Opinion
09 Civ. 2675 (KBF)
02-06-2012
ISLAND INTELLECTUAL PROPERTY LLC, et al., Plaintiffs, v. DEUTSCHE BANK AG, et al., Defendants.
MEMORANDUM AND ORDER
:
On August 16, 2011, the Federal Circuit issued its decision in Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011). Defendants viewed that decision as highly relevant to the eligibility under 35 U.S.C. § 101 of the patents at issue here and requested, and were granted, leave to make a related motion for summary judgment. The motion was referred to Special Master Martens (who was originally suggested by defendants). It was fully briefed and argued at a hearing before Martens in November 2011. (See Docket ("Dkt.") Nos. 194-97, 201-03, 208-09, 225-1 (hearing transcript).) On December 19, 2011, Martens issued his report and recommendation (the "Report") that the motion be denied. (See Dkt. No. 221.) On January 9, 2012, defendants filed timely objections to the Report. (See Dkt. No. 225.)
Plaintiffs have narrowed the patents and claims asserted in this litigation since defendants made their motion. The five remaining patents and claims are: Patent No. 7,519,551, Claims 18, 27; Patent No. 7,672,886, Claim 1; Patent No. 7, 509,286, Claim 1; and Patent No. 7,668,772, Claim 1.
In March 2011, defendants filed summary judgment motions on two of their other defenses - no indirect infringement and non-infringement of certain claims. (Dkt. Nos. 159-60.) Special Master Don W. Martens issued reports and recommendations on those motions on August 2, 2011, recommending that the Court partially grant and partially deny them. Defendants objected to certain portions of the reports and recommendations. On December 21, 2011, the Court adopted the reports and recommendations in their entirety. (Dkt. No. 217.)
For the reasons set forth below, this Court adopts the Report and DENIES defendants' motion for summary judgment on patent eligibility.
STANDARD OF REVIEW
This Court must review de novo any objections to a special master's findings of fact or conclusions of law. See Fed. R. Civ. P. 53(f)(3)-(4), It may "adopt or affirm, modify, wholly or partly reject or reverse, or resubmit to the master with instructions" a special master's report and recommendation. Id. 53(f)(1); see also In re Omeprazole Patent Litig., 227 F.R.D. 227, 229 (S.D.N.Y. 2005).
Summary judgment is appropriate when the record shows that no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c). The evidence proffered by the nonmoving party, "is to be believed, and all justifiable inferences are to be drawn in [the nonmovant's] favor." Anderson v. Liberty Lobby, 477 U.S. 242, 255 (1986). The evidence creates a genuine issue of fact if a reasonable jury could find for the nonmoving party. Id. at 248.
While patent eligibility under Section 101 is ultimately a question of law, "determination of this question may require findings of underlying facts specific to the particular subject matter and its mode of claiming." Arrhythmia Research Tech. Inc. v. Corazonix Corp., 958 F.2d 1053, 1055-56 (Fed. Cir. 1992); CLS Bank Intern. V. Alice Corp. Pty. Ltd., 768 F. Supp. 2d 221, 233 (D.D.C. 2011); Etak, Inc. v. Zexel USA Corp., No. C 94-4041 SC, 1995 WL 462240, at *2 (N.D. Cal. May 8, 1995); see also State Street Bank & Trust Co. v. Signature Financial Group, Inc., 149 F.3d 1368, 1370-71 ("The following facts pertinent to the statutory subject matter issue are either undisputed or represent the version alleged by the nonmovant."); Chamberlain Group, Inc. v. Lear Corp., 756 F. Supp. 2d 938, 967-68 (N.D. Ill. 2010); cf. Microsoft Corp. v. i4i Ltd. P'ship, 131 S. Ct. 2238, 2242-43 (2011) ("'While the ultimate question of patent validity is one of law,' . . . the same factual questions underlying the PTO's original examination of a patent application will also bear on an invalidity defense in an infringement action." (internal citations omitted)).
Because a patent is presumed to be valid pursuant to 35 U.S.C. § 282, a party must prove the factual elements of ineligibility by clear and convincing evidence. See, e.g., CLS Bank Intern, 768 F. Supp. 2d at 233; Voter Verified, Inc. v. Election Sys. & Software, Inc., 745 F. Supp. 2d 1237, 1251 (M.D. Fla. 2010) ("A patent is presumed valid, and [defendant] bears the burden to prove the factual elements of invalidity under 35 U.S.C. § 101 . . . by clear and convincing evidence."); see also Arrhythmia Research Tech., 958 F.2d at 1055-56 ("[W]e give plenary review to the question [of whether a claim is directed to statutory subject matter], with appropriate recognition of the burdens on the challenger of a duly issue United States patent. See 35 U.S.C. § 282 (duly issued patent is presumed valid)"). The clear and convincing evidence standard of proof also applies on summary judgment. See, e.g., CLS Bank Intern, 768 F. Supp. 2d at 233; Voter Verified, 745 F. Supp. 2d at 1251; see generally Liberty Lobby, 477 U.S. at 254 (holding that when deciding a motion for summary judgment, a court must bear in mind the applicable evidentiary burden under the substantive law).
DISCUSSION
This Court has conducted a thorough, de novo review of each of the issues raised in defendants' objections to the Report. The Court has carefully reviewed the Report and has studied each of the cases pertinent to the patent eligibility questions defendants have raised. The Court assumes familiarity with the procedural history of this action and the facts relating to the technology at issue. For context, however, the asserted claims can be summarized as methods enabling financial institutions, such as banks or broker dealers, to "sweep" their clients' (e.g., individual depositors') funds into external accounts at multiple deposit-taking banks that earn interest and provide FDIC insurance.
While the Court has studied each of defendants' objections, it does not recite its reasoning with regard to all of them. Rather, the Court will provide its analysis with respect to the most significant question defendants raise: Does the holding and reasoning in Cybersource Corp. v. Retail Decisions, Inc., 654 F.3d 1366 (Fed. Cir. 2011) - building on the Supreme Court's decision in Bilski v. Kappos, 130 S. Ct. 3218 (2010) - require a conclusion that the remaining claims in this action are ineligible for patent protection as a matter of law? The answer is no. Having said that, the law in this area has been evolving (and may continue to evolve) at a rapid rate, and some significant "grey areas" remain. Defendants acted both reasonably and responsibly in bringing their motion. On balance, however, given the current legal landscape, this Court has no basis in law to disagree with Special Master Martens's Report. Bilski , Cybersource, Ultramercial and Dealertrack
There are four cases that together form the centerpiece of the parties' arguments: Bilski, 130 S.Ct. 3218; Cybersource, 654 F.3d 1366; and two more recent Federal Circuit decisions, Ultramercial, LLC v. HULU, LLC, 657 F.3d 1323 (Fed. Cir. 2011) (decided only a month after Cybersource) and Dealertrack, Inc. v. Huber, Nos. 2009-1566, 2009-1588, 2012 WL 164439 (Fed. Cir. Jan. 20, 2012). Those cases - except Dealertrack, which had not yet been decided - are also at the center of Special Master Martens's Report. The Court has focused on those four decisions as well. No Federal Circuit judge sat on both the Ultramercial and Cybersource panels, and only one of the judges on those panels sat on the Dealertrack panel, Judge Dyk (also on Cybersource).
Dealertrack was not decided until January 20, 2012, one month after Special Master Martens issued the Report. See Dealertrack, 2012 WL 164439. The parties both rely on that decision, however, to argue their respective positions with regard to defendants' objections.
Of note, there was no petition for rehearing en banc in Cybersource. A petition in Ultramercial, however, was denied by the Federal Circuit on November 18, 2011. See 657 P.3d at 1323.
1. Bilski
In 2010, the Supreme Court considered whether business methods as a category are ineligible for patent protection. Bilski, 130 S. Ct. 3218. In a decision in which a majority of the Justices joined parts of the lead opinion, but only a minority joined all, the Court held that Section 101 does not categorically exclude business method patents. Id. at 3229 ("[T]he Patent Act leaves open the possibility that there are at least some processes that can be fairly described as business methods that are within patentable subject matter under § 101.").
The Court acknowledged that "Congress plainly contemplated that the patent laws would be given wide scope," id. at 3225, and emphasized its prior and repeated caution "'that courts should not read into the patent laws limitations and conditions which the legislature has not expressed,'" id. at 3226 (quoting Diamond v. Diehr, 450 U.S. 175, 182 (1981) (internal quotation marks omitted)). The Court's precedents going back 150 years provide three specific exceptions to "§ 101's broad patent-eligibility principles: laws of nature, physical phenomena and abstract ideas." Bilski, 130 S. Ct. at 3225. While those exclusions are not found in the statutory text, the Court explained that they are consistent with the overarching principle that a patentable process must be "new and useful." Id.
Bilski also reiterated that eligibility is simply a threshold test under the Patent Act. Id. at 3225. A claimed invention must also pass the separate, statutory tests of novelty (Section 102), non-obviousness (Section 103) and definiteness (Section 112). Id. at 3225. In other words, there is a distinction between patent eligibility and patent validity - claimed inventions must satisfy each of the conditions and requirements of the Patent Act. See id.; see also Ultramercial, 657 F.3d at 1326, 1329; Dealertrack, 2012 WL 164439, at *14.
After rejecting a categorical exclusion for the eligibility of business method patents, the Bilski Court "resolve[d] th[e] case narrowly on the basis of [its] decisions in Benson, Flook and Diehr, which show[ed] that [the] petitioners' claims [we]re not patentable processes because they [we]re attempts to patent abstract ideas." Bilski, 130 S. Ct. at 3229-30. In Benson, the Supreme Court held ineligible an algorithm to convert binary-coded decimal numerals into pure binary code; and in Flook, the Court held ineligible a procedure for monitoring conditions during the catalytic conversion process in the petrochemical and oil-refining industries. Id. at 3230; see also Parker v. Flook, 437 U.S. 584 (1978); Gottschalk v. Benson, 409 U.S. 63 (1972). According to the Bilski Court, "Flook stands for the proposition that the prohibition against patenting abstract ideas cannot be circumvented by attempting to limit the use of the formula to a particular technological environment or adding insignificant postsolution activity." 130 S. Ct. at 3230 (internal quotation marks omitted). Diehr - finding patent-eligible an industrial process for molding rubber products - "established a limitation on the principles articulated in Benson and Flook." Id. It explained that while an abstract idea could not be patented, an application of the idea to a known process could. Id.; see also Diamond v. Diehr, 450 U.S. 175, 187 (1981).
The underlying invention in Bilski claimed "the basic concept of hedging, or protecting against risk," as well as "broad examples of how hedging can be used in commodities and energy markets." See id. at 3231. All of the members of the Court agreed that the claims were abstract ideas. See 130 S. Ct. 3218. Relying on Benson and Flook, the Supreme Court held that the concept of hedging described and reduced to a mathematical formula is an abstract idea. Likewise, the claimed examples of how hedging could be used in the energy market based on random analysis techniques ran afoul of Flook's teaching "that limiting an abstract idea to one field of use or adding token postsolution components [does] not make the concept patentable." Id. at 3231.
2. Post-Bilski
Since Bilski, the Federal Circuit has decided the patent eligibility of business method claims reciting computer components on three occasions: In Cybersource and Dealertrack, the Circuit found the respective patents ineligible for protection under Section 101 and in Ultramercial, the patent eligible. Application of those three decisions to the patents in the instant action is this Court's - and with regard to Cybersource and Ultramercial was the Special Master's - task.
a. Cybersource
In Cybersource, the patent related to a method for verifying the validity of credit card transactions over the Internet. According to the Federal Circuit, the claims of the patent extended its reach to "essentially . . . any method or system for detecting credit card fraud which utilizes information relating credit card transactions to particular 'Internet address[es].'" 654 F.3d at 1368.
The court found that the "mere collection and organization of data regarding credit card numbers and Internet addresses is insufficient to meet the transformation prong of the [machine or transformation] test, and the plain language of claim 3 does not require the method to be performed by a particular machine, or even a machine at all." Id. at 1370. The court was not persuaded by appellant's argument that the claimed method's reliance on the Internet tied it to a particular machine. Id. "[T]he Internet cannot perform the fraud detection steps of the claimed method," the court stated, and to the extent that the Internet is used simply as a data source, "mere data-gathering steps cannot make an otherwise nonstatutory claim statutory." Id. (internal punctuation omitted).
The Federal Circuit's so-called "machine or transformation" test requires that for patent eligibility under Section 101, a claimed process be (1) tied to a particular machine or apparatus; or (2) transform a particular article into a different state or thing. See, e.g., In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008). To satisfy the "machine" prong, the machine "must impose meaningful limits on the claim's scope." Id. at 961. The Supreme Court in Bilski held that while the machine or transformation test was "a useful and important clue, an investigative tool," it is not the sole test for deciding whether an invention is a patent-eligible process. 130 S. Ct. at 3226.
Independent of the machine or transformation test, the Federal Circuit also found that the claimed invention was drawn to an unpatentable mental process because "[a]ll of claim 3's method steps [could] be performed in the human mind, or by a human using a pen and paper." Id. at 1371-72. For instance, the step of
'utilizing the map of credit card numbers to determine if the credit card transaction is valid' is so broadly worded that it encompasses literally any method for detecting fraud based on the gathered transaction and Internet address data. This necessarily includes even logical reasoning that can be performed entirely in the human mind. For example, a person could literally infringe step (c) by identifying a likely instance of fraud based on the simple observation that numerous transactions using different credit cards, having different user names and billing addresses, all originated from the same IP address.Id. at 1373. Even a claimed practical application will not save a method that can be performed entirely in the human mind, the court indicated. See id. at 1372-73.
The Federal Circuit also rejected the second claim at issue, which "recite[d] nothing more than a computer readable medium containing program instructions for executing the method of [the first claim]." Id. at 1374. "[W]e look to the underlying invention for patent-eligibility purposes," the court stated, "[r]egardless of what statutory category" - here a machine - "a claim's language is crafted to literally invoke." Id. "That purely mental processes can be unpatentable, even when performed by a computer, was precisely the holding of the Supreme Court in Gottschalk v. Benson, [409 U.S. 63 (1972)]," the court explained. Cybersource, 654 F.3d at 1375. Rather, to impart patent-eligibility to an otherwise unpatentable process, a machine "must play a significant part in permitting the claimed method to be performed." Id. (internal quotation marks omitted). Accordingly, the court said, "[t]his is entirely unlike cases where, as a practical matter, the use of a computer is required to perform the claimed method." Id. at 1376 (emphasis added).
b. Ultramercial
One month after Cybersource, in Ultramercial, a different Federal Circuit panel considered the patent eligibility of a method for monetizing and distributing copyrighted products over the Internet. By its terms - as stated in the specification - the patent sought to remedy problems with prior art banner advertising. Ultramercial, 657 F.3d at 1328; see also Patent No. 7,346,545, col.2 II.14-18. The claimed invention "disclose[d] a practical application" of the idea that advertising can be used as a form of currency, involving many steps "that [were] likely to require intricate and complex computer programming" and/or "requir[ing] specific application to the Internet and a cyber-market environment." Ultramercial, 657 F.3d at 1328 (emphasis added).
Notably, given the very recent Cybersource decision, the Ultramercial panel began its analysis by emphasizing "the broadly permissive nature of § 101's subject matter eligibility principles" and noting Bilski's "caution[] against 'reading into the patent laws limitations and conditions which the legislature has not expressed.'" Id. at 1326 (quoting Bilski, 130 S. Ct. at 3226). Accordingly, with regard to the non-statutory "abstract idea" limitation, the court stated that it
does 'not presume to define "abstract" beyond the recognition that this disqualifying characteristic should exhibit itself so manifestly as to override the broad statutory categories of eligible subject matter and the statutory context that directs primary attention on the patentability criteria of the rest of the Patent Act.'Id. at 1327 (emphasis added) (quoting Research Corp. Techs. Inc. v. Microsoft Corp., 627 F.3d 858, 868 (Fed. Cir. 2010)).
The Ultramercial panel explicitly acknowledged the recent Cybersource decision, which "discerned that an invention claimed an 'unpatentable mental process.'" 657 F.3d at 1329 (quoting Cybersource, 654 F.3d at 1370). "The eligibility exclusion for purely mental steps is particularly narrow," the court cautioned. Ultramercial, 657 F.3d at 1329-30 (emphasis added). "'The presence of mental steps in a claim does not detract from the patentability of other steps.'" Id. (punctuation omitted) (quoting Prometheus Labs, Inc. v. Mayo Collaborative Servs., 628 F.3d 1347, 1358 (Fed. Cir. 2010)); accord Classen Immunotherapies, Inc. v. Biogen IDEC, 659 F.3d 1057, 1065 (Fed. Cir. 2011) ("[T]he presence of a mental step is not of itself fatal to § 101 eligibility, and . . . the 'infinite variety' of mental and physical activity negates application of a rigid rule of ineligibility."). According to the Ultramercial court, "[u]nlike the claims in Cybersource, the claims here require, among other things, controlled interaction with a consumer via an Internet website, something far removed from purely mental steps." 657 F.3d at 1330 (emphasis original).
The crux of the Ultramerical analysis is that the invention even if based on an abstract idea, claims a practical application of that idea and so is patent-eligible under Section 101. See 657 F.3d at 1327. The Patent Act covers and protects "applied ideas" serving new and useful ends, the court stated. Id. "'Inventions with specific applications or improvements to technologies in the marketplace are not likely to be so abstract that they override the statutory language and framework of the Patent Act.'" Id. at 1328 (quoting Research Corp., 627 F.3d at 869). "By its terms," the court noted, "the claimed invention purports to improve existing technology in the marketplace. By its terms, the claimed invention invokes computers and applications of computer technology." Ultramercial, 657 F.3d 1332. Thus, as a particular "application" of collecting revenue through advertising, the claimed invention was not "'so manifestly abstract'" as to be ineligible for patent protection. See id. at 1330.
The Court explicitly declined to "define the level of programming complexity required before a computer-implemented method can be patent-eligible." Ultramercial, 657 F.3d at 1328.
On November 18, 2011, the Federal Circuit denied a petition for rehearing en banc in Ultramercial. See 657 F.3d at 1323. While the Court cannot divine the exact reason for that denial, it suggests that the judges viewed Ultramercial as sufficiently correct and consistent with the court's prior decisions - including Cybersource - not to necessitate consideration by the full circuit. See Fed. Cir. Practice R. 35.
c. Dealertrack
Most recently in Dealertrack, the Federal Circuit found patent-ineligible a "computer aided method of managing a credit application." 2012 WL 164439, at *14 (quoting the patent). In its "simplest form," the panel said, the claimed process "include[d] three steps: receiving data from one source . . . selectively forwarding the data . . . and forwarding reply data to the first source." Id. at *16. Effectively, the claim "explain[ed] the basic concept of processing information through a clearinghouse, just as claim 1 in [Bilski] explained the basic concept of hedging." Id. (internal punctuation omitted).
Like in Ultramercial, the court emphasized the breadth of Section 101, explaining that "[t]he vast number of claims pass this course eligibility filter. Their patentability is properly measured against other provisions of Title 35." 2012 WL 164439 at *14 (emphasis added); see also id. at *16. Thus, the decision provides no indication that the Federal Circuit in Dealertrack intended to depart from its previous Section 101 jurisprudence, requiring manifest abstractness for ineligibility. See id. at *16 (reiterating that abstractness must exhibit itself manifestly, as stated in Research Corp. and repeated in Ultramercial (see supra p. 13)). Rather - applying that jurisprudence - the court determined that it was "compelled to conclude that the claims [were] invalid as being directed to an abstract idea" because the steps that constituted the claimed method failed to "impose meaningful limits on the claim's scope." See id. at *16.
The court refused to interpret "computer aided" as an application that meaningfully limited the claims' abstraction because the claims were "silent as to how a computer aid[ed] the method, the extent to which a computer aid[ed] the method, or the significance of a computer to the performance of the method." Id. at *17. The court noted that a machine "'must play a significant part in permitting the claimed method to be performed, rather than function solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations.'" Id. (emphasis added) (quoting SiRF Tech., Inc. v. Int'l Trade Comm'n, 601 F.3d 1319, 1333 (Fed. Cir. 2010)). On that basis, the panel also distinguished the Dealertrack claims from those in Ultramercial:
Unlike in Ultramercial, where this court found that the patent claimed a practical application with concrete steps requiring an extensive computer interface, the claims here recite only that the method is 'computer aided' without specifying any level or involvement or detail.Dealertrack, 2012 WL 164439, at *17.
The Instant Action
At the end of his report, Special Master Martens concludes that "[t]he claims here are more similar to those in Ultramercial than to those in Cybersource." (Report at 15.) This Court - also now considering Dealertrack - agrees that the patents in the instant action are most analogous to those in Ultramercial. Like in Ultramercial, and as recognized by Special Master Martens, the claimed inventions, by their terms, "purport to improve existing technology" (they are disclosed as practical improvements on prior money management technology, see, e.g., '772 Patent col. 3:7-12; '551 Patent col. 2:33-38) and "invoke computers and applications of computer technology." (Report at 15 (citing Ultramercial, 657 F.3d at 1328).)
The claims indicate that computers as a practical matter are required to perform the disclosed methods. See Cybersource, 654 F.3d at 1376 ("This is entirely unlike cases where, as a practical matter, the use of a computer is required to perform the claimed method."); see also id. at 1375 ("[T]o impart patent eligibility . . . under the theory that the process is linked to a machine . . . . the machine must play a significant part in permitting the claimed method to be performed." (emphasis added and internal quotation marks and citation omitted)). Reading the claims, it is not difficult to conclude that their methods would be impracticable but for significant and complex computer programming permitting the transfer, tracking, calculation and actual payment of funds and interest between various financial institutions and numerous client and aggregated accounts. See Ultramercial, 657 F.3d at 1328 ("Many of these steps are likely to require intricate and complex computer programming.").
While it is theoretically possible that the claimed calculations could be completed in a hypothetical person's head - albeit very inefficiently - the Federal Circuit has admonished (directly in response to Cybersource) that "[t]he eligibility exclusion for purely mental steps is particularly narrow." Id. at 1329-30. "[C]laims must be considered as a whole . . . 'the presence of mental steps in a claim does not detract from the patentability of other steps.'" Id. at 1330 (internal punctuation omitted) (quoting Prometheus Labs., 628 F.3d at 1358); see also Classen, 659 F.3d at 1065. Thus, even if the computer-performed calculations cannot alone confer patent-eligibility, other steps of the claimed methods can, as confirmed by Ultramercial.
As discussed, infra, there is no evidentiary record, beyond the claims and specifications themselves, supporting this theoretical possibility.
The Court acknowledges the part of Dealertrack instructing that a machine which "'function[s] solely as an obvious mechanism for permitting a solution to be achieved more quickly, i.e., through the utilization of a computer for performing calculations,'" does not impose a meaningful limit on the scope of a claim. 2012 WL 164439, at *17 (quoting SiRF, 601 P.3d at 1333). The Federal Circuit has indicated - in Cybersource no less - that there is a distinction between "more quickly" and "only way practical." As discussed above, Cybersource hinges its analysis on practicality, stating that the case would be entirely different if "as a practical matter, the use of a computer [was] required." See 654 F.3d at 1375-76. In the instant action, the time involved in performing the claimed invention by hand would mean in reality that such invention would never "see the light of day;" it would be useless. It cannot be - and, in fact, would be explicitly contrary to Cybersource - that a machine which plays a significant part in permitting a method actually to be performed can be disregarded for purposes of patent eligibility. See id. at 1376. --------
Distinguishing the claims in Cybersource, the Federal Circuit in Ultramercial stated that "the claims here require, among other things, controlled interaction with a consumer . . . something far removed from purely mental steps." 657 F.3d at 1330 (emphasis added in part and original in part). Similarly, in the instant case - as Special Master Martens recognized - the claims on their face "require controlled interaction between the intermediate banks, the source banks who deal with the customers, and the program banks which hold the aggregated accounts. The claims variously define steps of posting interest amounts and transferring funds from one bank to another, all done with the aid of computers." (Report at 14; see also Pls.' Mem. (Dkt. No. 230) at 21 (citing examples from the "286 and '551 Patents).) Critical to plaintiffs' claims therefore are exchanges explicitly recognized by the Federal Circuit as taking methods outside of Cybersource and "far removed from purely mental steps."
Defendants have also failed to put forth evidence to show that the claimed processes could in fact be performed mentally - or that anyone has ever done so. They argue that the patents themselves merely reflect artful drafting but offer no evidence beyond the wording of the claims and specifications. At the hearing on November 30, 2011, Special Master Martens asked defendants' counsel whether there was any evidence in the record that the claimed process could be performed mentally. (Nov. 30, 2011 Hrg. Tr. at 146.) Counsel could not identify any. (Id.) Instead, counsel attempted to shift the burden on this motion, stating, "I could say there is no evidence to the contrary that it cannot be performed mentally," (Id.) "This is a claim-construction-based issue," he continued; "[y]ou look at the claims, you understand the scope of the claims, and then you decide, as a matter of law, looking at the four corners of the patent, whether or not the claims can be performed in the mind, and what is the impact of the computers." (Id. at 146-47.) The face of the claims, however, supports a denial of summary judgment here. The claims, on "their four corners," identify computers as significant parts of the inventions. As a result, defendants' failure to identify evidence that "'the calculations could be performed entirely in the human mind'" - or even, as a practical matter, that the disclosed and claimed computers could be eliminated - precludes summary judgment. Cybersource, 654 F.3d at 1376 (quoting SiRF Techs., 601 F.3d at 1333); see generally supra "Standard of Review."
The Court also agrees with Special Master Martens that the patents-in-suit "disclose and claim practical methods for applying the known principles that interest rates can be tiered and limits on FDIC insured accounts can be avoided." (Report at 14.) "'Inventions with specific applications . . . are not likely to be so abstract that they override the statutory language and framework of the Patent Act.'" Ultramercial, 657 F.3d at 1328 (quoting Research Corp., 627 F.3d at 869). While Cybersource suggests that a practical application will not save an entirely mental process, as discussed above, defendants have not met their burden of establishing that the claimed processes in this case are purely mental. See 654 F.3d at 1372.
CONCLUSION
This Court cannot conclude on the evidence before it that defendants are entitled to judgment as a matter of law on patent-eligibility - i.e. that the claimed inventions at issue are so "manifestly abstract" that they fail to pass through the "coarse filter" of Section 101. See also Dealertrack, 2012 WL 164439, at *14 ("The vast number of claims pass this course eligibility filter."); Ultramercial, 657 F.3d at 1329-30 ("The eligibility exclusion for purely mental steps is particularly narrow." (emphasis modified)). In light of the foregoing and for the reasons set for in the adopted Report, defendants' motion for summary judgment pursuant to Section 101 is denied. SO ORDERED Dated: New York, New York
February 6, 2012
/s/_________
KATHERINE B. FORREST
United States District Judge