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Sap America, Inc. v. Investpic, LLC

United States Court of Appeals, Federal Circuit

May 15, 2018

SAP AMERICA, INC., Plaintiff-Appellee
INVESTPIC, LLC, Defendant-Appellant

          Appeal from the United States District Court for the Northern District of Texas in No. 3:16-cv-02689-K, Judge Ed Kinkeade.

          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.

          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 addressed 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 anticipation 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 brilliant, " 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 novelty."); 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.



         Describing aspects of existing practices declared to be in need of improvement, the '291 patent states that "conventional 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 assumption, the patent says, "is generally false": "the PDF for financial market data is heavy tailed (i.e., the histograms 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 understate the true risk and overstate [the] potential rewards for an investment or trading strategy." Id., col. 1, lines 53-54.

         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 bootstrap method can be defined by selecting a specific investment 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 sample 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 investments (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 displaying investment data comprising the steps of:
(a) selecting a sample space, wherein the sample space includes at least one investment data sample;
(b) generating a distribution function using a re-sampled statistical method and a bias parameter, wherein the bias parameter 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 ...

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