UNITED STATES DISTRICT COURT FORTHE DISTRICT OF COLUMBIA

FEDERAL HOME LOAN MORTGAGE CORPORATION, ) ) Plaintiff,



### v. ) Civil Case No. 10-1948 (RJL) ) ) ) related to ) GRAFF/ROSS HOLDINGS LLP, )

Defendant. 

# "- ) Civil Case No. 11-941 (RJL) ) )

MEMORANDUM OPINION**(September~,** 2012) [Dkt. ##24, 33] 1 These actions are related to Graff/RossHoldings LLP v. FederalHome Loan Mortgage Corp., No. 07-cv-796 ("Graff/Ross f'), in which this Courtrecently issued a ruling ofinvalidity as to the challengedpatent claims. Mem. Op. [Dkt. #121], Graff/Ross 

### I, No. 07-cv-796 (Sept. 24, 2012). These cases involve two related patents issued to defendant Graff/Ross Holdings LLP ("Graff/Ross") by the United States Patent and Trademark Office ("USPTO"): PatentNo. 7,685,053 (the "'053 patent") and PatentNo. 7,908,202 (the "'202patent"). On November 15, 2010, plaintiffFederal Home Loan Mortgage Corporation ("Freddie Mac") filed a complaint against Graff/Ross seeking a

1Unless otherwise noted, all docket references herein are to the docket in lead Civil Case No. 10-1948. The respective docket numbers for the pending motions in Civil Case No. 11-941 are numbers 16 and 25.declaratoryjudgmentofnon-infringement or invalidity ofthe '053 patent.2 Compl. [Dkt. #1]. Thereafter, defendant counterclaimed for patent infringement. See Def.'s Answerto Pl.'s Am. Compl. for Declaratory J. ("Def.'s Ans.") [Dkt. #9] at 7. OnMay 19,2011, Freddie Mac filed a complaint in a separate action seeking a declaratoryjudgmentofnoninfringement or invalidity ofthe '202 patent, Compl., No. 11-cv-941 [Dkt. #1] (the '"202 Complaint"), to which Graff/Ross filed a counterclaim for patent infringement.3 See Def.'sAnswer & Countercls., No. 11-cv-941 [Dkt. #7] ("Def.'s '202 Ans."). On September 9, 2011, defendant filed aMotion for Partial Summary Judgment as to Patent Validity ("Def.'sMot. Validity") [Dkt. #24] with respecttoboth patents. Plaintiff opposedthis motion, and on May 21, 2012, filed a Motion for Summary Judgment of Invalidity Under 35 U.S.C. 

### § 101 ("Pl.'sMot. Invalidity") [Dkt. #33] as to both patents. Upon consideration ofthe parties' pleadings, relevant law, and the entire record herein, plaintiffFreddie Mac's motion [Dkt. #33] is GRANTED and defendant Graff/Ross's motion [Dkt. #24] is DENIED.

2 Plaintifffiled an amended complaint on February 17, 2011, supplementing its allegations. See FirstAm. Compl. ("Am. Compl.") [Dkt. #7]. 3 Graff/Ross originally sought to amend its complaint in Graff/RossI to include allegations related to the '053 and '202patents. See Graff/Ross's Notice Concerning Amending Compl. to Add Two Related Graff/Ross Patents, Graff/RossI, No. 07-cv-796 [Dkt. #89]; Graff/Ross's Opposed Mot. for Leave to File Third Am. Compl. for Patent Infringement & Demand for Jury Trial, Graff/RossI, No. 07-cv-796 [Dkt. #98]. This requestwas denied by the Court. See Minute Orders, Graff/Ross I, No. 07-cv-796 (May 12 & 16, 2011). Becausethese later filed cases, 10-cv-1948 and 11-cv-941, "involve the same accusedproducts,"the parties proposed ajoint schedule and filedjointbriefing in the cases. See Revised Joint Meet & Confer StatementUnder LCvR 16.3 & Rule 26(t) [Dkt. #29] at 1-2. Therefore, this Courtwill simultaneously address the identical motions filed in each case. 2

### BACKGROUND On March 23, 2010, the USPTO issuedthe '053 patent, entitled "Bidder System Using Multiple Computers Communicating Datato Carry Out SellingFixed Income Instruments," to Graff/Ross. Am. Compl.**~** 

### 16. Nearly a year later, on March 15, 2011, the USPTO issued to Graff/Ross the '202 patent, entitled "Computer System to Generate Financial Analysis Output."4 

### '202 Compl.**~** 

### 29, No. 11-cv-941. The patents are directed at "systems and methods that allow for the electronic sale ofa component ofa fixedincome asset," and both "are continuations ofthe '347 Patent" at issue in related case Graff!Ross Holdings LLP

### v. FederalHome LoanMortgage Corp., 

### No. 07-cv-796. Mem. ofP. & A. in Supp. ofDef.'sMot. Validity ("Def.'s Mem. Validity") [Dkt. #24-1] at 3. Plaintiffalleges that FreddieMac has infringed on these patents "byusing computer systems and methods to conduct electronic bond auctions offixed income instruments."5 

### Def.'sAns. at 7; Def.'s '202 Ans. at 7-8, No. 11-cv-941. Now both parties seek a determination ofthe validity ofthe patents. See generally 

### Def.'s Mot. Validity; Pl.'s Mot. Invalidity. Atissue is the validity of614 claims ofthe two differentpatents. Pl.'s Mem. ofP. & 

### A. in Supp. ofPl.'sMot. Invalidity ("Pl.'s Mem. Invalidity") [Dkt. #33] at 4; Def.'s Mem. ofP. & A. in Opp'nto Pl.'s Mot. Invalidity ("Def.'s Mem. Opp'n")

4

### Richard A. Graffis listed as the sole inventor ofthe patents, buthe assigned his interestto Graff/Ross. See 

### Am. Compl.**~** 

### 17 (the '053 patent); '202 Compl.**~** 

### 29, No. 11- cv-941 (the '202patent). 5 

### I find it important to note, as plaintiffso kindly pointed out, that Freddie Mac does not host the website it uses to conductthese auctions; rather, an entity named Grant Street Group "runs the website," and Freddie Mac is merely a user. Pl.'s Mem. Invalidity at 1n.l. According toplaintiff, Graff/Ross curiously has not sued Grant Street. 

### /d. 3[Dkt. #37-1] at·3. 6 Forthe sake ofease and clarity, I will analyze the claims in accordance with the categories identifiedbyplaintiffin its motion for summary judgment. Plaintiffdivided the claims into nine groups. Group 1consists ofindependent claims describing a "computer system" similarto the independent claim found invalid by this Court in Graff/Ross I. Pl.'s Mem. Invalidity at 4, 10. Group 2 consists ofclaims dependent on Group 1Claims,7but limited to particular fields ofuse. !d. at 4. Group 3· Claims include two independent claims, and claims dependent on them, that describe the "methods" ofGroups 1 and 2 Claims. !d. Group 4 Claims include two independent claims directed at multiple computer systems that implement Group 1Claims. !d. Group 5 consists ofclaims dependent on Group 4 Claims, but limited to particular fields ofuse. Id. Group 6 contains one independent claimthat describes the method used by the Group 4 Claims. 

### !d. Group 7 consists ofclaims dependent on the Group 6 Claim, but limited to particular fields ofuse. Id. Group 8 Claims include three independent claims,

6 The '053 patent contains 415 claims, U.S. PatentNo. 7,685,053, Ex. A to Pl.'s Mem. Invalidity, and the '202 patent contains 199 claims, U.S. PatentNo. 7,908,202, Ex. B to Pl.'s Mem. Invalidity. Sixteen ofthe 614 claims-four claims ofthe '053 patent and twelve claims ofthe '202 patent-areindependent claims, and the remaining 598 claims--411 claims ofthe '053 patent and 187 claims ofthe '202 patent-are dependent on one or more ofthe independent claims. Pl.'s Mem. Invalidity at 8; Def.'sMem. Opp'n at 3. Ofthe 614 claims, 470 claims, including thirteen ofthe sixteen independent claims, assert use ofa "computer system," while the remaining 144 claims, including three independent claims, recite a method. Def.'s Mem. Opp'n at 3. 7Dependent claims "contain a reference to a claimpreviously set forth and then specify a further limitation ofthe subject matter claimed. A claim in dependent form shall be construedto incorporate by reference all the limitations ofthe claimto which it refers." 35 U.S.C. § 112. 4

### and claims dependent onthem, that describe the apparatus used to implement Groups 6 and 7 Claims.8 !d. 

### And, Group 9 consists ofclaims dependent on Group 8 Claims with output means limited to monitors. !d. 

### Groups 1-5 include claims only from the '202 patent and Groups 6-9 include claims only from the '053 patent. !d. 

### at 9. Plaintiffcontends thatthe "patents-in-suit" fail "to claimpatent-eligible subject matter." !d. 

### at 1. According to plaintiff, the patents "recitethe abstract idea of computing a price for the sale ofa fixed-income asset and generating a financial output," and, because abstract ideas are notpatentable, defendant'spatents are invalid under 35 U.S.C 

### § 101. !d. 

### at 3-4. Defendant counters thatthe patents constitute subject matter eligible for patent, and in any event, plaintiffhas failed to meet its burden ofpersuasion. Def.'s Mem. Opp'n at 1; Def.'sMem. Validity at 1-2. Defendant argues thatthe patent "claims are directed to computer systems," and are "patent-eligible because they do not ... merely recite a fundamental principle with only the words 'apply it [using a computer]."'9 

### Def.'sMem. Opp'n at 1. 

### Forthe reasons that follow, I find thatplaintiff has met its burden by clear and convincing evidence, and therefore, GRANT plaintiffs motion for summaryjudgment, and DENY defendant's motion for summaryjudgment. 8

### The Court's description ofGroups 6 and 8 differs slightly from plaintiffs descriptions. Plaintiffs Group 6 "claims recite the same abstract idea as Group 1claims, butuse generic terms such a 'computer system' and 'processor,"' and "Group 8 claims recite in 'method' form the abstract idea ofGroups 6 and 7." Pl.'s Mem. Invalidity at4. Uponreview ofthe patent language, however, the Court believes its descriptions are more accurate. 9 

### Defendant also argues thatthe validity ofthe patents has already been determined by the USPTO. Def.'s Mem. Opp'n at 4, 22. But, Federal Circuit "case law consistently provides that a court is never bound by an examiner's finding in an exparte patent applicationproceeding." Pfizer, Inc. v. Apotex, Inc., 

### 480 F.3d 1348, 1359 (Fed. Cir. 2007). 

### 5STANDARD OF REVIEW Summaryjudgmentis appropriate when, based on the record, there is no genuine issue as to any material fact, and the movingparty is entitled tojudgment as a matter of law. See Fed. R. Civ. P. 56(a). The moving party bears the burden, and the court will draw "alljustifiable inferences" in favor ofthe non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). But, a party opposing summaryjudgment "may notrest upon the mere allegations

... ofhis pleading"; instead, he "must set forth specific facts showingthatthere is a genuine issue for trial." 

### !d. at 248 (quoting Fed. R. Civ. P. 56(e)). A genuine issue exists only when "the evidence is such that a reasonable jurycould return a verdict for the nonmoving party." 

### !d. ANALYSIS A patent is presumedvalid under 35 U.S.C. § 282, and the party asserting invalidity bears the burden to show by clear and convincing evidence that the patent is invalid. Research Corp. Techs. v. Microsoft Corp., 627 F.3d 859, 870 (Fed. Cir. 2010) (citation omitted). A patent may be granted to "[ w]hoever invents or discovers any new and useful process, machine, manufacture, or composition ofmatter," 35 U.S.C. § 101, unless the ideato bepatented is a law ofnature, a physical phenomenon, or an abstract

6idea, 

### Diamondv. Diehr, 450 U.S. 175, 185 (1981). 10 However, "an 

### application ofa law ofnature or mathematical formula to aknown structure orprocess may well be deserving ofpatentprotection," 

### FortProps., Inc. v. Am. MasterLeaseLLC, 671 F.3d 1317, 1321 (Fed. Cir. 2012) (quoting

### Diamond, 450 U.S. at 187), provided, "the prohibition against patenting abstract ideas '[is not] circumvented by attempting to limit the use ofthe formula to a particulartechnological environment' or adding 'insignificantpostsolution activity,"'

### Bilskiv. Kappas, 130 S. Ct. 3218, 3230 (2010) (quoting

### Diehr, 450 U.S. at 191-92). "[T]he form ofthe claims should not trump basic issues ofpatentability." 

### Bancorp Servs., L.L.C. 

### v. Sun LifeAssurance Co. of Can., 687 F.3d 1266, 1277 (Fed. Cir. 2012) (citations omitted). Therefore, a court should "look notjustto the type ofclaim but also to the underlying invention," and may find that "amachine, system, medium, or the like may in some cases be equivalent to an abstract mental process for purposes of patent ineligibility." 

### !d. at 1276-77 (citation and internal quotation marks omitted). To

10 The Federal Circuit has "notpresume[d) to define 'abstract' beyond the recognition that this disqualifying characteristic should exhibit itselfso manifestly as to override the broad statutory categories ofeligible subject matter and the statutory context that directs primary attention on the patentability criteria ofthe rest ofthe Patent Act." 

### Research Corp. Techs., Inc. v. Microsoft Corp., 627 F.3d 859, 868 (Fed. Cir. 2010). Further, "[u]nless the single mostreasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that ideato a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible 'abstract idea' under 35 U.S.C. § 101." 

### CLSBankInt'l v. Alice Corp. Pty. Ltd., 685 F.3d 1341, 1352 (Fed. Cir. 2012). 7determine thepatent-eligibility ofa process,II a court may use the "machine-ortransformation"test (the "MOTtest") as "aninvestigativetool" for analyzing claims under§ 101. Bilski, 130 S. Ct. at 3227, 3231. Underthe MOTtest, a process is patenteligible ifit either (1) "istied to a particularmachine or apparatus, or (2) [] transforms a particular article into a different state orthing." In re Bilski, 545 F.3d 943, 954 (Fed. Cir. 2008) (citations omitted), aff'dsub nom. Bilskiv. Kappos, 130 S. Ct. 3218. But, for "an otherwise unpatentableprocess"to be made patent-eligible by use of"amachine, the use ofthe machine 'mustimpose meaningful limits on the claim's scope."' CyberSource Corp. v. RetailDecisions, Inc., 654 F.3d 1366, 1375 (Fed. Cir. 2011) (quotingIn re Bilski, 545 F.3d at 961). "[T]hemachine mustplay a significantpart in permittingthe claimed methodto beperformed," id. (quoting SiRF Tech., Inc. v. Int'l Trade Comm 'n, 601 F.3d 1319, 1333 (Fed. Cir. 2010)) (internal quotation marks omitted), and mustbe

morethan "incidental use ...toperform [a] mental process," id., because "thebasic character ofa process claim drawn to an abstract ideais not changedby claiming only its performance by computers,"FortProps., 671 F.3d at 1323 (quoting CyberSource Corp., 654 F.3d at 1375).

II "Theterm 'process' means process, art or method, and includes a newuse ofa knownprocess, machine, manufacture, composition ofmatter, ormaterial." 35 U.S.C. § 100(b). 8

### L Group 1 Claims Group 1Claims describe computer systems "that allow for the electronic sale ofa component ofa fixed-income asset." 12 

### Def.'s Mem. Validity at 3. Claim 104 ofthe '202 patent is representative: A computer system to make financial analysis output having a systemdetermined purchase price for at least one component from property in consummating a sale, the system comprising: an input device converting input data, representing at least one component from property, wherein the property is a fixed-income asset, into input digital electrical signals representing the input data; a digital electrical computer system controlled by a processor electrically connected to receive said input digital electrical signals and electrically connected to an output means, the processor controlled to manipulate electrical signals to compute a systemdetermined purchase price for at least one component from property in consummating a sale and corresponding purchase of the component, and to generate financial analysis output at said output means. U.S. PatentNo. 7,908,202 col.61 11.8-24, Ex. Bto Pl.'s Mem. Invalidity at 55. Claim 104 is nearly identical to the independent method claimpreviously found

12 

### As categorizedby plaintiff, Group 1Claims include the following claims from the '202 patent: 57, 58, 76, 104, 106, and 139. Pl.'sMem. Invalidity at 9. Claim 76 is slightly different from the other Group 1Claims in that it is directed toward "[a] machine

... including a computer system." U.S. PatentNo. 7,908,202 col.5911.1-2, Ex. B to Pl.'sMem. Invalidity at 54. 9invalidbythis Court in Graff/RossI. 13 See Mem. Op., Graff/Ross I, No. 07-cv-796. The equivalence ofthese claims is readily apparent and the only real differencebetweenthe claims is the form inwhichthey were drafted. Forexample, Claim 104 describes "[a] computer systemto make financial analysis output," whereas Claim 101 ofthe '347 patent describes "[a] method for making financial analysis output." The computer system is comprised of"an input device converting input data, representing at least one component from property, ... a digital electrical computer system controlledby a processor ... , the processorcontrolledto manipulate electrical signals to compute a system-determined purchase price

... and to generate financial analysis output." U.S. PatentNo. 7,908,202 col.61ll.8-24, Ex. B to Pl.'sMem. Invalidity at 55. Similarly, the steps ofthe Graff/RossI method claim include "converting input data, representing at least one component from property, ...providing a digital electrical computer system

13 Claim 101ofthe '347 patentdisputed in Graff/RossIprovided: A method for making a financial analysis output having a systemdetermined purchase price for at least one component from property in consummating a sale, the financial analysis output being made by steps including: converting input data, representing at least one component from property, wherein the property is a fixed income asset, into input digital electrical signals representing the input data; providing a digital electrical computer system controlled by a processor electronically connected to receive said input digital electrical signals and electronically connectedto an output means; controlling a digital electrical computer processor to manipulate electrical signals to compute a system-determined purchase price for at least one component from property in consummating a sale and corresponding purchase ofthe component; and generatingthe financial analysis output at said outputmeans. Mem. Op. at 3, Graff/RossI, No. 07-cv-796. 10controlledby aprocessor ... ; controlling a digital electrical computerprocessorto manipulate electrical signals to compute a system-determinedpurchaseprice

... and generatingthe financial analysis output." Mem. Op. at 3, Graff/RossI, No. 07-cv-796. This Court will not fall victim to "the draftsman's art,"Mayo Collaborative Servs. v. PrometheusLabs., Inc., 132 S. Ct. 1289, 1294 (2012), and "exaltform over substance," particularly here, where "the claim is really to the method or series offunctions itself," CyberSource Corp., 654 F.3d at 1374 (citation omitted). Therefore, for purposes of patent-eligibility, these claims are equivalent. See Bancorp Servs., 687 F.3d at 1277. The methodunderlying the Group 1computer systems is clearly the same as the method described by the Graff/RossI independent method claim-i.e., computing a price for the electronic sale ofa component ofa fixed-income asset and generating financial analysis output. Thus, having already determinedthatthe Graff/Ross I independent method claim was a patent-ineligible abstract idea, Mem. Op. at 11-13, Graff/RossI, No. 07-cv-796, I easily concludethatthe Group 1Claims are also patent-ineligible. Likethe claim to "computerreadable medium" in CyberSource Corp., and contrary to defendant's assertions, the Group 1Claims recite abstract ideas that fail to meetthe MOTtest. Emphasizing the applicability ofthe Federal Circuit's decision in In

reAlappat, 33 F.3d 1526 (Fed. Cir. 1994), Graff/Ross argues that its computer system claims are special purpose machines, and as such, cannot "flail] within the 'abstractidea' exceptiontopatent eligibility." Def.'s Mem. Opp'n at 14-16 (citations omitted). However, the Federal Circuithas also noted that, "[a]tits most basic,

... a computer is an automatic electronic device for performing mathematical or logical operations," and 11"priortothe information age, a computerwas not a machine at all; rather, it was ajob title: a person employedto make calculations." Bancorp Servs., 687 F.3d at 1277-78 (citations and internal quotation marks omitted). Therefore, "theuse ofa computer in an otherwisepatent-ineligibleprocess for no more than its mostbasic function

... fails to circumventtheprohibition against patenting abstract ideas and mental processes." 

### !d. at 1278. Here, by looking to the substance ofthe claims, I find that the computer components are "function[ing] solely as an obvious mechanism for permitting a solution to be achieved more quickly," 14 SiRF Tech., Inc., 601 F.3d at 1333, and "[s]imply adding

a 'computer aided' limitation"-evenmultiple computer component limitations-"to a claim covering an abstract concept, without more, is insufficientto renderthe claim patent eligible,"Dealertrack, Inc. v. Huber, 674 F.3d 1315, 1333 (Fed. Cir. 2012). Much like Claim 101 to the '347patent in Graff/Ross I, the Group 1Claims are directed to patent-ineligible subjectmatter. 

### IL Group 2 Claims Group 2 Claims are dependent on Group 1Claims, but limitthe claimtoparticular fields ofuse, such as corporate debt. 15 See, e.g., U.S. PatentNo. 7,908,202 col.61 11.25-

14 The patent description specifically states that, as a matter ofefficiency, "it wouldbe bestto use automated means to do computing and dataprocessing," U.S. Patent No. 7,908,202 col.8 11.46-50, Ex. B to Pl.'s Mem. Invalidity at 28, not thatthe computer components are integral to the performance ofthe process, see CyberSource Corp., 654 F.3d at 1375. In fact, the patent lists the specific equations that will be used to compute the financial output sought, equations that one could complete mentally orby hand. See, e.g., U.S. PatentNo. 7,908,202 col.1911.9-30, Ex. B to Pl.'s Mem. Invalidity at 34. 15 As categorizedbyplaintiff, Group 2 Claims include the following claims from the '202patent: 59-63, 77-97, 105, 107-117, 129, 140-160, 163, 191-199. Pl.'s Mem. Invalidity at 9. 12

### 28, Ex. B to Pl.'s Mem. Invalidity at 55 (Claim 105: "The system ofclaim 104, wherein the digital electrical computerprocessor manipulates the electrical signals to generate the system-determinedpurchaseprice for corporate debt as the fixed income asset."). Having determined that the Group 1Claims' machine limitations fail to "impose meaningful limits on the claim[s'] scope,"' CyberSource Corp., 

### 654 F.3d at 1375 (citation omitted), "the question under 

### § 101 reduces to an analysis ofwhat additional features remain in the claims,"Bancorp Servs., 

### 687 F.3d at 1279 (citation omitted). As established by the Supreme Court in Parker v. Flook, 

### 437 U.S. 584, 589-90 (1978), and reiterated by that Court in Bilski, 

### "limiting an abstract ideato one field

... d[oes] not make the conceptpatentable." Bancorp Servs., 

### 687 F.3d at 1275-76, 1280 (quoting Bilski, 

### 130 S. Ct. at 3231). Thus, the Group 2 Claims are notpatent-eligible, because theirvarious field ofuse limitations-i.e., corporate debt security (Claim 61); tax-exempt security (Claim 63); yield/discountrate (Claim 109)-failto provide meaningful limits. See id. 

### at 1280 (claim limited to use in life insurance market was unpatentable). 

### IlL Group 3 Claims Group 3 Claims, including both independent and dependent claims, are similarto the claims in Groups 1and 2, but describe the method ofthe process. 16 

### Claim 98 is a

16 

### As categorizedby plaintiff, Group 3 Claims include the following claims from the '202 patent: 98-103, 118-127, 131-138, 164-190. Pl.'sMem. Invalidity at 9. Claims 98 and 164 are the independent claims. Def.'sMem. Opp'nat 8-9. 13representative independent claim: A method of using a machine to make financial analysis output, the machine including a computer system comprising a processor and an output device, the method comprising: receiving input signals representing input data at a processor, the input data representing a first component ofproperty and a second component of property, wherein at least some of the input data is received from another computer system, wherein the property is a fixed-income asset; program-controlling the processor to manipulate the input signals to compute a one valuation for the first component and an other valuation for the second component in consummating a one sale and corresponding one purchase ofthe first component to a one buyer at a one price corresponding to the one valuation and in consummating an other sale and corresponding other purchase of the second component to an other buyer at an other price corresponding to the othervaluation, and; producing financial analysis output including one of the one valuation and the one price and one ofthe other valuation and the otherprice at an output device. U.S. PatentNo. 7,908,202 col.60 11.30-59, Ex. B to Pl.'s Mem. Invalidity at 54. Claim 99 is a representative dependent claim: The method of claim 98, wherein the program-controlling includes program-controlling the processor to compute the one valuation for the first component including at least one security for corporate debt. !d. col.60 11.51-54, Ex. B to Pl.'s Mem. Invalidity at 54. Much like the Group 1 Claims, these method claims citeto computer components for "implementation ofa purely mental process that could otherwise beperformed withoutthe use ofa computer," CyberSource Corp., 654 F.3d at 1375, and the dependent claims' field ofuse limitations do notprovide sufficient additional limitations, Bancorp Servs., 687 F.3d at 1275-76, 1280. Once the "insignificantpostsolution activity" is

14removed, the Group 3 Claims are quite similarto the claims in

### Bilski, where petitioners' sought to patent a well-known business method. 130 S. Ct. at 3229-30. Like the court in 

### Bilski, I find thatthe Group 3 Claims, too, are invalid. 

### IV. Groups 4 Claims The two Group 4 Claims are independent Claims 3 and 64 ofthe '202 patent. Claim 3provides: 

### A multiple computer system to make financial analysis outputs, the multiple computer system including: a first computer system controlled to generate a first valuation ofa component ofproperty, wherein the property is at least one fixedincome asset, as part ofa first financial analysis output; and a second computer system including a processor programmed to receive at least some ofthe first financial analysis output including the first valuation as input, programmed to generate using at least some of said input a second valuation ofthe component reflecting computation ofa yield/discount rate for the property, and controlled toproduce a second financial analysis output in consummating a sale and corresponding purchase of the component at a price corresponding to the second valuation, wherein the second financial analysis output includes the price. U.S. PatentNo. 7,908,202 col.55 ll.7-23, Ex. B to Pl.'s Mem. Invalidity at 52. Claim 64 provides: An apparatus to make financial analysis outputs, the apparatus including: a first computer system including aprocessorprogrammedto receive input signals representing a fixed-income asset and controlled to manipulate the input signals to generate a valuation ofa component ofthe fixed-income asset as part ofa first financial analysis output; and a second computer system including a processor programmed to receive at least some ofthe first financial analysis output including the valuation as input and controlled to generate, using at least some of the input, a second financial analysis output including a 15system-determined purchase price for the component in consummating a sale and corresponding purchase of the component. 

### !d. col.58 11.1-16, Ex. B to Pl.'s Mem. Invalidity at 53. Again, these claims are simplyapplying multiple computer limitations to the same abstract ideaofcomputing a price for the sale ofa fixed-income asset and generating a financial analysis output, andthe "yield/discountrate" field ofuse limitation in Claim 3 does little to provide additional meaningful limitations. I see no transformation ofthese computer components into "adifferent state orthing" orinnovationthat adds something "specificto the [abstract idea] otherthan what is well-understood, routine, conventional activity, previously engaged inbythose in the field." Prometheus, 132 S. Ct. at 1299, 1302. Claims 

### 3 and 64 ofthe '202 patent are directed toward ineligible subject matter.



### V. Group 5 Claims Group 5 consists ofclaims similarto Group 4 Claims, but limited toparticular fields ofuse. 17 All buttwo ofthe Group 5 Claims are dependent claims. However, the two independent claims, Claims 1and 9 ofthe '202 patent, merely incorporate additional field ofuse limitations to the Group 4 Claims. Forexample, Claim 1 is essentially identical to Claim 3, exceptthat Claim 1 specifies that the fixed-income asset is taxexempt. U.S. PatentNo. 7,908,202 col.54 11.54-col.55 11.4, Ex. B to Pl.'s Mem. Invalidity at 51-52. Thus, for the same reasons the Group 2 and Group 4 Claims are invalid, so too

are the Group 5 Claims.

17 As categorizedbyplaintiff, Group 3 Claims include the following claims from the '202 patent: 1-2,4-56, 65-75, 128, 130, 161-162. Pl.'s Mem. Invalidity at 9. Claims 1and 9 are the independent claims. 

### !d. at 8.16

### VI. Group 6 Claims The one claim in Group 6 is independent Claim 1ofthe '053 patent: A method of using an apparatus in producing financial analysis output in selling fixed income instruments to multiple buyers, the method including: receiving at a first processor of a first computer system, from a second processor ofa second computer system, data associated with a price a first buyer is willing to pay for a first at least one fixed income instrument, the first computer system being a seller computer system, the first buyer being one ofthe multiple buyers, each respective one of said at least one fixed income instrument being a respective one ofthe fixed income instruments; program-controlling the first processor in automatically computing a first yield/discount rate at least in part from at least some ofsaid data associated with the price the first buyer is willing to pay for the first at least one fixed income instrument, the first yield/discount rate being associated with said first at least one fixed income instrument; and outputting financial analysis output comprised of the first yield/discount rate to one ofthe second computer system and a third computer system ofanother one ofthe multiple buyers. U.S. PatentNo. 7,685,053 col.5611.1-26, Ex. A to Pl.'s Mem. Invalidity at 52. Defendant emphasizes thatthe method recites neither "amathematical formula"

nor a "fundamental economic practice," and stresses the method's use ofcomputer components. Def.'s Mem. Opp'n at 20-21. But a review ofthe substance ofthe claim demonstrates that, at its core, the claim is directed toward computer components that are used simply to facilitate the computation ofvarious equations. 18 As this Courtpreviously stated, the use ofthe machine must be more than "incidental use ... to perform [a]
18 The '053 patent application contains the same statement as the '202 patent, that, as a matter ofefficiency, "itwould be bestto use automated means to do computing and data processing," U.S. PatentNo. 7,685,053 col.811.54-61, Ex. A to Pl.'s Mem. Invalidity at 28, and then recites some ofthe various equations used to compute the output. See, e.g., id. col.1911.27-48, Ex. A to Pl.'s Mem. Invalidity at 34. 17mental process." CyberSource Corp., 654 F.3d at 1375. The Group 6 Claim is directed towardpatent-ineligible subject matter. 

### VII. Group 7 

### Claims The Group 7 Claims are dependent onthe Group 6 Claim and recite additional limitations to a particulartechnological environment or field ofuse. 19 Becausethe Group 6 Claim is invalid, and for the same reasons that the Group 2 Claims are invalid,

so too are the Group 7 Claims. 

### VIII. Group 8 Claims Group 8 Claims include three independent claims, and claims dependent on them, that describe the apparatus used to implement Groups 6 and 7 Claims. 2

# °Claim 51 is representative ofthe independent claims: An apparatus to produce financial analysis output in a system to sell fixed income instruments to multiple buyers, the apparatus adapted to carry out the operations of: receiving at a first processor of a first computer system, from a second processor ofa second computer system, data associated with a price a first buyer is willing to pay for a first at least one fixed income instrument, the first computer system being a seller computer system, the first buyer being one ofthe multiple buyers; and program-controlling the first processor in automatically computing a first yield/discount rate at least in part from at least some ofsaid data associated with the price the first buyer is willing to pay for the first at least one fixed income instrument, the first yield/discount rate

19 As categorizedbyplaintiff, Group 7 Claims include the following claims from the '053 patent: 2-50, 372-415. Pl.'s Mem. Invalidity at 9. 20 As categorized by plaintiff, Group 8 Claims include the following claims from the '053 patent: 51-320,322,324-371. Pl.'s Mem. Invalidity at 9. Claims 51-53 are the independent claims. 

### Id at 8. 18being associated with said first at least one fixed income instrument; and outputting financial analysis output comprised of the first yield/discount rate to one ofthe second computer system and a third computer system ofanother one ofthe multiple buyers. U.S. PatentNo. 7,685,053 col.64 11.45-64, Ex. A to Pl.'sMem. Invalidity at 56. Claim 54 is representative ofthe dependent claims: The apparatus of claim 51, wherein the data includes the price the first buyer is willing to pay for the first at least one fixed income instrument. 

### !d. col.6511.49-51, Ex. A to Pl.'s Mem. Invalidity at 57. Although different in form, the Group 6 and Group 8 Claims are similarly directed to an abstract mental process, which defendant attempts to limit through recitation of computer components and field ofuse restrictions. Forthe same reasons I found the claims in Groups 2, 6, and 7 invalid, so too, do I find these claimspatent-ineligible. 

### IX Group 9 Claims Finally, Group 9 includes two dependent claims, Claims 321 and 323 ofthe '053 patent. Pl.'s Mem. Invalidity at 9. Claim 321 is dependent on Claim 59, a Group 8 Claim, and specifies thatthe output means is a monitor. U.S. PatentNo. 7,685,053 col.98 11.41-43, Ex. A to Pl.'s Mem. Invalidity at 73. Claim 323 is dependent on Claim 321, and further limits the apparatus to the field ofcorporate debt securities. 

### !d. col.98 11.46-48, Ex. A to Pl.'sMem. Invalidity at 73. The Courthas already stated, adnauseum, that merely providing a particulartechnological environment or field ofuse limitation to an otherwisepatent-ineligible subject matter, does not renderthe claimpatentable. Therefore, I conclude thatthe Group 9 Claims are also invalid.

19CONCLUSION For all ofthe foregoing reasons, I find that the defendant's PatentNos. 7,685,053 and 7,908,202 constitute patent-ineligible subject matter under 35 U.S.C. § 101, and are therefore invalid. Accordingly, the Court GRANTS Freddie Mac's Motion for Summary Judgment ofInvalidity Under 35 U.S.C. § 101 [Dkt. #33] and DENIES Graff/Ross's Motion for Partial Summary Judgment as to Patent Validity [Dkt. #24]. The Court further DISMISSES these actions in their entirety. An Order consistent with this decision accompanies this Memorandum Opinion.

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