United States: Claims Directed To Document Data Extraction Technology Not Patent Eligible Under § 101

In Content Extraction & Transmission LLC v. Wells Fargo Bank, National Ass'n, Nos. 13-1588, -1589, 14-1112, -1687 (Fed. Cir. Dec. 23, 2014), the Federal Circuit affirmed the district court's grant of a motion to dismiss under Fed. R. Civ. P. 12(b)(6), which found the asserted claims invalid as patent ineligible under 35 U.S.C. § 101.

Content Extraction and Transmission LLC ("CET") owns U.S. Patent Nos. 5,258,855 ("the '855 patent"); 5,369,508 ("the '508 patent"); 5,625,465 ("the '465 patent"); and 5,768,416 ("the '416 patent") (collectively "the asserted patents"). The claims generally claim methods of extracting data from hard copy documents using scanning technology, recognizing specific information from the extracted data, and storing the data in memory.

CET sued Wells Fargo Bank, N.A. ("Wells Fargo") and The PNC Financial Services Group, Inc. and PNC Bank, N.A. (collectively "PNC"), alleging infringement of the asserted patents by automated teller machines ("ATMs") with check deposit software. Diebold, Inc. ("Diebold"), the manufacturer of Wells Fargo's and PNC's ATMs, filed a separate action against CET, seeking DJ that CET's patents were invalid under § 101 and injunctive and monetary relief for tortious interference and violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"). CET counterclaimed against Diebold for direct and indirect infringement of its asserted patents.

PNC moved to dismiss for failure to state a claim under Rule 12(b)(6), arguing that all of the asserted claims are directed to patent-ineligible subject matter under § 101, focusing its arguments on claim 1 of the '855 patent and claim 1 of the '416 patent, which PNC contended were representative. The district court granted PNC's motion that all of the claims were invalid as patent ineligible under § 101 and dismissed the complaints against PNC and Wells Fargo. The district court also dismissed Diebold's RICO claims, finding that CET's acts were protected under the Noerr-Pennington doctrine. CET appealed and Diebold cross-appealed.

"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." Slip op. at 9.

On appeal, the Federal Circuit first considered whether the asserted patents claim patent-ineligible subject matter. Applying the test set forth in Alice Corp. v. CLS Bank International, 134 S. Ct. 2347 (2014), and Mayo Collaborative Services v. Prometheus Laboratories, Inc., 132 S. Ct. 1289 (2012), the Court determined that the claims of the asserted patents were generally directed 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." Slip op. at 7. The Court explained that "[t]he concept of data collection, recognition, and storage is undisputedly well-known," and noted that "humans have always performed these functions." Id. The Court then rejected CET's argument that the claims were patent eligible because they required hardware to perform functions that humans cannot, such as processing and recognizing the stream of bits output by the scanner. Comparing the asserted claims to "the computer-implemented claims in Alice," the Court concluded that the claims were "drawn to the basic concept of data recognition and storage," even though they recited a scanner. Id. at 8.

Next, the Court considered whether the limitations of the asserted claims transformed the claims into patent-eligible applications of the abstract idea. The Court noted that CET conceded during oral argument that using a scanner to extract data from documents was well known at the time of the asserted patents' filing. As a result, the Court found that the 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." Id. at 9. The Court stated that "[t]here 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. Rather, the Court explained that, "[a]t 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," which the Court held was "insufficient" to render the claims patent eligible. Id.

The Court next considered CET's argument that the district court's failure to individually consider all claims was inconsistent with the statutory presumption of validity. The Court rejected this argument, noting that the district court treated two claims as representative and found that all of the claims were substantially similar and linked to the same abstract idea. The Court stated that CET had failed to object to the district court's identification of the representative claims and failed to identify claims that CET believed were not fairly represented by the representative claims.

The Court also rejected CET's assertion that the district court erred by dismissing its complaint at the pleading stage without first construing the claims. The Court explained that "claim construction is not an inviolable prerequisite to a validity determination under § 101." Id. at 11. Although finding that claim construction was not required, the Court then determined that even if the claims were 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." Id. Accordingly, the Court affirmed the district court's finding that the asserted claims were invalid under § 101.

Turning next to Diebold's cross-appeal, the Court also affirmed the district court's dismissal of Diebold's tortious interference and RICO claims, although it did so on different grounds. The Court considered the Noerr-Pennington doctrine, which presumptively shields petitioning the government from liability on First Amendment grounds against certain types of claims. Applying this doctrine, the Court then held that Diebold failed to demonstrate that CET's suits were objectively baseless, explaining that "the state of the law of § 101 was deeply uncertain at the time CET filed its complaints," and that the suits were protected under the Noerr-Pennington doctrine. Id. at 13-14.

Accordingly, the Court affirmed the district court's grant of PNC's motion to dismiss under Rule 12(b)(6) on the ground that the claims of CET's asserted patents are invalid as patent ineligible under § 101 and affirmed the district court's dismissal of Diebold's tortious interference and RICO claims.

Judges: Dyk, Taranto, Chen (author)

[Appealed from D.N.J., Judge Shipp]

This article previously appeared in Last Month at the Federal Circuit - January 2015

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