Isentium, LLC v. Bloomberg Fin. L.P.

• Citation: 343 F.Supp.3d 379
• Decision Date: 29 October 2018
• Docket Number: 17-cv-7601 (PKC)
• Parties: ISENTIUM, LLC, Plaintiff, v. BLOOMBERG FINANCE L.P., Bloomberg L.P. and Bloomberg Inc., Defendant.
• Court: U.S. District Court — Southern District of New York

343 F.Supp.3d 379

ISENTIUM, LLC, Plaintiff,

v.BLOOMBERG FINANCE L.P., Bloomberg L.P. and Bloomberg Inc., Defendant.

17-cv-7601 (PKC)

United States District Court, S.D. New York.

Signed October 29, 2018

Justin Brent Perri, Steptoe & Johnson, LLP, New York, NY, for Plaintiff.

Joseph Michael Drayton, Jonathan Paul Bach, Cooley LLP, New York, NY, for Defendant.

OPINION AND ORDER

CASTEL, U.S.D.J.

Plaintiff iSentium, LLC ("iSentium") creates computer applications that collect and analyze messages posted to social media. On October 7, 2014, the United States Patent and Trademark Office ("USPTO") issued United States Patent No. 8,856,056 to iSentium, titled "Sentiment calculus for a method and system using social media for event-driven trading" (the " '056 Patent"). The '056 Patent describes a multi-step method for evaluating statements posted to Twitter that discuss publicly traded assets. This method purports to evaluate whether the statements express a positive, negative or neutral opinion, and assigns them a score of 1, 2 or 3 based on the strength of the opinion. It claims to do so with a scale, efficiency and accuracy that is not possible for human readers, and to anticipate changes in an asset's price before human traders can act.

In May 2013, before the '056 Patent was issued, iSentium entered into an agreement with defendants Bloomberg Finance L.P., Bloomberg L.P. and Bloomberg Inc. (collectively, "Bloomberg") to incorporate iSentium's technology into the well-known Bloomberg terminal platform. In or around February 2016, Bloomberg and iSentium terminated their arrangement pursuant to a mutual non-disclosure agreement (the "NDA").

On October 4, 2017, iSentium commenced this action, alleging, among other things, that Bloomberg has infringed the '056 Patent by developing its own application for analyzing social media posts. iSentium also brings claims under New York law.

Bloomberg has moved to dismiss the Complaint pursuant to Rule 12(b)(6), Fed. R. Civ. P. Bloomberg urges that the '056 Patent is directed to an abstract idea that is not eligible for patent protection under 35 U.S.C. § 101. Bloomberg separately moves to dismiss iSentium's claims for the misappropriation of trade secrets, promissory estoppel and unjust enrichment, all of which are brought under New York law. The Court heard argument on the motion on October 15, 2018.

For the reasons that will be explained, Bloomberg's motion to dismiss iSentium's patent infringement claim is granted. Drawing every reasonable inference in favor of iSentium, the '056 Patent is directed to the abstract idea of interpreting a written statement posted to social media. It describes a method for using algorithms and databases to determine the meanings of words based on their surrounding context. But selecting information, analyzing it with mathematical techniques and reporting the results is an abstract idea that is not eligible for patent protection. See SAP Am., Inc. v. InvestPic, LLC, 898 F.3d 1161, 1167 (Fed. Cir. 2018). The '056 Patent does not describe an additional, inventive concept that transforms this abstract idea into a patent-eligible application. Bloomberg's motion to dismiss iSentium's patent infringement claim is therefore granted.

RULE 12(b)(6) STANDARD.

Rule 12(b)(6) requires a complaint to "contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). In assessing the sufficiency of a pleading, a court must disregard legal conclusions, which are not entitled to the presumption of truth. Id. Instead, the Court must examine the well-pleaded factual allegations and "determine whether they plausibly give rise to an entitlement to relief." Id. at 679, 129 S.Ct. 1937. "Dismissal is appropriate when ‘it is clear from the face of the complaint, and matters of which the court may take judicial notice, that the plaintiff's claims are barred as a matter of law.’ " Parkcentral Global Hub Ltd. v. Porsche Auto. Holdings SE, 763 F.3d 198, 208-09 (2d Cir. 2014) (quoting Conopco, Inc. v. Roll Int'l, 231 F.3d 82, 86 (2d Cir. 2000) ).

In deciding a Rule 12(b)(6) motion, " ‘the complaint is deemed to include any written instrument attached to it as an exhibit or any statements or documents incorporated in it by reference.’ " Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002) (quoting Int'l Audiotext Network, Inc. v. Am. Tel. & Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995) (per curiam) ); see also Rule 10(c), Fed. R. Civ. P. ("A copy of a written instrument that is an exhibit to a pleading is a part of the pleading for all purposes."). The Complaint attaches a copy of the '056 Patent, which the Court may consider in connection with this motion without converting it into a motion for summary judgment.

When a defendant challenges patent eligibility through a Rule 12(b)(6) motion, courts "must apply the well-settled Rule 12(b)(6) standard which is consistently applied in every area of law." Berkheimer v. HP Inc., 890 F.3d 1369, 1372 (Fed. Cir. 2018) (concurring in denial of rehearing en banc) (" Berkheimer II"). If a motion " ‘raise[s] factual disputes underlying the § 101 analysis,’ " the Complaint should not be dismissed. Id. at 1373 (quoting Aatrix Software, Inc. v. Green Shades Software, Inc., 882 F.3d 1121, 1124 (Fed. Cir. 2018) ). A patent is presumed to be valid, and "[t]he burden of establishing invalidity of a patent or any claim thereof shall rest on the party asserting such invalidity." 35 U.S.C. § 282(a) ; cf. Tranxition, Inc. v. Lenovo (United States), 664 Fed. App'x 968, 972 n.1 (Fed Cir. 2016) (indicating that district court erred by not applying a presumption of validity in deciding section 101 eligibility) (summary order).

However, "not every § 101 determination contains genuine disputes over the underlying facts material to the § 101 inquiry," and statements in the pleadings may provide a basis to conclude that a claimed invention is ineligible for patent protection. Berkheimer v. HP Inc., 881 F.3d 1360, 1368 (Fed. Cir. 2018) (" Berkheimer I"). "Patent eligibility can be determined at the Rule 12(b)(6) stage ‘when there are no factual allegations that, taken as true, prevent resolving the eligibility question as a matter of law.’ " Voter Verified, Inc. v. Election Sys. & Software LLC, 887 F.3d 1376, 1384 (Fed. Cir. 2018) (quoting Aatrix, 882 F.3d at 1125 ).

DISCUSSION.

I. Bloomberg's Motion to Dismiss iSentium's Patent Infringement Claim on Grounds of Patent Ineligibility Is Granted.

A. Overview of the '056 Patent.

The USPTO approved the '056 Patent on October 7, 2014. (Compl't ¶ 11 & Ex. 1.) As broadly summarized in the Complaint, the '056 Patent"allows for the delivery of highly predictive and real-time market sentiment data, derived from social media, to financial professionals, including traders, portfolio managers, and other market participants, that has hitherto been unavailable from any other source." (Compl't ¶ 12.) The Complaint asserts that development of the '056 Patent was "a complicated endeavor" that required the investment of "substantial capital" and the work of "internationally recognized experts in linguistics and computer science, over a period of five years." (Compl't ¶ 34.)

The '056 Patent describes a process that it calls "sentiment analysis," which "attempts to ascertain the feelings, thoughts, attitude, opinion, etc. of a speaker or a writer with respect to a topic." (Col. 1, l. 22-25.) In essence, a "sentiment analysis" reviews a statement and identifies any opinion that it contains. The '056 Patent states that sentiment analysis traditionally has had two approaches. The first is a "bag of words" approach, which considers the frequency of words used in a document and classifies the document as either positive or negative. (Id., l. 25-35.) The second approach is described as "semantic orientation," which classifies words as either "good" or "bad," and "computes an overall good/bad score for the text." (Id., l. 36-43.)

According to the '056 Patent, these two approaches do not adequately analyze sentiments contained in the short, 140-character posts made to Twitter. (Col. 1, l. 44-48; Col. 6, l. 13-25.) "[A]n object of the present invention" is to provide a "sentiment calculator of social-media messages for the real-time evaluation" of publicly traded assets. (Col. 1, l. 52-60.) For publicly traded stocks, the "sentiment calculator" purports to analyze social-media messages "to predict stock movements before human traders can act." (Col. 7, l. 16-17.) By evaluating the contents and frequency of posts made to Twitter, the '056 Patent intends to provide traders with a decision-making tool about anticipated changes to a stock's value. (Col. 21, l. 6-19.)

The '056 Patent bases its sentiment analysis on two concepts: "polarity and strength." (Col. 2, l. 2-3.) Polarity simply means whether a statement is positive, negative or neutral. (Id., l. 32-34.) Strength indicates how strongly held the opinion is, and is scored with integers of 1, 2 or 3. (Col. 8, l. 13-16.)

The '056 Patent explains that it determines polarity and strength by "apply[ing] rules considering syntactic constituents in head-complement, modifier-modified, and subject-predicate relations." (Col. 2, l. 10-13.) The terms "head-complement, modifier-modified, and subject-predicate" are basic elements of English grammar. (Col. 15, l. 1-17.) For example, a "modifier" just means an adverb or adjective, accompanied by the noun or verb it describes. (Id., l. 9-12.) A head "is a lexical item such as a verb" that relates to another part of the sentence, called a "complement." (Col. 15, l. 5-17.) "Syntactic constituents" include adjectives, nouns and verbs. (Col. 14, l. 65-67.) In plain English, the '056 Patent proposes a method for determining the meaning of...