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United States: Freddie Mac Proves Patent Invalid On Motion To Dismiss That Is Converted Into A Summary Judgment Motion For Claiming Unpatentable Subject Matter
Graff/Ross Holdings LLP ("Graff/Ross") filed a patent
infringement action against the Federal Home Loan Mortgage
Corporation ("Freddie Mac") for patent infringement.
Freddie Mac moved to dismiss pursuant to Fed.R.Civ.P. 12(b)(6) on
the ground that the patent was invalid for claiming unpatentable
subject matter. The district court referred the motion to the
Magistrate Judge who recommended granting Freddie Mac's motion
after converting it into a motion for summary judgment. Graff/Ross
objected to the district court.
Claim 101 of the patent-in-suit provides:
A method for making a financial analysis output having a
system-determine purchase price for at least one component from
property in consummating a sale, the financial analysis output
being made by steps including:
Converting input data, representing at lest one component from
property, wherein the property is a fixed income asset, into input
digital electrical signals representing the input data;
Proving a digital electrical computer system controlled by a
processor electronically connected to receive said input digital
electrical signals and electronically connected to an output
means;
Controlling a digital electrical computer processor to
manipulate electrical signals to compute a system-determined
purchase price for at least once component from property in
consummating a sale and corresponding purchase of the component;
and
Generating the financial analysis output at said output
means.
As the first part of the district court's analysis, it first
agreed with the standard of review used by the Magistrate Judge:
"The Court agrees with Magistrate Judge Kay that the issue of
patent validity should be decided on summary judgment, and
therefore, hereby converts defendant's motion to dismiss into a
motion for summary judgment. Summary judgment is appropriate when,
based on the record, there is no genuine issue as to any material
fact, and the moving party is entitled to judgment as a matter of
law. See Fed. R. Civ. P. 56(a)."
The district court then agreed with the Magistrate Judge that
the patent claims were directed to nothing more than an abstract
idea on a general purpose computer. "As Judge Kay concluded,
plaintiff's claims 'recite [] nothing more than an abstract
idea on a general purpose computer - i.e., computing a price for
the sale of a fixed income asset and generating a financial
analysis output.' R&R at 11. 'To salvage an otherwise
patent-ineligible process, a computer must be integral to the
claimed invention facilitating the process in a way that a person
making calculations or computations could not.' Bancorp
Servs., L.L.C. v Sun Life Assurance Co. of Can., 687 F. 3d
1266, 1278 (Fed. Cir. 2012) (citing SiRF Tech., 601 F. 3d
at 1333). Like the computer limitations in Bancorp Services, the
computer technology here 'is employed only for its most basic
function, the performance of repetitive calculations, and as such
does not impose meaningful limits on the scope of those
claims.' Bancorp, 687 F.3d at 1278 (citing
Benson, 409 U.S. at 67)."
After that analysis, the district court concluded that the
Magistrate Judge had not erred in granting the motion. "Thus
having determined that the machine limitations were 'no more
than object[s] on which the method operates,' R&R at 12
(citation and internal quotation marks omitted) (alteration in
original), Judge Kay next analyzed the 'field of use
limitation,' id. at 8, 13 (citing Bilski I 130 S. Ct.
at 3231). Contrary to plaintiff's objections, Judge Kay's
analysis is not 'erroneous.' Pl.'s Obj. at 2. 'When
the insignificant computer-based limitations are set aside from
those claims that contain such limitations, the question under
§ 101 reduces to an analysis of what additional features
remain in the claims.' Bancorp Servs., 687 F.3d at
1279 (citing Mayo Collaborative Servs. V. Prometheus Labs,
Inc. 132 S. Ct. 1289, 1297 (2012)). As established by the
Supreme Court in Parker v. Flook, 437 U.S. 584, 589-90
(1978), and reiterated by that Court in Bilski,
'limiting an abstract idea to one field...d[oes] not make the
concept patentable.' Bancorp, 687 F.3d at 1275-76,
1280 (quoting Bilski, 130 S. Ct. at 3231), Just as the
Court in Bancorp found that the claim limited 'to use
in the life insurance market' was unpatentable, id.,
687 F.3d at 1280, I agree with Judge Kay that limiting
Graff/Ross' claim to fixed income assets does not provide
meaningful limitations to "bestow patentability on the
claim," see R&R at 8-9, 13."
Graff/Ross Holdings LLP v. Federal Home Loan Mortgage
Corporation, Case No. 07-796 (D.D.C. Sept. 24, 2012)
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