Content Extraction & Transmission LLC v. Wells Fargo Bank, N.A., ___F.3d ___ (Fed. Cir. Dec. 23, 2014) (Dyk, Taranto, CHEN) (D.N.J.: Shipp) (5 of 5 stars)

Federal Circuit affirms Rule 12(b)(6) dismissal of infringement case due to § 101 invalidity of all claims, and dismissal of related tortious interference and RICO counterclaims.

Patent-Ineligibility: Applying the two-step test of Mayo and Alice, CET’s patent claims (1) were drawn to abstract ideas, and (2) did not represent patent-eligible applications of those ideas.  In general, CET’s claims were method claims with three steps: extracting data using, e.g., a scanner; recognizing information in the extracted data; and storing that information in a memory.  For step one of the Mayo/Alice inquiry, the Federal Circuit held that each of these was an abstract idea that was well-known, noting that humans “have always performed these functions.”  Op. at 7.  While humans are not generally able to transform paper documents into digital files, the use of a computer and scanner did not make the claims less abstract. 

In step two of the Mayo/Alice inquiry, CET’s claims did not incorporate any “inventive concept” in using computers and scanners to practice the methods by relying on “existing scanning and processing technology.”  Id. at 9.  The district court did not err in basing its judgment on two independent claims that it deemed representative of the 242 claims in CET’s four asserted patents, as CET did not object to the claims’ representativeness or cite other claims that might be patent-eligible.  Additional limitations in various dependent claims recited “well-known, routine, and conventional functions of scanners and computers.”  Id. at 11.  The district court also did not err in dismissing CET’s infringement claims at the pleading stage without formal claim construction, because it construed terms in the manner most favorable to CET, and full claim construction is not a prerequisite to determining patent eligibility under § 101.

Tortious interference and RICO counterclaims: CET’s infringement claims did not amount to sham litigation, and the district court did not err in dismissing tortious interference and RICO counterclaims under the Noerr-Pennington doctrine.  CET’s suit was not objectively baseless, particularly considering the “deeply uncertain” state of the law surrounding § 101 at the time of CET’s complaints against Diebold’s customers.  The Federal Circuit expressed skepticism that the filing of a lawsuit, even a frivolous one, could be “extortion” sufficient to support a RICO claim.  Op. at 12 n.2.