Sap America, Inc. v. Investpic LLC , 890 F.3d 1016 ( 2018 )

United States Court of Appeals
for the Federal Circuit
______________________
SAP AMERICA, INC.,
Plaintiff-Appellee
v.
INVESTPIC, LLC,
Defendant-Appellant
______________________
2017-2081
______________________
Appeal from the United States District Court for the
Northern District of Texas in No. 3:16-cv-02689-K, Judge
Ed Kinkeade.
______________________
Decided: May 15, 2018
______________________
KATHERINE VIDAL, Winston & Strawn LLP, Menlo
Park, CA, argued for plaintiff-appellee. Also represented
by MICHAEL A. BITTNER, THOMAS M. MELSHEIMER, Dallas,
TX; TYLER JOHANNES, Chicago, IL; STEFFEN NATHANAEL
JOHNSON, Washington, DC; JOHN D. VANDENBERG, Klar-
quist Sparkman, LLP, Portland, OR.
CECIL E. KEY, DiMuroGinsberg PC – DGKeyIP Group,
Tysons Corner, VA, argued for defendant-appellant. Also
represented by TERESA MARIE SUMMERS; JAY P. KESAN,
McLean, VA.
______________________
2 SAP AMERICA, INC. v. INVESTPIC, LLC
Before LOURIE, O’MALLEY, and TARANTO, Circuit Judges.
TARANTO, Circuit Judge.
InvestPic, LLC’s U.S. Patent No. 6,349,291 describes
and claims systems and methods for performing certain
statistical analyses of investment information. We ad-
dressed this patent in In re Varma, 816 F.3d 1352 (Fed.
Cir. 2016), where we construed key claim terms and
partly reversed and partly vacated the Patent Trial and
Appeal Board’s cancellations of various claims in two
reexamination proceedings involving issues of anticipa-
tion and obviousness under 35 U.S.C. §§ 102 and 103.
The present appeal involves a declaratory judgment
action filed in 2016 by SAP America, Inc., which alleges,
among other things, that the claims of the ’291 patent are
invalid because their subject matter is ineligible for
patenting under 35 U.S.C. § 101. When SAP moved for a
judgment on the pleadings on that ground, the district
court granted the motion, holding all claims ineligible
under § 101 and hence invalid. SAP Am., Inc. v. In-
vestPic, LLC, 260 F. Supp. 3d 705, 718–19 (N.D. Tex.
2017).
We affirm. We may assume that the techniques
claimed are “[g]roundbreaking, innovative, or even bril-
liant,” but that is not enough for eligibility. Ass’n for
Molecular Pathology v. Myriad Genetics, Inc., 569 U.S.
576, 591 (2013); accord buySAFE, Inc. v. Google, Inc., 765
F.3d 1350, 1352 (Fed. Cir. 2014). Nor is it enough for
subject-matter eligibility that claimed techniques be novel
and nonobvious in light of prior art, passing muster under
35 U.S.C. §§ 102 and 103. See Mayo Collaborative Servs.
v. Prometheus Labs., Inc., 566 U.S. 66, 89–90 (2012);
Synopsys, Inc. v. Mentor Graphics Corp., 839 F.3d 1138,
1151 (Fed. Cir. 2016) (“[A] claim for a new abstract idea is
still an abstract idea. The search for a § 101 inventive
concept is thus distinct from demonstrating § 102 novel-
SAP AMERICA, INC. v. INVESTPIC, LLC 3
ty.”); Intellectual Ventures I LLC v. Symantec Corp., 838
F.3d 1307, 1315 (Fed. Cir. 2016) (same for obviousness)
(Symantec). The claims here are ineligible because their
innovation is an innovation in ineligible subject matter.
Their subject is nothing but a series of mathematical
calculations based on selected information and the
presentation of the results of those calculations (in the
plot of a probability distribution function). No matter
how much of an advance in the finance field the claims
recite, the advance lies entirely in the realm of abstract
ideas, with no plausibly alleged innovation in the non-
abstract application realm. An advance of that nature is
ineligible for patenting.
I
A
Describing aspects of existing practices declared to be
in need of improvement, the ’291 patent states that “con-
ventional financial information sites” on the World Wide
Web “perform rudimentary statistical functions” that “are
not useful to investors in forecasting the behavior of
financial markets because they rely upon assumptions
that the underlying probability distribution function
(‘PDF’) for the financial data follows a normal or Gaussian
distribution.” ’291 patent, col. 1, lines 24–36. That as-
sumption, the patent says, “is generally false”: “the PDF
for financial market data is heavy tailed (i.e., the histo-
grams of financial market data typically involve many
outliers containing important information),” rather than
symmetric like a normal distribution. Id., col. 1, lines 36–
37, 41–44. Moreover, “statistical measures such as the
standard deviation provide no meaningful insight into the
distribution of financial data.” Id., col. 1, lines 44–46. As
a result, the patent asserts, conventional “analyses un-
derstate the true risk and overstate [the] potential re-
wards for an investment or trading strategy.” Id., col. 1,
lines 53–54.
4 SAP AMERICA, INC. v. INVESTPIC, LLC
To remedy those deficiencies, the patent proposes a
technique that “utilizes resampled statistical methods for
the analysis of financial data,” which do not assume a
normal probability distribution. Id., col. 1, line 65
through col. 2, line 3. One such method is a bootstrap
method, which estimates the distribution of data in a pool
(a sample space) by repeated sampling of the data in the
pool. Id., col. 10, lines 20–38. A sample space in a boot-
strap method can be defined by selecting a specific in-
vestment or a particular period of time. Id., col. 12, lines
62–66. Data samples are drawn from the sample space
“with replacement”: samples are drawn from the sample
space and then returned to the pool before the next sam-
ple is drawn. Id., col. 10, lines 60–62, col. 11, lines 18–20.
The patent also describes using a “bias parameter” to
“specif[y] the degree of randomness in the resampling
process.” Id., col. 11, lines 55–58. In order to “perform a
resampled statistical analysis,” a client “may specify a
number of parameters including an investment or in-
vestments (e.g., a portfolio) to be analyzed, a financial
function, a sample size, a period, a type of plot and a bias
parameter, which controls the randomness of the
resampling process.” Id., col. 2, lines 50–56.
Claims 1, 11, and 22 are the remaining independent
claims of the ’291 patent. 1 Claims 1 and 11 are method
claims. Claim 1 reads as follows:
1. A method for calculating, analyzing and dis-
playing investment data comprising the steps of:
1 In this court, InvestPic has quoted various
amended or added claims it has proposed in an ex parte
reexamination. We have not been informed that those
claims have issued. Those claims are not before us.
SAP AMERICA, INC. v. INVESTPIC, LLC 5
(a) selecting a sample space, wherein the
sample space includes at least one in-
vestment data sample;
(b) generating a distribution function us-
ing a re-sampled statistical method and a
bias parameter, wherein the bias parame-
ter determines a degree of randomness in
a resampling process; and,
(c) generating a plot of the distribution
function.
Id., col. 16, lines 35–43. Claim 11 states the following:
11. A method for providing statistical analysis of
investment data over an information network,
comprising the steps of:
(a) storing investment data pertaining to
at least one investment;
(b) receiving a statistical analysis request
corresponding to a selected investment;
(c) receiving a bias parameter, wherein
the bias parameter determines a degree of
randomness in a resampling process; and,
(d) based upon investment data pertaining
to the selected investment, performing a
resampled statistical analysis to generate
a resampled distribution.
Id., col. 17, lines 17–30.
Claim 22 is a system claim and reads as follows:
22. A system for providing statistical analysis of
investment information over an information net-
work comprising:
a financial data database for storing in-
vestment data;
6 SAP AMERICA, INC. v. INVESTPIC, LLC
a client database;
a plurality of processors collectively ar-
ranged to perform a parallel processing
computation, wherein the plurality of pro-
cessors is adapted to:
receive a statistical analysis request cor-
responding to a selected investment;
based upon investment data pertaining to
the selected investment, perform a
resampled statistical analysis to generate
a resampled distribution; and,
provide a report of the resampled distribu-
tion.
Id., col. 18, lines 14–27.
B
In May 2017, the district court granted SAP’s motion
for judgment on the pleadings. SAP, 260 F. Supp. 3d at
718–19. The court concluded that the claims of the ’291
patent are directed to “performing statistical analysis,”
specified using words in the claims and using more tech-
nical, mathematical notation in the written description.
Id. at 711. Because mathematical calculations and for-
mulas are not patent eligible, the court concluded, all of
the claims of the ’291 patent, including the dependent
claims (which contain more specific mathematical steps)
are not directed to patent-eligible subject matter. Id. at
714–15, 717–18. The court then ruled that the claims add
no inventive concept to the mathematics to which they are
directed—merely (a) further-specified mathematical
calculations and (b) pre- and post-solution activities like
use of the internet or generic computer hardware. Id. at
715–18.
The district court issued its final judgment on May 18,
2017, and InvestPic filed its notice of appeal on May 22,
SAP AMERICA, INC. v. INVESTPIC, LLC 7
2017, within the 30-day time limit. See 28 U.S.C.
§ 2107(a). We therefore have jurisdiction to hear this
appeal pursuant to 28 U.S.C. § 1295(a)(1).
II
We review a judgment on the pleadings under Rule
12(c) de novo. See Hughes v. The Tobacco Inst., Inc., 278
F.3d 417, 420 (5th Cir. 2001). “The standard for deciding
a Rule 12(c) motion is the same as a Rule 12(b)(6) motion
to dismiss. The court accepts all well-pleaded facts as
true, viewing them in the light most favorable to the
plaintiff,” which “must plead enough facts to state a claim
to relief that is plausible on its face.” Guidry v. American
Public Life Ins. Co., 512 F.3d 177, 180 (5th Cir. 2007)
(internal citations and quotation marks omitted).
Eligibility under 35 U.S.C. § 101 is a question of law,
based on underlying facts. See Aatrix Software, Inc. v.
Green Shades Software, Inc., 882 F.3d 1121, 1125 (Fed.
Cir. 2018); Berkheimer v. HP Inc., 881 F.3d 1360, 1364–65
(Fed. Cir. 2018). Like other legal questions based on
underlying facts, this question may be, and frequently has
been, resolved on a Rule 12(b)(6) or (c) motion where the
undisputed facts, considered under the standards re-
quired by that Rule, require a holding of ineligibility
under the substantive standards of law. See, e.g., Two-
Way Media Ltd. v. Comcast Cable Commc’ns, LLC, 874
F.3d 1329, 1341 (Fed. Cir. 2017); RecogniCorp, LLC v.
Nintendo Co., 855 F.3d 1322, 1328 (Fed. Cir. 2017); Fair-
Warning IP, LLC v. Iatric Sys., Inc., 839 F.3d 1089, 1098
(Fed. Cir. 2016); Genetic Techs. Ltd. v. Merial L.L.C., 818
F.3d 1369, 1380 (Fed. Cir. 2016); Ultramercial, Inc. v.
Hulu, LLC, 772 F.3d 709, 717 (Fed. Cir. 2014). This is
such a case.
Section 101 provides that “[w]hoever invents or dis-
covers any new and useful process, machine, manufac-
ture, or composition of matter, or any new and useful
improvement thereof, may obtain a patent therefor,
8 SAP AMERICA, INC. v. INVESTPIC, LLC
subject to the conditions and requirements of this title.”
35 U.S.C. § 101. The provision, however, “contains an
important implicit exception: Laws of nature, natural
phenomena, and abstract ideas are not patentable.” Alice
Corp. Pty. Ltd. v. CLS Bank Int’l, 134 S. Ct. 2347, 2354
(2014). A claim falls outside § 101 where (1) it is “directed
to” a patent-ineligible concept, i.e., a law of nature, natu-
ral phenomenon, or abstract idea, and (2), if so, the par-
ticular elements of the claim, considered “both
individually and ‘as an ordered combination,’” do not add
enough to “‘transform the nature of the claim’ into a
patent-eligible application.” Id. at 2355; see Mayo, 566
U.S. at 78–79. The first stage of the Alice inquiry looks at
the “focus” of the claims, their “‘character as a whole’”;
and the second stage of the inquiry (where reached) looks
more precisely at what the claim elements add—
specifically, whether, in the Supreme Court’s terms, they
identify an “‘inventive concept’” in the application of the
ineligible matter to which (by assumption at stage two)
the claim is directed. Electric Power Group, LLC v. Al-
stom S.A., 830 F.3d 1350, 1353–1356 (Fed. Cir. 2016)
(quoting Enfish, LLC v. Microsoft Corp., 822 F.3d 1327,
1335–36 (Fed. Cir. 2016)); see also Intellectual Ventures I
LLC v. Capital One Fin. Corp., 850 F.3d 1332, 1338 (Fed.
Cir. 2017) (Capital One); BASCOM Glob. Internet Servs.,
Inc. v. AT&T Mobility LLC, 827 F.3d 1341, 1348 (Fed.
Cir. 2016); Internet Patents Corp. v. Active Network, Inc.,
790 F.3d 1343, 1346 (Fed. Cir. 2015).
A
The claims in this case are directed to abstract ideas.
The focus of the claims, as is plain from their terms,
quoted above, is on selecting certain information, analyz-
ing it using mathematical techniques, and reporting or
displaying the results of the analysis. That is all abstract.
We have explained that claims focused on “collecting
information, analyzing it, and displaying certain results
SAP AMERICA, INC. v. INVESTPIC, LLC 9
of the collection and analysis” are directed to an abstract
idea. Electric Power, 830 F.3d at 1353. “Information as
such is an intangible,” hence abstract, and “collecting
information, including when limited to particular content
(which does not change its character as information), [i]s
within the realm of abstract ideas.” Id. (citing cases). So,
too, is “analyzing information . . . by mathematical algo-
rithms, without more.” Id. at 1354 (citing cases, including
Parker v. Flook, 437 U.S. 584 (1978), and Gottschalk v.
Benson, 409 U.S. 63 (1972)). And “merely presenting the
results of abstract processes of collecting and analyzing
information, without more (such as identifying a particu-
lar tool for presentation), is abstract as an ancillary part
of such collection and analysis.” Id. (citing cases). The
claims here are directed at abstract ideas under those
principles.
Contrary to InvestPic’s contention, the claims here
are critically different from those we determined to be
patent eligible in McRO, Inc. v. Bandai Namco Games
America Inc., 837 F.3d 1299 (Fed. Cir. 2016). The claims
in McRO were directed to the creation of something
physical—namely, the display of “lip synchronization and
facial expressions” of animated characters on screens for
viewing by human eyes. Id. at 1313. The claimed im-
provement was to how the physical display operated (to
produce better quality images), unlike (what is present
here) a claimed improvement in a mathematical tech-
nique with no improved display mechanism. The claims
in McRO thus were not abstract in the sense that is
dispositive here. And those claims also avoided being
“abstract” in another sense reflected repeatedly in our
cases (based on a contrast not with “physical” but with
“concrete”): they had the specificity required to transform
a claim from one claiming only a result to one claiming a
way of achieving it. McRO, 837 F.3d at 1314; see Finjan,
Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1305–06 (Fed.
Cir. 2018); Apple, Inc. v. Ameranth, Inc., 842 F.3d 1229,
10 SAP AMERICA, INC. v. INVESTPIC, LLC
1241 (Fed. Cir. 2016); Affinity Labs of Texas, LLC v.
DIRECTV, LLC, 838 F.3d 1253, 1265 (Fed. Cir. 2016); see
also Two-Way Media, 874 F.3d at 1337; Secured Mail
Solutions LLC v. Universal Wilde, Inc., 873 F.3d 905, 909
(Fed. Cir. 2017); RecogniCorp, 855 F.3d at 1326; Syman-
tec, 838 F.3d at 1316.
Similarly, in Thales Visionix Inc. v. United States, 850
F.3d 1343, 1348–49 (Fed. Cir. 2017), the improvement
was in a physical tracking system. The use of mathemat-
ics to achieve an improvement no more changed the
conclusion that improved physical things and actions
were the subject of the claimed advance than it did in
Diamond v. Diehr, 450 U.S. 175 (1981). Here, in contrast,
the focus of the claims is not a physical-realm improve-
ment but an improvement in wholly abstract ideas—the
selection and mathematical analysis of information,
followed by reporting or display of the results.
Contrary to InvestPic’s suggestion, it does not matter
to this conclusion whether the information here is infor-
mation about real investments. As many cases make
clear, even if a process of collecting and analyzing infor-
mation is “limited to particular content” or a particular
“source,” that limitation does not make the collection and
analysis other than abstract. Electric Power, 830 F.3d at
1353, 1355 (citing cases). Moreover, the “investment”
character of this information simply invokes a separate
category of abstract ideas involved in Alice and many of
our cases—“the creation and manipulation of legal obliga-
tions such as contracts involved in fundamental economic
practices.” Id. at 1354; OIP Techs., Inc. v. Amazon.com,
Inc., 788 F.3d 1359, 1363 (Fed. Cir. 2015) (“At best, the
claims describe the automation of the fundamental eco-
nomic concept of offer-based price optimization through
the use of generic-computer functions.”); see Credit Ac-
ceptance Corp. v. Westlake Servs., 859 F.3d 1044, 1055
(Fed. Cir. 2017); buySAFE, 765 F.3d at 1353–54.
SAP AMERICA, INC. v. INVESTPIC, LLC 11
InvestPic also argues that the ’291 patent’s claims are
similar to others we have concluded were patentable at
the first stage of the Alice inquiry, specifically the claims
in Enfish and BASCOM. In those cases, claims were
patent-eligible because they were directed to improve-
ments in the way computers and networks carry out their
basic functions. Enfish, 822 F.3d at 1335–36; BASCOM,
827 F.3d at 1348–49; see Electric Power, 830 F.3d at 1354.
The claims in Visual Memory LLC v. NVIDIA Corp., 867
F.3d 1253, 1259–60 (Fed. Cir. 2017), were similar. Here,
the focus of the claims is not any improved computer or
network, but the improved mathematical analysis; and
indeed, the specification makes clear that off-the-shelf
computer technology is usable to carry out the analysis.
See, e.g., ’291 patent, col. 4, lines 13–22, col 5, lines 28–37,
col. 6, lines 13–16, col. 14, lines 50–61. The claims of the
’291 patent thus fit into the familiar class of claims that
do not “focus . . . on [] an improvement in computers as
tools, but on certain independently abstract ideas that use
computers as tools.” Electric Power, 830 F.3d at 1354.
B
Because the claims are directed to an abstract idea,
we must proceed to the second stage of the Alice inquiry.
We readily conclude that there is nothing in the claims
sufficient to remove them from the class of subject matter
ineligible for patenting and transform them into an
eligible application. What is needed is an inventive
concept in the non-abstract application realm. Here, all of
the claim details identified by InvestPic fall into one or
both of two categories: they are themselves abstract; or
there are no factual allegations from which one could
plausibly infer that they are inventive. In these circum-
stances, judgment on the pleadings that the claims recite
no “inventive concept” is proper.
We have already noted that limitation of the claims to
a particular field of information—here, investment infor-
12 SAP AMERICA, INC. v. INVESTPIC, LLC
mation—does not move the claims out of the realm of
abstract ideas. Dependent method claims 2–7 and 10 add
“limitations . . . [that] require[] the resampling method to
be a bootstrap method.” SAP, 260 F. Supp. 3d at 715.
Likewise, “[c]laims 8 and 9 add limitations that the
statistical method is a jackknife method and a cross
validation method.” Id. at 716. Because bootstrap, jack-
knife, and cross-validation methods are all “particular
methods of resampling,” those features simply provide
further narrowing of what are still mathematical opera-
tions. They add nothing outside the abstract realm. See
Mayo, 566 U.S. at 88–89 (stating that narrow embodi-
ments of ineligible matter, citing mathematical ideas as
an example, are still ineligible); buySAFE, 765 F.3d at
1353 (same). Dependent method claims 12–21 are no
different.
Some of the claims require various databases and pro-
cessors, which are in the physical realm of things. But it
is clear, from the claims themselves and the specification,
that these limitations require no improved computer
resources InvestPic claims to have invented, just already
available computers, with their already available basic
functions, to use as tools in executing the claimed process.
Although counsel for InvestPic contended at oral argu-
ment that the inclusion of a “parallel processing” compu-
ting architecture in claim 22 should render the claim
patent eligible, Oral Arg. at 13:10–13:45, neither the
claims nor the specification calls for any parallel pro-
cessing system different from those available in existing
systems. Rather, to the extent that parallel processing is
discussed in the specification, it is characterized as gener-
ic parallel processing components—not even asserted to
be an invention of InvestPic—on which the claimed meth-
od could run. ’291 patent, col. 14, lines 50–61.
In accordance with the Supreme Court’s conclusion in
Alice, 134 S. Ct. at 2358–59, this court has ruled many
times that “such invocations of computers and networks
SAP AMERICA, INC. v. INVESTPIC, LLC 13
that are not even arguably inventive are insufficient to
pass the test of an inventive concept in the application of
an abstract idea,” Electric Power, 830 F.3d at 1355 (inter-
nal quotation marks omitted) (citing cases). See, e.g.,
Credit Acceptance, 859 F.3d at 1055–56; Smart Sys.
Innovations, LLC v. Chicago Transit Auth., 873 F.3d
1364, 1374–75 (Fed. Cir. 2017); Secured Mail, 873 F.3d at
911–12. Under those decisions, an invocation of such
computers and networks is not enough to establish the
required “inventive concept” in application. Indeed, we
think it fair to say that an invocation of already-available
computers that are not themselves plausibly asserted to
be an advance, for use in carrying out improved mathe-
matical calculations, amounts to a recitation of what is
“well-understood, routine, [and] conventional.” Mayo, 566
U.S. at 73. Here, that conclusion is properly drawn under
the standards governing Rule 12(c) motions.
There is, in short, nothing “inventive” about any claim
details, individually or in combination, that are not them-
selves in the realm of abstract ideas. In the absence of
the required “inventive concept” in application, the claims
here are legally equivalent to claims simply to the assert-
ed advance in the realm of abstract ideas—an advance in
mathematical techniques in finance. Under the principles
developed in interpreting § 101, patent law does not
protect such claims, without more, no matter how
groundbreaking the advance. An innovator who makes
such an advance lacks patent protection for the advance
itself. If any such protection is to be found, the innovator
must look outside patent law in search of it, such as in the
law of trade secrets, whose core requirement is that the
idea be kept secret from the public.
III
For the foregoing reasons, we affirm the judgment of
the district court.
AFFIRMED