01/10/15

Context Extraction and Transmission LLC v. Wells Fargo Bank: Adding A Scanner Limitation to Data Processing Claims is Not Enough to Meet 101 Under Alice


Category: 101   
 
 
 
By: Jesus Hernandez, Blog Editor/Contributor 
 
TitleContext Extraction and Transmission LLC v. Wells Fargo Bank, 2013-1588, -1589, 2014-1112, -1687 (Fed. Cir. Dec. 23, 2014).
Issues
[1: Abstract Idea] Are claims directed to 1) collecting data, 2) recognizing certain data within the collected data set, and 3) storing that recognized data in a memory, an abstract idea?
See, generally, Context Extraction and Transmission LLC at *6-7.
[2: Additional Limitations] Does the use of a scanner in a claim limitation - either individually or as an ordered combination— transform the claims into a patent-eligible application?
See, generally, id. at 9.
Holdings
[1: Abstract Idea] [T]he 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.
Id. at *7.
[2: Additional Limitations] CET’s claims merely recite the use of this existing scanning and processing technology to recognize and store data from specific data fields such as amounts, addresses, and dates. See id. There is no “inventive concept” in CET’s use of a generic scanner and computer to perform well-understood, routine, and conventional activities commonly used in industry.
Id. at *9.
 
 
 

Procedural HistoryContent 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.
Context Extraction and Transmission LLC, at *3.

 

Legal Reasoning (CHEN, Taranto, Dyk)
Background
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 correspond- ing to said first data field into memory lo-
cations for said first data field.

Context Extraction and Transmission LLC, at *3-4.
[1: Abstract Idea]
Legal Standard: 101 Abstract Idea
We first deter- mine 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. [...] This is the search for an “inventive concept”—something sufficient to ensure that the claim amounts to “significantly more” than the abstract idea itself. [...]
Context Extraction and Transmission LLC, at *6-7 (citations omitted).
The Supreme Court has not “delimit[ed] the precise contours of the ‘abstract ideas’ category.” [...] We know, however, that although there is no categorical business-method exception, Bilski v. Kappos, 561 U.S. 593, 606, 608 (2010), claims directed to the mere for- mation 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).
Id. at *6-7.
Analysis
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 some time, reviewed checks, recognized relevant data such as the amount, account number, and identity of account holder, and stored that information in their records.
Id. at *7-8.
CET attempts to distinguish its claims from those found to be abstract in Alice and other cases by showing that its claims require not only a computer but also an additional machine—a scanner.1 […] However, the claims in Alice also required a computer that processed streams of bits, but nonetheless were found to be abstract. See 134 S. Ct. at 2358. Similar to how the computer-implemented claims in Alice were directed to “the concept of intermediated settlement,” id. at 2356, and the claims in Dealertrack were directed to the concept of “processing information through a clearing- house,” 674 F.3d at 1333, CET’s claims are drawn to the basic concept of data recognition and storage.
Id. at *8.
[2: Additional Limitations]
Legal Standard: application of abstract ideaFor the second step of our analysis, we determine whether the limitations present in the claims represent a patent-eligible application of the abstract idea. Alice, 134 S. Ct. at 2357. For the role of a computer in a computer- implemented invention to be deemed meaningful in the context of this analysis, it must involve more than performance of “well-understood, routine, [and] conventional activities previously known to the industry.” Id. at 2359 (quoting Mayo, 132 S. Ct. at 1294 (internal quotation marks and brackets omitted)). Further, “the mere recitation of a generic computer cannot transform a patent- ineligible abstract idea into a patent-eligible invention.” Id. at 2358.
Context Extraction and Transmission LLC, at *8-9.
Analysis
Applying Mayo/Alice step two, we agree with the district court that the asserted patents contain no limitations—either individually or as an ordered combination- that transform the claims into a patent-eligible application. CET conceded at oral argument that the use of a scanner or other digitizing device to extract data from a document was well-known at the time of filing, as was the ability of computers to translate the shapes on a physical page into typeface characters. Oral Arg. at 3:35–3:55; 16:12–16:17, available at http://oralarguments. cafc.uscourts.gov/default.aspx?fl=2013-1588.mp3. CET’s claims merely recite the use of this existing scanning and processing technology to recognize and store data from specific data fields such as amounts, addresses, and dates. See id. There is no “inventive concept” in CET’s use of a generic scanner and computer to perform well-understood, routine, and conventional activities commonly used in industry. See Alice, 134 S. Ct. at 2359. At most, CET’s claims attempt to limit the abstract idea of recognizing and storing information from hard copy documents using a scanner and a computer to a particular technological environment. Such a limitation has been held insufficient to save a claim in this context. See Alice, 134 S. Ct. at 2358; Ultramercial, Inc. v. Hulu, LLC, 772 F.3d 709, 715– 16 (Fed Cir. 2014); buySAFE, 765 F.3d at 1355.
Id. at *9.
CET notes that dependent claim 44 of the ’416 patent additionally requires: “defining a set of symbols which designate fields of information required by an application program; and detecting the presence of a particular one of said defined set of symbols on a hard copy document and extracting a field of information required by an application program based on said detecting.” Id. This limitation merely describes generic optical character recognition technology, which CET conceded was a routine function of scanning technology at the time the claims were filed. Oral Arg. at 3:35–3:55, 16:12–16:17, available at http://oralarguments. cafc.uscourts.gov/default.aspx?fl=2013-1588.mp3. Indeed, all of the additional limitations in the claims cited in CET’s appeal brief recite well-known, routine, and conventional functions of scanners and computers. Thus, while these claims may have a narrower scope than the representative claims, no claim contains an “inventive concept” that transforms the corresponding claim into a patent-eligible application of the otherwise ineligible abstract idea.
Id. at *10-11.
CET contends that the district court erred by declaring its claims patent-ineligible under § 101 at the pleading stage without first construing the claims or allowing the parties to conduct fact discovery and submit opinions from experts supporting their claim construction positions. Although the determination of patent eligibility requires a full understanding of the basic character of the claimed subject matter, claim construction is not an inviolable prerequisite to a validity determination under § 101. See Ultramercial, 772 F.3d at 714–15; Bancorp, 687 F.3d at 1273–74. The district court construed the terms identified by CET “in the manner most favorable to [CET],” necessarily assuming that all of CET’s claims required a machine, even though several claims do not expressly recite any hardware structures. [...]; CET, 2013 WL 3964909, at *12. Nonetheless, the district court determined the claims of the asserted pa- tents were patent-ineligible. Likewise, we conclude that even when construed in a manner most favorable to CET, none of CET’s claims amount to “significantly more” than the abstract idea of extracting and storing data from hard copy documents using generic scanning and processing technology. The district court’s resolution of PNC’s motion to dismiss at the pleading stage was therefore proper.
Id. at *11.
Conclusion
We affirm the district court’s grant of PNC’s motion to dismiss under FRCP 12(b)(6) on the ground that the claims of CET’s asserted patents are invalid as patent-ineligible under § 101.
Context Extraction and Transmission LLC, at *14.

 

Contributor Comment
This case also discussed RICO violations.
Context Extraction and Transmission LLC, at *12.

 

 Image Attribution Statement: FIG. 1 of U.S. Patent No. 5,258,855.

 

 

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