant-appellee Wells Fargo Bank, National Association. Of counsel on the brief for defendant-appelleesThe PNC Financial Services Group, Inc., et al. was Noam J. Kritzer, Bakos & Kritzer of Florham Park, New Jersey.

Roy H. Wepner, Lerner, David, Littenberg, Krumholz & Mentlik, LLP, of Westfield, New Jersey, argued for plaintiff-counterdefendant-cross appellant Diebold, Incorporated. With him on the brief were Arnold I. Rady and Brian D. Hill.

Before DYK, TARANTO, and CHEN, Circuit Judges.

CHEN, Circuit Judge.

Content Extraction and Transmission LLC and its principals (collectively, CET) appeal from the grant of a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure (FRCP), in which the United States District Court for the District of New Jersey held that the claims of CET's asserted patents are invalid as patent-ineligible under 35 U.S.C. § 101. Cross-appellant Diebold, Inc. (Diebold) appeals from the district court's dismissal of its tortious interference and Racketeer Influenced and Corrupt Organizations Act (RICO) claims against CET in a related action. We affirm the district court's dismissal of both CET's and Diebold's claims.

Background

CET owns U.S. Patent Nos. 5,258,855 ('855 patent), 5,369,508 ('508 patent), 5,625,465 ('465 patent), and 5,768,416 ('416 patent) (collectively, the asserted patents). The '508, '465, and '416 patents are continuations of the '855 patent, and share substantially the same specification. The four patents contain a total of 242 claims. The claims generally recite a method of 1) extracting data from hard copy documents using an automated digitizing unit such as a scanner, 2) recognizing specific information from the extracted data, and 3) storing that information in a memory. This method can be performed by software on an automated teller machine (ATM) that recognizes information written on a scanned check, such as the check's amount, and populates certain data fields with that information in a computer's memory.

Claim 1 of the '855 patent recites:

A method of processing information from a diversity of types of hard copy documents, said method comprising the steps of:

(a) receiving output representing a diversity of types of hard copy documents from an automated digitizing unit and storing information from said diversity of types of hard copy documents into a memory, said information not fixed from one document to the next, said receiving step not preceded by scanning, via said automated digitizing unit, of a separate document containing format requirements;

(b) recognizing portions of said hard copy documents corresponding to a first data field; and

(c) storing information from said portions of said hard copy documents corresponding to said first data field into memory locations for said first data field.

'855 patent, 16:19–34.

In April and November 2012 respectively, CET filed infringement actions against appellees Wells Fargo Bank, N.A. (Wells Fargo) and The PNC Financial Services Group, Inc. and PNC Bank, N.A. (collectively, PNC), alleging that they were using ATMs with check deposit software that infringed its patents. In December 2012, Diebold, the manufacturer of Wells Fargo's and PNC's ATMs, filed an action against CET seeking 1) a declaratory judgment that its ATMs did not infringe CET's asserted patents and that CET's patents were invalid, and 2) injunctive and monetary relief for tortious interference and violations of the RICO Act arising from CET's act of filing allegedly baseless infringement suits against Wells Fargo, PNC, and other Diebold customers. CET counterclaimed against Diebold by asserting direct and indirect infringement of its patents. The district court eventually consolidated the three inter-related actions between CET and Wells Fargo, PNC, and Diebold for pretrial purposes.

Relevant here, PNC subsequently moved to dismiss CET's complaint in its entirety pursuant to FRCP 12(b)(6), on the ground that each claim of the asserted patents was invalid as patent-ineligible under 35 U.S.C. § 101. PNC focused its arguments on two claims: claim 1 of the '855 patent and claim 1 of the '416 patent. PNC contended that these two claims were representative, and that none of the other claims included anything more than minor changes in format or phrasing. In its opposition to PNC's motion, CET did not challenge PNC's characterization of claim 1 of the '855 patent or claim 1 of the '416 patent as representative, instead focusing its arguments on defending those two claims.

The district court agreed that all CET's asserted claims were invalid as patent-ineligible under § 101, granted PNC's motion, and dismissed CET's complaints against both PNC and Wells Fargo. Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, No. 12–6960, 2013 WL 3964909, at *5, *14 (D.N.J. July 31, 2013) ( CET ). In light of this holding, the district court also dismissed Diebold's request for a declaratory judgment of invalidity and noninfringement as moot. Lastly, the district court dismissed Diebold's RICO and tortious interference claims against CET, concluding that CET's act of filing lawsuits against Diebold's customers—such as Wells Fargo and PNC—was protected under the Noerr–Pennington doctrine, as established in E. R.R. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961), and United Mine Workers of Am. v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). CET appealed and Diebold crossappealed the district court's order dismissing the parties' complaints. We have jurisdiction under 28 U.S.C. § 1295(a)(1).

Standard of Review

We review a district court's dismissal for failure to state a claim under the law of the regional circuit. In re Bill of Lading Transmission & Processing Sys. Patent Litig., 681 F.3d 1323, 1331 (Fed.Cir.2012). The Third Circuit reviews challenges to a dismissal for failure to state a claim under FRCP 12(b)(6)de novo. Sands v. McCormick, 502 F.3d 263, 267 (3d Cir.2007). We review the district court's determination of patent eligibility under § 101de novo.Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed.Cir.2012).

Discussion

An invention is patent-eligible if it claims a “new and useful process, machine, manufacture, or composition of matter.” 35 U.S.C. § 101. The Supreme Court, however, has long interpreted § 101 and its statutory predecessors to contain an implicit exception: “laws of nature, natural phenomena, and abstract ideas” are not patentable. Alice Corp. Pty Ltd. v. CLS Bank Int'l, 573 U.S. ––––, 134 S.Ct. 2347, 2354, 189 L.Ed.2d 296 (2014). We focus here on whether the claims of the asserted patents fall within the excluded category of abstract ideas.

The Supreme Court's two-step framework, described in Mayo and Alice, guides our analysis. Id. at 2355 (citing Mayo Collaborative Servs. v. Prometheus Labs., Inc., 566 U.S. ––––, 132 S.Ct. 1289, 1296–97, 182 L.Ed.2d 321 (2012)). We first determine whether a claim is “directed to” a patent-ineligible abstract idea. If so, we then consider the elements of the claim—both individually and as an ordered combination—to assess whether the additional elements transform the nature of the claim into a patent-eligible application of the abstract idea. Id. This is the search for an “inventive concept”—something sufficient to ensure that the claim amounts to “significantly more” than the abstract idea itself. Id.

The Supreme Court has not “delimit[ed] the precise contours of the ‘abstract ideas' category.” Id. at 2357. We know, however, that although there is no categorical business-method exception, Bilski v. Kappos, 561 U.S. 593, 606, 608, 130 S.Ct. 3218, 177 L.Ed.2d 792 (2010), claims directed to the mere formation and manipulation of economic relations may involve an abstract idea. See Alice, 134 S.Ct. at 2356–57. We have also applied the Supreme Court's guidance to identify claims directed to the performance of certain financial transactions as involving abstract ideas. See buySAFE, Inc. v. Google, Inc., 765 F.3d 1350, 1355 (Fed.Cir.2014) (creating a transaction performance guaranty for a commercial transaction on computer networks such as the Internet); Accenture Global Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1338 (Fed.Cir.2013) (generating rule-based tasks for processing an insurance claim); Bancorp Servs., L.L.C. v. Sun Life Assur. Co. of Canada (U.S.), 687 F.3d 1266, 1278 (Fed.Cir.2012) (managing a stable value protected life insurance policy); Dealertrack, 674 F.3d at 1333 (processing loan information through a clearinghouse).

Applying Mayo/Alice step one, we agree with the district court that the claims of the asserted patents are drawn to the abstract idea of 1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory. The concept of data collection, recognition, and storage is undisputedly well-known. Indeed, humans have always performed these functions. And banks have, for...