Intellectual Ventures I LLC v. Erie Indem. Co.

INTELLECTUAL VENTURES I LLC,INTELLECTUAL VENTURES II LLC, Plaintiffs-Appellants v. ERIE INDEMNITY COMPANY, ERIE INSURANCE EXCHANGE,ERIE INSURANCE PROPERTY & CASUALTY COMPANY,ERIE INSURANCE COMPANY,FLAGSHIP CITY INSURANCE COMPANY,ERIE FAMILY LIFE INSURANCE COMPANY, Defendants-Appellees

2017-1147

United States Court of Appeals for the Federal Circuit

November 3, 2017

NOTE: This disposition is nonprecedential.

Appeal from the United States District Court for the Western District of Pennsylvania in No. 1:14-cv-00220-MRH, Judge Mark R. Hornak.

CHRISTIAN JOHN HURT, Nix Patterson & Roach LLP, Dallas, TX, argued for plaintiffs-appellants. Also represented by DEREK TOD GILLILAND, Daingerfield, TX.

GREGORY H. LANTIER, Wilmer Cutler Pickering Hale and Dorr LLP, Washington DC, argued for defendants-appellees. Also represented by CLAIRE HYUNGYO CHUNG, KEITH THOMAS HOWELL; MONICA GREWAL, Boston, MA.

Before PROST, Chief Judge, REYNA and WALLACH, Circuit Judges.

WALLACH, Circuit Judge.

Appellants Intellectual Ventures I LLC and Intellectual Ventures II LLC (together, "IV") sued Appellees Erie Indemnity Company et al. (collectively, "Erie") in the U.S. District Court for the Western District of Pennsylvania ("District Court"), alleging infringement of U.S. Patent No. 7,757,298 ("the '298 patent"). Erie responded by filing a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), asserting that all claims of the '298 patent are patent ineligible under 35 U.S.C. § 101 (2012).¹ The District Court granted Erie's Motion to Dismiss. See Intellectual Ventures I LLC v. Erie Indem. Co., 200 F. Supp. 3d 565, 577 (W.D. Pa. 2016).

IV appeals. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(1) (2012). We affirm.

DISCUSSION

I. Standards of Review

We review a district court's dismissal under Rule 12(b)(6) according to the law of the regional circuit, Content Extraction & Transmission LLC v. Wells Fargo Bank, Nat'l Ass'n, 776 F.3d 1343, 1346 (Fed. Cir. 2014), here, the Third Circuit. The Third Circuit reviews de novo a dis-trict court's grant of a motion to dismiss under Rule 12(b)(6). Sands v. McCormick, 502 F.3d 263, 267 (3d Cir. 2007).

We review issues "unique to patent law," including patent eligibility under § 101, consistent with our circuit's precedent. Madey v. Duke Univ., 307 F.3d 1351, 1358 (Fed. Cir. 2002) (citation omitted); see Accenture Glob. Servs., GmbH v. Guidewire Software, Inc., 728 F.3d 1336, 1340-41 (Fed. Cir. 2013) (reviewing a § 101 question under Federal Circuit precedent). A district court's determination of patent eligibility under § 101 is an issue of law that we review de novo. See Intellectual Ventures I LLC v. Erie Indem. Co., 850 F.3d 1315, 1325 (Fed. Cir. 2017).

II. The Claims of the '298 Patent Are Patent IneligibleUnder 35 U.S.C. § 101

"Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of" Title 35 of the United States Code. 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." Content Extraction, 776 F.3d at 1346 (internal quotation marks and citation omitted).

The Supreme Court's decision in Alice Corp. Pty. Ltd. v. CLS Bank International provides the framework through which we assess patent eligibility under § 101. See 134 S. Ct. 2347, 2354-55 (2014). A patent

claim falls outside § 101 where (1) it is "directed to" a patent-ineligible concept, i.e., a law of nature, natural phenomenon, or abstract idea, and (2), if so, the particular elements of the claim, con- sidered "both individually and 'as an ordered combination,'" do not add enough to "'transform the nature of the claim' into a patent-eligible application."

Elec. Power Grp., LLC v. Alstom S.A., 830 F.3d 1350, 1353 (Fed. Cir. 2016) (quoting Alice, 134 S. Ct. at 2355). We analyze the claims against this framework.

A. The '298 Patent

Entitled "Method and Apparatus for Identifying and Characterizing Errant Electronic Files," the '298 patent purports to improve upon the prior art by providing a method and apparatus to detect "undesirable files" "stored on computer storage devices" "according to pre-set criteria." '298 patent col. 1 ll. 59-60, col. 2 ll. 40, 41-42. Specifically, the '298 patent teaches a method and apparatus whereby files "can be selected for review and characterized as acceptable or unacceptable," id. col. 1 ll. 5657, which helps combat "great legal risks to [a] corporation," id. col. 1 l. 56, from "the presence of certain files (such as depictions of child pornography or copyrighted music files)," id. col. 1 ll. 53-55; see id. col. 2 ll. 48-57, col. 3 ll. 28-35 (similar); see also Intellectual Ventures, 200 F. Supp. 3d at 569 (characterizing the '298 patent as one that "recognizes various characteristics of files . . . that give away illegal, illicit, or offensive content . . . and in so doing, saves Web hosting services from criminal, copyright, or some other liability"). The files, once recognized as errant files using the '298 patent's "file identification application," will be marked for deletion from the hosting server. '298 patent, Abstract.

The District Court treated independent claim 1 as representative of the '298 patent, Intellectual Ventures, 200 F. Supp. 3d at 568, "and so may we," Elec. Power, 830 F.3d at 1352. Claim 1 recites:

A computer-implemented method for identifying and characterizing stored electronic files, said method comprising:

under control of one or more configured computer systems:

selecting a file from a plurality of files stored in a computer storage medium, wherein selecting the file is performed according to at least one of:

selecting the file based on the size of the file by determining whether an aggregate size of plural identically-sized files exceeds a predetermined threshold;

selecting the file based on whether content of the file matches a file type indicated by a name of the file; or

selecting the file based on whether the file comprises data beyond an end of data marker for the file;

generating an identification value associated with the selected file, wherein the identification value is representative of at least a portion of the content of the selected file;

comparing the generated identification value to one or more identification values associated with one or more of a plurality of unauthorized files; and

characterizing the file as an unauthorized file if the identification value matches one of the plurality of identification values associated with the unauthorized files.

'298 patent col. 12 ll. 21-44 (emphases added). Relevant here, claim 1 discloses three selection criteria, any one of which may be used to identify errant files, with selection based on: (1) size, i.e., "whether an aggregate size of plural identically-sized files exceeds a predetermined threshold," id. col. 12 ll. 29-30; (2) content, i.e., "whether content . . . matches a [certain] file type," id. col. 12 ll. 31-32; and (3) naming convention, i.e., "whether the file comprises data beyond an end of data marker," id. col. 12 ll. 33-34.

B. The Claims of the '298 Patent Are Directed to anAbstract Idea

The District Court held that the '298 patent "merely claims a computerized solution to a longstanding problem that exists outside of computers: identifying and categorizing illicit files, the possession of which might subject an individual or organization to liability." Intellectual Ventures, 200 F. Supp. 3d at 575. It analogized the patent to solving problems faced by a "librarian tasked with marking and removing books containing pornographic material from a library." Id. IV contends that the District Court erred in holding that the claims of the '298 patent are directed to an abstract idea. Appellants' Br. 18-29. Specifically, IV argues that, because the '298 patent's claims "improve[] upon how computer systems detect unauthorized files" by teaching a "specific way of identifying unauthorized files using specific selection criteria that humans did not use," the patent's claims are not directed to an abstract idea. Id. at 20, 29. We disagree with IV.

"The Supreme Court and we have held that a wide variety of well-known and other activities constitute abstract ideas." Intellectual Ventures I LLC v. Symantec Corp., 838 F.3d 1307, 1314 (Fed. Cir. 2016) (footnote omitted); see id. at 1314 n.5 (collecting cases). For example, in BASCOM Global Internet Services, Inc. v. AT&T Mobility LLC, we held that a claim reciting a "content filtering system for filtering content retrieved from an Internet computer network[, e.g., to prevent users from accessing certain websites,] . . . is [directed to] an abstract idea." 827 F.3d 1341, 1348 (Fed. Cir. 2016) (internal quotation marks and citation omitted). Additionally, in Content Extraction, we found the claims directed to an abstract idea where they claimed, inter alia, "collecting data" and "recognizing certain data within the collected data set." 776 F.3d at 1347. In FairWarning IP, LLC v. Iatric Systems, Inc., we held that an automated system for "detecting fraud and/or misuse in a computer environment based on analyzing data" according to "one of several rules" was directed to an abstract idea. 839 F.3d 1089, 1093 (Fed Cir. 2016) (internal quotation marks and citation omitted). Finally in CyberSource Corp. v. Retail Decisions, Inc., we found claims that could be "performed in the human mind[] or by a human using a pen and paper" were directed to patent-ineligible mental processes. 654 F.3d 1366, 1372 (Fed. Cir. 2011).

The claims of the '298 patent teach a method for "identifying and characterizing" files based on one of three selection criteria. '298 patent col. 12 ll. 21-22; see id. col. 12 ll. 28-34 (listing selection criteria). Taken...